By Dan Wilchins
NEW YORK (Reuters) - This year's mergers juggernaut is unlikely to slow until at least the middle of next year, bankers said, amid cheap borrowing costs, high stock prices and private equity firms swimming in cash.
At least seven big acquisitions or offers were announced on Thursday, including an $18.7 billion deal to take No. 1 U.S. radio company Clear Channel Communications Inc. (CCU.N: Quote, Profile, Research, Stock Buzz) private, pushing the value of announced mergers this year over $3.33 trillion, according to Dealogic.
"What we see suggests that 2007 is going to be a very, very good year," said Dennis Hersch, global mergers and acquisition chairman at JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research, Stock Buzz), at the Reuters Investment Banking Summit.
There are reasons to be skeptical of how long the current merger mania can last. Economic growth is slowing and longer-term borrowing costs may eventually rise.
But for now, merger bankers seem unconcerned, in part because record high stock market levels give companies strong currency for acquisitions. The Standard & Poor's 500 index .SPX closed at a six-year high on Thursday.
Meanwhile private equity firms, which have raised $350 billion this year by some estimates and have been behind some of the top deals, could fuel more than a trillion dollars of deals in coming years.
"If you pulled private equity out of the market, the whole investment banking business would be limping along," said Tony James, Blackstone Group president.
Another factor is the low cost of borrowing. Continued...
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