How the Tax Overhaul Could Give M.&A. a Lift: DealBook Briefing


The responses to survey suggest that many of the predictions for how companies would use the proceeds from the tax overhaul may prove correct. Though many firms garnered headlines for doling out bonuses to employees or raising hourly wages, analysts and economists largely predicted that corporate America would turn to deal-making, dividends or share buybacks as ways to spend their money.

“At the end of the day, tax is not a driver of M.&A., but it certainly is a key element,” Bill Casey, EY’s Americas vice chair of transaction advisory services, told me. He added that the removal of uncertainty about taxes, as well as the potential benefits from the overhaul, appears to have lifted companies’ deal-making spirits.

Not that M.&A. has been bad so far this year. Announced transactions in the United States for the year to date are up 55 percent from the same time last year, according to Thomson Reuters. And Mr. Casey pointed out that companies already have access to plenty of cheap financing to pursue acquisitions.

But for mid-market companies especially, extra money in the pocket can help provide an extra shot of confidence.

“There’s more capital being fueled by tax reform, and that will ultimately lead to a better deal market,” Mr. Casey said.

Other findings from the survey

• 75 percent of respondents said that they are likely to grow their United States manufacturing base in some way

• 89 percent said that they planned to “enhance compensation” because of forthcoming tax benefits

• 38 percent of mid-cap companies plan to create new jobs, compared to only 19 percent of large-caps

• 66 percent are likely to pass some tax savings onto customers

— Michael de la Merced

How Trump blocked the biggest-ever tech takeover

Few deal makers that Michael has spoken to since last night can recall such a dramatic scenario: T he president intervening in a hostile takeover, citing national security reasons.

President Trump essentially salted the earth for Broadcom’s bid for Qualcomm. Broadcom was ordered to “immediately and permanently abandon the proposed takeover,” and its nominees for Qualcomm’s board, who had stood a good chance of winning most of the seats, were immediately disqualified.

What John Kabealo, a specialist in foreign investment law, told Cecilia Kang and Alan Rappeport of the NYT:

“It certainly aligns with the administration’s willingness to be more active in trade and implementing protectionist policies,” he said. “It is definitely a much more activist policy than the previous administration.”

Scott Kennedy of the Center for Strategic & International Studies told Bloomberg, “This decision hangs a huge ‘not-for-sale’ sign on just about every American semiconductor firm.”

Big question 1: Much has been made of this White House’s protectionism. But Cfius, the government panel that reviews deals for national security concerns, cited Broadcom’s “relationships with third-party foreign entities.” What does that mean?

Big question 2: Did Broadcom — which sped up its efforts to move its legal headquarters to the U.S. in apparent defiance of Cfius’s orders — misplay this situation?

Big question 3: Does any non-U.S. bidder for an American company now need to worry about Cfius?

Critics’ corner: Brook Sutherland of Gadfly warns, “This should be a warning for future deal makers and would-be friends of Trump.” Considering Qualcomm’s prospects now, Lex says the company “has disappointed before — even without the president’s help.”


Credit Richard Lord

Meet Larry Page’s self-flying taxis

Andrew took the wraps off the Alphabet C.E.O.’s well-hidden side project, which aims to be the Uber of self-flying aircraft before Uber can even get there.

More from Andrew’s column:

On Tuesday, Mr. Page’s company and the prime minister of New Zealand, Jacinda Ardern, will announce they have reached an agreement to test Kitty Hawk’s autonomous planes as part of an official certification process. The hope is that it will lead to a commercial network of flying taxis in New Zealand in as soon as three years.

New Zealand has long been seen as safety-conscious, so its regulations for the vehicles could be a model in the U.S. and elsewhere.


What’s next for Goldman’s heir apparent, D.J. D-Sol

Now that the Wall Street titan has officially anointed an up-and-coming disc jockey — a.k.a. David Solomon, longtime investment banker — Lloyd Blankfein’s likely successor, it’s worth considering his priorities:

From Dakin Campbell of Bloomberg:

Blankfein and the board were impressed, insiders say, by Solomon’s proven ability to build businesses, the strength of the deal making team he assembled and his efforts to recruit and retain talent. Those qualities became even more valuable as the bank decided it had focused too much on hedge funds as trading customers, at the expense of corporations.

And in an interview with the Virgin Group founder Richard Branson last month, Mr. Solomon suggested that Goldman — which has added consumer lending to its stable of services — “could move in your direction a little bit.”

The succession race was Wall Street’s most closely watched, with Mr. Solomon, the outsider investment banker, squaring off against a Goldman lifer and veteran trader, his fellow co-president Harvey Schwartz.

From Kate Kelly of the NYT:

Late last year, Mr. Schwartz approached Goldman’s lead director, the private-equity executive Adebayo O. Ogunlesi, with an ultimatum, according to people familiar with the exchange. Mr. Schwartz said that unless he was tapped as chief executive in the coming months, he would resign. Mr. Ogunlesi was noncommittal, these people said.

Peter Eavis’s take: Morgan Stanley has arguably done more than Goldman to diversify away from trading into more stable businesses like wealth management.

A stumble for Goldman’s deal business: It’s fifth in Thomson Reuters’s global league tables, behind Morgan Stanley, JPMorgan Chase, Bank of America Merrill Lynch and Lazard.

