NEW YORK (CNN/Money) -
What do auto parts makers, data storage providers and old-line trucking companies have in common?
All three sectors saw big merger or takeover bids announced Tuesday, the clearest sign yet that companies are once again looking for deals.
Auto parts maker ArvinMeritor made a hostile $2.2 billion bid for rival Dana Corp., EMC agreed to buy Legato Systems for $1.3 billion in stock, and trucker Yellow Corp. announced it would buy competitor Roadway Corp. for cash and stock worth just under $1 billion.
The news of the deals mark the first time since Sept. 24, 2001, that three separate deals of this size were announced on the same day, according to Dealogic, an independent investment research firm.
The announcements are just the latest in what until a few weeks ago was the tired arena of mergers and acquisitions.
Oracle Corp. (ORCL: Research, Estimates) made a hostile takeover bid for rival software maker PeopleSoft (PSFT: Research, Estimates) last month, a bid it later raised to about $6.3 billion. And Canadian aluminum maker Alcan (AL: Research, Estimates) Monday made a hostile $3.9 billion bid for French competitor Pechiney.
While the deals have been spurred by specific needs of the companies involved, Wall Street analysts say there are broader forces at work spurring the increased pace of merger and acquisition activity. Growing expectations for a pickup in the economy and the recent gains in the stock market have made this a ripe time for companies to act before deals get even more expensive.
"The Oracle bid opened the flood gates," said Joseph Ryu, a merger analyst at Dealogic.
"Before this, even when they saw strategic opportunities and attractive valuations, companies had a reluctance to do a deal. It was time for companies to shore up their own businesses. Now you have this potential rise in the (stock) market, so you've got players ready to pursue deals before (their target's) valuations might rise," he added.
Low interest rates, making financing cheap, along with the recent rise in stock prices have given potential buyers the resources to do deals, said Richard Peterson, market strategist for Thomson Financial.
"There's a lot of liquidity in the system. That's a key buzzword right now," said Peterson. "With low interest rates, a lot of firms raised a lot of cash in debt markets. And if your stock is worth 20 or 30 percent more than it was in March, you've got greater leverage to do a deal."
But Peterson said the recent rash of deals looks big but that's just because activity was so sluggish early this year. "We're moving ahead, but we're not going back to heydays of 90s," he said.
The first six months of this year had deals and bids worth $157 billion announced, down 14 percent from the first half of last year. It'll take a continuation of the recent rash of deals and hostile bids to reach last year's $430 billion total, Peterson said. And that puts it no where near 2000's record $1.7 trillion in announced deals.
"I'm in the camp that says it will be a third down year or at best a little bit higher," said Peterson. "I'm still waiting to see if Oracle deal gets done. Typically with hostile deals, three out of four never get completed."
The largest of the possible deals announced Tuesday was ArvinMeritor Inc.'s hostile $2.2 billion bid for competitor Dana Corp.
ArvinMeritor said it made the $15 a share cash bid after Dana had rebuffed a request to negotiate a friendly deal. The offer, a 56 percent premium over Dana's closing stock price Monday, sent shares of Dana (DCN: up $4.32 to $16.34, Research, Estimates) soaring to well above the offer price, indicating investors expect a higher bid to emerge. ArvinMeritor (ARM: down $0.75 to $20.25, Research, Estimates) shares fell about 5 percent.
Data storage company EMC Corp. (EMC: down $0.42 to $11.32, Research, Estimates) said it agreed to buy Legato Systems Inc. (LGTO: up $0.90 to $10.00, Research, Estimates) in a $1.3 billion all-stock deal that could fuel a wave of expected consolidation in the tech sector. The price is a 19 percent premium based on Monday's close, and Legato shares jumped about 10 percent, while EMC lost about 4 percent in morning trading.
Finally, Yellow Corp. (YELL: down $2.39 to $22.10, Research, Estimates) said it would buy competitor Roadway Corp. (ROAD: up $15.26 to $45.28, Research, Estimates) in a half-cash, half-stock deal worth just under $1 billion.
The two companies are leaders in handling shipments of freight from several companies on the same truck, a business known as less-than-truckload shipping that is important to many businesses whose shipments are too large for parcel carriers but too small to fill a truck.
But Yellow and Roadway, whose employees are represented by the Teamsters, have seen increasing competition from non-union competitors, as well as the parcel carriers such as FedEx (FDX: Research, Estimates) and United Parcel Service (UPS: Research, Estimates).
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