Goldman Sachs and the other busiest advisers on takeovers this year — Morgan Stanley, JPMorgan Chase & Co., Citigroup Inc., Credit Suisse Group AG and Barclays Plc — all played a role in 2012's biggest takeover, Glencore International Plc's $34 billion purchase of Xstrata Plc to create the world's fourth-biggest mining company. Goldman Sachs led the league table for the second year in a row, with $542 billion of deals, data compiled by Bloomberg show.

The three biggest acquisitions of the year besides Glencore-Xstrata were all announced this quarter, while IntercontinentalExchange Inc.'s $8.2 billion purchase of NYSE Euronext led $77 billion in transactions announced during last week alone, the data show. At the end of the third quarter, the pace of deals was set to result in the worst year since 2009.

Telecommunications deals have dominated the recovery this quarter, as Tokyo-based Softbank agreed to pay about $20 billion for 70 percent of Sprint and Deutsche Telekom AG's T-Mobile USA unit agreed to a $29 billion combination with MetroPCS Communications Inc.

U.S. Growth

Softbank's entry into the U.S. through the deal with Sprint is allowing its billionaire owner Masayoshi Son to participate in a market that's still growing in contrast to Japan, where handset shipments tumbled 27 percent during the past five years.

The American economy will expand 2 percent next year and 2.8 percent in 2014, more than double the rate of both Japan and the euro area in each year, according to economists' estimates compiled by Bloomberg.

The U.S. has the potential to boost both economic growth and sentiment among CEOs further next year if President Barack Obama reaches an agreement with the Republican-led U.S. Congress to avert more than $600 billion in spending cuts and tax increases, known as the fiscal cliff, set to take effect in January, according to bankers. Obama and Congress return to Washington today and have five days to reach a deal.

“Notwithstanding the concerns we have about anemic growth in the U.S., the country looks good on a relative basis,” said Christopher Lawrence, New York-based deputy chairman of Rothschild's global investment-banking business. “As a result, the U.S. is attracting the interest of well-capitalized non- American corporations.”

European companies were also more active this quarter, with deals increasing 73 percent from the previous three months to $176 billion. The European Union summit on Dec. 13 and Dec. 14 closed out a year in which policy makers bolstered the 17-nation single currency by setting up fiscal rules for indebted states, a permanent bailout fund, a central-bank bond-buying program and a road map for tighter banking and fiscal union. Still, Italian Prime Minister Mario Monti's resignation, announced Dec. 21, may threaten to overshadow some of the progress.

“People are a bit more confident that the euro zone isn't going to collapse like they feared a few months ago,” said Giuseppe Monarchi, co-head of Europe, Middle East and Africa M&A at Credit Suisse in London. “It's not inconceivable that we'll see a pickup later next year, but we still need more visibility on the macro side to feed CEO confidence.”

No Growth

The largest European acquisition this quarter was OAO Rosneft's agreement in October to buy TNK-BP, a 50-50 venture between BP Plc and a group of billionaires, for $54.8 billion. The acquisition was the third-biggest ever in the oil industry, according to data compiled by Bloomberg.

That purchase dwarfed other European deals this quarter, such as Siemens AG's proposed purchase of Invensys Plc's rail unit for 1.74 billion pounds ($2.8 billion). Siemens Chief Executive Officer Peter Loescher embarked on his biggest purchase in half a decade with the Invensys takeover after building up a cash pile of more than 11 billion euros ($15 billion).

“European companies have strong balance sheets and low economic growth in their markets, which means they have to acquire to grow,” said Henrik Aslaksen, Frankfurt-based Deutsche Bank AG's global head of M&A in London.

Takeovers by Asian companies in the fourth quarter rose to their highest level in more than a year, helped by Softbank's Sprint purchase. The deal was the biggest publicly announced outbound purchase by a Japanese company on record and marks the most acquisitive quarter for Japanese firms in a decade, according to data compiled by Bloomberg. Still, overall Asian transactions for all of 2012 were almost unchanged from 2011, according to data compiled by Bloomberg.

Appetite for deals has stalled with economic growth in Asia on track to slow to 6.2 percent in 2012, the smallest expansion since 2009, according to data compiled by Bloomberg. China's economy, Asia's largest, may grow 7.7 percent in 2012, the lowest level since 1999, the data show. Still, the country's slowdown “appears to now have bottomed out,” the World Bank said on Dec. 19.

China is still beefing up global reserves to feed demand in the world's second-largest economy, which accounted for half of the world's oil consumption growth in 2011, according to the U.S. Energy Information Administration. Canada approved this month Beijing-based Cnooc Ltd.'s $15.1 billion takeover of Nexen Inc., the largest foreign deal by a Chinese company, data compiled by Bloomberg show.

Growth Abroad

Overall, cross-border takeovers accounted for about half all announced deals this year. Appetite for growth abroad could lead to an improvement in global volumes next year, according to Hernan Cristerna, head of M&A for Europe, the Middle East and Africa at JPMorgan in London.

“The driver will likely be cross-border activity,” said Cristerna. “We're seeing much more interest in deal making.”

Private-equity firms also have capacity to contribute as they look to unload assets acquired in 2006 and 2007, when $1.3 trillion in leveraged buyouts took place. In 2012, private- equity acquisitions slumped to $211 billion, the lowest level since 2009, according to Bloomberg data.

“There's quite a backlog of assets that buyout firms are keen to either spin off or find new owners for,” said Scott Matlock, London-based chairman of international M&A at Morgan Stanley. “In fact, many assets bought around 2006 and 2007 are particularly ripe for new ownership.”

Companies also have strong balance sheets and access to “attractively priced funding,” which should support acquisitions, Matlock said.

The extra yield investors demand to hold corporate bonds worldwide from the most creditworthy to the riskiest fell to 219 basis points as of Dec. 24 from 345 basis points a year earlier, according to the Bank of America Merrill Lynch Global Corporate & High Yield index. Sales of the debt have exceeded $3.9 trillion this year, surpassing the 2009 record. A basis point is 0.01 percentage point.

The average size of deals this year was $149 million, with 97 percent of the transactions under $500 million, and 14 exceeding $10 billion, according to Bloomberg data. Companies have been more focused on selling non-strategic businesses and making smaller acquisitions than transformational deals, said Mark Warham, co-head of M&A in EMEA at Barclays in London.

“We're seeing more of the portfolio rebalancing than mega mergers and that sort of activity will continue,” Warham said. “Maybe as markets continue to settle, we'll see people being a bit more ambitious.”

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