The M&A increase that wasn’t | USAEMALL.com

The latest on CoreWeave to start: We’ve covered every twist leading up to CoreWeave’s initial public offering this week. DD’s coverage has included technical defaults, nixed commitments, a heavy load of amortising debt and an opus from our friends at FT Alphaville. But finally, the stock has priced — albeit at a smaller size and lower value than first planned.

Another thing: Donald Trump has ordered a crackdown on WilmerHale, a law firm with ties to the prosecutor who investigated allegations of Russian meddling in the 2016 presidential election, as he widens an attack on elite US legal groups.

And a scoop: Blackstone has struck a £235mn deal to acquire a stake in the owner of Aberdeen, Glasgow and Southampton airports, as infrastructure investors look to profit from the booming travel sector.

In today’s newsletter: 

• Will Trump ever spur an M&A boom? 

• One of Buffett’s worst deals takes a turn

• The ‘Egg King’ heads to America

Trump bump M&A hopefuls fade

Donald Trump’s election in November had M&A bankers’ hearts pounding. 

The new dealmaker in the White House was expected to pursue a wave of deregulation and laxer antitrust policies, prompting a flurry of takeovers. “Animal spirits” would be unleashed, according to Wall Street bankers.

But fast forward to the end of the first quarter, and the Trump bump has largely failed to materialise when it comes to M&A.

Trump’s escalating global tariffs have led to volatile markets. Combined with a tough message from his new competition regulators, that has meant plenty of instability and uncertainty. That has all put a damper on deals.

The value of global M&A reached $758.4bn through to March 25, a 17 per cent increase from the same period last year, according to data from the London Stock Exchange Group. 

However, that has been driven by just a few megadeals, while the number of transactions is actually down 18 per cent over the same time to hit the lowest number of deals since 2015.

Top advisers acknowledge that the year has been slower than expected, with no sign of when the clouds will part. 

“There is always uncertainty when a new administration comes to power, but the uncertainty today is well beyond whatever I’ve experienced before,” according to Jonathan Corsico, who leads law firm Simpson Thacher’s Washington M&A practice.

The US investment bank Jefferies reported on Wednesday that its revenues for the start of this year were below forecasts, a warning sign for the broader industry ahead of quarterly reporting next month by the Wall Street behemoths.

Europe M&A value gained 18 per cent while the US was down 3 per cent, dragging on activity. 

Takeovers worth more than $5bn — so-called megadeals — powered the broader uptick in M&A value thanks to large transactions such as Alphabet’s $32bn acquisition of the cyber security company Wiz.

Advisers said dealmaking could increase later this year, once there’s more clarity on the White House’s policies.

Evercore’s co-head of US investment banking, Naveen Nataraj, told DD the bank still expected “a more active M&A environment as the year progresses, particularly as trade and foreign policy related uncertainty begin to clarify”.  

Buffett’s auditors (finally) give him a thumbs up

Warren Buffett has been saying less and less since he turned 90, meaning there’s more attention than ever on what ends up in Berkshire Hathaway’s annual report. The same is true for what gets cut.

For the astute reader this year, several paragraphs that have been buried in the report since 2019 were missing.

It was one indication that Buffett is finally getting a thumbs up on one of his worst acquisitions: the $37bn takeover of aerospace parts maker Precision Castparts.

This year, Deloitte, which has audited Berkshire’s accounts since 1985, did not issue a so-called critical audit matter over the value of Precision Castparts.

Critical audit matters, known as CAMs, are a warning sign that an auditor had to make a complex judgment over something that could be material to a business’s financial accounts.

Deloitte had previously said the valuation of Precision’s goodwill and intangible assets required a “high degree of auditor judgment and an increased extent of effort” to assess.

It also routinely noted the “significant judgments made by management to estimate the fair value of the [Precision Castparts] reporting unit and certain customer relationships”.

It was a recognition of the trouble the business was in and the difficulty in valuing it. 

Precision Castparts was hard hit by troubles at one of its biggest customers — Boeing — which struggled with production halts and delays of the 737 Max, and then with production stoppages over the 787 Dreamliner.

