It’s official… 2015 is the year that investment bankers pulled off two of the top 10 biggest mergers in history, according to Dealogic. With Dupont (DD) and Dow Chemical (NYSE: DOW) in advanced talks for a $120 billion marriage, according to the Wall Street Journal, that would make three. The chemical giants would be sandwiched between the Pfizer (PFE)/Allergan (AGN) $160 billion deal and the Anheuser-Busch InBev (BUD)/SAB Miller $117 billion combo.
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“The lack of GDP growth is forcing companies to do mega acquisitions,” said Bob Nardelli, who has held CEO roles at Home Depot (HD) and Chrysler. Nardelli described these mergers as necessary for corporate executives to manufacture growth. “They’re buying revenue; they’re buying earnings during a lackluster year of low and slow growth.” Nardelli made those remarks during an interview Wednesday on FOX Business Network’s Mornings With Maria.
To Nardelli’s point, the culmination of these big deals comes with the U.S. economy on track to grow in the neighborhood of 2% this year, a performance some economists characterize as so-so. Next year, we may see more of the same. Firms, including Bank of America (BAC), predict the U.S. economy will grow 2.5% next year. The fever pitch of deal making has also picked up ahead of the Federal Reserve’s December meeting next week in which policymakers are widely expected to raise interest rates by a quarter of a percent or 0.25 basis points from near zero where they’ve been since 2008.
It also comes as U.S. stocks hug the flat line in terms of yearly performance. Investors are slowing recovering from the late summer sell-off which was accompanied by increased volatility in both global and U.S. stocks. The S&P 500 (SPY) is little changed this year.
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Through Wednesday, a record $4.6 trillion in deals have been announced globally. The wave of M&A is potentially good news for Wall Street’s biggest firms. Goldman Sachs (GS), J.P. Morgan (JPM), Morgan Stanley (MS) and Bank of America are the top four firms for global M&A advisory as tracked by Dealogic. Even more notable, Goldman Sachs and J.P. Morgan are the first banks to reach $1 trillion in U.S. M&A advisory on record, a milestone reached in November and December respectively.