By Tanya Agrawal
REUTERS - Wall Street was set to open higher on Monday after Warren Buffett's Berkshire Hathaway agreed to buy Precision Castparts in a deal valued at $37.2 billion, showing the M&A boom was alive and well.
Adding to the positive sentiment, poor data out of China boosted hopes for additional stimulus from Beijing. Greek banks could get a first capital injection soon after a bailout deal is agreed, and before the ECB can conduct stress tests, a euro zone official told Reuters.
Precision Castparts shares jumped 19 percent to $230.71 after Berkshire Hathaway agreed to buy the aircraft components in the biggest deal for Buffett's Hathaway. Berkshire Class B shares fell 1.4 percent to $141.42 while its Class A shares were marginally down at $215,462.76.
As the U.S. Federal Reserve has kept interest rates near zero for nearly a decade, debt has been cheap leading to a rise in merger and acquisition activity.
Up to the end of July, cross-border M&A activity totaled $913.5 billion, up 23 percent from a year ago.
July was the seventh strongest month for deal activity since 1980, according to Thomson Reuters data, showing the hunger for acquisitions as the Fed prepares to hike rate later this year.
"The M&A environment is ripe for more deals and at the end of the year you will see a lot more deals than what we saw last year," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
S&P 500 e-minis were up 14.75 points, or 0.71 percent, with 176,166 contracts traded at 8:51 a.m. ET (1251 GMT).
Nasdaq 100 e-minis were up 29.75 points, or 0.66 percent, on volume of 27,433 contracts while Dow e-minis were up 129 points, or 0.74 percent, with 28,273 contracts changing hands.
In other deal news, ammonia maker CVR Partners said it would acquire Rentech Nitrogen Partners for about $533 million. Rentech soared 20.7 percent to $12.44.
Mallinckrodt was up 1.6 percent at $102 after the Dublin-based drugmaker said it would buy immunotherapy company Therakos in a deal valued at about $1.33 billion.
IBM rose 1.7 percent to $157.69 after Buffett's comments on CNBC were interpreted to mean that he would be interested in buying more IBM stock.
U.S. stocks ended lower on Friday, with the Dow closing down for the seventh straight day, after solid job growth data for July pried the door open a little wider for a potential rate in September.
"I think the Fed is desperate to raise rates this year and I think it will happen in September. The only fly in the ointment is the inflation rate which is below what the Fed wants," said Hogan.
Companies scheduled to report results on Monday include Hertz Global Holdings and Shake Shack.
Dean Foods rose 2.59 percent to $18.19 after the largest U.S. milk processor's quarterly adjusted profit beat expectations.
(Reporting by Tanya Agrawal in Bengaluru; Editing by Savio D'Souza)
