Deal bonanza heralds optimism for 2011 M&A
A clutch of deals worth nearly USD 21 bn were struck over the past day ranging from enzymes to bunny ears, fueling Wall Street optimism that M&A volumes could rise for the second year in a row.
January 11, 2011 / 19:53 IST
A clutch of deals worth nearly USD 21 bn were struck over the past day ranging from enzymes to bunny ears, fueling Wall Street optimism that M&A volumes could rise for the second year in a row.
Duke Energy agreed to buy Progress Energy for USD 13.7 bn in an all-stock deal creating the largest US power company. Danish food ingredients and enzymes company Danisco overnight announced a USD 5.8 bn deal to be bought by DuPont. Playboy Enterprises Inc, the publisher known for its bunny ears and nude centerfolds, on Monday announced plans to go private in a deal that values the company at USD 207 mn."As the economy gets better, as people become more comfortable with their base businesses, they begin to look at M&A as a way of expansion," said Mort Pierce, head of M&A at law firm Dewey & Leboeuf LLP.Cheap debt, record cash piles and the need to outpace slow economic growth should prompt more companies to buy rivals and could also embolden them to go for larger deals, investment bankers and lawyers say."During the recession people were worried about maintaining their business so they were not as focused on M&A transactions and you see smaller deals," said Pierce.Leveraged buyouts could also blast back through the USD 10 bn to USD 15 bn mark this year, bankers have said.Sara Lee Corp, which has a market value of USD 11 bn, has also emerged as a potential buyout target. A source familiar with the situation said that a group of private equity firms including Apollo Global Management is interested in buying the food and beverage company. A leveraged buyout of Sara Lee would likely be the largest since the credit crisis. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
