Takeovers and IPOs: Trump's policies are causing major deals to collapse

Handelsblatt Takeovers and IPOs: Trump's policies are causing major deals to collapse Maisch, Michael • 10 hours • 3 minutes read Frankfurt Stock Exchange: DAX companies increased revenue in 2024 despite the economic crisis The tariff chaos on the markets is causing severe turmoil in the already struggling market for IPOs and acquisitions. Hopefuls like Klarna are postponing their IPOs. Donald Trump's tariff policy has proven toxic for the stock markets. Wall Street experienced its biggest drop in five years on Thursday and Friday. These losses are also causing chaos in the M&A market and in IPO planning. According to consistent media reports, at least six companies have suspended their IPO plans since the announcement of the US tariffs, including the Swedish payment service Klarna, one of this year's hopefuls among technology listings. Klarna filed its IPO prospectus in the US in April and aimed to raise at least $1 billion with the listing. The total valuation would have been more than $15 billion. According to media reports, Klarna was valued at more than $45 billion in a financing round in 2021. Among the larger companies that have temporarily paused their IPOs is the US ticket platform Stubhub, which announced its listing in March. Wall Street had originally reacted with euphoria to Trump's election and expected a significant upswing in IPOs. But this optimism had already evaporated before the tariff announcement. Most recently, the botched listing of the tech company Coreweave caused disillusionment. The company, which specializes in services for artificial intelligence applications, was forced not only to significantly reduce the number of shares offered but also to lower the issue price shortly before its IPO. Postponed Sales Cause Share Prices to Fall The unpredictability of US economic policy also caused disruption in the mergers and acquisitions (M&A) market. The multi-billion dollar sale of the pharmaceutical packaging group Gerresheimer is in danger of collapsing after one of the potential bidders, the financial investor KKR, withdrew. Gerresheimer's share price subsequently plummeted by more than 14 percent on Friday. According to information from the Bloomberg news agency, the French group Saint-Gobain is for the time being foregoing the sale of its auto glass division. The deal would have been valued at around €2.5 billion. Similar to IPOs, investment bankers had hoped for a boost from the new US administration in the M&A market. But here, too, these hopes were not realized. Data from the information service Dealogic show that M&A volume in the US fell by three percent in the first quarter. Investment bankers now fear that the chaos in the markets and fears of a global recession will make financing acquisitions significantly more difficult. "Banks will become significantly more reluctant to grant leveraged loans," says a Frankfurt-based banker. These loans are specifically designed to finance acquisitions. But it's not just financing that could cause deals to fall through; CEOs are also likely to become more cautious. In a Bloomberg interview, Jim Zelter, president of the financial investor Apollo, said: "I believe senior management has a vision and desire for acquisitions, but in reality, things have stalled."