Uptick In Mergers And Acquisitions – US-FOREX.US
There has been a surge in corporate deals lately, from Sprint Nextel and Virgin Mobile USA to IBM and SPSS.
Sprint Nextel acquired Virgin Mobile USA on July 28 for 483 million, including Sprint’s previous 13.1% diluted ownership in the company. That same day, IBM acquired predictive analytics firm SPSS for 1.2 billion in cash. For those who are optimistic about the capital markets, this spells more mergers and acquisitions in the second half of this year.Howard Lanser, director at Robert W. Baird, foresees mergers and acquisitions picking up in the third quarter through 2010. He says the credit markets have opened up from earlier in the year, fueling more deals. Lanser anticipates more M&A activity in the health care, technology and for-profit education sectors as each of these areas have stable cash flow.Others, however, think that this recent uptick does not signify a major turnaround. Frank Reddick, partner at Akin, Gump, Strauss, Hauer & Feld law firm, only foresees mergers and acquisitions coming from firms that are emerging from bankruptcy and seeking to survive. He says that financing is still too difficult to get from the credit markets and that his clients are approaching mergers with caution. Though there will likely be more distressed transactions for the next six months, better-quality M&A probably won’t return until the first quarter of 2011, Reddick says.To really discern whether the economy is turning around, watch M&A activity in industrials, energy and construction sectors, Lanser says.