“Companies around the globe, betting on an economic recovery, are on the prowl for merger partners. They’re being buoyed by heightened investor confidence and still-cheap stocks,” writes Robin Sidel in today’s Wall Street Journal.

“Just Tuesday, ArvinMeritor Inc., an auto-parts company, launched an unsolicited $2.2 billion tender offer for Dana Corp.; trucking firm Yellow Corp. agreed to buy rival Roadway Corp. for $966 million; and EMC Corp., a data-storage concern, agreed to buy Legato Systems Inc. for $1.3 billion. Also this week, Canadian aluminum maker Alcan Inc. launched a $3.91 billion hostile bid for French rival Pechiney SA, and apparel maker VF Corp. agreed to buy Nautica Enterprises Inc. for nearly $600 million.”

“Meantime, R.J. Reynolds Tobacco Holdings Inc. and British American Tobacco PLC’s Brown & Williamson Tobacco unit, squeezed by brutal price competition, have been holding discussions to merge their U.S. tobacco operations, people familiar with the matter said. (And in another booming area of deal-making, history was made Tuesday with the biggest-ever convertible-bond deal.)”

“Even the traditional summer business slowdown isn’t stopping the recent flow of friendly and hostile merger transactions in a broad range of industries. Some $26 billion in mergers world-wide have been announced so far in July, building on a trickle of transactions that began to flow last month, according to Thomson Financial, which tracks merger data.”

“The apparent revival of corporate deal-making follows a two-year merger slumber. Corporate executives, burned badly by a wave of 1990s mergers that went sour, hunkered down to slash costs. The collapse of Enron Corp. in late 2001 also cut deeply into merger activity as financial-reporting methods came under scrutiny. Deal activity has remained slow for much of 2003 as economic fallout from the Iraq war and the SARS epidemic made executives reluctant to pursue transactions.”

“Now, ‘for the first time since Enron, we are starting to see companies view M&A as a good thing to do opportunistically,’ says Don Meltzer, co-head of global mergers and acquisitions at Credit Suisse First Boston in New York.”

“Behind the moves are stock prices that are rising but still not prohibitively expensive. Major stock indexes are up this year — the Dow Jones Industrial Average has risen nearly 11% — and some investors expect they could post their first annual gain since 1999. This has made potential buyers feel better about their own businesses and at the same time, feel pressure to pounce on targets before those stocks get too expensive. And the pickup in activity reflects a growing view among some investors that economies world-wide will wake up from their slumber.”