Until recently, investors have cheered on dealmakers in the hope of making big profits
Wall Street puts it quite like Carl Icahn. “There are far too many boards”, the veteran activist investor opined on June 24th, that “believe...that stockholders are the peasants who represent a necessary evil that must be tolerated, possibly patronised, but certainly ignored.” Mr Icahn’s target was Occidental, an oil firm whose directors are pursuing an unpopular $55bn takeover of Anadarko, a rival. But his outburst reflects a broader change in mood on mergers and acquisitions .
Rather than cheering activity on, however, investors are in revolt. As Tara Lachapelle, a commentator at Bloomberg, put it, deals are being “panned instantly”. On the two days after their acquisitions were announced,’s shares fell by 7%, AbbVie’s by 13%, Occidental’s by 9% and Eldorado’s by 14%. This fits a broader pattern of underperformance. Over the past 12 months North American buyers have had a median share-price drop of 4.
If investors are one impediment to big deals, antitrust regulators are the other. Over the past two decades they have been a walkover, but there are signs this is changing. The merger of Sprint and T-Mobile, two mobile-network operators, still awaits approval after a long delay. Even if the Department of Justice gives it the green light, a coalition of state attorneys-general has pledged to fight the deal, which they say will reduce choice for consumers.
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