Dealmakers Choose Donald Trump
Maybe it's because he wrote "The Art of the Deal." Maybe it's because he boasts about his business acumen. Maybe it's just because he says the word "deal" a lot.
Whatever the case, M&A practitioners and observers think Republican candidate Donald Trump would be the best U.S. president -- let me finish -- for dealmaking.
About 22 percent of 140 bankers, lawyers and others in the M&A community favor the billionaire when it comes to business interests, including mergers and acquisitions, according to a survey released Wednesday by Brunswick Group, a corporate relations advisory firm. That's enough to make him their top pick. (He's also the front-runner among Republican voters so far). Not far behind are Democrat Hillary Clinton, with 21 percent, and Republican John Kasich, with 19 percent. 1
Republican Marco Rubio, who dropped out of the race Tuesday night after losing badly to Trump in his home state of Florida, received 11 percent. Republican Ted Cruz -- just like in the Senate -- barely received any support from respondents of the survey, which was conducted last month. (See Bloomberg Politics for more on Tuesday's Democratic and Republican primaries.)
Perhaps it's not surprising that Wall Street types picked the one businessman among the presidential hopefuls. That said, it's interesting because Trump has also been one of the most outspoken against companies sending American jobs abroad and seeking foreign tax havens through acquisitions. (He even called out companies such as Pfizer and Eaton Corp. on Tuesday night and said he was "disgusted" by their tactics.) Such cost-cutting maneuvers underpinned last year's merger spree, even after the U.S. government tried to discourage tax-inversion deals. And while Trump says his tax reform plan will make inversions unnecessary, there's been plenty of pushback on the feasibility of his ideas. (Survey takers also said they see corporate inversions decreasing in 2016.)
Trump has also been criticized by Republicans -- who tend to play nice with the Wall Street crowd -- for not being Republican enough. And he told Iowans near corn fields 1,000 miles outside the world's financial hub that he "doesn't care about the Wall Street guys" and won't let them "get away with murder."
As for the outlook for M&A this year, it depends on who you ask. Seventy percent of U.S. dealmakers surveyed expect activity in North America to decline because of economic conditions and a downturn in the stock market. But globally, two-thirds said deal volume could reach last year's record. And while last year was marked by a spate of mega-mergers, transactions this year are projected to skew smaller.
As far as industries are concerned, survey participants said this finally could be the year for all those oil mergers bankers and executives have been predicting since mid-2014, when the price of crude began its descent. There have been a handful of large tie-ups, such as Shell's $79 billion takeover of BG Group and Halliburton's $38 billion purchase of Baker Hughes, which hasn't yet been able to obtain all regulatory approvals. Those aside, there hasn't been the gusher of takeovers we were expected to see as companies with good assets unable to produce at such low prices are forced to sell. Maybe this year?
One of the most surprising parts of the survey were the results of a question about which region would attract Asian acquirers -- 58 percent said Europe, while only 33 percent chose North America. The assumption is that the Committee on Foreign Investment in the U.S., known as CFIUS, would stand in the way of Chinese companies wanting to scoop up important American assets. But that hasn't stopped them. A flurry of bids for U.S. companies has come out of China this year, with some even looking to break up deals with other buyers.
During this past week alone, Beijing's Anbang Insurance Group agreed to buy Strategic Hotels (owner of Manhattan's JW Marriott Essex House) from Blackstone for about $6.5 billion and also made a $12.8 billion bid for Starwood Hotels, the operator of the W and Westin hotel brands that had already agreed to a merger with Marriott International. China's Zoomlion made an unsolicited offer for Terex, the U.S. crane maker that agreed to be bought by Finland's Konecranes. Ingram Micro, a computer networking supplier in California, is being sold to China's Tianjin Tianhai Investment Co.
We'll see if the survey respondents are right: Is the U.S. going to turn away these Chinese buyers? Are tax-inversion deals really going away? And if Donald Trump is our next commander in chief, will dealmakers cheer?
--With assistance from Gillian Tan.
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Tara Lachapelle in New York at firstname.lastname@example.org
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