Global M&A still on course for record 2007-Thomson

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LONDON, Sept 21 (Reuters) Global mergers and acquisitions volumes are still on course to set a record in 2007 despite the recent slowdown in debt markets that has stifled the ability of buyout firms to raise cash, according to data from Thomson.

Global deal volumes in the third quarter of 2007 rose 17 percent to 4 billion as corporate activity filled the void left by buyout firms, Thomson said in the preliminary figures.

Year-on-year, the first nine months of 2007 saw a 37 percent increase in global M&A activity over the record year of 2006, showing the rise in M&A narrowed in the third quarter after bumper deals in the first half of 2007.

Miner Rio Tinto's bid for rival Alcan and Qatari investment firm Delta Two's offer for UK retailer Sainsbury, valued by Thomson respectively at billion and billion, helped keep third-quarter M&A on an upward trend despite the recent credit turmoil.

However the volume of assets acquired by buyout firms fell by 66 percent in the quarter from the same period a year ago as companies struggled to raise the cheap debt that had given them an edge in auctions over the past few years.

The credit problems of the summer have left an estimated 0 billion of leveraged buyout loans stuck on banks' balance sheets globally and led European corporate bond issuance to shut down, with a string of deals being delayed.

While there have been positive signs, with the investment-grade market reopening in recent weeks and some progress being made on selling off LBO loans, the jury remains out on how quickly the backlog can be shifted.

Blackstone Group President Hamilton James predicted on Thursday the debt market could work through the backlog ''surprisingly fast'' in about six months. Others have been more pessimistic.

U.S.-based investment bank Goldman Sachs Group Inc topped the global M&A rankings so far this year. It also held the number one position a year ago.


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