Trump victory pose temporary snag in mega-mergers: WSJ

While Donald Trump’s surprise victory over Hillary Clinton could temporarily trip up the surging mergers-and-acquisitions market, the businessman’s election may ultimately spark an acceleration in deal-making, bankers and lawyers the Wall Street Journal said Wednesday.

Companies are likely to hold off on striking big combinations as they size up the new president and his policies, according to a number of deal advisers.

“I think in the short term it injects a fair amount of uncertainty in the markets, as participants and CEOs all anticipated a Clinton victory,” said Robert Townsend, co-head of the global M&A group at law firm Morrison & Foerster. “As people go through that exercise of ascertaining what the election results mean for the larger economy and their particular businesses, they will presumably slow down on some of the M&A and strategic plans they had in place.”

In the past few weeks, as polls indicated Mrs. Clinton was the front-runner, companies struck megadeals at a clip reminiscent of the record pace in 2015. AT&T. inked the biggest takeover of the year when it agreed to buy Time Warner for $85 billion. In the following weeks, General Electric struck a deal to acquire Baker Hughes for as much as $30 billion, while CenturyLink agreed to purchase Level 3 Communications for about $25 billion. October was the busiest month on record for US M&A, with more than $250 billion of deals struck, according to Dealogic.

But traders who already were jittery about the outcome of those and other pending deals drove down shares of some takeover targets on Wednesday. Time Warner dropped 1.5%, helping widen the discount to AT&T’s cash-and-stock offering price to 24.2%. A so-called spread that wide indicates a large degree of skepticism among traders that the deal will get done. It already stood at 21.7% Tuesday night after a number of policy makers came out against the deal, including Mr. Trump. The spread on Bayer AG’s $56 billion proposed acquisition of chemical company Monsanto widened to 29.5% from 28.7% as the market factored in the odds the Trump administration could target the trans-Atlantic tie-up.

Full Content: The Wall Street Journal

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