Big Deals Are Damped by Tough Regulations, JPMorgan’s Simon Says

  • M&A hit by antitrust scrutiny, U.S. election uncertainty
  • Deals valued over $10 billion are down by almost half in 2016

A challenging regulatory environment has damped big dealmaking across industries, according to JPMorgan Chase & Co.’s global chairman of mergers and acquisitions.

Deals valued over $10 billion are down by almost half this year, partly due to increased antitrust scrutiny for high-profile mega deals across industries, Kurt Simon said in an interview on Bloomberg TV’s Deals Report segment Monday.

“This is probably the most challenging regulatory antitrust approval process,” Simon said, talking about U.S. rules. “If you think of that in an election year, I think it’s going to put a little bit of a downer on activity,” he said.

Just last week, the U.S. Justice Department cited antitrust laws as it blocked two multi-billion dollar health-care deals -- Anthem Inc.’s $48 billion bid for Cigna Corp., and Aetna Inc’s $37 billion proposal to acquire Humana Inc.

Uncertainty due to the upcoming U.S. presidential election may also explain some of the slow growth in deal activity, Simon said. 

“Anything that adds volatility as we head into the fall is going to be challenging to the overall level of M&A activity,” he said.

Despite this uncertainty, Simon expects to see increased activity this year in certain technology industries, including software and semiconductors. SoftBank Group announced a $32 billion acquisition of ARM Holdings Plc last week.

He also expects deals in the media industry to increase, as new potential buyers like Inc. and Alphabet Inc.’s Google enter the market. However, activity is unlikely to heat up until after the election, he said.