Blizzard of Deals Heralds an Era Of Megamergers; Ample Credit, Foreign Rivals And High Commodity Prices Propel Push for Global Reach

• Published in: The Wall Street journal. Eastern edition
• Main Author: Dennis K. Berman and Jason Singer
• Format: Newspaper Article
• Language: English
• Published: New York, N.Y Dow Jones & Company Inc 27.06.2006
• Edition: Eastern edition
• Subjects: Acquisitions & mergers; Commodities; Competition; Equity; Interest rates; Private equity; Securities markets; Stock exchanges; Stockholders; Trends
• ISSN: 0099-9660

Still, he says that today's merger cycle is perhaps less like the those of the 1980s or 1990s than it is like the empire-building of the late 19th century. Back then, says Mr. [Robert Bruner], corporations combined "horizontally" -- railroads buying railroads, for instance, or coal companies buying other coal companies. Mergers based on consolidating industries typically yield positive results for their shareholders, Mr. Bruner has found. Vertical deals, in which one business buys another in a related field, perform less well, while multiline conglomerates perform the worst, he said. Paul Gibbs, global head of M&A research at J.P. Morgan in New York, says the first quarter of 2006 offered "ideal conditions" for deals, and the trend is likely to continue across many industries. "I can't think of a sector where there isn't M&A going on," he says. "There is so much capital out there that the markets aren't susceptible to halting if one deal goes wrong," says Mark Shafir, Lehman Brothers Holdings Inc.'s global head of mergers. "The market for these M&A transactions appears to be so much deeper and broader relatively to years ago."