The U.S. Is in Its Big M&A Era. Will It Last?
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Hey, What's News listeners. It's Sunday, August 17th. I'm Alex Osele for The Wall Street Journal. This is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. On today's show, are we in our merger era? Signs point to yes. Wall Street is coming off a hot summer of deals unusual for this time of year. We discuss why, for companies, big is in, whether the tie-up trend is likely to continue, and what roadblocks might stand in the way. Late last month, rail operator Union Pacific announced that it would acquire rival Norfolk Southern, creating the first coast-to-coast rail operator in U.S.
history. That deal, for about $70 billion, may be the largest to be announced in recent months, but it's far from the only one. Back in May, credit card company Capital One acquired Discover for $35 billion. In the entertainment industry, Paramount bought Skydance Media for $8 billion. In the grocery department, Nutella maker Ferrero bought breakfast cereal conglomerate W.K. Kellogg for about $3 billion. And in tech, Google parent Alphabet made a blockbuster $32 billion bid for cybersecurity startup Wiz. That's just a sampling of the many deals done across many different industries. Taken together, they're an indication of a red-hot period for mergers and acquisitions, one that many on Wall Street hope can continue.
WSJ lead deals reporter Lauren Thomas joins me to help better understand this productive period of dealmaking and what's driving it. Lauren, I just mentioned a whole bunch of deals. What do they have in common?
What I've been hearing from bankers and advisors and others across Wall Street is just this idea that deals are back. And really, we started the year off thinking that under Trump, it was going to be an M&A bonanza. And that just didn't really transpire. I think when we got into April, certainly around Liberation Day. And a lot of the tariff noise and just geopolitical uncertainties throughout this year so far, that's been a big overhang. And I think we hit the summer and companies have gotten to a point where they're comfortable enough under Trump and have settled into this new normal, quote unquote, that they're just ready to get out and do deals. And CEOs don't want to sit on the sidelines any longer.
What do companies hope to gain by becoming so large? Is this an effort for expansion or are they really playing defense?
It totally depends. And certain industries are in different phases right now. Take consumer retail, for example, where you have a company like Kraft Heinz, which we've reported, has been exploring a breakup. And you have another business out there, Kinview, which owns Tylenol and Band-Aids, and they're exploring strategic alternatives that could entail a sale of the company or a breakup. The consumer retail space is one area right now that is up against slower growth, and these companies are not necessarily like tech where you're seeing— great earnings and stock prices running up.
Why are so many large U.S. M&A deals happening right now?
Some of these consumer companies are hitting a wall. So if you're in consumer retail, maybe you're looking to pursue M&A or looking to break up the business or sell pieces of the business as a way to find growth versus tech. It's just growth, growth, growth. And you want to keep buying and you have all this cash and you're able to go out and do deals. It's different depending on which industry you're in.
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