The mega-merger is back.
For the corporate takeover business, the last half-decade was a fallow period. Wall Street deal makers and CEOs, brought low by the global financial crisis, lacked the confidence to strike the audacious multibillion-dollar acquisitions that had defined previous market booms.
Cycles, however, turn, and in the opening weeks of 2013, merger activity has roared back to life. On Thursday, Berkshire Hathaway, the conglomerate run by Warren E Buffett, said it had teamed up with Brazilian investors to buy ketchup maker H.J Heinz for $23 billion. American Airlines and US Airways agreed to merge in a deal of $11 billion.
Those transactions come a week after a planned $24 billion buyout of computer company Dell by founder Michael S Dell, and private equity backers. And Liberty Global, controlled by the billionaire media magnate John C Malone, struck a $16 billion deal to buy UK cable business Virgin Media.
“Since the crisis, one by one, the stars came into alignment, and it was only a matter of time before you had a week like we just had,” said James B Lee Jr, vice chairman of JPMorgan Chase.
Still, bankers and lawyers remain circumspect, warning that it is still too early to declare a mergers-and-acquisitions boom like those during the junk bond craze of 1989, the dot-com bubble of 1999 and the leveraged buyout bonanza of 2007.
Many factors have driven recent deals. The stock market has been on a tear, with the Standard & Poor’s 500-stock index this week hitting its highest levels since November 2007. Also, M&A activity in 2012 was tepid as firms took a wait-and-see approach over the outcome of the presidential election and fiscal cliff negotiations. NYT
(Michael J de la Merced contributed reporting)