Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Coronavirus Pandemic Vaccines Indicator Current State - 3rd Mar 21
AI Tech Stocks Investing 2021 Buy Ratings, Levels and Valuations Explained - 3rd Mar 21
Stock Market Bull Trend in Jeopardy - 3rd Mar 21
New Global Reserve Currency? - 3rd Mar 21
Gold To Monetary Base Ratio Says No Hyperinflation - 3rd Mar 21
US Fed Grilled about Its Unsound Currency, Digital Currency Schemes - 3rd Mar 21
The Case Against Inflation - 3rd Mar 21
How to Start Crypto Mining Bitcoins, Ethereum with Your Desktop PC, Laptop with NiceHash - 3rd Mar 21
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Mergers & Acquisitions Set to Accelerate in 2011 Following Best Start in a Decade

Stock-Markets / Mergers & Acquisitions Jan 13, 2011 - 06:00 AM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleDon Miller writes: So far, 2011 has seen the biggest flurry of mergers and acquisitions (M&A) in a decade, helped by a stock market that's off to a roaring start.

Worldwide deals worth $34 billion were announced on Sunday and Monday, bringing total M&A volume this year to more than $83 billion, up from $67 billion in the same period last year, the Financial Times reported.

The early frenzy of deal making marks the busiest start for M&A activity since 2000, buoying expectations for a rebound in volumes and prices as the economy recovers.

The biggest deals so far have involved companies looking to strengthen their core businesses - a trend analysts expect to continue throughout the year. Two recent examples include:

•Duke Energy Corp. (NYSE: DUK) agreeing to buy U.S. utility peer Progress Energy Inc. (NYSE: PGN) in a stock-based deal worth $13.7 billion, or $26 billion including debt.
•And U.S. chemicals group E.I. du Pont de Nemours & Co. (NYSE: DD) shoring up its position in the fast-growing food and nutrition industry by signing a $6.3 billion deal with Danisco A/S (PINK: DNSOF) of Denmark.
With low valuations for takeover target companies, easier credit terms, and historically high cash balances, the atmosphere for deals in 2011 is as positive as it's been since the credit crisis sent the economy - and M&A activity - into a tailspin.

"A lot of deals which have been in the backlog are finally coming through and companies are moving quickly to get these deals done in case the macroeconomic environment changes," Henrik Aslaksen, global head of M&A at Deutsche Bank AG (NYSE: DB) told The FT.

The surge follows a solid, but unspectacular, 2010 when deals totaled $2.8 trillion, up 23% from $2.3 trillion in 2009, according to The Economist.

Global M&A activity is expected to increase 36% in 2011 to $3.04 trillion, according to a report released late last year by Thomson Reuters and Freeman Consulting Services.

And rising stock valuations are providing a tailwind, as U.S. equities are up almost 8% since the beginning of December.

"There is no better predictor of overall M&A activity than equity markets," Rob Kindler, global head of mergers and acquisitions at Morgan Stanley (NYSE: MS) told The FT. "It is pretty straightforward. If there is volatility, people don't do deals and in down markets people don't do deals."

Consider that the all-time record for merger deals in a single year - $4.3 trillion, according to Dealogic - came in 2007. That's the same year the Dow Jones Industrial Average hit its all-time high.

The feverish pace continued in 2008, until deal volume fell off a cliff after the stock market crashed in October of that year. November 2008 marked the lowest level of M&A activity since 1995, when Dealogic started tracking deal volume.

Morgan Stanley's Kindler feels dealmaking will be robust in 2011, especially if the market returns to the glory days when big-ticket deals were more prevalent.

"There were surprisingly few big deals in 2010," he says. "If those return, then 2011 could prove a bigger year still."

Although the number of deals worth more than $1 billion jumped by more than 25% in 2010, buyers still displayed a cautious approach to big risk.

The United States tallied 40 transactions valued at $1 billion or more last year, up from 32 in 2009. But that number is still well below the peak years of 2007 and 2008 when 79 and 74 big deals were recorded, respectively.

In fact, the largest deal last year was the U.S. Treasury's $48 billion swap of its bail-out investment in insurer American International Group (NYSE: AIG) for a large equity stake - a deal that had most observers questioning whether it even qualified as M&A.

Still, a few of shoppers were on the prowl for multiple big-ticket deals last year, especially in the technology sector. Hewlett-Packard Co. (NYSE: HPQ) inked three big deals in 2010, while International Business Machines Corp. (NYSE: IBM) and Intel Corp. (NYSE: INTC) each closed two of the big transactions as well.

Private equity and hedge funds also returned to test the waters. Overall, buyout shops accounted for seven deals last year valued at more than $1 billion, up from four in 2008 and five in 2009.

Of course, a key difference this year is the cash lining corporate coffers.

The 1,000 biggest companies by market value worldwide have amassed about $1.93 trillion in cash and equivalents based on their latest filings, according to the U.S. Federal Reserve. That's about 57% above the level at the same time in 2006.

"Cash is not only on the sidelines, but actually it's growing every single day," Frank Aquila, a partner at Sullivan & Cromwell LLP, told Bloomberg News.

Investors have put increasing pressure on managers to put those funds to work or return money to shareholders. And acquisitions can accelerate growth in both revenue and market share. They also provide access to markets, products, and technologies that might otherwise be available only after many years of sizable capital investment.

Large global companies also are expected to drive deal making because they can make longer-term strategic bets and pay high premiums, in cash, to buy smaller players.

Last year, the financial sector saw the largest volume of M&A, but the oil industry took the top spot in terms of value. Energy deal making is likely to be strong once again in 2011, with significant activity in mining, health care, and technology. We will probably also see more airline deals in the wake of the recent mergers.

Cross-border deals will figure to be a hot spot, with acquirers from Asia particularly active, where the average cash balance of companies was almost double that of U.S. companies.

Source :

Money Morning/The Money Map Report

©2010 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules