WSJ What’s News - The U.S. Is in Its Big M&A Era. Will It Last?

Episode Date: August 17, 2025

Several big M&A deals have been announced in the U.S. in the last few months, including a deal uniting Union Pacific and Norfolk Southern to create the first coast-to-coast rail operator in U.S. history. WSJ lead deals reporter Lauren Thomas discusses why we’re seeing so many deals, what’s in store for big tie-ups and where this M&A trend is headed. Alex Ossola hosts. Further Reading It’s a Scorching Hot Summer for Deals on Wall Street. Vacation Can Wait.   Trump Fast-Tracks Deregulatory Push at Consumer-Protection Bureau    Top Justice Department Antitrust Officials Fired Amid Internal Feud Dealmakers Are Struggling to Make Sense of Trump’s Antitrust Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

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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 stay. 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 $8,000. billion. In the grocery department, Nutella Maker Ferreiro bought breakfast cereal conglomerate WK.K. Kellogg for about $3 billion. And in tech, Google Parent Alphabet made a blockbuster $32 billion bid for cybersecurity startup whiz. 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. WS.J. 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 emanate 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, Kinvue, 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 or you're seeing great earnings and stock prices running up. 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. But generally, it does boil down to your want to show your investors that you can keep growing. So you mentioned the possibility of Kraft Heinz breaking up. There's also Honeywell, which announced that it would be breaking up. So how

does breaking up result in growth versus merging as well? Right. Well, it is kind of ironic because you've got a lot of M&A going on and companies are looking to do deals. And then at the same time, you see this wave of breakups. And over time, you can just look at Wall Street and it is very cyclical. You'll see a company buy up smaller companies for use. and then they become this behemoth. And then they reach a moment when they're too big. And then suddenly pieces of the business are worth more or could be valued at a higher multiple if they were separated from that bigger entity.

So it's almost like a rinse and repeat. I do think that that's just part of the nature of how these things play out over the years. You've seen some of these bigger companies lately like a Honeywell get to the point where it is so big and the stock becomes kind of stagnant. In the case of Honeywell, they had this aerospace and defense business. that was growing really quickly inside of Honeywell, but it wasn't being valued as it would as a standalone company within the bigger entity. So they decided to spend it out. And they also were facing pressure from activists to do so.

Activist investors will often play a role in coming in and pushing for some of those changes. You mentioned tech as an industry that has seen more mergers than breakups. I can't help thinking about Google, which has been faced with some antitrust enforcement that might actually force it to break up. Yeah. Can we talk a little bit about that? What is going on with antitrust at the Trump administration and where does that leave a lot of these big tie-ups? Yeah. No, the Google situation is really unique too because, of course, they went out and did a big deal earlier this year. Now, that deal hasn't closed yet, but they're planning to acquire the cybersecurity company, Whiz, which was a big Israeli startup and huge player in the cyberspace. There are two different things happening here. While, yes, they're facing this antitrust case for creating a monopoly around search. the company has still been able to go out and look and do big M&A within what we've seen in tech specifically is a lot of these CEOs, I think, have realized under the Trump administration really helps to have a line in to Washington. And maybe that means having a line in

directly to Trump. Mark Zuckerberg, for example, has been spending more time with Trump and down in D.C. Whereas under the Biden administration, you had Lena Con and the FTC was very anti-Big Tech. Beyond tech, what is the Trump administration's track record so far with antitrust enforcement? It's early days, for sure, because a lot of these deals have just been announced. But the one thing that I hear repeatedly from advisors and especially people down in D.C. is this idea that the Trump administration is much more open to remedies. And effectively, that's if you have company A and company B, they want to merge and you go down to D.C and you're meeting with the FTC and the FTC or whatever agency will say, okay, you can do that deal,

but you just, you need to sell off this little piece of your business. We think that that might be an issue or there's too much overlap there. So they propose kind of a remedy or solution where you might have to do something here, something there, sell a piece of your business in one part of the country where there could be too much of a monopoly. But then they'll let your deal go through. So there is a general understanding that the Trump administration is much more in favor of letting that deals work their way through the system and presenting kind of these smaller solutions to get there. Coming up, can Wall Street's deal-making vibe continue? More after the break. Okay, there's so much going on in M&A.

