M&A tidal wave incoming

In today’s big story, we’re looking at why corporate America isn’t afraid of the Biden administration’s anti-trust stance anymore and how that’s leading to a wave of M&A.

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Shortly after US President Joe Biden took office in 2021, he looked to make good on his promise of scrutinizing corporate dealmaking, particularly in Big Tech.

But as he enters the final year of his initial term, the floodgates for big M&A deals have opened, writes Business Insider’s Matt Fox.

The strict anti-trust stance of Biden and Lina Khan, the Federal Trade Commission chief he appointed, hasn’t stopped a wave of deal announcements since September that total more than $170 billion.

A key turning point was Khan’s failure to stop Microsoft’s $69 billion bid to buy Activision Blizzard.

Like the first one to take a dip at a pool party, a court ruling in favor of Microsoft and against the FTC in July was a signal for companies and their bankers to join the fun.

Now everyone from Cisco to Exxon Mobil is getting in on the action with pricey transactions of their own. Even Warren Buffett is reportedly considering helping to finance a high-profile deal in the energy space.

But the starkest example of how bold dealmakers have gotten is a potential tie-up between giant health insurers Cigna and Humana, Matt writes. The deal is a longshot to get approved, but the fact both sides are even trying shows corporate America’s ambivalent views toward the Biden administration’s anti-trust agenda.

Wedbush analyst Dan Ives told Matt, “there’s going to be a tidal wave of M&A ahead,” now that fear over Khan and the FTC squashing deals has mostly subsided.

The revelation comes at a perfect time for the industry. Bankers have been desperate to get the M&A market going after an elongated drought.

That, coupled with the market predicting significant cuts to interest rates next year, means things could ramp up quickly.

And rest assured, bankers aren’t interested in nickel-and-dime type deals. Earlier this year, Goldman Sachs was reportedly targeting mega deals — those over $10 billion — as a way to get back on track.

But it’s not just the size of deals that’ll be worth watching. There could be some interesting tie-ups between large incumbents and the startups that initially set out to disrupt them.

With VC money drying up and an unwelcoming IPO market, late-stage companies might look to be acquired by the companies they once looked to topple.

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Dan DeFrancesco, senior editor and anchor, in New York City. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Lisa Ryan, executive editor, in New York City.

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