Large-Cap Wall Street Stalwarts Consider Consolidation

M&A chatter has been growing louder by the day and to see it happening left, right and center among big-caps, specifically among old economy companies, is odd. Old economy companies are those well-established, safer bets belonging to traditional industry sectors and paying consistent dividends, devoid of huge volatility.

Recently, sectors such as media, cigarette and alcohol companies are on the forefront of M&A activity.

Media

Some of the M&A news doing the rounds in the media space includes:

• A report in the New York Post suggested that CBS Corporation CBS and Viacom, Inc. VIAB, both controlled by National Amusements Inc., could announce a potential combination by Thanksgiving Day, which falls on November 24.
• Beleaguered Yahoo! Inc. YHOO found a savior in Verizon Communications Inc. VZ, which has agreed to buy its core search business, although there is considerable uncertainty surrounding the deal due to Yahoo getting embroiled in a controversy surrounding data breach.
• Meanwhile, Bloomberg reported on Thursday that AT&T Inc. T is eyeing purchase of media giant Time Warner Inc TWX in a bid to lap up valuable content.

Related Link: CBS A Buy, With Or Without Viacom Merger

Alcohol Companies High On Deal News

• Anheuser-Busch InBev SA NV (ADR) BUD is close to completing its purchase of SABMiller plc, which would propel it to pole position as far as brewing is concerned.
• Meanwhile, the compulsion to consummate its agreement to be bought by Anheuser Busch has forced SABMiller sell its stake in MillerCoors' joint venture to partner Molson Coors Brewing Co TAP in a $12 billion deal.
• Constellation Brands, Inc. STZ purchased Grupo Modelo's U.S. beer business for $4.75 billion in 2013. Recently, the company announced sale of its Canadian wine business to the Ontario Teachers' Pension Plan but struck a purchase agreement in a bid to hold sway in the premium category market.

Related Link: A Look At British American Tobacco's Offer To Buy Reynolds American

Tobacco

Not to be left behind, tobacco companies are also going all out to ride the M&A wave.

• As recently as Friday, British American Tobacco PLC (ADR) BTI agreed to buy the 58 percent stake it does not own already in Reynolds American, Inc. RAI by paying $47 billion. The U.K. company has had a stake in Reynolds American since 2004, when it merged its U.S. unit with it.

Economic necessity, survival strategy, taking out competition, market expansion, etc. could be some of the reasons these firms are exploring consolidation. Whatever be the rationale, it looks like consolidation is here to stay in the days to come.

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