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Broadcom blow threatens to burst the M&A bubble

It has been the busiest first quarter ever for M&A announcements. Deal makers are becoming exuberant amid strong growth synchronized across the developed markets. But rising protectionism in the biggest M&A market of all could yet turn a banner year into one to forget. Should investment bankers fear the new Trump effect?

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Illustration: Morten Morland 

The typical investment banker working in mergers and acquisitions tends to be shrewd, considered and a little bit ruthless. You don’t rise up the ranks without becoming good at weighing all your clients’ strategic options with unemotional clarity; learning to roll with the blows in the heat of battle during contested takeovers; and adept at calmly persuading third parties – board directors, shareholders, analysts, regulators – round to your view of the rights and wrongs of a deal.

M&A bankers are mostly pretty smooth. But on March 12 this year all that went out of the window.

You don’t expect president Donald Trump’s tone to be anything other than emphatic when issuing an executive order, even when somebody else has written it for him. And his pronouncement on Broadcom’s proposed $130 billion unsolicited acquisition of semi-conductor company Qualcomm was a beauty.

Upon review of the recommendation from the Committee on Foreign Investment in the United States (CFIUS), the president declared that: “There is credible evidence that leads me to believe that Broadcom Limited, a limited company organized under the laws of Singapore, along with its partners, subsidiaries, or affiliates, through exercising control of Qualcomm Incorporated, a Delaware corporation, might take action that threatens to impair the national security of the United States.”

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