MoneyBeat: Banner M&A Week Despite Election -- WSJ
October 25 2016 - 3:02AM
Dow Jones News
By Dana Mattioli
Deal making just had its biggest week since the dot-com
boom.
More than five multibillion dollar deals were announced this
past week, totaling $207 billion in deal volume globally. That is
the biggest week since 1999, according to data provider Dealogic.
That includes British American Tobacco PLC's proposed purchase of
the rest of Reynolds American and AT&T Inc.'s blockbuster $85.4
billion deal to buy Time Warner Inc., the largest acquisition
announced this year.
The timing of the deals -- just weeks before a presidential
election -- defies conventional wisdom. Chief executives typically
wait out an election to see what impact a new president may have on
the regulatory environment and how that affects their strategy.
The fact that so many have just been announced reflects
increasing confidence in boardrooms that Hillary Clinton will be
elected president, observers say.
Still some deal makers found the timing of AT&T's offer to
buy Time Warner particularly puzzling in light of its past
regulatory troubles. In 2011, AT&T had to pay T-Mobile US Inc.
a $4 billion breakup fee, or 10.2% of the total purchase price for
T-Mobile, after the transaction faced government opposition.
While AT&T's deal for Time Warner has the potential to
reshape the media landscape, it will have to navigate possible
strong opposition from U.S. antitrust authorities as well as
objections by lawmakers and media and telecom rivals.
The deal comes at a time when many of the largest mergers have
fallen apart due to what CEOs have characterized as a tougher
antitrust environment. In April, Pfizer, for instance, walked away
from its planned $150 billion merger with Allergan PLC after the
Obama administration took aim at it, which would have been moved
the combined company overseas. In May, a federal judge blocked the
planned merger of rivals Staples and Office Depot because of
antitrust concerns.
Even so, deal makers are expecting a strong finish to the year,
especially with the debt cheap and readily available and companies
facing anemic growth. Indeed, Chip maker Qualcomm is expected to
announce as early as this week the roughly $40 billion purchase of
NXP Semiconductors, according to people familiar with the
matter.
In addition to the Time Warner deal, aerospace equipment
supplier Rockwell Collins Inc. agreed to buy B/E Aerospace Inc. for
$6.4 billion and on Monday TD Ameritrade Holding agreed to acquire
Scottrade Financial Services Inc. in a $4 billion deal.
"The timing of the election had nothing to do with our
decision," said TD Ameritrade CEO Tim Hockey in an interview on
Monday. Mr. Hockey added that technology and scale are becoming
more important in his industry and that impacted his decision to
strike a deal with Scottrade.
The trend of Chinese buyers looking to the U.S. for growth also
was on display this weekend. China Oceanwide Holdings Group Co.
inked a $2.7 billion deal to buy insurance company Genworth
Financial on Sunday. On Monday, China's HNA Group bought 25% of
hotel chain Hilton Worldwide Holdings for $6.5 billion.
(END) Dow Jones Newswires
October 25, 2016 02:47 ET (06:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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