Thanks to record low interest rates, an easier corporate lending environment and corporate cash coffers swelling, merger and acquisition activity picked up steam in 2010. Across various industries and companies both public and private, deal making came back in 2010.

IN PICTURES: 9 Simple Investing Ratios You Need To Know

The Return Of Private Equity
After a quiet couple of years thanks to the freezing of credit markets, private equity deals were very active in the M&A space in 2010. The most recent deals included the $5 billion buyout of consumer foods and pet products company Del Monte Foods (NYSE:DLM) by a private equity consortium led by KKR & Co. (NYSE:KKR). Unless another private equity deal emerges in the coming weeks, Del Monte's buyout will be the largest leverage buyout in 2010. A few days later, two private equity firms announced the $3 billion buyout of retailer J. Crew (Nasdaq:JCG). In fact, during the last week of November, more than $10 billion in private equity buyout deals were announced, the busiest such week since the good old days of 2007.

Corporate Consolidation
Looking for ways to use increasing cash piles, corporations took advantage of attractive equity prices to buy out competitors or quality assets on the cheap. Leading discount airline Southwest (NYSE:LUV) announced a deal to buy out smaller rival AirTran (NYSE:AAI). After more than a year of struggle, fertilizer producer CF Industries (NYSE:CF) finally won out in its offer to acquire smaller nitrogen rival Terra Industries. CF Industries and Canada's Agrium (NYSE:AGU) were battling over Terra beginning in 2009, and CF finally prevailed in April 2010.

Strategic Division Buyouts
In addition to buying out entire businesses, companies were buying out strategic divisions from other competitors. One of the biggest in 2010 was MetLife's $15.5 billion deal to buy AIG's American Life Insurance Co., or Alico. Overall, M&A activity was brought back to life in 2010. As the economy recovered, investors came back with a little confidence aided by a huge appetite for debt despite record low interest rates. (For more, see What Makes An M&A Deal Work?)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Analyzing Home Depot's Return on Equity (ROE)

    Discover what Home Depot's return on equity (ROE) ratio says about the performance of the company and how it relates to historical averages and industry trends.
  2. Investing

    Asset Manager Ethics: Acting With Competence and Diligence

    Managers must make investment decisions based on their personal investment process, which in turn should be based on solid research and due diligence.
  3. Forex Education

    Understanding The Income Statement

    Learn how to use revenue and expenses, among other factors, to break down and analyze a company.
  4. Stock Analysis

    Will J.C. Penney Come Back in 2016? (JCP)

    J.C. Penney is without a doubt turning itself around, but that doesn't guarantee the stock will respond immediately.
  5. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  6. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  7. Stock Analysis

    The Biggest Risks of Investing in Pfizer Stock

    Learn the biggest potential risks that may affect the price of Pfizer's stock, complete with a fundamental analysis and review of other external factors.
  8. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  9. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  10. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  1. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  2. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  3. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
  4. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
  5. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  6. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>

You May Also Like

Trading Center