$100b on table for strategic mergers

Oracle and Honeywell International's latest acquisitions have kicked off a week that may end with more than US$70 billion ($98 billion) in takeovers.

Oracle, the No 3 maker of business-management software, will buy PeopleSoft for US$10.3 billion, while Honeywell will acquire building instruments maker Novar for $1.51 billion.

Sprint is set to acquire Nextel Communications for as much as US$36 billion, and Johnson & Johnson may agree to buy Guidant for about US$24 billion.

The acquisitions will help increase the total value of global takeovers this year to at least US$1.76 trillion, the most since 2000, when US$2.95 trillion in transactions were announced as stockmarkets crested, Bloomberg data shows.

Merger advisers, who will be paid millions of dollars in fees, say the spate of year-end buyouts may foreshadow an increase in acquisitions next year.

"This has been a robust week and bodes well going into next year," said Robert Woolway, a managing director at San Diego-based investment bank Relational Advisors.

"There's a lot of pent-up demand for deals. It's a good time to be a banker going into next year."

Takeovers are rising after a three-year slump as sharemarkets slumped, global economic growth slowed and a rash of corporate scandals sapped investor and management confidence.

This year, companies are using their shares to make acquisitions in industries saddled with overcapacity and a dearth of new products.

"These are all strategic deals," said Morton Pierce co-chairman Dewey Ballantine. His firm advised Sanofi-Synthelabo on its US$73 billion takeover of rival French drugmaker Aventis.

Oracle's planned acquisition of PeopleSoft concluded after an 18-month hostile takeover battle that led to the ouster of the company's chief executive officer and cost it customers.

Credit Suisse First Boston, the adviser to Oracle, stands to receive about US$14 million in fees, while Citigroup and Goldman Sachs split about US$18 million for assisting PeopleSoft.

JPMorgan Chase probably earned US$7.4 million for advising Honeywell, while Goldman, CSFB and UK investment banker Cazenove will share fees of US$7.7 million.

Sprint's negotiations to combine with mobile-telephone company Nextel may prove to be the biggest deal of the week.

An acquisition would create a wireless carrier with 33 million customers, helping Sprint and Nextel vie with market leaders Cingular Wireless and Verizon Wireless.

Nextel, with the highest average monthly bills and lowest rate of customer turnover, would ally with Sprint, which is furthest along in sales of advanced services such as wireless web access.

Johnson & Johnson, the world's biggest maker of medical devices, extended talks to buy Guidant for US$24 billion after meetings over the weekend and may reach an agreement in the next few days.

Johnson & Johnson is negotiating to pay US$75 for each share of Guidant, the world's second-biggest maker of heart-rhythm products, in a cash-scrip deal.

- BLOOMBERG