US: The government shutdown effect: merger spree may come to a halt

As the US experiences a merger boom, according to reports, the ongoing government shutdown could throw a roadblock in the path of such an acquisition spree.

While the shutdown has not yet caused major problems for the nation’s merger activity, reports say there are three main reasons the shutdown could eventually pierce the merger trend.

The first is the end of fast-tracked mergers, as the US Federal Trade Commission is currently running on about one-third of its usual staff thanks to the shutdown; according to White & Case’s Mark Gidley, the lack of staff means merger approvals under the early termination process won’t easily be obtained.

The second, say reports, is that executives may shy away from making future deals due to confusion about when the government will reopen and effects on the government budget in the future. And with the threat of merger delays, executives are even more unlikely to strike deals.

Finally, if the government shutdown continues, the FTC may begin to automatically issue second requests when receiving merger applications as a method of buying time; such second requests require more work from the merger parties.

Despite the risks, reports point out that the government shutdown has not affected the Securities and Exchange Commission, which remains fully staffed thanks to excess funds. Further, the recent buyout of Smithfield Foods – a record acquisition for its Chinese buyer – was closed before the government shutdown hit.

Full Content: USA Today

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