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By Anjuli Davies and Sophie Sassard
LONDON, Sept 4 (Reuters) - Verizon's deal to buy Vodafoneout of their U.S. wireless venture for $130 billion may havebeen years in the making, but bankers hope it could be aninflexion point that marks the revival of big dealmaking.
The telecoms deal, the third-biggest takeover on record,crowns a string of transactions this summer that the bankers saycould boost boards' confidence that the time is right to pursuetransformational M&A.
"This has been a great summer to remember," said HernanCristerna, global co-head of M&A at JP Morgan, which advisedVerizon and also helped Nokia with itsdecision to sell its mobile phone business to Microsoft, announced on Tuesday.
"We have to be slightly cautious, but what these dealssignal is that there's a shift in sentiment. We're changinggears in the M&A mindset."
In the wake of the 2007-09 financial crisis, dealmakingdeclined and executives shied away from large leveragedtransactions, cutting debt instead and slimming down to theircore businesses through asset disposals. Big became synonymouswith greater risk and lower performance.
After a slow start, the summer's activity has pushed globalM&A activity across all sectors to $1.55 trillion so far thisyear, up 1 percent on the same period last year.
The telecoms, media and technology (TMT) sector has led thecharge.
"This could be the beginning of a big wave of M&A in the TMTsector; we are beginning to see a shifting of the telco tectonicplates globally," said Eric Benedict, Co-Head TMT atAlixPartners in London.
"There has been a lot of action in the U.S., but more couldstart happening in Europe," said Benedict.
TMT was already the biggest contributor to M&A activity inthe first half of 2013, and Vodafone-Verizon has taken the totalto $447.9 billion, more than two thirds higher than last yearand making 2013 the best year for TMT dealmaking since 2007,according to Thomson Reuters data.
"There are really punchy, 'life's great' sort of deals goingon, but they're really sector specific," said Tom Massey, headof European M&A at Citi.
"But like in past cycles, once one domino goes, the restfall."
Data also show reasons for optimism, with 15 deals above $10billion so far this year, the highest number since 2009,according to Thomson Reuters data.
"The acid test for the M&A market is beyond the naturalevolutions of add-ons. It's about seeing M&A used to transformrather than just add on or peel off," said Cristerna.
Bankers say companies and their shareholders are warming tomore weather-changing deals.
"Companies are dusting off some deals they have beenstudying for a long time. In addition to divestiture of non-coreassets and bolt-on acquisitions, CEOs are starting to look atlarge industry-transforming strategic transactions," saidGilberto Pozzi, head of European M&A at Goldman Sachs.
The acquisition of Telecom Italia is among thelong-expected deals that could soon happen, as the firm is beingcircled by potential investors including China's HutchisonWhampoa and Egyptian media tycoon Naguib Sawiris,bankers say.
In the UK, the owners of mobile operator EE could also sellit to leveraged buyout funds or trade players like AT&T inwhat would be a 10-12 billion pound ($16-20 billion) deal,bankers say.
Long-flagged sizeable takeover targets in the pharmaceuticalfield such as Shire, Astrazeneca and privateequity-owned Smith & Nephew could also change hands.
Buoyant financing markets could facilitate largertransactions and encourage some to take companies back intoprivate hands, deals that have been largely confined to theUnited States, with Dell, Virgin and Heinz, say the bankers.
"The level of M&A activity seen to date has not sated thedemand for acquisition-related loan deals from loan investors,"said Charlotte Conlan, head of loan syndications for EMEA at BNPParibas.
"Bank liquidity remains deep, easy to access and flexiblefor the right deal. The much-talked-about M&A uptick is what theloan market is looking for."
Industrials conglomerates such as Smiths Group andconsumer group Reckitt Benckiser are also on bankers'radar as possible break-up candidates.
With the Vodafone-Verizon announcement, 2013 would be thebest year for mega-deals - those over $50 billion - since 2008,according to TR data. There have been only seven such dealssince 2007.
"This could be kicking off broader M&A activity in othersectors. Everybody will be pitching like crazy. Mega-deals areoutliers, though; the universe of possible mega-deals islimited, and they're what people remember, but the vast majorityof deals that take place are in the $1-5 billion bracket. 2013could be the year that kicked it all off," said Massey.
Ultimately, CEOs need to pull the trigger, and that could beas much about psychology as funding or commercial logic.
"Will people be bold enough to do transformational deals?That's very specific to particular companies, but it's easier todo when there is an encouraging environment," said Mark Warham,head of M&A for EMEA at Barclays.
