Wall Street dealmakers and corporate leaders expect the flood gates to open on merger and acquisition activity after President-elect\u00a0Donald Trump\u00a0takes office in January.<\/p>\n
And he\u2019ll likely have congressional help. Trump defeated Democratic candidate Vice President\u00a0Kamala Harris, and Republicans claimed a majority of the Senate in elections this week. That red wave is expected to spell loosening regulations on deal-making, with plenty of pent-up demand.<\/p>\n
\u201cWe know kind of where the world is headed in a Trump environment because we\u2019ve seen it before,\u201d said Jeffrey Solomon, president of TD Cowen, on\u00a0CNBC\u2019s \u201cMoney Movers\u201d Wednesday. \u201cI think the regulatory environment will be much more conducive to economic growth. There will be lighter and targeted regulation.\u201d<\/p>\n
Solomon added that the scaled-back regulation will be focused on certain areas \u201cof particular interest to the Trump administration,\u201d rather than a broad based reassessment of the entire landscape.<\/p>\n
In recent years, there has been greater scrutiny of pending deals by the Biden administration\u2019s Department of Justice and Federal Trade Commission, headed by Chair Lina Khan. Some have pointed to that dynamic as a chilling factor on deal flow. High interest rates and soaring company valuations have contributed, too.<\/p>\n
Khan said in September that \u201cwhen you see greater scrutiny of mergers, you can see greater deterrence of illegal mergers.\u201d Her\u00a0hard line\u00a0has drawn harsh criticism, but now, there\u2019s optimism around a forthcoming FTC with a lighter hand.<\/p>\n
\u201cAssuming interest rates drop and you see corporate tax rates go down, the ingredients are there for a really active M&A market,\u201d said one top dealmaker, who talked to CNBC on the condition of anonymity to speak candidly.<\/p>\n
On Wednesday,\u00a0markets rallied\u00a0on the Republican presidential win, with the\u00a0Dow Jones Industrial Average\u00a0soaring 1,500 points to a new record high.<\/p>\n
Some sectors, including financial and pharmaceutical industries in particular, are likely to get a lift under a second Trump regime, experts said.<\/p>\n
Pharmaceutical executives are especially optimistic that lighter antitrust enforcement could clear the way for deal-making, said one health-care-focused M&A advisor, who added that antitrust enforcement could have \u201chardly gotten worse\u201d under either administration but now believes things will improve \u201cmeaningfully.\u201d<\/p>\n
Khan has taken on scores of biopharma mergers over the last four years, arguing that monopolies will stifle the development of new drugs in certain disease areas and hurt consumer choice. Biotech company Illumina last year said it would\u00a0divest\u00a0diagnostic test maker Grail after heated battles with the FTC and European antitrust regulators.<\/p>\n
Also last year, the FTC blocked Sanofi\u2019s proposed acquisition of a drug in development for Pompe disease, a genetic condition, from Maze Therapeutics. Sanofi ultimately terminated that deal.<\/p>\n
\u201cWhether or not Lina Khan is bounced day one is a key consideration, but even if fewer changes at the FTC take place, there is no doubt this administration \u2014 at least on paper \u2014 will be far more amicable when it comes to business combinations,\u201d Jared Holz, Mizuho health-care equity strategist, said in an email on Wednesday.<\/p>\n
One top dealmaker expected an M&A uptick broadly, but agreed that pharmaceuticals and the financial sector were particularly poised for a resurgence. That deal-maker also noted that with the Senate flipping, more outspoken antitrust voices like Sen. Elizabeth Warren, D-Mass., could find it more difficult to push for DOJ or FTC investigations.<\/p>\n
In the financial sector regional banks\u00a0recognize the need for scale,\u00a0making them\u00a0likely candidates for consolidation,\u00a0said one former industry executive,\u00a0noting\u00a0that smaller banks had been getting gobbled up for \u201csome time.\u201d That person expects\u00a0the pace and size of those acquisitions\u00a0to\u00a0ramp up under a Trump presidency.<\/p>\n
Other industries, such as tech, may still face an uphill battle in getting deals done.<\/p>\n
One M&A advisor, who also spoke to CNBC anonymously, noted that Trump\u2019s disdain for Big Tech companies \u2014 historically active deal-makers \u2014 might keep them on the sidelines. On Wednesday, tech leaders took to social media to\u00a0congratulate\u00a0Trump.<\/p>\n
