Changing Tides in the Global Landscape of Mergers and Acquisitions

Changing Tides in the Global Landscape of Mergers and Acquisitions

By Braxton Roam, MJIL Staff Member

The global mergers and acquisitions landscape has drastically transformed over the past half-century.[1] Hostile takeovers peaked at 40% of the total M&A market in 1967, but has dropped to just 8.6% by 2014.[2] To that end, investment banks have found other methods to create revenue, including advisement and financing of corporate inversions.[3] According to Dealogic, U.S. investment banks have advised on announced tax inversion deals valued at more than $700 billion since 2011, with $240 billion from announced deals in 2015 alone.[4] These figures do not include the many unannounced deals that occur each year.[5] With U.S. companies continuing to hold more than $2.5 trillion in cash overseas,[6] many corporations remain in the market for cash investments. Further, this amount has increased six-fold since 2002 when corporations held less than $400 billion overseas.[7]

For example, Johnson & Johnson is headquartered in New Jersey with 250 subsidiary companies managing products like Band-Aids, Listerine, Motrin, Nicorette, and Tylenol that are sold in 175 countries around the world.[8] Johnson & Johnson recently announced they are in discussions to make a cash deal with Swiss drug company Actelion Pharmaceuticals, Ltd.[9] Despite the estimated $20 billion cost of Actelion, Johnson & Johnson can afford to make massive cash acquisitions because the company holds nearly $40 billion in cash overseas.[10] Finalizing a deal with Actelion would be Johnson & Johnson’s third multi-billion-dollar cash acquisition in 2016 alone.[11]

Now that Donald Trump has been elected as the next President of the United States, he plans to lower the U.S. corporate tax rate and implement a corporate repatriation holiday that would allow corporations to bring the accumulated cash stored stashed overseas back into the United States at a lower tax rate.[12] Donald Trump has proposed to reduce the corporate tax rate from 35 percent down to 15 percent.[13] He also proposes to enact a 10 percent repatriation tax on accumulated profits of foreign subsidiaries of US companies to allow businesses to hire, innovate, and expand the U.S. economy.[14] With Trump’s corporate tax plan and Ireland’s limitation on the Double Irish Arrangement,[15] we may see numerous corporations moving their corporate headquarters back to the United States along with their accumulation of cash held overseas.

[1] Matthew D. Cain, Stephen B. McKeon, & Steven Davidoff Solomon, Do Takeover Laws Matter? Evidence from Five Decades of Hostile Takeovers, 122 J. of Fin. Econ. (forthcoming 2016).

[2] Id. at 26.

[3] John Carney, Treasury’s Inversion Crackdown Will Sting Investment Bankers, Wall Street Journal, Apr. 6, 2016,

[4] Id.

[5] Id.

[6] Jeff Cox, US Companies are Hoarding $2.5 Trillion in Cash Overseas, CNBC News, Sept. 20, 2016,

[7] Sean Williams, Donald Trump’s Corporate Tax Repatriation Plan Would Benefit These 5 Companies the Most, The Motley Fool, Nov. 5, 2016,

[8] About Johnson & Johnson, (last visited Nov. 27, 2016).

[9] Jonathan D. Rockoff, Johnson & Johnson Approaches Actelion About Potential Deal, Wall Street Journal, Nov. 25, 2016,

[10] Id.

[11] Johnson & Johnson Acquisitions, (last visited Nov. 27, 2016).

[12] Jim Nunns, Len Burman, Jeff Rohaly, & Joe Rosenberg, An Analysis of Donald Trump’s Tax Plan, Tax Policy Center, Dec. 22, 2015,

[13] Id. at 2.

[14] Williams, supra note 7.

[15] Kelly Phillips Erb, Ireland Declares ‘Double Irish’ Tax Scheme Dead, Forbes, Oct. 15, 2014,