Merger and Acquisition Activity Continues

M & A activity continuesDJ Transports closed below late September closing levels of 7675 and 7700.  Not a good sign for a sector that is historically viewed as “early cyclical”.

The Airlines were particularly weak, with the lead damage coming from Southwest Air; LUV. Why does it bother me so much that Airlines are getting crushed while Oil trades at a 6 year + lows???

MLPs  were the first sector to go green Tuesday and many names in the MLP arena closed above Monday’s highs.   This was accompanied with  very heavy volume for the 2nd day in a row. This speaks of capitulation type selling combined with am outside reversal day.

KMI could be the fly in the ointment in MLP land today after announcing a 75% cut to its dividend.   This comes just a few weeks after the company said it was confident  it would be able to maintain its then current payout through 2016.

Fed Funds futures indicate close to an 80% probability of an interest rate hike by the FED a week from today. The 2 year note yields +0.94%

Merger and Acquisition Activity Continues

M & A activity continues to be brisk and were not talking small potatoes deals either. The industrial chemical space is buzzing this morning with chatter (WSJ page 1) of a significant business combination between Dow Chemical and Dupont.

DuPont and Dow Chemical near merger: WSJ

Dow Chemical Co. and DuPont Co. are in advanced talks to merge, in a tie-up that would cap off the strongest year ever for takeovers and come amid a surge of deal activity in the agriculture industry.

The chemical giants, which each has a market capitalization of about $60 billion, could announce a merger in coming days, people familiar with the matter said. It would be followed by a three-way breakup of the combined company, they said, a common approach to mergers and acquisitions of late.

Dow’s DOW, +12.55% Chief Executive Andrew Liveris is expected to be executive chairman of the new company, with DuPont DD, +11.41% Chief Executive Edward Breen keeping that title. A deal has not yet been inked and the talks could fall apart, the people cautioned.

Should it come to fruition, a combination of the centuries-old companies would be one of the biggest in a year marked by big deals. So far, companies have struck some $4.35 trillion of takeovers in 2015, in recent days eclipsing 2007 as the top year on record for deals, according to Dealogic.

It would create a giant with more than $90 billion in combined sales and strong positions in everything from plastics to industrial chemicals and agriculture.

An expanded version of this report appears at WSJ.com.

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