By Dana Mattioli, Dana Cimilluca and Ben Dummett
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 31, 2018).
The year got off to a fast start for deal making as companies
struck mergers including Takeda Pharmaceutical Co.'s $63 billion
acquisition of Shire PLC. The pace was so torrid, some thought 2018
would be the biggest year ever for M&A.
But choppy financial markets, trade tensions and fears of an
economic slowdown hampered deal makers when they returned from
summer vacation. It was still a good year and is set to go down as
the third-busiest ever for M&A, trailing only 2007 and 2015,
with more than $3.8 trillion in announced deals.
It was also a good year for the bankers and lawyers who helped
arrange all those corporate marriages, for which they reap fees
that can run into the tens of millions of dollars. The Wall Street
Journal spoke to some of those who landed the biggest fish and
asked, among other things, what's in store for 2019.
Roger Altman, founder and senior chairman at Evercore
Mr. Altman had a seat at the table for a chess match between
some of media's most powerful players, advising Comcast Corp. on
its $38.7 billion acquisition of Sky PLC. Comcast outbid 21st
Century Fox Inc. -- itself involved in a deal with Walt Disney Co.
-- ending a monthslong takeover battle. "The three or four most
complicated transactions I ever worked on all occurred in the last
two years," says the longtime deal maker. Mr. Altman remains
upbeat, but acknowledges that declines in the stock prices of
advisory firms such as Evercore and Lazard suggest investors are
less certain. Either way, the proliferation of thorny deals is here
to stay, he says.
Frank Aquila, partner at Sullivan & Cromwell LLP
Mr. Aquila, who has advised corporate clients in consumer,
health-care and other industries, helped arrange one of the year's
largest energy deals, working with Andeavor Corp. on its $23
billion sale to Marathon Petroleum Corp., announced in April. "I
thought we were going to see more activity than we did in the
second half of the year," he says. But Mr. Aquila says he isn't
fretting about 2019, in part because M&A is part of the
day-to-day decision-making at big companies now. "I don't think
we're going to go through the type of boom and bust we've seen in
prior periods," he says.
Scott Barshay, global head of M&A at Paul, Weiss, Rifkind,
Wharton & Garrison LLP
When the powerhouse corporate lawyer left white-shoe firm
Cravath Swaine & Moore LLP in 2016, all eyes were on whether
members of Cravath's storied stable of clients would follow. In
October, when International Business Machines Corp., a decadeslong
Cravath client, tapped Mr. Barshay to do its largest deal ever --
the $37 billion purchase of Red Hat Inc. -- he proved that even
some of the stickiestCravath clients remained loyal to him. He
seemed to find a role on one big deal after another in 2018
including the planned marriage of Harris Corp. and L3 Technologies
Inc. On the year, Mr. Barshay advised on more than $300 billion in
transactions. "2018 was a year of big deals," he says.
George Boutros, CEO of Qatalyst Partners
Technology was 2018's busiest sector for deal making.
Mr. Boutros was in the middle of much of the action, including
selling CA Technologies to Broadcom Inc. for $19 billion. Qatalyst
also sold market-analytics startup Qualtrics International Inc. to
SAP SE for $8 billion. Mr. Boutros is bullish: "The drivers for
M&A are there, and I think there will be a lot of activity in
software, barring extreme volatility."
Chris Gallea, formerly of JPMorgan, now vice chairman of
investment banking at Goldman Sachs Group Inc.
Mr. Gallea hit the ground running when he joined Goldman from
JPMorgan Chase & Co. in May, helping ink L3's merger with
Harris -- the largest-ever defense-industry merger -- just months
into his new role. In November, Goldman was named as an adviser on
United Technologies Corp.'s giant, three-way breakup. Over the past
year, Goldman has hired more than a dozen high-ranking dealmakers.
The industrial assignments show the hiring spree is already
starting to pay off. Conglomerates are narrowing their focus to one
or two fields, a trend that Mr. Gallea predicts will generate more
deal activity. "CEOs are asking themselves 'what are the businesses
we should not be in and how do we exit them in a smart way,'" he
says.
Gregg Lemkau, co-head of investment banking at Goldman
Mr. Lemkau put his 26 years of experience at Wall Street's No. 1
merger adviser to use in Dell Technologies Inc.'s $24 billion
buyout of shares that track its VMware Inc. cloud operation. Mr.
Lemkau played an important role bridging differences between Dell
and hedge funds that argued its initial proposal was too stingy.
Eventually Dell sweetened the offer, part of a plan to take the PC
and data-storage giant public again, and the investors dropped
their opposition. (The new Dell shares started trading Friday.) The
year "was phenomenal -- for three quarters, " says Mr. Lemkau, who
expresses hope that in the new year executives will refocus on
strategic priorities and spur a return to increased deal activity.
"CEOs feel really good about their fundamental business outlook and
growth prospects," he says.
Kurt Simon, ex-JPMorgan now co-chair of global technology, media
and telecommunications at Goldman
Before joining Goldman from JPMorgan in November, Mr. Simon
advised Disney on its $71 billion deal to buy a big chunk of 21st
Century Fox. The deal, one of the largest in recent years, was
contentious and involved a bidding war between Disney and Comcast.
Mr. Simon also advised Sprint Corp. on its sale to T-Mobile US
Inc., which many deal watchers thought would never actually happen.
(The deal still requires regulatory approval.) In 2018, M&A was
done "at a feverish pace," Mr. Simon says. "But if the volatility
persists, matching 2018's pace may prove to be a challenge."
Write to Dana Mattioli at dana.mattioli@wsj.com, Dana Cimilluca
at dana.cimilluca@wsj.com and Ben Dummett at
ben.dummett@wsj.com
(END) Dow Jones Newswires
December 31, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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