Reuters Summit-Mergers could hit record high-JPM's Hersch

(For other news from the Reuters Investment Banking Summit, click here)

By Mark McSherry

NEW YORK, Nov 14 (Reuters) - Global mergers and acquisitions in 2006 could soon surpass the record year of 2000, helped by cross-border deals and the ongoing leveraged buyout boom, Dennis Hersch, global chairman of M&A at JP Morgan (JPM.N: Quote, Profile, Research, Stock Buzz), said on Tuesday.

Speaking at the Reuters Investment Banking Summit in New York, Hersch said the ability of the debt markets to absorb the huge amounts associated with this year's biggest buyouts was another crucial factor fueling the boom.

The value of announced global mergers and acquisitions stands at $3.32 trillion for 2006 year to date, compared to $3.33 trillion for full year 2000, according to research firm Dealogic.

"I think it's very possible that we'll exceed 2000," said Hersch.

Going forward, Hersch said he expects the financial institutions, natural resources, health care and transportation sectors to be among the areas busy with consolidation.

Hersch said major Japanese companies are looking for deals in the United States "to a greater degree than I have seen in recent years."

Big Japanese financial firms are known to be keen on buying U.S. firms, but Hersch added: "It's not just financial institutions. (It's) industrial companies. I think the emphasis is on industrial."

Hersch said many Asian companies backed away from the United States when the last Asian buying wave finished and certain Japanese firms were perceived to have overpaid for some U.S. assets.

"What I'm seeing is a willingness to think again," Hersch said.

APPETITE FOR DEBT

Hersch applauded the ability of the high-yield debt market to absorb the enormous amounts linked to this year's largest leveraged buyouts.

High-yield bond investors have been snapping up new debt issues at a record pace this year, helping private equity firms finance some of the largest buyouts in history.

Global high-yield debt issuance jumped to a record $222 billion year to date last week, topping the previous record of $211 billion in 2004, according to Dealogic.

"We have seen the vibrant nature of the high-yield market that's been able to digest the enormous amounts of high-yield debt coming out of some of the big LBOs announced," said Hersch.

In one of the biggest junk bond offerings ever, hospital operator HCA Inc. HCA.N last week sold $5.7 billion of notes for its leveraged buy out.