Does The New Administration Change Anything For These Proposed Mega-Deals?

A court rejection of a proposed $37 billion mega-merger between healthcare giants Aetna Inc AET and Humana Inc HUM and President Donald Trump’s critical commentary surrounding the proposed AT&T Inc. T merger with Time Warner Inc TWX may have investors concerned about potential anti-M&A policies from the new administration. However, Trump’s pro-business attitude and M&A-friendly cabinet appointments suggest that reasonable deals shouldn’t have any problem getting approved in coming years.

Trump And M&A Deals

As recently as early January, Trump still opposed the AT&T/Time Warner deal. “It’s too much concentration of power in the hands of too few,” Trump said of the deal back in October.

Trump has openly feuded with CNN, one of Time Warner’s most valuable cable assets.

Despite singling out the AT&T deal, Trump’s policy focus on cutting corporate taxes, eliminating corporate regulations and potentially providing a repatriation holiday for companies with cash stored overseas all seem to bode well for the M&A environment in general.

The only potential red flag that could come with many deals is jobs cuts as part of the integration process. Often, big M&A deals are followed by job cuts as the combined companies eliminate redundancies in their workforces. Trump made U.S. job creation a centerpiece of his campaign and would likely balk at any M&A proposal that could involve layoffs.

Bullish Environment For M&As?

Overall, however, the environment seems particularly bullish for M&A deals. Trump selected former FTC member Joshua Wright as an advisor on antitrust policy. Wright was openly critical of the Obama administrations opposition to several proposed mega-mergers.

In addition, Trump nominated Steven Mnunchin as treasury secretary and Gary Cohn as head of the National Economic Council. Both men formerly worked at investment bank Goldman Sachs Group Inc GS, which oversaw nearly $1 trillion in global M&A volume in 2016.

Couple Trump’s pro-business attitude and favorable appointments with interest rates that are still near historical lows and you get a recipe for an M&A explosion.

“I haven’t seen a set of factors that’s been more bullish for M&A activity in some time,” Perella Weinberg Partners’ Peter Weinberg said.

Other Deals To Watch

In addition to the AT&T/Time Warner deal, some of the biggest potential deals out there that Trump and his administration may influence are a proposed merger between Walgreens Boots Alliance Inc WBA and Rite Aid Corporation RAD and Bass Pro Shop’s buyout of Cabelas Inc CAB.

Another deal that Trump may be unwilling or unable to save is the proposed merger of CIGNA Corporation CI and Anthem Inc ANTM. Many experts believe the Cigna/Anthem deal had a much lower probability of approval than the rejected Humana/Aetna merger.