Day for the Ages in M&A - TheStreet

After nearly grinding to a halt earlier this year, the M&A market is finally showing signs of life.

On Monday,

Bank of America

(BAC) - Get Report

announced that it would acquire

FleetBoston

( FBF) for more than $40 billion in stock to create the nation's second-largest bank.

Meanwhile,

Anthem

(ATH) - Get Report

said it would buy

WellPoint

(WLP)

for $15 billion, and

United Health

(UNH) - Get Report

agreed to acquire

Mid Atlantic Medical Services

( MME) for just under $3 billion.

"The first quarter of this year was a very, very slow period

for merger and acquisition activity, said Richard Peterson, chief market strategist at Thomson Financial. "Activity in the first three months of the year was the lowest since the second quarter of 1994. Now perhaps we're getting back to a more reasonable level."

So far this year, some 5,900 deals have been announced compared to 5,700 at the same time a year ago. The value of the deals currently sits at $400 billion, compared to $355 at a comparable period last year, Peterson said.

A three-year bear market sent the M&A market into a prolonged slump. Back in 2000, M&A volume amounted to about $770 billion but it slipped to $616 billion in 2001 and fell to just $432 billion last year. Recently however, some companies have started to open up their pocketbooks, emboldened by a stronger stock market and economic growth of close to 6% in the third quarter.

Indeed, a flurry of big deals has recently been announced. Canada's

Manulife Financial

(MFC) - Get Report

said at the end of September that it would buy

John Hancock Financial

( JHF) for $10.5 billion, and in early October,

General Electric

(GE) - Get Report

said it would buy

Vivendi's

(V) - Get Report

entertainment segment for $3.8 billion in cash.

So far this month, M&A volume has reached $104.7 billion, according to Peterson. That's the first time monthly activity has exceeded $100 billion since July 2001. "The fact that four of the biggest deals have been announced in the past 30 days certainly bodes well," he said.

Analysts are particularly optimistic about M&A activity in the financial arena following Bank of America's acquisition Monday.

"The deal appears to be a precursor of further industry consolidation," said Merrill Lynch analyst Matthew Burnell. "We believe lower-risk banking franchises remain attractive to bank buyers, while interest in brokers and asset managers has waned."

Burnell said companies like

Mellon Financial

( MEL),

SunTrust Banks

(STI) - Get Report

,

Bank of New York

(BK) - Get Report

and

PNC Financial Services

(PNC) - Get Report

are possible takeover targets.

All of these stocks were showing strong gains Monday. In contrast, potential buyers like

Wachovia

(WB) - Get Report

,

Citigroup

(C) - Get Report

,

Bank One

(ONE) - Get Report

and

Wells Fargo

(WFC) - Get Report

traded lower.

"We view the announcement today that Bank of America is buying Fleet as a milestone that should lead to more consolidation in the industry," noted Mike Mayo, an analyst at Prudential Securities.

The purchase "may feed speculation about other potential transactions with banks like

KeyCorp

(KEY) - Get Report

, PNC and

Comerica

(CMA) - Get Report

," he said.

In the health care space, SG Cowen analyst said further consolidation makes sense "given

the lack of deals, mature industry and sluggish jobs outlook." A weak labor market reduces the number of people enrolled in health plans.

This heightened M&A activity is good news for the nation's investment banks, which have struggled over the past few years with declining fees. "It's got to give a little bit of confidence to investment bankers," Peterson said. "Is it the road to heaven? Well, maybe not. But this is a positive sign."