Largest Deals In History

With the weekend announcement of a proposed AT&T / Time Warner marriage, the table of largest mergers & acquisition announcements has been re-arranged. The deal would rank as the 5th-largest in the past 20 years.

There has been a spate of these large announcements in the past two years.

Cheap financing is certainly a big driver, but so is an accommodating stock market. Whenever a deal like this is announced, it always triggers concern that perhaps the market is too accommodating and due for a pullback.

Let's look at the largest deals in history and see how the S&P 500 fared going forward. These deals are:

• In the U.S. only
• For at least $20 billion
• Only mergers & acquisitions (spinoffs, etc are not included)
• Includes non-completed transactions

Here is how stocks performed afterward:

There was some evidence of short-term weakness, with a negative average return, risk/reward, and percentage of time positive over the next two weeks. But beyond that, there was no particular edge, with returns about in line with random.