Wall Street giddy as Trump expected to okay wave of mergers

Wall Street is salivating as President-elect Donald Trump is expected to usher in a new era of increased dealmaking during his second term — including a stepped-up pace of mergers and acquisitions.

The second White House win by Trump, who campaigned on a pledge to loosen the reins of the regulatory state, has sent the Dow Jones Industrial Average to record highs this week, powered by stocks in banking, energy and cryptocurrency.

But a loosening of antitrust enforcement could meanwhile boost stocks of US companies across the board. In a Wednesday note to clients, Goldman Sachs predicted a 20% increase in M&A activity next year. The investment banking giant said that M&A activity fell this year 15% compared to 2023.

“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 under the incoming administration,” Goldman Sachs chief US equity strategist David Kostin wrote.

Warner Bros. Discovery CEO David Zaslav, whose cable news network CNN has long had an adversarial relationship with Trump, expressed optimism that his incoming administration would be a “real positive” for business consolidation.

“We have an upcoming new administration,” Zaslav told analysts on an earnings call on Thursday.

“It’s too early to tell, but it may offer a pace of change and an opportunity for consolidation that may be quite different, that would provide a real positive and accelerated impact on this industry that’s needed.”

In July, Zaslav expressed hope that the next administration would allow for more mergers.

“We just need an opportunity for deregulation, so companies can consolidate and do what we need to, to be even better,” Zaslav said at the time.

The Biden administration has frustrated business leaders over its aggressive antitrust stance spearheaded by Federal Trade Commission Chair Lina Khan, Securities and Exchange Commission boss Gary Gensler and Justice Department antitrust division chief Jonathan Kanter.

The FTC under Khan has sued to block a merger of supermarket giants Kroger and Albertsons. The agency has also taken action against Amazon for alleged antitrust violations related to its Prime subscriptions service.

Tech companies such as Apple, Meta and Google have also been subjected to antitrust action by the Biden administration.

Several tech CEOs including Apple boss Tim Cook, Google chief executive Sundar Pichai and Amazon founder Jeff Bezos were among the first to congratulate Trump on his election win.

Analysts predicted this week that a Trump administration would green-light the Kroger-Albertsons merger as well as other deals that are currently being held up, including the proposed Tapestry-Capri deal.

Tapestry, the luxury retailer which owns Coach and Kate Spade, saw its stock price rise by more than 5.5% while Capri stock was up 10% since Tuesday.

Shares of Frontier and Spirit – two airlines that were blocked from merging by a federal judge – also spiked in the wake of Trump’s victory earlier this week.

Gensler, the former Goldman Sachs banker, has been a thorn in the side of the crypto industry due to the dozens of cases that he has brought against digital currency firms and traders.

Trump has pledged to fire Gensler, who is expected to step down soon after the administration assumes power in late January.

The transition team advising Trump is reportedly considering Dan Gallagher, currently the chief legal and compliance officer at retail trading platform Robinhood, as a possible successor to Gensler.

Gallagher, who is a popular pick among cryptocurrency executives who donated millions of dollars to Trump’s campaign, is the front-runner at this point, although the discussions are fluid, two of the people said.

Also in the mix for SEC chair is Paul Atkins, another former Republican SEC commissioner and CEO of consultancy Patomak Global Partners.

Atkins served on Trump’s transition team in 2016, when he was also a contender for the SEC chair role, Reuters reported at the time.