The last time so many companies paired off, in 2006 and 2007, stocks were surging and investors were pocketing big gains on takeover news.
Now a few lucky investors are reliving the boom years. Here are some recent deals raining riches on shareholders, from data provider Dealogic:
ConAgra Foods Inc., maker of Chef Boyardee, announces a $5 billion deal to buy private-label food maker Ralcorp Holdings. Ralcorp shares rise 26 percent to $88.80.
IntercontinentalExchange Inc. offers to buy NYSE Euronext, owner of the iconic stock exchange on Wall Street, for $8 billion. Premium to NYSE shareholders: 43 percent.
Freeport-McMoRan Copper & Gold says it is buying oil and natural gas explorer Plains Exploration & Production Co. for $17 billion, handing Plains shareholders a 44 percent premium.
Deals totaling $219 billion have been announced so far this year, more than double the level over the same time last year, Dealogic reported. The value of deals is slightly above the same period in 2007. And that turned into a record year, with the value of deals reaching $1.6 trillion.
Those looking to profit on deals by picking companies before they're taken over should know it's not easy. But there are guidelines for choosing possible targets. One is a reasonably valued stock. Other signs are low debt and a history of generating lots of cash. Those are key for buyers who borrow heavily to finance deals, said Hottovy, the Morningstar analyst. Their debt can be repaid with the money coming out of target companies.
Hottovy warned that, despite the good signs, CEOs can sour on mergers and acquisitions if their confidence evaporates. He said a flood of deals a year ago turned into a trickle on fears the European debt crisis would hurt U.S. companies.
“We thought we were back,” he said. “But then Europe put a halt to all that.”
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