The deals are back, but is merger arb?

Thu Jan 1, 2004



Higher interest rates may be the one missing ingredient for a return to double digit performance that characterized the late-1990s

Over the last two years, risk arbitrageurs, suffering from a dearth of merger opportunities, had started to look a lot like the bored and listless characters in Samuel Beckett's "Waiting for Godot." But the waiting game may be over. Rising equity indices and greater stability within financial markets is reinvigorating the supply side of the merger landscape. In fact, October's M&A calendar weighed in at an impressive $120 billion, the best monthly showing since July 2001, which was roughly $125 billion.

These signs of life are very welcome to the hapless risk arbitrageurs, who were left with fewer and fewer prospects to play after the tech bust. Even the first quarter of 2003 saw a paltry $60 billion in announced merger activity - the worst level seen over...

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