Stock Market Quarterly Review: Lots of Merger Activity -- A Few Big Deals; Bank of America Provides Final Flourish, While Bids From China Roil U.S. Politics
THE MERGERS TRAIN just keeps rolling along. The past three months of mergers and acquisitions produced the most active period since the end of 2000, with corporations and investors putting down $665.9 billion for deals around the world, 53% more than the year-earlier period.</br></br>From utilities and cable television to banks and real estate, companies showed they wouldn't shy away from doing deals even amid a lackluster stock market. If earnings improve and cash continues to pile up on corporate balance sheets, the next six months stand to produce a similar stream of deals, say the bankers and lawyers who put the transactions together. Still, there probably will be few blockbusters, such as the one announced yesterday: Bank of America's roughly $35 billion purchase of MBNA Corp. Instead, expect a procession of announcements driven by these M&A stalwarts: cost- cutting and modest geographic expansion.</br></br>"Boards are still cautious," says Boon Sim, head of mergers and acquisitions for the Americas, at Credit Suisse First Boston. "I don't think there are any 'concept' deals out there. The market is still pretty disciplined, and that trend will continue for the rest of the year."</br></br>Still, activity in the second quarter picked up by nearly every measure. In the U.S. alone, the amount spent on deals surged 73%, compared with the second quarter of 2004, and rose 20% from this year's first quarter. Private-equity firms continued their march into the fray, accounting for 17% of global M&A activity, a sharp increase from 11% last year, according to data from Thomson Financial.</br></br>Through the first-half of this year, the dollar volume of global deals involving retailers surged 137% according to data firm Dealogic, while oil and gas deals also leapt 137%, and technology rose 60%.