Merger Activity Is Expected to Spurt, With Financial Buyers Taking Big Role
NEW YORK -- A slew of new takeover bids in recent days signals the merger business's long-awaited awakening from its summer slumber.</br></br>Financial buyers, including leveraged buy-out specialists such as Kohlberg Kravis Roberts & Co. as well as traditional corporate raiders, are dominating the new string of bids, a phenomenon that Wall Street merger professionals expect to continue through the fall. With worries about an overall economic decline abating and a stable stock market at their backs, investment bankers are betting a wave of $25 billion or more in money targeted for buy-outs will create a robust takeover business through year end.</br></br>Among groups contemplating fall acquisitions, "we're seeing many more financial buyers," says Eric Gleacher, Morgan Stanley & Co.'s merger chief. "They've got the proverbial money burning holes in their pockets. And if they can finance a deal going in, their one risk is an economic drop-off."</br></br>Adds Langhorne Reid, co-head of mergers at PaineWebber Inc.: "There is a wall of money that has to be invested. Everybody has waited a long time for some kind of economic chaos, and it kind of persists in not happening. The environment looks very good."</br></br>For the first time since the spring, Wall Street's merger community is awash in reports of forthcoming deals, both real and imagined. One of the best bets to attempt a fall takeover is Chicago investor William Farley, who is said to be readying a $3 billion hostile offer. Speculation on the target's identity centers on VF Corp., maker of Wrangler and Lee jeans; James River Corp., a paper company, and West Point-Pepperell Inc., in which Mr. Farley may already have accumulated a small stake.