Lauren, have we entered a big company era? Certainly in tech, it feels that way. And maybe consumer two and other. industries. It gets to a point where it's no longer efficient maybe or you're no longer as profitable or able to make money operating at a smaller scale. And so companies do face this moment of reckoning. Either we join forces with this other company to remain relevant and to be able to keep operating and to pay our bills on time and pay our workers or you risk falling behind. And it's very timely. I've been covering past couple of days just what's going on at Intel. That's a big company that's at a pivotal, critical moment. It has to figure out what it's going to do. And a lot of people have argued that for a number of years now, Intel has fallen

behind and maybe moved too slowly. And it's valued at less than $100 billion, a fraction of what it once was. And we could possibly see some M&A there now because of the state that Intel is in. So I think there are a lot of case studies. What are some of the logistical issues or even advantages of when you have two big companies come together. Does that create this kind of unwieldy beast to operate? Yeah. There have been certainly situations in which there's been a big merger and it totally flops. Integration is really tough and you have two CEOs.

You have two boards. There are all these logistics that you have to work through and pick, okay, who's going to run this? Who's going to run that? Are we keeping your name or are we keeping our name? And I think that's often where some of the most interesting stuff happens is actually after the fact I think a lot of times what people will say is, you know, getting the deal across the finish line, getting it signed is one thing. But then that's where the hard work really starts. That's like day one of navigating that whole process.

For those smaller companies, there was once an advantage to kind of making it on your own until you could really be at fighting size. Do you get a sense that that is kind of no longer the case? That is for a lot of these tech startups in particular, it is more advantage. pages to get acquired and then build from there. They might not say it outright, but I do talk to a lot of founders. That's definitely the goal. That's one of the goals, you know, either you get acquired or, of course, you could go public. It's got me thinking of a recent case study that we've kind of watched play out in real time. Figma, this design tech company that at one point was close a couple years ago to being acquired by Adobe. But then that deal got blocked. It didn't happen. Figma remained a

standalone business. And it just IPOed very recently here. And it was a pretty successful IPO. So that's an example of where it was close to being acquired, but then it was able to remain a standalone business for some time. And now is probably able to unlock more value through the public markets than it would being acquired. That IPO route will still be there for some, but I think it's very hard nowadays to achieve a scale like Figma did. As someone who's been covering this space for a while, do you see a relationship between the frequency of M&A and the frequency of IPOs? Yeah, definitely. Certainly when I started this job, folks would always tell me you tend to see a burst in the IPO market precedes a burst of activity in the M&A market and in deals.

First, you'll see the wave of IPOs, then you'll see the wave of deals. It's almost been reversed, I think, in part because there were so many IPOs. in 2021, kind of coming out of the bouts of COVID, and that pulled forward a lot of demand. And a lot of those IPOs, unfortunately, kind of fell flat and now are just not doing well and maybe shouldn't be public companies. And so the narrative has switched in a way. But in general, I would say the two do tend to move in tandem. There's a lot of hope that given the sort of beginnings of some movement in the IPO market this summer that the fall they're going to really explode and all these companies that have been sitting on the sidelines are finally going to go

public. Do we expect this frenzy of M&A to continue as well? If my conversations are any signal, I mean, as we sit here right now, it's August and typically this is like the dog days of summer and everyone's in Europe or on vacation or out in the Hamptons. And I feel like way more bankers and lawyers I talk to are stuck in New York City and is sitting in, boardrooms are on conference calls and hammering out deals because companies of CEOs are at a point where they see a window of opportunity. And it's like, let's go out and get this done. Even if it's August, the expectations are high riding into the rest of the year. I've had a lot of folks tell me, just buckle up, get ready, because after Labor Day, the expectation is it's going to be

pretty busy. And of course, these bankers and lawyers get a cut of the fee as well. So they're motivated to see things get done. Do you see any potential roadblocks for this M&A bonan So great caveat to all of this big grain of salt is that it is still the Trump administration. And as we've seen, it can be unpredictable. And so one day, the administration might be feeling good about a deal the next day. Maybe not take this Verizon buying frontier communications. Well, Verizon ultimately had to rewrite and scrap some of its policies around DEI in order to get the deal done. And then they finally got the approval they needed from the FCC to close that. deal. So I think we've entered this new era of their different players in Washington. They're motivated. Some of it's tit for tat, but it could change on a dime. That was WSJ lead deals reporter Lauren Thomas. Thank you, Lauren. Thank you so much. And that's it for What's New Sunday for August 17th. Today's show was produced by Charlotte Gartenberg with supervising producer Michael Cosmides. We got help from deputy editor Chris Zinsley. I'm Alex Osala. We'll be back on Monday morning with a new

Thanks for listening.