Larry Kudlow may head back to the White House

As the current front-runner to replace Gary Cohn, the CNBC commentator would become the White House’s top salesman for its economic policies — and one of the top internal supporters of free trade, when protectionism is ascendant.

Why Mr. Kudlow, whose last formal Washington job was in the Reagan administration? From Maggie Haberman and Jim Tankersley of the NYT:

Mr. Kudlow, who advised Mr. Trump during his campaign and after he became president, is someone with whom Mr. Trump has a rapport, and he is a media personality whom the president enjoys watching on television, according to aides.

Just in time: Mr. Kudlow and Stephen Moore have an op-ed in today’s WSJ on the economy. From the piece: “Mr. Trump’s tax-cutting and deregulatory policies are already pushing out the supply curve, creating real growth that isn’t inflationary.”

More context: The apparent discarding of the previous front-runner, Chris Liddell, is another blow to Jared Kushner, for whom he worked.

The political flyaround

• While some Senate Republicans have introduced bills to block President Trump’s proposed tariffs, G.O.P. leaders are unlikely to take them up. European carmakers said the tariffs might lead them reduce investment, and therefore jobs, in the U.S.

• Mr. Trump abandoned his promise of tougher gun rules opposed by the National Rifle Association, including raising the age limit to buy assault-style rifles. And the Justice Department is moving to punish those who lie to obtain guns.

• Republicans on the House Intelligence Committee found that Russia did not try to sway the 2016 election in Mr. Trump’s favor, contradicting the intelligence community. (NYT)

• The Senate Banking Committee is on track to pass legislation that will protect Equifax and its peers from consumer lawsuits, while allowing it to expand in the mortgage business. (Politico)

• Stormy Daniels, who says she had an affair with Mr. Trump, has offered to return $130,000 to his personal lawyer to break a nondisclosure agreement. (NYT)


Credit Hamad I Mohammed/Reuters

The deals flyaround

• Could Saudi Arabia abandon plans to list Aramco on an international stock exchange? A tweak to MSCI’s indexes might make that happen. (Reuters)

• Geely’s acquisition of almost a tenth of Daimler has stoked German fears about China’s rise as an industrial power. (FT)

• HNA Group is in talks to sell some Hilton-related investments, unnamed sources said. (WSJ)

• IHS Towers, Africa’s largest telecommunication-towers company, is planning an I.P.O. in New York, and MTN Group, which owns about 29 percent of it, could sell a stake worth about $2.3 billion. (Bloomberg)


Credit Josh Edelson/Agence France-Presse — Getty Images

It’s not quite Netflix, but …

Apple said yesterday that it was buying Texture, the so-called “Netflix of magazines.” It has already acquired the likes of Shazam, the music-recognition app, as it seeks services that could entice and keep customers within its ecosystem.

More from Tripp Mickle and Lukas Alpert of the WSJ:

Apple has set a goal of increasing total revenue from services to more than $40 billion by 2020. The company generated nearly $30 billion in services revenue in its fiscal year ended in September.

Also of note: Apple’s market value as of yesterday’s close was $922 billion, after touching a high of $925 billion.

The virtual currency corner: Bitcoin is at $9,189.66 this morning. Endowments and foundations are steering clear of virtual currencies, but that doesn’t mean they’re not interested. And the Japanese trading platform Coincheck said it had compensated customers hit when it was hacked and had resumed exchange services.

The tech flyaround

• Not everyone in tech agrees about immigration. (Axios)

• Marketers, increasingly worried about the reliability of audience numbers, are flocking to businesses that identify fake accounts on platforms like Instagram. (NYT)

• A federal judge rejected a bid to dismiss much of a lawsuit against Yahoo over its security breaches, which claims that all 3 billion users had information compromised. (Reuters)

• Lyft said that its sales surpassed $1 billion last year and are still growing quickly. (Axios)


When Jerome Powell called Warren Buffett

Thanks to eagle-eyed reader Ashay Gupta for spotting this late-1980s interaction between the future Fed chairman and the Berkshire Hathaway chief during the Salomon Brothers saga.


Nancy Dubuc, who leaves A&E on April 16. Credit Ethan Miller/Getty Images

Revolving door

Shane Smith is preparing to cede his position as C.E.O. of Vice Media to Nancy Dubuc, who is stepping down from A&E Networks, unnamed sources said. (NYT)

Debra Reed will step down as president and C.E.O. at Sempra Energy, which just finished acquiring Oncor. (L.A. Times)

The speed read

• China will overhaul supervision of its debt-ridden financial sector, environmental regulators and other essential government agencies, consolidating the Communist Party’s power. (NYT)

• The Russo brothers, who directed several Marvel movies, are running a $250 million production company backed by China’s largest private film company, Huayi Brothers Media. (WSJ)

• Wage data is volatile and may be declining in quality. (NYT)

• The world’s largest asset managers often declined to support shareholder resolutions pushing big energy companies toward greater action on climate change, according to a study of 2017 data. (Axios)

• Arnold Schwarzenegger wants to sue oil companies for “knowingly killing people all over the world.” (Politico)

• Wynn Resorts dropped litigation against its former largest shareholder, the Japanese pachinko mogul Kazuo Okada, a step toward resolving a six-year legal battle. (WSJ)

• G.E. did not pay its top executives a cash bonus last year, for the first time in its history. (WSJ)


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