Giant utility deals do not come along often. Mergers in this heavily regulated industry require approvals from multiple agencies and often face pushback from politicians and local civic groups worried about rising electricity prices.
But two of the largest power companies in the United States, NextEra Energy and Dominion Energy, are giving it try, with a $67 billion tie-up announced in May. Sysco, the big food distributor, also went big in March with the $29 billion acquisition of Jetro Restaurant Depot, a supplier to independent restaurants, a deal that could reshape the food supply industry. And this month, Stripe and the private equity firm Advent International offered about $53 billion to acquire PayPal, in what would be one of the largest-ever deals in financial services.
Companies across America are seizing on what may be the most favorable regulatory environment for businesses in years to complete deals that might have been unlikely under previous presidencies. The rush is on to get them done before President Trump’s term runs out.
“There is a ‘now or never’ attitude for attempting transformational combinations,” lawyers at Hunton Andrews Kurth wrote in a note this year.
Although Mr. Trump plays no formal role in approving most mergers, he has publicly weighed in on deals. Some executives, recognizing that the administration is more transactional than its predecessors, have stopped by the White House during their efforts to get his administration’s blessing for them.
The regulators the president has appointed to oversee deals have taken a more flexible approach. For example, the Justice Department last week said that it would fast-track its review of some mergers, asking fewer questions upfront. That new policy was a sign the department was “open for business,” lawyers at Wilmer Hale wrote in a memo for clients.
“You have a federal antitrust enforcement regime that is viewed generally as meaningfully more accommodative than the Biden administration,” said Edward Lee, a partner at the law firm Kirkland & Ellis. “Obviously, or in terms of dealmakers and dealmaking animal spirits, that’s always a good thing.”
Analysts at Goldman Sachs said they expected busy deal activity to continue into the second half of the year, citing, among other factors, a “friendly” regulatory backdrop. The firm’s list of potential targets for acquisitions include the copper company Freeport-McMoRan, as the building of A.I. data centers increases demand for the metal. Analysts expect the boom in data centers to spur other deals as well, particularly in power and energy.
Banking executives have picked up talks about merging their own businesses, as regulators have unwound the Biden administration’s efforts to make those deals harder. There has long been a debate about how stringently to monitor banking deals, because some critics argue they could force the closure of vital community branches or consolidate risk among fewer banks. Some, though, including former Treasury Secretary Janet L. Yellen, have argued that more consolidation among the roughly 4,100 small U.S. banks could help steady industry volatility.
In November, the comptroller of the currency, Jonathan Gould, described acquisitions in the industry as potentially “quite valuable.” Analysts at Jefferies, who wrote that approval times for banking deals “appear to be fast-tracked,” recently listed M&T Bank and Wells Fargo among the likely future acquirers. (Wells Fargo was freed last year from an asset cap, imposed by the Federal Reserve, that prevented the bank from growing.)
JPMorgan Chase’s chief executive, Jamie Dimon, has said the bank is considering acquisitions for as large as $20 billion.
Pharmaceutical companies continue to explore acquisitions to keep their drug pipeline stocked. “I think that we are looking more than ever before,” Novo Nordisk’s chief executive, Maziar Mike Doustdar, told CNBC in May.
Some lawyers and bankers say the flood of global deals this year — worth about $3.2 trillion through June, a 45 percent jump from a year earlier — is simply pent-up demand after the Biden administration.
Still, “caution is warranted,” the Hunton Andrews Kurth lawyers wrote in their note, given a number of unpredictable speed bumps, including political influence over deal reviews.
A year ago, Union Pacific announced its $85 billion deal for Norfolk Southern, which would create the United States’ first coast-to-coast rail network, linking 43 states. The deal also would put around two-fifths of rail freight in the hands of one company, raising fears of higher prices in a crucial industry.
Railroad deals require approval by the federal Surface Transportation Board, and in May it surprised some in the industry by pausing its review of this one. Around the same time, Mr. Trump publicly floated taking a 15 percent stake in what he called the “very big” merger. The federal government had already taken a “golden share” in Nippon Steel’s deal for U.S. Steel as part of its approval.
“There’s an opportunity of transformational M&A, but there is also a risk of tripping,” said Ethan Klingsberg, who leads the mergers and acquisitions practice at the law firm Freshfields. “Navigating the White House as well as navigating antitrust authorities at the Justice Department and Federal Trade Commission is a delicate task. It’s easy to make a mistake.”
Some trial balloons have already popped. Mr. Trump said he was opposed to a tie-up of United Airlines and American Airlines after the idea was broached in Washington. (An unusual American Airlines news release welcomed the “leadership and strong support of President Trump” and said a deal would be bad for competition.)
And, increasingly, executives are wary that an overt entreaty to the White House can attract too much attention from Democratic state attorneys general, because they view the approval process as blatantly political or are simply concerned by the acquisition — or both.
That scrutiny could intensify if Democrats in Congress get subpoena authority in the midterm elections, lawyers and bankers say.
“The questions of political interference on the antitrust side are very, very hot right now,” said David Schwartz, an antitrust partner at Bryan Cave Leighton Paisner.
The attorneys general must be selective about their targets because they have fewer resources than federal enforcers. But they have demonstrated in recent months that they can create real headaches for some of the highest-profile deals.
In April, state attorneys general secured a restraining order to halt the merger of the broadcasting companies Nexstar and Tegna, months after Mr. Trump urged on social media, “GET THAT DEAL DONE!”
And a dozen Democratic attorneys general sued to halt Paramount’s acquisition of Warner Bros Discovery. Paramount then agreed to halt its deal potentially through June as it prepares to defend the acquisition in court.