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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) 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) strike a $1.8 billion deal for Timberland (TBL), the Wendy's Arby's Group (WEN) unload the fast-food chain that forms the latter half of its name for $430 million, and Honeywell (HON) 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.

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