Mergers and acquisitions are poised for a “significant recovery” within the next two years as U.S. companies seek growth internationally, said Peter Weinberg, co- founder of Perella Weinberg Partners LP.
“There is a will and a desire to expand globally,” Weinberg said today at the Tulane University Corporate Law conference in New Orleans. “U.S. companies have resources and currency to make large acquisitions.”
Weinberg is optimistic dealmaking will increase even though volume has shrunk 30 percent this year from the same period in 2011, which saw M&A slow in the second half as a broadening European debt crisis damped enthusiasm. Deals probably will accelerate as U.S. investors get choosier, buying companies that show the most growth, he said.
Weinberg co-founded the boutique investment bank that bears his name a half-dozen years ago with Joseph Perella. Before that, he served as chief executive officer at Goldman Sachs Group Inc. (GS) His New York-based firm currently ranks 18th on deals this year, Bloomberg data show.
Cross-border transactions accounted for almost half of last year’s $2.3 trillion in deals, according to data compiled by Bloomberg. The largest was Johnson & Johnson’s offer to buy Swiss orthopedics maker Synthes Inc., which at the time of the April announcement was valued at about $21 billion.
“All the seeds for good M&A activity are there,” William Ackman, the activist hedge-fund manager who runs Pershing Square Capital Management LP, said at the conference. “You have limited opportunities for growth here so you need to go acquire that.”
Corporate CEOs are becoming more acquisitive as markets recover, Weinberg said. The Standard & Poor’s 500 Index has advanced 8.6 percent this year and reached its highest level in almost four years last month as global economic prospects improve.
“CEO confidence is key,” he said. “Companies and CEOs are sensitive to their stock price, and I think the market is giving them confidence.”
The largest takeover announced this year is Glencore International Plc’s $45 billion offer, including debt, for Swiss miner Xstrata Plc, according to data compiled by Bloomberg. The mining and energy industries have been the busiest, with almost $100 billion in proposed acquisitions.
The biggest takeover announced last year, AT&T’s $39 billion offer for Deutsche Telekom AG’s T-Mobile USA Inc., collapsed after regulators raised antitrust concerns. The first quarter has yielded $315 billion in announced deals globally, compared with about $453 billion in the same period a year earlier.
“There is something missing in M&A,” Weinberg said at the conference. “Last year the first half was very strong. And then it stopped.”
JPMorgan Chase & Co. (JPM) leads the banks in underwriting deals with a 29 percent share of them globally, according to data compiled by Bloomberg. Goldman Sachs and Barclays Plc follow. Morgan Stanley has managed the most deals this year and ranks fifth in market share according to deal size.
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