Wall Street Giddy Over Coming Merger Boom as Trump Expected to Fire Lina Khan
One corporate CEO welcomed the Republican's victory as "an opportunity for consolidation."
Wall Street is "foaming at the mouth," as one leading business magazine put it, at the prospect of a corporate merger frenzy following Republican Donald Trump's victory in the 2024 presidential election—a win that's set to spell the end of antitrust champion Lina Khan's popular tenure at the helm of the Federal Trade Commission.
Trump's second administration, which is likely to be stacked with billionaires and corporate-friendly officials, is expected to take aim at merger and acquisition guidelines issued last year by Khan's FTC and the U.S. Department of Justice after decades of relentless corporate consolidation.
David Kostin, chief U.S. equity strategist at the Wall Street behemoth Goldman Sachs, predicted in a note published Wednesday that under Trump's incoming administration, "the regulatory posture of the Federal Trade Commission and the Department of Justice Antitrust Division that during the past four years challenged many proposed business combinations will likely be more relaxed."
That more relaxed posture, according to Kostin, could result in a 20% increase in merger activity in just the first year of Trump's second term.
Raul Gutierrez, the head of mergers and acquisitions at the investment banking firm Truist Securities, echoed Kostin's assessment, tellingBloomberg that "you should be able to see larger transactions move forward" under the incoming Trump administration.
"Some of these had been put on hold given the current antitrust stance," said Gutierrez, "and I think you'll see a greater willingness to test agencies out once the administration takes over."
Khan's term officially expired in late September, but she's expected to stay on at the FTC until Trump is inaugurated in January and chooses a replacement. While Vice President-elect JD Vance has praised Khan, "Trump and his allies are likely to get rid of anyone associated with the Biden administration's antitrust battles with the big Silicon Valley tech companies," The New York Timesreported earlier this week.
Tesla CEO Elon Musk, who pumped upward of $118 million into Trump reelection efforts, wrote days before the November 5 election that Khan "will be fired soon."
According to the FTC's latest data, the Biden administration brought a record number of merger enforcement actions in fiscal year 2022. A recent analysis by the American Economic Liberties Project found that the Biden administration "brought to trial four times as many billion-dollar merger challenges as Trump-Pence or Obama-Biden enforcers did."
Under Khan's leadership, the FTC has taken legal action against some of the most powerful companies in the world, including Amazon and Microsoft.
But Trump's election victory has sparked hopes on Wall Street that aggressive merger enforcement could soon end.
"We think that under a Trump administration, deal approvals will speed up markedly and the process will be more clearly delineated," Mark Fitzgibbon, managing director of the banking company Piper Sandler, wrote in a research note.
David Zaslav, the CEO of Warner Bros. Discovery, hailed Trump's victory as "an opportunity for consolidation."
Kroger, a company that is currently locked in a legal battle with the Khan-led FTC over its attempt to acquire competitor Albertsons, saw its stock price jump in the wake of Trump's election victory, with investors anticipating "a more lax environment for corporate mergers" under the Republican, Barron'sreported.
Axiosreported Friday that "the $35 billion credit card merger of Capital One and Discover will be a bellwether for how Trump's antitrust crew views the M&A environment."
"Shares of each company rose 15% after his election," the outlet observed, adding that shares of the airline companies Frontier and Spirit also surged in a "sign their previous attempt at a merger could be revived."
