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.
Rhonda Churchill | AFP | Getty Images
Wall Street dealmakers and business leaders expect the floodgates to open after President-elect Trump takes office in January.
He will likely get help from Congress. Trump defeated Democratic candidate Vice President Kamala Harris, and Republicans won the Senate majority 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,” TD Cowen President Jeffrey Solomon said Wednesday on CNBC’s “Money Movers.” “I think the regulatory environment will be more conducive to the economy. 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.
Markets rise Wednesday on Republican win Dow Jones Industrial Average Soared 1,500 points, reaching a record high.
specific industry
Experts say some industries, notably financial and pharmaceuticals, could get a boost under a second Trump administration.
Pharmaceutical industry executives are particularly optimistic that looser antitrust enforcement could clear the way for deals, said one M&A adviser who focuses on health care, adding that under any administration, antitrust enforcement could ” It’s hardly getting worse,” but now believes things will improve.
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 Diagnostic test maker Grail is being spun off after 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 1 is a key consideration, but even if fewer changes occur at the FTC, there is no doubt that this administration – at least on paper – is moving ahead with corporate mergers. It 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 pharmaceuticals and financials 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.
In finance, regional banks recognize the need for scale, making them candidates for consolidation, a former industry executive said, noting that smaller banks have been gobbled up “for some time.” The person expects the pace and scale of these acquisitions to accelerate during Trump’s presidency.
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. Tech leaders took to social media Wednesday to congratulate Trump.
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 previously reported Qualcomm Recently contacted Intel Regarding potential acquisitions.
“I think the simplest way to put it is more transactions, 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.
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 to buy grocery chain Albertsons May have better chance of approval under Trump tapestry Proposed acquisition capri.
The merger between Kroger and Albertsons is currently under review by a federal judge, and Tapestry is working to appeal a federal order granting the Federal Trade Commission’s motion for a preliminary injunction against the merger.
“The FTC’s hostile stance on 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 doesn’t necessarily mean companies like Kroger-Albertsons The big deal will be approved, but it does mean that other deals like Tapestry-Capri will be welcomed with greater 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, highlighting comments he made earlier this year at Allen & Co.’s annual Sun Valley conference.
“We’re about to have a new administration… it’s too early to tell, but it may bring about a very different pace of change and opportunities for consolidation that will have a really positive and accelerating impact on the industry, which 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,” Chief Executive 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 $8.5 billion deal to acquire MGM and the merger of Warner Bros. and Discovery Communications were blocked under the Biden administration, but a federal judge blocks Simon & Schuster’s $2.2 billion deal Sale to Penguin Random House.
Skydance Media and Paramount Worldwide agreed to merge earlier this year and are expected to receive regulatory approval in 2025.
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