Dealmaking hits highest levels since 2007

Should we view all these corporate weddings as irrational exuberance that comes before a swoon for stocks?

By MSN Money Partner Jun 23, 2014 3:21PM
Image: Handshake (© Image Source Black/Jupiterimages)By Victor Reklaitis, MarketWatch

If you've felt like every Monday lately has been a Merger Monday, that's because companies have been getting hitched at a rate not seen in years.


Though it still has a few days to go, the current quarter is already the biggest quarter for global deal-making since the 2002-2007 bull market that the financial crisis brought to a screeching halt.


This year's second quarter has seen $952 billion in announced deals, according to Dealogic figures out Friday, excluding spin-offs and repurchases. 


That's the most since $959.9 billion in deals in the 2007’s fourth quarter, when the Standard & Poor's 500 Index ($INX) hit a high that it wouldn't reclaim until 2013.


In 2014 to date, there has been $1.65 trillion in announced mergers and acquisitions worldwide, Dealogic says. That’s the highest dollar volume for a Jan. 1 through June 20 period since 2007, when it reached $2.26 trillion.


So should we view all these corporate weddings as irrational exuberance that comes before a swoon for stocks?


It's worth noting the number of deals is actually down from prior years, even though the dollar volume has jumped. The year to date has seen 17,140 announced deals worldwide, according to Dealogic.


That's well below the totals as of June 20 in other years. There had been more than 21,000 deals at this point in 2011 and 2012, for example.


In addition, the Financial Times has found encouraging signs in this year's M&A boom, saying it's the real deal since it’s not financed by as much borrowed money as in 2007.


But others are worried. In a column Friday, MarketWatch's Mark Hulbert quoted a Harvard Business School expert who said each of the last five great merger waves on record, going back more than 125 years, ended with a big drop for stocks.


Yet this expert, Matthew Rhodes-Kropf, also said a bear market isn't necessarily imminent, and his hunch is that this merger trend could last a while longer.


Monday was yet another busy merger day. Deals include Oracle Corp. (ORCLplanning to buy Micros Systems (MCRS) in a $5.3 billion deal, Wisconsin Energy (WEC) acquiring Integrys Energy Group (TEG) in a deal worth $5.71 billion, and Harbinger Group (HRG) bidding $10 a share for Central Garden & Pet (CENT).


In addition, General Electric (GE) has seen a barrier removed in its push to purchase Alstom, and Banco Santander (SANagreed to buy part of GE Capital's consumer-finance business for $952 million.


More from MarketWatch

Tags: GEORCLSAN
5Comments
Jun 23, 2014 4:25PM
avatar
No mystery here.  As governments continue to pander to a wealth envy public and push more regulations, greater consolidation is needed to leverage legal resources to lobby and fight back.

The losers = the 98% - they just keep on shooting themselves in the foot.

Jun 23, 2014 6:11PM
avatar
Big fish eating the small fish this is not a good sign for the economy in my opinion. Less competition and more inflation. The Fed better get with the program and start slowly raising now.
Jun 23, 2014 9:45PM
avatar
"MarketWatch's Mark Hulbert quoted a Harvard Business School expert who said each of the last five great merger waves on record, going back more than 125 years, ended with a big drop for stocks."

Well when Companies are using financial Engineering as opposed to Real Organic Growth, it rarely ends well. This time won't be any different.
Jun 23, 2014 6:17PM
avatar
All the money will end up at the top and then the Guberment will take over to create a Utopia where they are the caregiver to the entire world.  Scary thought but who will ever care or try to stop it?
Jun 23, 2014 6:39PM
avatar
Just more Wall Street quick buck schemes.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124
124 rated 1
282
282 rated 2
455
455 rated 3
624
624 rated 4
642
642 rated 5
665
665 rated 6
610
610 rated 7
460
460 rated 8
287
287 rated 9
167
167 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
KOGKODIAK OIL & GAS Corp10
TWXTIME WARNER Inc10
BBBYBED BATH & BEYOND INC10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
COPCONOCOPHILLIPS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.