Lucky Investors Gain Big As M&A Surges In New Year
Most deals have been companies buying each other in the same or similar businesses, with investment firms, and their heaps of borrowed money, playing no role. The companies often tap banks for money but usually use more of their own cash and are considered safer.
Still, CEOs have hesitated to strike deals because they were unsure they could count on the economy to help lift profits and absorb the costs of combining two companies. Now, that fear apparently is ebbing.
"It's a sign that Corporate America believes that the expansion is going to accelerate," says Peter Cardillo, chief market economist at Rockwell Global Capital.
The deals follow other signs that confidence is returning. So far this year, initial public offerings of stocks have raised the most cash in two decades; small investors are putting money into U.S. stock mutual funds at the fastest pace in five years; and professional investors are borrowing more to finance their trades because they are not as fearful of losing money.The last time so many companies paired off, in 2006 and 2007, stocks were surging and investors were pocketing big gains on takeover news. Now a few lucky investors are finding they're reliving the boom years. Here are some recent deals raining riches on shareholders, according to Dealogic, a data provider: â¿¿ ConAgra Foods Inc., maker of Chef Boyardee, announces a $5 billion deal to buy private-label food maker Ralcorp Holdings. Within hours, Ralcorp shares rise 26 percent to $88.80. â¿¿ IntercontinentalExchange Inc. offers to buy NYSE Euronext, owner of the iconic stock exchange on Wall Street, for $8 billion. Premium to NYSE shareholders: 43 percent. â¿¿ Mining giant Freeport-McMoRan Copper & Gold says it is buying oil and natural gas explorer Plains Exploration & Production Co. for $17 billion, handing Plains shareholders a 44 percent premium.
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