Former U.S. President and Republican presidential candidate Donald Trum is shown on a screen during the Nevada Republican Election Watch Party in Las Vegas, Nevada on November 6, 2024. Participants cheered for his speech.
Ronda Churchill | AFP | Getty Images
Wall Street dealmakers and business leaders expect floodgates to open for M&A activity if president-elect Donald Trump Taking office in January.
He will likely get help from Congress. Trump defeats Democratic vice presidential nominee Kamala HarrisRepublicans gained a majority in the Senate in this week’s election. The red wave is expected to lead to loosening of trading regulations and generate a lot of pent-up demand.
“We know where the world is going in a Trump environment because we’ve seen it before,” said TD Cowen President Jeffrey Solomon. “Money Moves” Wednesday on CNBC. “I think the regulatory environment will be more conducive to economic growth. Regulation will be more relaxed and targeted.”
Solomon added that the scaled back regulations would focus on certain areas “of particular interest to the Trump administration” rather than a broad reassessment of the entire situation.
The Biden administration’s Justice Department and departments led by Federal Trade Commission Chairwoman Lina Khan have placed greater scrutiny on pending deals in recent years. Some point to this dynamic as a chilling factor in deal flow. High interest rates and soaring company valuations also play a role.
“When you see greater scrutiny of mergers, you see greater deterrence against illegal mergers,” Khan said in September. She said hard line It’s been harshly criticized, but now there’s optimism about upcoming FTC easing.
“Assuming interest rates come down and corporate tax rates come down, then the conditions are there for the M&A market to be really active,” one top dealmaker who spoke candidly to CNBC on condition of anonymity said.
Wednesday, market rebound After the Republican presidential election victory, Dow Jones Industrial Average It soared 1,500 points to a record high.
Specific industries
Experts say some industries, especially financial and pharmaceutical industries, could get a boost under a second Trump administration.
“We could see domestic manufacturing benefiting from increased tariffs and technology growth slowing as the antitrust environment tightens,” said Howard Gutman, head of private equity strategy and coverage at Morgan Franklin Consulting. “In addition, We expect the aerospace and defense industry to grow in conjunction with the broader geopolitical environment as it has historically done under successive Republican administrations.”
Other industries, such as technology, may still face an uphill battle in getting deals done.
One M&A adviser who also spoke to CNBC anonymously noted that Trump’s disdain for big tech companies – historically active dealmakers – could keep them on the sidelines. On Wednesday, tech leaders took to social media to express congratulate trump card.
The adviser noted that apparent Republican opposition to the CHIPS Act means semiconductor integration could face challenges, while warning that it’s too early to know what a Trump presidency will mean. CNBC reported before That Qualcomm Recently contacted Intel Regarding potential acquisitions.
“I think the simplest way to put it is more deals, less regulation, where the government will have the power and maybe be willing to pick winners and losers,” said Jonathan Miller, chief executive of Integrated Media, which specializes in digital media investments. .
Regional banks, many of which make out Consolidation may also be pursued because of scale, a former industry executive said. The adviser noted that smaller banks have been gobbled up “for some time,” but the pace and scale of those acquisitions are likely to accelerate during Trump’s presidency.
Pharmaceutical executives are also optimistic that looser antitrust enforcement could clear the way for deals, said an M&A adviser who focuses on health care, adding that antitrust enforcement is likely to improve under any administration. “It’s hardly going to get worse,” but it’s now believed things will improve. meaningful. “
Khan, who has conducted dozens of biopharma mergers over the past four years, believes monopolies will stifle the development of new drugs in certain disease areas and harm consumer choice. Biotech company Illumina said last year it would divestment Diagnostic test maker Grail is following a bitter battle with the Federal Trade Commission and European antitrust regulators.
Also last year, the FTC blocked Sanofi’s proposal to acquire a drug in development to treat Pompe disease, a genetic disorder, from Maze Therapeutics. Sanofi ultimately terminated the deal.
“Whether Lina Khan is fired on day one is a key consideration, but even if there are fewer changes at the FTC, there’s no question that this administration – at least on paper – will be a better choice for businesses The merger aspect will be friendlier, Mizuho Healthcare equity strategist Jared Holz said in an email on Wednesday.
One top dealmaker expects M&A activity to rise broadly, but also sees a recovery in the financials and pharmaceuticals sectors in particular. The dealmaker also noted that as the Senate shifts, more outspoken antitrust voices such as Sen. Elizabeth Warren, D-Mass., may find it harder to push for Justice Department or Federal Trade Commission investigations.
Focus on retail, media
David Zaslav at the Allen & Company Sun Valley Conference on July 9, 2024 in Sun Valley, Idaho.
David Grogan | CNBC
A Trump presidency could bring about some retail deals that have been blocked by the Federal Trade Commission. Kroger’s bid Taking over a grocery chain Albertsons May have better chance of approval under Trump tapestry Proposed acquisition capri.
Kroger-Albertsons merger currently underway Under review Before a federal judge, Tapestry is trying appeal A federal order granting the Federal Trade Commission’s motion for a preliminary injunction against the collaboration.
“The FTC’s hostile approach to mergers and acquisitions will almost certainly be reset and replaced by a worldview more conducive to corporate transactions,” said Neil Saunders, managing director at GlobalData. “That’s not necessarily the case. That means big deals like Kroger-Albertsons will be approved, but it does mean other deals like Tapestry-Capri will be received with more enthusiasm than they were under the Biden administration.”
Meanwhile, ongoing turmoil in the media industry has led many to consider consolidation as the next step for the industry.
Warner Bros. Discovery CEO David Zaslav on Thursday emphasized opportunities that could arise if regulations are relaxed, redoubling efforts Comment He made the decision earlier this year at Allen’s annual Sun Valley conference.
“We’re about to have a new administration… it’s too early to tell, but it’s likely to bring about a very different pace of change and opportunities for consolidation that will have a really positive and accelerating impact on the industry,” This is what we need,” Zaslav said on the earnings call.
Radio station group owner sinclair Similar sentiments were expressed Wednesday.
“We’re very excited about the regulatory environment that’s coming,” CEO Chris Ripley said on the earnings call. “It does feel like the cloud is lifting across the industry.”
Still, the previous Trump and Biden administrations have differing records on media industry deals.
Trump’s Justice Department allows disney purchase fox’s assets, but was subsequently sued to block AT&T’s Time Warner deal.
Amazon’s market value is $8.5 billion during Biden’s administration trade For MGM and merge Acquisitions of Warner Bros. and Discovery Communications both clear, but a federal judge blocks Simon & Schuster’s $2.2 billion bid for Penguin Random House Random House) deal for sale.
Skydance Media and Paramount Worldwide agree The merger will occur earlier this year, with regulatory approval expected in 2025.
