Merrill's Fleming sees strategic deal rebound

By Mark McSherry

NEW YORK (Reuters) - Strategic mergers could pick up again in the second half of this year, but leveraged buyouts might stay in the doldrums until 2009, according to Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) President and Chief Operating Officer Greg Fleming.

Fleming said in an interview on Thursday that conditions in the credit markets have been as tough as he can remember but that things could improve in the next six-to-nine months.

Announced global M&A volume is down roughly 25 percent year to date and buy-out volume is down roughly 53 percent, according to data provider Dealogic.

"The dialogue exceeds the pipeline today (for deals), but there is hope that as and when the credit markets get better, M&A will pick up reasonably quickly," said Fleming.

"Stock as acquisition currency, for well positioned companies, is back, and you may see more hostile activity," he said.

Private equity deals were likely to be slow through 2008, and he added: "A pick up in financial sponsor deals is a 2009 event -- we have to work through so much inventory."

Fleming also hinted that Merrill Lynch was not planning dramatic job cuts amid the widespread credit crunch.

"We are conscious of the environment. We are watching expenses and cutting where we think it makes sense, but we want to be well positioned when the cycle turns," Fleming said.