A recent wave of megamergers is a sign that companies are on the defensive, an NYSE trader said Thursday.
"They are merging because it's a defensive play, they don't want to use that money to be creative and build a new environment," Empire Executions' Peter Costa told CNBC's "Closing Bell."
Costa said companies want to grow, but not by investing in their own products, instead opting to take over other companies. "I think if that money is going to be spent it should be spent building and employing people and building new businesses," he added.
Among the most recent news on megamergers is a possible deal between Allergan and Pfizer and another between Walgreens and Rite Aid.
Jim Keenan, head of credit at BlackRock, said deals will continue as companies look to expand in a low-growth environment.
"You see these megadeals as a way to create cost synergies because they [companies] don't have expectations of a significant growth trend, so where they are creating shareholder value is through these deals," he said in the same interview.
"This is a point of time where there will be a lot of dispersion; in a low-growth environment you are going to have your winners and losers."