Global M&A hits record $3.37 trillion

By Mark McSherry

NEW YORK (Reuters) - The value of global mergers and acquisitions for 2006 has reached an all-time high of $3.368 trillion, beating the previous record of $3.332 trillion in 2000, research firm Dealogic said on Thursday.

The merger boom has been driven by low interest rates, gains in stock markets, liberal credit markets and strong chief executive confidence, bankers said at this week's Reuters Investment Banking Summit in New York.

Also fueling the M&A market have been private equity funds, also known as financial sponsors, which have raised more than $300 billion in new funding this year, according to research by Private Equity Intelligence.

Dealogic said financial sponsor M&A buyout volume has reached a record $563.2 billion in 2006, accounting for 17 percent of all global merger activity. That compares to only $118.4 billion and 4 percent of deal value in 2000.

"I have always believed that CEO confidence is perhaps the greatest driver of M&A activity," said Mark Davis, managing director at boutique investment bank Gleacher Partners, at the Reuters summit.

"To me right now, CEO confidence is extraordinarily high -- and I don't see any signs of that abating."

Also, 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.

EUROPE STORMS AHEAD

A number of deals announced on Thursday helped 2006 hit the all-time high.

Companies involved included Clear Channel Communications Inc. (CCU.N: Quote, Profile, Research, Stock Buzz), the No. 1 U.S. radio station operator, which said it would be acquired by private equity firms Thomas H. Lee Partners THL.UL, Bain Capital and the company's founding Mays family for nearly $19 billion.

Dealogic said European-targeted M&A has reached a record $1.34 trillion in 2006 -- up from $1.12 trillion in 2000 -- and now accounts for about 40 percent of global mergers.

The United States is still the most targeted nation for mergers, accounting for 36 percent of all M&A in 2006 worth about $1.22 trillion, but that's down from 46 percent and $1.53 trillion in 2000.

This year's biggest deals have included AT&T Inc.'s (T.N: Quote, Profile, Research, Stock Buzz) proposed acquisition of BellSouth Corp. BLS.N for roughly $80 billion in the United States, and the roughly $47 billion offer by German utility E.ON EONG.DE for Spanish rival Endesa

(ELE.MC: Quote, Profile, Research, Stock Buzz).

Asia-Pacific (except Japan) mergers this years have also hit a record at $323.2 billion, now representing 10 percent of all mergers compared to 7 percent in 2000.

Dealogic said Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) continues to top the global M&A adviser ranking, followed closely by JP Morgan (JPM.N: Quote, Profile, Research, Stock Buzz), Citigroup (C.N: Quote, Profile, Research, Stock Buzz), Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz).