Philadelphia Inquirer – After a strong start in January and February, investment bankers are predicting a record year for corporate mergers and acquisitions.
The year has already brought Boston Scientific Corp.’s $27.2 billion acquisition of Guidant Corp. and the Walt Disney Co.’s $7.4 billion purchase of Pixar Animation Studios Inc.
Analysts attribute an overall increase in the value of deals announced in part to heightened activism among investors, such as hedge funds that are pushing companies to sell unprofitable business units. Another factor is the long-held belief that buying a competitor is the fastest way to expand a company.
“It is easier to buy something than build it from scratch,” said Andrea Pericli, a portfolio manager with Euclid Financial Group, a Washington hedge fund.
During the first eight weeks of the year, 4,037 deals worth $473 billion were announced, compared with 4,971 totaling $378 billion in early 2005, according to Thomson Financial, a business-information company that tracks merger activity.
That is the second-most-active start for Wall Street since early 2000, when AOL bought Time Warner in a deal then worth $182 billion and there were 6,061 transactions worth $728 billion.
