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Merger activity rises as markets remain buoyant - report

(Credit: Reuters) This Reuters photo shows a trader working on the floor of the New York Stock Exchange shortly before the end of the day's trading.New York Stock Exchange
January 2
6:54 AM 2014

The all-stock, cross-border merger between rivals California maker of semiconductor manufacturing equipment Applied Materials and Japan's Tokyo Electron was said to be the indication that slightly risky deals are possible, prompting more executives to consider more consolidations than usual, said a report published on The New York Times' The DealBook. In September, Applied Materials and Tokyo Electron agreed on a deal to merge both companies, which was worth over $9 billion.

The report also said that the attitude to take more risky deals is now picking up traction in the US. Despite global deal-making recording a flat figure in its fourth, successive year, the yearly dealmaking volume in the US jumped 11% for 2013 as compared to the year before, according to Thomson Reuters. The New York Times report also added that US companies have declared deals during the year worth over $1 trillion, which was the biggest since the 2008 financial crisis. The amount of deals in the US had led the nation to account 43% of global deals, the biggest US has achieved since 2001. Moreover, it has been observed that the last two quarters of the year saw an increased activity in dealmaking, prompting deal volumes rising sharply from the first half of the year, the report said.

Independent investment bank Centerview Partners co-founder Blair W. Effron said, "There's a feeling of a more stable backdrop that executives think will be with us for the foreseeable quarters. I didn't have a sense of that at the end of 2012 or 2011. Boards are thinking about their goals not just tactically in a one-year 2014 increment, but more strategically for the longer term. Companies are looking further down the field."

Cravath, Swaine & Moore head of the corporate department Scott A. Barshay added, "From a macroeconomic perspective, we have a stronger economy, we have Congress behaving more responsibly, and we have all appearances of stability at the Fed. C.E.O.'s can look forward and say, ‘I don't see any near-term economic bumps.' "

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