Do I hear $100 billion?

Posted Jun 26th 2006 2:08PM by Tom Taulli
Filed under: Deals, Pfizer (PFE)

A billion here, a billion there – yes, pretty soon, it adds up to a lot of money. That's the case with today. Wall Street was able to strike up $90 billion in merger & acquisition (M&A) deals.

Even during the boom times of the 1980s and 1990s, this would be a blockbuster day.

Here's a look at the key deals:

First, Phelps Dodge crafted a $40 billion deal to buy two companies in the nickel mining business, Inco Ltd. and Falconbridge Ltd. With the transaction, Phelps Doge will have 40,000 employees. The company's name also changes to Phelps Dodge Inco (kind of like a law firm, huh?) The massive entity will be the #2 worldwide in copper and molybdenum, as well as #1 for nickel.

Next, Mittal Steel Co. agreed to shell out $33.83 billion for Arcelor SA. This ended a five-month complex deal process.

The new company will be called Arcelor Mittal. It will be the biggest steel producer in the world (three times bigger than Nippon Steel).

What's more, Johnson & Johnson agreed to pay $16.6 billion for Pfizer's consumer products division. Brands include Rolaids, Nicorette and Listerine. In all, the division has about $3.9 billion in revenues.

Basically, despite the swoon in the stock market lately and fears of slowing economic growth, major companies are willing to make significant commitments on deals. Keep in mind that – looking at the history of M&A – high activity happens only when there is confidence in the boardroom. And, yes, there appears to be no lack of confidence right now.

In other words, the recent M&A activity is certainly bullish for equities. In fact, there is already about $1.7 trillion in deals this year, according to Thomson. That's as much as all the deal activity in all of 2004.

Tags: Arcelor, Falconbridge, Inco, Mittal Steel, MittalSteel, Phelps Dodge, PhelpsDodge