Merger arbitrage hedge funds bank on M&A resurgence

Watching the spread

mergarb-radiotelescope

A notable up-tick in corporate deal-making in the first quarter is fuelling expectations of better returns for merger arbitrage funds over the coming months.

Global mergers and acquisition (M&A) volume hit $809 billion in the first three months of 2011, up 28% from $634 billion a year ago, according to data from Dealogic.

US deal volume grew an astonishing 62% to $329 billion from $204 billion in the first quarter of 2010, while M&A activity in Asia-Pacific (excluding Japan) and Europe was up 31%