Deal bonanza heralds optimism for 2011 M&A

NEW YORK (Reuters) - Nearly $21 billion in deals were struck over the past day targeting everything from food enzymes to men's magazines, as corporate boards become more willing to strike large deals to drive growth.

Duke Energy (DUK.N) agreed to buy Progress Energy (PGN.N) for $13.7 billion in an all-stock deal creating the largest U.S. power company. Danish food ingredients and enzymes company Danisco DCO.CO overnight announced a $5.8 billion deal to be bought by DuPont.

Playboy Enterprises Inc PLA.N, the publisher known for its bunny ears and nude centerfolds, on Monday announced plans to go private in a deal that values the company at $207 million.

Cheap debt, record cash piles and the need to outpace slow economic growth should prompt more companies to buy rivals and could also embolden them to go for larger deals, investment bankers and lawyers say.

"The outlook in the developed economies is for growth, but slow economic growth. The types of deals that typically result from that environment are deals of scale, deals of synergies, and transactions which help improve earnings even in a slow revenue growth environment," Paul Parker, global head of M&A at Barclays Capital.

"During the recession people were worried about maintaining their business so they were not as focused on M&A transactions," said Mort Pierce, head of M&A at law firm Dewey & Leboeuf LLP, adding that deals are on the upswing.

Last year saw increased focus on transactions in the $1 billion to $5 billion range as companies emerged from the credit crisis and cautiously returned to the takeover track.

Cash, credit and confidence levels all indicate that more large deals will get done.

French drugmaker Sanofi Aventis SA (SASY.PA) said on Sunday it was in direct takeover discussions with U.S. bid target Genzyme Corp GENZ.O, in a sign the two sides may be moving closer to a deal three months after Sanofi took its $18.5 billion bid hostile in October.

Leveraged buyouts could also blast back through the $10 billion to $15 billion mark this year, bankers have said.

A mega leveraged buyout by private-equity firms has proved elusive since the financial crisis. The biggest private equity deals in 2010 ranked as Kohlberg Kravis Roberts & Co's KKR.UL $5.3 billion acquisition of Del Monte Foods Co DLM.N and the $4.6 billion acquisition by Canadian investors of British car parts maker Tomkins. Both figures included debt.

Del Monte said on Monday it did not get any superior buyout offers during the "go-shop" period following its agreement to sell itself to the KKR-led group.

"Financial sponsors are beginning to look at deals of much greater size. Last year, few financial sponsors were contemplating club deals, but we're starting to see them come together in consortia to consider acquiring companies," Parker said.

"Interest rates are incredibly low, financial sponsors still have large pools of capital available to them, and there's increasing interest and urgency in deploying that capital."

In one example, Sara Lee Corp (SLE.N), which has a market value of $11 billion, has emerged as a potential buyout target. A source familiar with the situation said that a group of private equity firms including Apollo Global Management is interested in buying the food and beverage company.

A leveraged buyout of Sara Lee would likely be the largest since the credit crisis.

(Editing by Steve Orlofsky, Gary Hill)