Global mergers halve in Q2, bankers see green shoots

By Victoria Howley

LONDON (Reuters) - Global mergers and acquisitions (M&A) plunged by more than half in the second quarter to $402 billion (245 billion pounds), but the green shoots of economic recovery may soon kick-start fee revenue from an eleven-year low.

Announced M&A had its slowest second quarter in six years, according to Thomson Reuters data released on Friday.

That was despite the $58 billion iron ore joint venture between mining giants BHP Billiton (BHP.AX) and Rio Tinto that made up around a seventh of all deals.

But rallying markets and brighter economic outlook of the last few months have allowed companies to forecast earnings with more certainty, sparking hopes that activity would not fall any further, or could even start to rise again.

"We have reached the trough of the current M&A cycle. Based on previous cycles, we can expect activity to remain weak for about 18 to 24 months," said Dieter Turowski, head of European M&A at Morgan Stanley (MS.N).

Turowski's bank tops the global advisory league table for the year and has advised clients including Rio Tinto (RIO.L) (RIO.AX) and DirecTV Group (DTV.O) on some of the second quarter's largest deals.

The collapse in dealmaking is a far cry from the pre-crisis days of 2007, when huge bank loans powered boom-year cash takeovers after hotly contested auctions.

The economic crisis left buyers of assets in short supply, constrained by scarce debt and often harbouring radically lower ideas than vendors of what a business is worth.