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Trump makes investment banking fees uncertain again


By and Carl O'Donnell

(Reuters) - President Donald Trump's dramatic intervention in Singapore-based Ltd's $117 billion hostile bid for U.S. semiconductor peer Qualcomm Inc is the latest reminder to investment bankers not to take lucrative fees on transformative mergers for granted under his administration.

Seven investment that were backing Broadcom's bid for Qualcomm, the largest acquisition ever attempted in the technology sector, stand to lose out on fees as a result of Trump's order on Monday prohibiting the deal due to national security concerns.

"Bankers will be sceptical about cross-border deals that involve technology or data that could have implications for national security or for America's competitive position in key industries," said Erik Gordon, a professor at the University of Michigan's Ross School of Business.

has disclosed its financial advisers as Moelis & Co , Citigroup , , JPMorgan Chase & Co , Bank of America Corp , and & Co . They stood to receive an estimated $135 million if the deal had gone ahead, according to Freeman Consulting Services.

This is not the first time has put fees in jeopardy. The filed a lawsuit in November to stop Inc , from buying and owner for $85 billion, citing antitrust concerns.

If that deal closes, AT&T's adviser, Perella Weinberg Partners, will receive an estimated $80 million, Freeman said, while Time Warner's advisers, Allen & Co, and , will receive $140 million, according to regulatory filings.

To be sure, the Trump administration's overall track record is not hostile to mergers. Deal activity continues to be robust, with U.S. merger and acquisition volumes reaching $389 billion so far this year, compared with $236.5 billion in the same period a year ago, as companies have been emboldened by U.S. tax reform to pursue big deals.

What is more, typically do receive some small portion of the full fees if deals fall through. In the case of Broadcom, the could now receive an estimated $20 million, according to Freeman.

However, the high-profile dealmaking casualties illustrate how Trump's pro-business rhetoric has not always translated into smooth sailing for the regulatory approval of deals.

Investment bankers' nerves are about to be tested further, as more transformative deals make their way through the regulatory review process. Walt Disney Co's $52.4 billion acquisition of assets from , CVS Health Corp's $69 billion deal to buy Inc and U.S. Corp's $52 billion agreement to buy will be subjected to intense regulatory scrutiny later this year.

(Reporting by and in New York; Editing by Jonathan Oatis)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, March 14 2018. 01:53 IST