Lazard CEO Sees ‘Yellow Light’ in M&A Amid U.S. Trade Tensions

(Bloomberg) -- Trade tensions between the U.S. and China will impact mergers and acquisitions that involve companies in the two countries, according to Lazard Ltd. Chief Executive Officer Ken Jacobs.

"Anything related to China is going to be very difficult to do,” he said Thursday in a phone interview after the firm reported second-quarter results. That includes “Chinese deals into the U.S. and complicated regulatory deals that need to be cleared through China. Those are going to take on a level of complexity that I think we haven’t experienced before."

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U.S. President Donald Trump this week eased trade tensions with the European Union, but questions remain over how he will handle negotiations with China. He may be improving ties to allies in order to embolden him to pursue a more stringent approach with his Asian trading partner, Evercore ISI Krishna Guha said in a note.

Trump has threatened to target as much as $500 billion worth of goods, and the administration has already imposed 25 percent tariffs on $34 billion worth of Chinese imports.

There’s a “cautious, yellow light on M&A for some people,” Jacobs said in the interview. His firm and two rivals -- Evercore Inc. and Moelis & Co. -- this week all posted record revenue in the three months ended June 30. "The rest of cross-border activity has yet to be affected, but I think it’s in people’s minds."

JPMorgan Chase & Co. CEO Jamie Dimon and Citigroup Inc.’s Michael Corbat earlier this month said that trade tensions aren’t yet affecting customer behavior. At Morgan Stanley, Chief Financial Officer Jonathan Pruzan has said there are clients that have delayed dealmaking, while others have sped up negotiations in fear of more uncertainty in the future.

Clients are questioning whether it’s “a series of rhetorical barbs back and forth to establish a negotiating position,” Jacobs said. "Or is this really going to be something that fundamentally is going to change the business landscape? And I think we’ll have a better feel for that early next year."

To contact the reporter on this story: Sonali Basak in New York at sbasak7@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steven Crabill

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