Conditions Right For More Merger Mania

Today, the market is experiencing the second merger mania Monday in a row. Harrah’s board of directors announced it will meet this week to discuss potential buyout offers, and Sabre Holdings is up for sale as well. Shares of medical-device maker Biomet are also up after Smith & Nephew said it is close to bidding about $11 billion for its U.S. rival. Tom Burnett, director of research at Wall Street Access, says the conditions are ripe now for M&A deals – and we could see more in 2007.

According to Burnett, a strong economy –minus housing – low interest rates, good company management and even strong business growth in Japan and Western Europe are feeding the buyout and merger markets. Whether or not this continues depends on continued strong fundamentals – and the absence of any additional geopolitical strife related to terrorism.

Aside of the strong M&A activity in gaming and REITs of late, Burnett sees attractive pricing in the exploration and development division of the oil and gas sector going forward into 2007.