This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Deal Pace Expected to Persist Through 2011

(M&A deal story updated with further commentary.)

NEW YORK ( TheStreet) -- In the business of M&A, it's a seller's market.

The pace of dealmaking in the United States has accelerated over the last 12 months -- including a flurry of activity just announced on Monday.

The conditions that have fueled this resurgence look to remain in place for the rest of 2011, according to some experts. That's because the gasoline driving the deals is cheap debt. Both companies (often referred to as "strategic buyers" in the deal business) as well as private-equity firms have seen credit markets loosen to a degree not seen since the beginning of the last boom.

With the Federal Reserve holding interest rates at zero, the yields on U.S. Treasuries are below normal, persuading institutional investors to seek returns elsewhere, including in the high-yield and bank debt markets. Investor demand has, in turn, made it easier for buyers to find financing for their transactions at attractive interest rates.

Because of demand, junk-bond investors and banks are "very receptive to putting money into play," says Tim Hartnett, a consultant in the transactions services arm of PwC. "The velocity of the deal market, and how quickly it came back, I think surprised most people."

The number of big transactions in corporate America has picked up in 2011. Since the beginning of the year, 31 U.S. deals worth at least $2 billion have been announced, according to data compiled by Dealogic and Bloomberg. (The total value of those transaction exceeds $200 billion, the biggest being AT&T's (T - Get Report) troubled $39 billion offer for Deutsche Telekom's T-Mobile.) That compares to just 17 transactions worth $2 billion or more in the first half of 2010, and 46 such deals in all of last year.

With weak economic data recently sparking fears of a double-dip recession, the Fed will likely keep interests rates low for the foreseeable future. That means corporate and investment buyers will likely remain eager to take advantage of today's window of opportunity by continuing to wheel and deal.

A busy "merger Monday," as the financial media cleverly dubbed it, saw apparel colossus VF Corp. (VFC - Get Report) strike a $1.8 billion deal for Timberland (TBL), the Wendy's Arby's Group (WEN - Get Report) unload the fast-food chain that forms the latter half of its name for $430 million, and Honeywell (HON - Get Report) agree to buy EMS Technologies (ELMG) for about half a billion dollars. Then there were the rumors, courtesy of the Sunday Times of London, that commodities juggernaut Glencore was in pursuit of the Kazakhstan miner Eurasian Natural Resources for as much $19.5 billion.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
RKT $0.00 0.00%
HON $101.54 0.00%
IP $33.12 0.00%
T $36.21 0.00%
VFC $56.81 0.00%


Chart of I:DJI
DOW 15,660.18 -254.56 -1.60%
S&P 500 1,829.08 -22.78 -1.23%
NASDAQ 4,266.8370 -16.7550 -0.39%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs