If that's right, these deals do not portend good things, and will likely represent the end — or at least the beginning of the end — of a bull market.
That doesn't mean the market is going to falter tomorrow, or even in the coming months. If history is any guide, there is likely a year of more deal-making, and with interest rates likely to remain low, it is possible it could go on even longer. When Wall Street banks announce their earnings over the next two weeks, expect talk of an unusually long list of deals in the pipeline. But to many astute financial minds, this level of deal-making is unsustainable.
More from The New York Times:
AB InBev and SABMiller Reach Tentative Agreement on Merger
Sale of Royal Mail Stake Nets $907 Million for British Government
Worldpay Shares Rise 6 Percent After I.P.O. in London
Consider what's behind Monday's announcements: businesses that are under siege and trying to transform themselves. In the case of Dell-EMC, Dell is trying to move away from its personal computer business while EMC has been struggling in the face of a changing environment for computer storage. According to my colleague Peter Eavis, Dell's private numbers reflect a net loss of $768 million, compared with a $570 million loss in the same period a year earlier. Revenue was also down, falling to $27.5 billion in the latest six months, from $29.5 billion in the year-earlier period. The deal may very well work — in fact, it's probably what both companies should be doing — but the transaction is hardly being struck from a position of strength.
The same is true of the possible Anheuser-Busch InBev-SABMiller tie-up. Market share has declined for both companies and sales have fallen in developed countries, where microbrews are stealing significant market share. The rationale for merging is very clear: cost-cutting.