Buffett would later describe the takeover of Precision Castparts as a “big” mistake, saying he overpaid for the business and overestimated how much it would earn. The unit took a $10bn writedown in 2021, as the aerospace industry grappled with the pandemic.

But sales and profits have finally rebounded, and the unit’s valuation is now high enough to give Deloitte comfort. 

“I hope the questions about Precision Castparts get asked at the annual meeting,” Buffett told DD’s Eric Platt when asked recently about the CAMs. “Either Greg Abel or I will be happy to talk about Precision.”

Brazil’s ‘Egg King’ goes stateside with billion-dollar purchase

Eggs are a coveted item on US shopping lists these days, not only for cash-strapped consumers — but also agribusiness royalty.

After shortages resulted in record prices in the states earlier this year, a large takeover will test the Trump administration’s desire to rubber stamp the sale of kitchen table assets to foreign buyers.

Brazilian businessman Ricardo Faria, dubbed the “Egg King” in his homeland, is shelling out $1.1bn to expand into America through the acquisition of Hillandale Farms from the Bethel family, the FT reported exclusively this week.

Buying one of the biggest chicken egg producers in the US will double production by Faria’s privately owned holding group, Global Eggs, which is on an international expansion drive.

The Luxembourg-based entity was set up only late last year and made its overseas debut in November, paying €120mn to gain control of Spain’s Grupo Hevo.

It also houses Granja Faria, which the entrepreneur founded in 2006 and calls itself the market leader in Brazil. Combined 2024 revenues of its businesses were about $2bn, with roughly $500mn of ebitda, said Faria.

The 49-year-old — who told the FT he isn’t so keen on his nickname — joined the Forbes Brazil billionaires’ list last year with an estimated fortune of R$17.5bn ($3bn).

He is the latest Brazilian agri-tycoon to try his luck in the US.

JBS, the world’s largest meatpacker and controlled by the Batista brothers, has a major presence in US beef, pork and poultry. And it, too, recently entered the egg segment in Brazil through an acquisition.

The Hillandale takeover involves Brazilian investment bank BTG Pactual, whose private equity arm is injecting $300mn into Global Eggs in exchange for an 11 per cent stake.

A surge of egg inflation early in Trump’s term has drawn the notice of the president, who has embarked on a protectionist path.

But Faria is betting his deal doesn’t get scuppered by political posturing.

Global Eggs is also planning a New York stock listing, offering a pathway to show the deal is about US investment.

Job moves

• The private equity firm Arctos has formed Arctos Keystone Real Assets (AK-RA) to invest in real estate and other assets. The firm has hired Ira Shaw and Gina Spiegel as partners, Greg Lombardi as managing director and Robert DiGiovine as vice-president. They all join from Crow Holdings.

• Deutsche Bank has made the latest in a number of changes to its top leadership, announcing the departure of chief financial officer James von Moltke. He will be replaced by Morgan Stanley banker Raja Akram in October.

Smart reads

Tariff turmoil The global car industry has been thrown into chaos by Donald Trump’s new tariffs, which are expected to drive up prices and cost the industry up to $110bn, the FT reports.

Dotcom lessons Investors can learn from the differences and similarities between the dotcom IPO Global Crossing, and the soon-to-be listed tech company CoreWeave, the FT’s Richard Waters writes.

Insurers cash in When Medicaid recipients signed up in two states at once, insurers often got paid twice, a Wall Street Journal investigation found. Taxpayers ended up paying the price — amounting to billions of dollars.

News round-up

Apollo president says private credit is ‘not a bubble’ (FT)

Tencent takes €1.2bn stake in spin-off from Assassin’s Creed-maker Ubisoft (FT)

Fed urged to explore hedge fund bailout tool for basis trade (Bloomberg)

US trading partners warn of retaliation against Donald Trump’s 25% car tariffs (FT)

‘Hard to ignore’: Fox News lures in advertisers after Trump’s return (FT)

EU watchdog to set punitive capital rules for insurers holding crypto (FT)

Thousands of British Steel jobs at risk as it considers closing blast furnaces (FT)

Asset managers race to set up European defence funds (FT)