Firms Target M&A for Top-Line Growth

What’s driving the M&A landscape?

Nuveen Asset Management’s Bob Doll on what’s behind recent mergers and if the deals are lifting stocks.

AT&T (NYSE:T) and Time Warner’s (NYSE:TWX) partnership intentions are now official after the two companies announced an $85.4 billion tie up over the weekend.

Nuveen Asset Management’s Bob Doll explained to Neil Cavuto on the FOX Business Network’s Cavuto: Coast to Coast, there are many reasons for companies to consider more deals before the end of the year.

“If I’m a CEO, I can borrow money at zero. It’s been that way for quite some time. I’ve been buying my stock back, that’s juiced my earnings some, and my top line’s starting to grow a little better, but that’s still not good enough. So maybe I’ll buy the company down the street,” Doll said.

Third-quarter revenue growth is expected to come in stronger than previous quarters, pulling Corporate America out of its earnings recession. Doll said that slow growth has been a big reason why many companies have resorted to growth-by-acquisition.

“If you’re sitting around a corporate board room these days, you know the top-lined growth rate is a struggle for most companies. So, inevitably, on the strategic list has to be: Could we do better if we combined with somebody else?” he said.

As for whether the AT&T-Time Warner combination will receive regulatory approval, Doll said only time will tell.

“The media business is massively complicated and figuring out market share and competition – all of that is going to take some time. So many who are more expert at this than me are saying there’s a 50/50 chance…this one’s not as much of a gimmie, as you said,” he explained.

The bottom line: Doll said the two companies likely understand the value of the content they’re bringing together, and what they need to do to create synergy more quickly than either company could do on its own.