Centerview’s Effron Says Coronavirus Impacting M&A

(Bloomberg) -- Coronavirus-fueled market jitters are upending the mergers and acquisitions market, according to Blair Effron, a prominent investment banker and Democratic Party supporter.

“How many people have had a deal in trouble the past two weeks?” Effron, co-founder of Centerview Partners, said in a presentation Thursday at Tulane University’s Corporate Law Institute conference in New Orleans. “Volatility hurts M&A, the longer it goes, the more quiet it is.”

The volume of M&A announced through the end of February was down 27% to $419 billion, the slowest start to a year since 2013, according to data compiled by Bloomberg. In some cases, the market volatility is causing sellers to temper their price expectations.

“What strikes us about corona is how quickly and savagely it got into the market,” Effron said. “I am very surprised at how little the market has been focused on the potential impact of a major election.”

Dealmaking across the world is being hampered by the spread of the coronavirus, grounding jet-setting investment bankers and threatening a decade-long boom in mergers and acquisitions. Seven & i Holdings Co., owner of the 7-Eleven convenience store chain, scrapped plans to acquire Marathon Petroleum Corp.’s Speedway gas station business for $22 billion on Thursday, with the coronavirus outbreak among factors impacting negotiations, Bloomberg News reported.

The world’s economy will suffer short-term and potential long-term effects of the epidemic, Effron said. That could include a temporary curtailing of consumer demand, and perhaps a broader economic slowdown. Supply chains will not only be immediately affected, but longer term disruptions could help feed anti-globalist sentiment.

Some of the biggest M&A transactions are already facing longer antitrust review processes. The U.S. review of T-Mobile U.S. Inc.’s Sprint Corp. acquisition has lasted 674 days compared to a 10-year average of about 170 days, according to Effron’s presentation.

2020 Election

“I would argue that 2020 has the potential to be a real change election,” Effron said.

A victory by a progressive democrat would likely extend antitrust reviews, especially for large mergers. Even under a moderate democrat, scrutiny would likely increase, said Effron, who was floated as a potential Treasury secretary during the Obama administration.

Senator Bernie Sanders represents “a very big change” to the status quo when it comes to health care, regulatory reviews and breaking up companies, Effron said.

“I’m also going to suggest that Joe Biden as president will be perhaps the least in terms of change,” he said.

Tax policy and government spending, along with trade policy and support -- or the lack of it -- for environmental and social goals would also change under a Democratic administration.

Since its founding in 2006, Centerview has advised on $3 trillion in transactions worldwide, according its website. It now has more than 50 partners. Effron told Bloomberg News last year that his firm is “just fine” as a private company.

To contact the reporter on this story: Crystal Tse in New York at ctse44@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Michael Hytha

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