M&A deals spark buyer share surge US investors are rewarding acquisitive companies like never before, sending the stocks of buyers soaring after they announce deals that look likely to pay off. With M&A volumes down, deal-hungry companies that put cash to work, take advantage of cheap financing and pursue inorganic growth often see their share prices spike in the days after a deal. Last week clothing maker PVH said it would pay $2.9bn for Warnaco, reuniting all the Calvin Klein brands under one corporate parent. PVH shares shot up 19.5 per cent in the following days, adding $1.4bn, or nearly half the deal's value, to its market capitalisation. After US insurer Aetna announced a $5.7bn deal to buy Coventry Health Care in August, its stock rose 16 per cent, adding more than $2bn to its market capitalisation. Surveying several large transactions from last year, JPMorgan found that the stock price of acquiring companies rose an average of 6.3 per cent after five days, and 11.8 per cent after 30 days. "When firms are doing a clear cut adjacent transaction that is a great fit, investors like it," said Marc Zenner, co-head of corporate finance advisory at JPMorgan, who wrote a report on the subject. There are not a lot of organic growth opportunities, so one way to grow the bottom line is acquisitions. The favourable market reaction to deals is a break with the past. "It was once the case that on average investors had a lukewarm or even negative reaction to buyers announcing an M&A transaction," Mr Zenner wrote in his report. Now, however, "investors are getting more enthusiastic about acquisitions, particularly by companies with management teams viewed with credibility and a track record of successful transactions," said Michael Boublik, head of Americas M&A at Morgan Stanley. Not all acquisition announcements send shares soaring. In Europe especially, several deals have sent investors fleeing from buyers" stocks. After EADS and BAE Systems said they were in talks, EADS shares fell 16 per cent in the following weeks, a bad omen for a deal that wouldn't get done. In Japan, SoftBank shares fell by 24 per cent after the telecoms group announced it would buy US wireless carrier Sprint, a deal with no operational synergies. "Ultimately, the strategic rationale needs to be compelling and the communication needs to be well understood," said Mr Boublik. Otherwise the transaction is not likely to be well received. Nonetheless, many dealmakers point to the trend continuing. Since NRG Energy said it would buy GenOn for $1.7bn in July, its stock has risen as much as 29 per cent, adding more than $500m to its market capitalisation. And after railway operator Genesee & Wyoming agreed to buy RailAmerica for $1.4bn, its stock rose 31 per cent, adding $700m, or half the deal price, to its market value.