Goldman sees M&A above decade averages in 2025

Good morning. Here's what happened overnight and what you need to know today.

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1.

M&A hunch: Goldman Sachs CEO David Solomon expects dealmaking in equities and mergers and acquisitions to meet or exceed 10-year averages in 2025. Citing optimism at a Reuters conference, Solomon pointed to potential pro-growth policies under Donald Trump’s administration but noted the first 100 days would provide more clarity on trade, energy, immigration and tax policies. Goldman has benefited from a recent rebound in dealmaking activity, cementing its top spot in global M&A advisory rankings, having advised Mars on its USD36 billion acquisition of Kellanova in one of the year’s biggest deals. Despite slow private equity buyouts, bankers predict an uptick next year. Goldman is also refocusing on investment banking and trading after exiting its consumer business, which suffered heavy losses.(Reuters)

2.

Universal promise: Prime Minister Anthony Albanese will unveil a plan for subsidised childcare three days a week, scrapping the activity test, in a speech outlining his second-term vision for universal childcare. The government has been developing a model offering childcare at $10 to $20 per day for up to three days a week, diverging from the Productivity Commission’s recommendation to tweak current settings. The proposal has already gone to be reviewed by the expenditure committee. Speaking at the Building Early Education for Australia’s Future event in Brisbane on Wednesday, Albanese will confirm that families earning up to $530,000 annually will qualify for the subsidy. “Our Three Day Guarantee will ensure every family can afford three days of high-quality early education,” his speech draft states. He will clarify that universal childcare remains optional: “Universal and accessible doesn’t mean compulsory. The choice will be up to parents, as always, as it should be.” (Capital Brief)

3.

Pharmacy M&A: US pharmacy chain Walgreens Boots Alliance is in talks to sell itself to Sycamore Partners, The Wall Street Journal reported citing sources. Walgreens, whose market value has fallen from over USD100 billion ($156.77 billion) in 2015 to about USD7.5 billion today, has faced mounting pressures on its pharmacy and retail operations. Its shares –down 70% this year – rose over 20% following the report. The company operates over 12,000 stores globally, including in the US, Latin America and Europe, but has struggled against e-commerce competitors like Amazon and payment pressures from pharmacy-benefit managers. In October, Walgreens announced plans to close 1,200 underperforming stores over three years. Sycamore, known for smaller retail and consumer investments, may sell off parts of Walgreens or partner with others to complete the transaction, the paper said. (WSJ)

4.

Bibi trial: For the first time in Israel’s history, a sitting prime minister testified as a criminal defendant. Benjamin Netanyahu, the country’s longest-serving leader, appeared in a fortified underground courtroom in Tel Aviv, facing bribery, fraud and breach of trust charges. Denying all allegations, he called the accusations baseless and politically motivated. "I have been waiting for eight years for this moment to tell the truth,” he told the court. “I’ve read the materials and I’m amazed by the magnitude of the absurdity,” he added. His testimony, scheduled for six hours a day, three days a week over several weeks, will take up much of his time as he oversees Israel’s war in Gaza and other regional conflicts. Critics accuse Netanyahu of exploiting the ongoing war to stay in power, while his supporters claim the charges are politically motivated. A verdict is not expected before 2026 at the earliest, when Netanyahu would have the option to appeal to the Supreme Court. (Capital Brief)(Reuters)(Bloomberg)(AP)

5.

Dovish turn: The RBA kept the cash rate at 4.35%, but Governor Michele Bullock said "many configurations of data" could lead to rate cuts in February or early 2025. Bullock emphasised the central bank’s cautious approach, stating, "We need to get a bit more confident before we’re willing to declare victory over inflation." But the RBA board’s post-decision statement was interpreted as a deliberate shift to a dovish tone, with the removal of prior language ruling out actions. Economists responded with mixed views. Goldman Sachs, CBA and AMP noted a higher likelihood of February cuts, while ANZ and Moody’s maintained a May baseline, contingent on Q4 CPI and labour data. EY and Oxford Economics remain sceptical, highlighting mixed labour market signals and the need for sustained inflationary easing. Bullock avoided forward guidance but stressed the board had noticed weaker economic growth and easing inflation, stating, "We do need to take a little bit of signal from that." (Capital Brief)

6.

Syria flux: Mohamed al-Bashir, head of Hayat Tahrir al-Sham’s de facto government in the northwestern Syrian city of Idlib, has been appointed Syria’s interim prime minister after HTS-led rebels ousted President Bashar al-Assad. Bashir, an electrical engineer and sharia law graduate, will lead a caretaker government until 1 March 2025, as Damascus cautiously returns to normalcy. Assad’s government fell over the weekend, with the leader fleeing to Russia, ending 54 years of his family’s authoritarian rule. HTS pledged accountability for past crimes, offered amnesty to conscripts and reopened prisons. Meanwhile, Israel struck military targets, destroying Syria’s navy, and moved troops into a demilitarised buffer zone over 200 square kilometres from the occupied Golan Heights. Israel captured most of the Golan Heights from Syria in 1967, but its claim remains internationally unrecognised. Defence Minister Israel Katz said the aim was to create a “sterile defensive zone,” while Prime Minister Benjamin Netanyahu called Golan Heights vital for Israel’s security, saying it would be an “inseparable part of the state of Israel forever.” Israel’s actions faced condemnation from regional powers, while reports indicated Russia relocated part of its Mediterranean fleet offshore. (Capital Brief)(AP)(Reuters)(FT)

7.

Battery pact: Stellantis and China's CATL will invest €4.1 billion ($6.76 billion) to build a lithium battery factory in Zaragoza, Spain, as part of a 50-50 joint venture. The factory is scheduled to begin production by late 2026 with a planned capacity of 50 GWh, sufficient to power an estimated 700,000 cars daily, Reuters reported citing the Netherlands-based Electric Vehicle Database. The facility will produce lithium iron phosphate batteries for small and medium-sized electric vehicles, the companies said. Spain's renewable energy resources, lower labour costs and €300 million in government subsidies contributed to the decision. It will be CATL’s third European factory, following plants in Germany and Hungary. Prime Minister Pedro Sánchez met with CATL's chair, Robin Zeng, ahead of the announcement, the Reuters reported, underscoring Spain’s push to attract Chinese investment. (Stellantis)(FT)(Reuters)

8.

Oracle slip: Shares in enterprise software maker Oracle plummeted after fiscal Q2 revenue missed Wall Street estimates, despite growing 9% year-on-year. Oracle reported revenues of USD14.06 billion ($22.06 billion) for the November quarter, just below analyst expectations of USD14.1 billion, according to LSEG data. Shares, which have surged 83% this year, fell about 10% on Tuesday, erasing USD48 billion in market cap and wiping roughly USD20 billion off the net worth of Oracle’s billionaire co-founder Larry Ellison. Adjusted EPS of USD1.47 also narrowly missed the USD1.48 forecast. Facing stiff competition from Microsoft and Amazon, Oracle has heavily invested in AI-driven cloud infrastructure, and CEO Safra Catz said record AI demand boosted revenue. Its cloud segment she said “should top USD25 billion” in fiscal 2025, compared with USD12 billion in cloud services, licence support, and other cloud revenues for the quarter. (Capital Brief)(Oracle financials)(Oracle statement)(Reuters)