And that wasn't all. Newegg Inc., a well-known computer and electronics e-tailer, announced plans to raise $175 million via an initial public stock offering (IPO) – and intends to use some of the proceeds to expand its already-growing operation in China.

Welcome to merger-mania Monday, which delivered a highly bullish message to investors: Although U.S. stocks have surged 57% from their March 9 lows – creating a strong belief that a correction is overdue – a frenetic burst of mergers-and-acquisitions (M&A) activity and a growing number of IPO deals could mean that U.S. stocks still have room to run.

And it also points to some lucrative profit plays for investors who know where to look.

"For this [rally] to have legs you're going to have to have some M&A," Uri Landesman, head of global growth strategist at ING Investment Management in New York, told CNBC.com. "I don't think [stock prices at] this level would be substantiated without it. If we're going to see a much higher market, M&A is going to have to be a part."

If that's what's needed to fuel the market rally, there could be some very bright days ahead.

After all, don't forget that it was an explosion of M&A deals two years ago that helped propel the Dow Jones Industrial Average to its Oct. 12, 2007 record of 14,093.08. This time around, Corporate America has an estimated $700 billion in cash on its collective balance sheet – more than enough keep the M&A market humming, said Howard Silverblatt, an analyst for Standard & Poor's Inc. (NYSE: MHP).

The M&A market is clearly healthy again.

And it's not just M&A. With eight stock-offering deals raising more than $3.5 billion, last week was the biggest for the U.S. IPO market in two years. And there are more IPO deals in the hopper, including several companies with household brand names.

Investors can also take heart that the dealmakers aren't the only market catalyst at work right now. There's also a pile of cash on the sidelines – including $3.5 trillion parked in no-yield money markets alone. That's enough to keep the current rally going for some time to come.

But something's needed to draw that cautious money back into the stock market. The flurry of deals could be just the ticket – especially if investors can understand just what is driving this dealmaking.

Increased investor confidence has certainly helped, since the rebound in stock prices has given companies more "currency" – enabling them to use their higher share prices as part of the of deal payment. Corporate balance sheets are stronger than they've been in awhile, too. During the worst of the global financial crisis, companies slashed payrolls to cut costs and to build up cash cushions.

Louis Basenese, a noted M&A and IPO expert who is the editor of The Takeover Trader investing service, said the global financial crisis and ensuing recession and credit squeeze prompted many companies to hoard cash. Some wanted it as a buffer. Others simply refused to reinvest their profits until they could combine that cash with leverage to effectively buy more.

But "that much cash doesn't sit idle forever. Not when it earns a paltry 1% interest in a bank account," Basenese told Money Morning. "In fact, the longer it sits, the more executives will be itching to put it to work to earn higher returns. After all, it's their responsibility to maximize shareholder wealth."

Some of the same factors that jump-started the M&A market are now also helping to drive new stock offerings, Basenese said.

"The best cure for an IPO lull is a bull market," he said. "Companies want to tap into the enthusiasm. And a 50% rebound [in U.S. stocks] certainly qualifies. So it's no wonder we're witnessing an uptick in recent weeks."

Kraft Bid for Cadbury Ignites Zeal For Deals

M&A deals and IPOs have traditionally been among the stock market's top headline grabbers. And with good reason – both are major wealth creators for investors, offering the potential for windfall returns.

Buyout offers – especially those that are unsolicited, or even hostile – tend to feature a hefty premium over the target company's previous trading price. As for IPOs – well, though it's not as common as it was during the dot-com heyday, who hasn't heard the stories about companies that went public at $12 or $14 a share, only to have their newly minted shares zoom up past the $200 a share level?

With this latest flurry of M&A deals, the buyout play that caught the imagination of investors was the $16.7 billion unsolicited takeover bid that Kraft Foods Inc. (NYSE: KFT) launched for Cadbury PLC (NYSE ADR: CBY). Not only was it the most significant deal in 10 months, it was yet another sign that the next round of mega-mergers will have a global face.

Like the $52 billion buyout of U.S.