How Trump's China spat is killing global appetite for M&A

Paul Jacobs QualcommDavid Becker/Stringer

  • Mergers and acquisition deals have fallen by $783 billion in the third quarter of this year compared with the prior quarter, a decline of 35%, Reuters reported.
  • "We've got some clouds on the horizon, vis a vis a trade skirmish, or potentially a trade war with China" Citigroup's global co-head of M&A, Mark Shafir told Reuters.
  • "Anything that points to uncertainty and a lack of confidence is not good for M&A," Hernan Cristerna, JPMorgan's Global Co-head of M&A told Business Insider on September 24. "A prolonged trade war will, of course, mean large cross-border deals are more difficult and harder to get across the line.


The Trump-China trade war has already torpedoed at least one mega merger. Bankers aren't so optimistic at it stopping there.

Mergers and acquisitions are down globally by $783 billion in the third quarter of this year, marking a decline of 35% from the quarter before, Reuters reported. Qualcomm's decision to cancel its $44 billion acquisition of NXP Semiconductors back in July made it high profile victim of a bitter Sino-U.S. trade spat - China's delay in offering an antitrust nod was seen as retaliation for US tariffs.

The events have caused doubt about other possible deals involving China, including the planned $23 billion acquisition of Rockwell Collins by aerospace supplier United Technologies.

"Anything that points to uncertainty and a lack of confidence is not good for M&A," Hernan Cristerna, JPMorgan's Global Co-head of M&A told Business Insider in a separate interview on September 24. "A prolonged trade war will, of course, mean large cross-border deals are more difficult and harder to get across the line."

There has been a drop in the volume of global deals by about 6% compared to a year ago, with the number of new deals announced at their lowest level since 2013.

"We've got some clouds on the horizon, vis a vis a trade skirmish, or potentially a trade war with China. You have the potential for a hard Brexit and we've got rising rates," Citigroup's global co-head of M&A, Mark Shafir, told Reuters.

US M&A fared better then other regions in the quarter, and the first nine months of 2018 has seen global deal making reach a record $3.2 trillion. But announced deals in the Asia-Pacific were down 38% and fell by 14% in Europe.

"We're already seeing signs that geopolitical risks, including trade tensions, are dimming the prospects for large-scale M&A going into next year," Cristerna told BI.

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