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What you need to know
- The Trump White House is likely to see a rise in deals by 2025. After a period of time when high interest rates, a strict regulatory system and other factors hampered deal-making, this will be the first year that doors are open.
- Among the reasons M&A is expected to increase next year: cheaper funding due to lower interest rates, a solid economy, and a Trump presidency, which is expected lead to looser antitrust regulations.
- Chief executive officers, who had been reluctant to make deals in the past, are again considering it according to observers.
Get ready for an M&A boom next year.
In 2025 the Trump White House is likely to see more deals, after years of high interest rates and tough regulations that stifled deal-making. This year, several high-profile mergers and acquisitions were scrapped. JetBlue Airways (JBLU), for example, tried to purchase budget airline rival Spirit Airlines (SAVEQ), while Kroger (KR) was trying to take over grocery rival Albertsons.
Not everyone believes that will be the case. Funding is expected to get cheaper, with the Federal Reserve extending its interest-rate-cutting cycle, lowering borrowing costs, even as the central bank struggles with the last mile of its inflation fight. While the stock market is strong, it appears that the economy has a solid foundation. It will ease stock-for-stock transactions.
Donald Trump was re-elected president, and he is a supporter of fewer regulations. According to analysts and bankers, the Biden administration was more aggressive in its antitrust scrutiny, blocking many mergers due to competitive concerns.
New FTC, Justice Department Appointments Likely More Open to M&A
The president-elect already has taken steps relevant to M&A with his appointments. Andrew Ferguson, a Republican attorney, was named as the nominee of his party to succeed Lina Khan at the Federal Trade Commission. Lina was known for her tough stance on M&A deals. Gail Slater will replace Jonathan Kanter at the Justice Department’s Antitrust Division. Both the Justice Department (FTC) and FTC share antitrust enforcement authority.
Ferguson and Slater will likely be more willing to make deals. “likely come with a more traditional, lighter touch antitrust framework,” Morgan Stanley analysts have written earlier this month. “This should drive up animal spirits and improve corporate clarity in an M&A environment where market conditions are already supportive for activity.”
Morgan Stanley analysts have written that regulatory approvals of deals will be streamlined under the Biden Administration. “was less predictable” Many CEOs chose to stay on the sidelines due to the fear of being sued or having a long and drawn out deal process.
Morgan Stanley reported that senior Wall Street bankers Goldman Sachs, Lazard and Morgan Stanley all attended an industry conference where they made comments. “companies are dusting off mergers that they had not been thinking about in some time” The confidence in making deals has returned.
A Stagnant Three Years for M&A
Any deal that comes in will be welcomed by the bankers. Deal-making has been slow in the past three years, and 2024 figures are only slightly higher than last year.
Dealogic data shows that there will be more than $1 trillion announced in deals by 2024. That’s higher than the $1.32 billion of 2023, but less than 2022, which was $1.42 trilllion. The figures do not include debt. (The figures exclude debt.)
Here are the five biggest announced M&A deals for U.S. targets in 2024, according to Dealogic, with just two out of five completed so far.
1. Vernova spun out of General Electric
General Electric’s three-way split and spinoff of its power and wind business—now called GE Vernova (GEV)—was 2024’s biggest M&A transaction, valued at $38.09 billion.
2. Capital One's Approach for Discover
Capital One Financial Corp.’s (COF’s) bid of Discover Financial Services in February valued at $35.32 billion would have created a payments giant that serves more than 100,000,000 customers, however, it still hasn’t received the regulatory go-ahead.
3. Synopsys Bids on Ansys
The offer of $33.60 billion made by Synopsys, a chip design software firm (SNPS), to Ansys, a simulation software company (ANSS), in January has still not been concluded.
4. Mars Seeks Kellanova takeover
Candy giant Mars’ $29.91 billion offer for Pop-Tarts and Pringles maker Kellanova (K), announced in August, is still awaiting U.S. regulators’ go-ahead.
5. Diamondback Buys Endeavor Energy
Diamondback Energy (FANG) announced plans in February for a $28.11 billion takeover of Endeavor Energy Resources—the latest in a string of big energy-sector deals. This deal is now closed.
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