Johnson & Johnson's $25.4 billion takeover of Guidant Corp. and the $35 billion union of Sprint Corp. and Nextel Communications Inc. are leading the busiest quarter for mergers in more than four years.
Companies have spent $576 billion on takeovers since the start of October, the most since the second quarter of 2000, when $761 billion of acquisitions were made, data compiled by Bloomberg show.
Mergers are picking up as stock markets recover and global economic growth gathers pace. The Standard & Poor's 500-stock index is the highest since Aug. 3, 2001. World economic growth is projected to expand 5 percent this year, the fastest in three decades, the International Monetary Fund forecast in September.
"There's no doubt that as the stability of capital markets persists, the recovery in the M&A market is gathering momentum," said Paulo Pereira, head of European mergers and acquisitions at Morgan Stanley, the No. 4 adviser on takeovers this year.
Companies have announced $123 billion of acquisitions this week, the most since the five days that started on Oct. 25, Bloomberg data show.
Johnson & Johnson, the world's biggest maker of medical devices, agreed to buy Indianapolis-based Guidant, adding electrical devices for treating heart diseases its to health care products. Symantec Corp., the world's largest maker of computer anti-virus programs, agreed to buy Veritas Software Corp. for $13.5 billion in the second-largest software-company merger. Noble Energy Inc. agreed to buy Patina Oil & Gas Corp. for $2.76 billion.
United Technologies Corp. announced a plan to buy Kidde Plc of Britain for $2.8 billion in cash to add fire-protection products to its Chubb burglar alarms and Otis elevators.
Rising stock markets have boosted management confidence to do deals, said Scott Moeller, a takeover specialist at Cass Business School of the City University in London. The S&P 500 has gained 13 percent since this year's low on Aug. 12.
"People are talking about markets going up, and companies are confident about their share value to do the deals," Moeller said in a telephone interview. "Companies still have their strategic imperatives that are easier achieved through acquisitions."
"Previously anticipated transactions, like Sprint, come to fruition as threshold events are crossed, such as the U.S. elections," said Pereira. "There is also somewhat of a rush to get deals announced before the end of the year."
The world economy may expand more than 4 percent in 2005 and any drop in oil prices will underpin growth, International Monetary Fund chief economist Raghuram Rajan said in an interview today.
"There's a lot of pent-up activity and enthusiasm," Stephen Barrett, a director of KPMG's corporate finance unit in London, said in an interview on Dec. 13. "We'll see a strong 2005."