Cash-rich companies see opportunities amid turmoil

By Jessica Hall

PHILADELPHIA (Reuters) - Companies as diverse as fertilizer maker Potash Corp (POT.TO), pharmaceutical firm Merck & Co Inc (MRK.N) and steelmaker Nucor Corp (NUE.N) all have one thing in common: they view the financial market turmoil as opening up acquisition opportunities.

Companies with strong balance sheets and the luxury of cash may pursue acquisitions even though most dealmaking has been frozen by the lack of funding available in the credit markets.

Overall, the volume of mergers and acquisitions has dropped 24.7 percent so far this year worldwide, and fallen 29.7 percent in the U.S., according to Thomson Reuters data.

Despite this drop in total M&A, deals by corporations have seen less of a decline, softening only 12.3 globally and 7.6 percent in the U.S., according to Thomson Reuters data.

"There are a lot of companies sitting on significant cash that we think will be used once there's some stability in the market," said Tim Ghriskey, chief investment officer of Solaris Asset Management.

"The availability of credit is difficult, but if a company has the ability to finance it themselves and they have the cash on their balance sheets, they can do it," Ghriskey said.

Many of the recent deals forged amid the credit crisis where done under duress or timed to help ailing companies, such as the takeover of Bear Stearns by JP Morgan Chase & Co (JPM.N), the planned acquisition of Constellation Energy Group Inc (CEG.N) by MidAmerican Energy and the planned takeover of Wachovia Corp WB.N by Wells Fargo & Co (WFC.N).

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