Attendees cheer as former U.S. president and Republican presidential candidate Donald Tram speaks at a Florida election party on screen at the Nevada Republican Party Election Observation Party in Las Vegas, Nevada, November 6, 2024. .
Rhonda Churchill | AFP | Getty Images
Wall Street traders and business executives expect the floodgates to open for merger and acquisition activity after President-elect Donald Trump takes office in January.
And perhaps get some help from Congress. Trump defeated Democratic candidate Vice President Kamala Harris, giving Republicans control of the Senate in this week’s elections. This red wave is expected to ease regulations on deal-making on the back of a lot of pent-up demand.
TD Cowen President Jeffrey Solomon said Wednesday on CNBC’s “Money Movers” that “we kind of know where the world is going in the Trump environment, because we’ve seen that before. “I have seen the situation,” he said. “I think the regulatory environment will be much more favorable to economic growth. Regulation will be less and more targeted.”
Solomon added that the regulatory rollbacks would focus on specific areas “of particular interest to the Trump administration,” rather than a broader reassessment overall.
Oversight of pending deals has increased in recent years by the Biden administration’s Justice Department and the Federal Trade Commission, chaired by Lina Khan. Some point out that this power relationship is a factor that dampens the flow of transactions. High interest rates and soaring corporate valuations are also contributing factors.
“We can see that stronger oversight of mergers will help deter illegal mergers,” Khan said in September. Her hard-line stance has drawn harsh criticism, but there is now growing optimism that the FTC will take a lighter stance.
“Assuming interest rates come down and corporate tax rates come down, we have the ingredients for a really active M&A market,” said one top dealmaker, who spoke candidly to CNBC on condition of anonymity.
On Wednesday, markets rallied following the Republican presidential victory. Dow Jones Industrial Average Increased by 1,500 points, setting a new record high.
By sector
Experts said some sectors, especially the financial and pharmaceutical industries, are likely to improve under the second Trump administration.
One health care M&A advisor said pharmaceutical executives are particularly optimistic that loosening antitrust enforcement would clear the way for deals to close, adding that under either administration, antitrust enforcement would be “lower than expected.” “It could hardly have gotten any worse, but we now believe the situation will get better,” he added. In a meaningful way. ”
Khan has worked on a number of biopharmaceutical mergers over the past four years, arguing that monopolies stifle new drug development in certain disease areas and undermine consumer choice. Biotechnology company Illumina announced last year that it would sell diagnostic test maker Grail after a fierce battle with the FTC and European antitrust regulators.
Last year, the FTC also blocked Sanofi’s proposed acquisition of a drug it was developing for the genetic disease Pompe disease from Mays Therapeutics. Sanofi ultimately terminated the contract.
“Whether Lina Khan gets a no-trial on day one is an important consideration, but even if there are few changes at the FTC, this administration will be far friendlier — at least on paper — when it comes to business combinations. “There is no doubt that this will happen,” Jared Holtz, a healthcare equity strategist at Mizuho, said in an email Wednesday.
One top dealmaker, who had widely expected an increase in M&A, agreed that the pharmaceutical and financial sectors were particularly poised for a comeback. The consensus builder also said the Senate reversal will make it more difficult for more outspoken antitrust voices, like Sen. Elizabeth Warren of Massachusetts, to push for Justice Department and FTC investigations. He also pointed out that there is a possibility.
In the financial sector, local banks recognize the need for scale and are likely candidates for consolidation, one former industry executive said, noting that smaller banks have been gobbled up “for some time.” The people expect the pace and scale of these acquisitions to accelerate under President Trump.
Other industries, such as technology, may still face an uphill battle to close deals.
One M&A advisor, who also spoke anonymously to CNBC, said President Trump’s disdain for Big Tech companies, which have historically been deal-active, may keep them on the sidelines. On Wednesday, technology industry leaders congratulated President Trump on social media.
The adviser noted that Republicans’ apparent opposition to the CHIPS Act means semiconductor integration could be difficult, and he is not sure what Trump’s presidency will mean. He cautioned that it was still too early to know. CNBC previously reported: Qualcomm recently approached intel Regarding a potential takeover.
Jonathan Miller, chief executive of digital specialist Integrated Media, said: “The simplest way to say this is that governments, with a sense of scale and perhaps a will to pick winners and losers, will increase transactions and regulate.” I think it’s about reducing that.” media investment.
Focus on retail industry and media
David Zaslav attends the Allen & Company Sun Valley Conference on July 9, 2024 in Sun Valley, Idaho.
David Grogan | CNBC
A Trump presidency could open up many retail transactions that the FTC has blocked. kroger’s Bid to buy grocery chain albertsons Approval may become more likely under the Trump administration tapestry acquisition proposal of capri.
The Kroger-Albertsons merger is currently under review by a federal judge, and Tapestry is appealing the federal order that granted the FTC’s preliminary injunction against the partnership.
“The FTC’s adversarial approach to mergers and acquisitions will almost certainly be reset and replaced with a worldview more favorable to corporate transactions,” said Neil Saunders, managing director at GlobalData. “This doesn’t necessarily mean big deals like Kroger-Albertsons will be denied, but it does mean other companies like Tapestry Capri will receive a much warmer reception than they would have under the Biden administration. I am doing it.”
Meanwhile, the media industry remains in turmoil, with many considering consolidation as the next step for the media industry.
Warner Bros. Discovery CEO David Zaslav on Thursday doubled down on comments he made earlier this year at Allen & Co.’s annual Sun Valley conference, raising concerns about what could happen if restrictions ease. highlighted an opportunity.
“There will soon be a new administration.…It’s too early to tell, but it may bring a completely different pace of change and opportunity for consolidation, which is much needed in this industry.” “This will have a real positive accelerating impact,” Zaslav said. He spoke at a financial results conference.
Broadcasting station group owner sinclair Similar comments were made on Wednesday.
“We’re very excited about the regulatory environment going forward,” CEO Chris Ripley said during an earnings call. “I feel like the clouds that were hanging over the industry are starting to lift now.”
Still, the former Trump and Biden administrations have a divergent record on media industry deals.
President Trump’s Justice Department approves disney buy fox’s Lawsuit filed to block assets AT&T’s contract with Time Warner.
Under the Biden administration, Amazon’s $8.5 billion deal with MGM and the Warner Bros.-Discovery Communications merger were both rejected, but a federal judge ruled against Simon & Schuster’s $2.2 billion deal with Penguin Random House. The sale of was prohibited.
Skydance Media and Paramount Global agreed to merge earlier this year, with regulatory approval expected in 2025.
