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Dealmaking: The Vultures Are Gorging Themselves

With the economy in tatters, corporate dealmaking remains anemic. But at least one group is feasting: vultures. Hostile takeovers and other unsolicited bids accounted for more than 11% of the acquisitions announced in the past 12 months. Utility Exelon (EXC) increased its unwanted offer for nuclear power company NRG Energy (NRG) to about $8 billion in July. Fertilizer company Agrium (AGU) wants to buy CF Industries Holdings (CF) for almost $4 billion.

It's a sign of the times. Hostile bids last made up such a large part of the dealmaking back in 2002 during the tech bust, according to Thomson Reuters (TRI). In better times it typically averages around 4%. "A growing number of public companies are vulnerable," says Matteo Tonello, associate director of corporate governance at the Conference Board. "Companies with cash have a tremendous bargain hunting opportunity [and can] position themselves for future success."

A Few Good IPOs

Brand-new stocks are doing better than blue chips. The FTSE Renaissance Capital IPO Composite Index, which tracks the performance of initial public offerings, is up roughly 17% so far this year, vs. a 5% decline for the Dow Jones industrial average. Why? Mainly high-quality companies go public during downturns since investors tend to be pickier. It's a short list amid the current crisis: just 21 U.S. IPOs over the past 12 months, including language software maker Rosetta Stone (RST) and formula manufacturer Mead Johnson Nutrition (MJN). That's down from an average of 200 IPOs a year between 2004 and 2008, and more than 500 a year in the dot-com era.

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