The heaven for deal making: that is what the yearly meeting is called at the Tulane University in New Orleans. Due to political movements in Washington, the mood among investment bankers and top-tier lawyers is at its best. The cocktails in the stately Roosevelt Waldorf Astoria Hotel and Bourdon Street did the rest.
The takeover bid of the American PPG on their Dutch competitor AkzoNobel with a generous premium does not stand alone. Trump has boosted the stock prices at a maximum which resulted in a stock rally the last couple of months. This gives the ladies and gentlemen in the boardrooms more leeway.
Board members feel more confident and richer due to rising stock prices. They have furthermore, due to a strong Dollar currency, relatively more purchasing power overseas. A lot of investors and investment bankers salivating of the idea of possible transboundary mergers and acquisitions. Goldman Sachs is leading the list of dealmakers. According to the New York Times, Goldman Sachs had a market share of 22% in the first quarter. Morgan Stanley follows with 21%.
In New Orleans, top banker Kurt Simon of JPMorgan (number five on the list with 14% market share) dared to state that an American company, during the current circumstances, will place a bid of more than $100 billion in cash. The current record is $66 billion: the takeover bid of Bayer on Monsanto of last year.
Encouraged by investment bankers, American corporates are hunting outside the borders. The total value of the cross-border mergers, which is approximately half of the total value of mergers, is on highest end since 2007. In the first quarter, this value has even grown by a factor of three (on a year-to-date basis). According to preliminary figures of Thomson Reuters, the total value of all mergers and acquisitions in the first quarter of 2017 is around $726.5 billion. That is seven percent more than last year.
This could be much more. The unwanted takeover bid on Unilever by the American Kraft Heinz was surprisingly fast off the table last month after leaked information about the takeover plan. While earlier this year, the takeover of the American Johnson & Johnson on Swish Actelion was closed. This counted for a total value of around $30 billion. The other way around, the British Reckitt Benckiser placed a bid of $17.9 billion on the American food company Mead Johnson.
The economic nationalism of Trump is not seen as a major obstacle yet. Despite earlier rhetoric, experts expect a flexible attitude when it is about big mergers and acquisitions by the authorities during the era of Trump. For investment bankers and lawyers enough reason for another Sazerac in New Orleans.