Wall Street awoke Monday to a new plate of mergers and acquisitions, in a sign that the deal flows are back, some strategists say.
"The illiquidity and the negativism from the summer months have given way to renewed optimism on the outlook for the economy and the outlook for investment," said Joe Battipaglia at Gruntal & Co.
Plenty of M&A plans were put on hold this summer as stock prices fell between 10-50 percent, hurting buyers attempts to close stock-based deals, Battipaglia suggests. The surprise October recovery on the heels of a Federal Reserve rate cut look to put some of the deals back on the table.
Managements "had made strategic plans to go into technology, buy into new territory geographically," he said. "Now that the market has rallied 1,000 points, the deal flow is hot and heavy all over again."
Battipaglia is expecting the deals to resume in the oil patch sectors among exploration and drillers; in the technology world, especially in software, and among regional players and insurance companies in financial services.
"The summer correction forced management of all the small brokers and banks to see the need to have a proper strategic partner," he said.
On the plate Monday:
- Cardiac device maker Medtronic Inc. (MDT) said it will acquire Sofamor Danek Group Inc.(SDG), a neurological device maker, in a stock deal valued at about $3.4 billion.
- BMC Software (BMCS) said it's buying Boole & Babbage (BOOL) in a stock swap deal worth $900 million. BMC Software will issue 0.675 shares of BMC Software common stock for each share of Boole & Babbage common stock.
- Duke Energy (DUK) said it signed a definitive agreement to sell Panhandle Eastern Pipe Line Company, Trunkline Gas Company and the Trunkline LNG Company terminal to CMS Energy (CMS) for a cash payment of $1.9 billion plus $300 million of Panhandle debt.
Written By Emily Church