Apparent GOP opposition to the CHIPS Act means that semiconductor consolidation might be challenging, the advisor noted, while cautioning it is still too early to know what a Trump presidency would mean. CNBC\u00a0previously reported\u00a0that\u00a0Qualcomm\u00a0recently approached\u00a0Intel\u00a0about a potential takeover.<\/p>\n
\u201cI think the simplest way to put it is more deals, less regulation with the administration having its thumb on the scale, perhaps with a willingness to pick winners and losers,\u201d said Jonathan Miller, chief executive of Integrated Media, which specializes in digital media investments.<\/p>\n
A Trump presidency could usher in a number of retail deals that have been hamstrung by the FTC.\u00a0Kroger\u2019s\u00a0bid\u00a0to take over grocery chain\u00a0Albertsons\u00a0could have a better chance of getting approved under Trump, as could\u00a0Tapestry\u2019s\u00a0proposed acquisition of\u00a0Capri.<\/p>\n
The merger between Kroger and Albertsons is currently\u00a0under review\u00a0by a federal judge, while Tapestry is working to\u00a0appeal\u00a0a federal order that granted the FTC\u2019s motion for a preliminary injunction against the tie-up.<\/p>\n
\u201cThe hostile approach of the FTC to mergers and acquisitions will almost certainly be reset and replaced with a worldview that is more favorable to corporate dealmaking,\u201d said GlobalData managing director Neil Saunders. \u201cThis does not necessarily mean that big deals like Kroger-Albertsons will be waved through, but it does mean others like Tapestry-Capri will receive a far warmer reception than they have under the Biden administration.\u201d<\/p>\n
Meanwhile, ongoing turmoil in the media industry has led many to consider consolidation as the next step for the sector.<\/p>\n
Warner Bros. Discovery\u00a0CEO David Zaslav on Thursday highlighted opportunities that could come up if regulations were to loosen, doubling down on\u00a0comments\u00a0he made earlier this year at Allen & Co.\u2019s annual Sun Valley conference.<\/p>\n
\u201cWe have an upcoming new administration. \u2026 It\u2019s too early to tell, but it may offer a pace of change and opportunity for consolidation that may be quite different, that would provide a real positive and accelerated impact on this industry that\u2019s needed,\u201d Zaslav said on an earnings call.<\/p>\n
Broadcast station group owner\u00a0Sinclair\u00a0on Wednesday echoed a similar sentiment.<\/p>\n
\u201cWe\u2019re very excited about the upcoming regulatory environment,\u201d CEO Chris Ripley said during an earnings call. \u201cIt does feel like a cloud over the industry is lifting here.\u201d<\/p>\n
Still, the track record between the previous Trump administration and the Biden administration for media industry deals is split.<\/p>\n
Trump\u2019s DOJ allowed\u00a0Disney\u00a0to buy\u00a0Fox\u2019s\u00a0assets, but then sued to block\u00a0AT&T\u2019s\u00a0deal for Time Warner.<\/p>\n
Under the Biden administration, Amazon\u2019s $8.5 billion\u00a0deal\u00a0for MGM and the\u00a0merger\u00a0of Warner Bros. and Discovery Communications were both waved through, but a federal judge blocked the $2.2 billion sale of Simon & Schuster to Penguin Random House.<\/p>\n
Skydance Media and Paramount Global\u00a0agreed\u00a0to merge earlier this year and expect to receive regulatory approval in 2025.<\/p>\n<\/p>\n
Wall Street dealmakers and corporate leaders expect the flood gates to open on merger and acquisition activity after President-elect\u00a0Donald Trump\u00a0takes office in January. And he\u2019ll likely have congressional help. Trump defeated Democratic candidate Vice President\u00a0Kamala Harris, and Republicans claimed a majority of the Senate in elections this week. That red wave is expected to spell […]<\/p>\n","protected":false},"author":0,"featured_media":12076,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-12075","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/12075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=12075"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/12075\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/12076"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=12075"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=12075"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=12075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}