[1/11/17] Some U.S. companies are reviewing potential mergers while others are rethinking job cuts or looking at their manufacturing operations in China for fear of being cast as “anti-American” by President-elect Donald Trump, according to Wall Street bankers, company executives and crisis management consultants.
Having seen some of America’s largest companies, including General Motors Co, Lockheed Martin Corp and United Technologies Corp, bluntly and publicly rebuked by Trump on Twitter, many others are worried they may be his next target – especially if they have significant overseas manufacturing, have had U.S. job cuts or price increases for consumers.
“Any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. without retribution or consequence is WRONG!” Trump, who assumes office on Jan. 20, tweeted in December.
Trump campaigned on an “America First” anti-globalization platform that promised the return of thousands of U.S. manufacturing jobs to economically depressed areas.
That nationalist rhetoric and Trump’s willingness to use his Twitter account as a cudgel has so rattled some companies that they are putting on hold mergers and acquisitions that may involve significant job cuts or moving production or tax domicile abroad, out of fear that such deals could be seen as “unpatriotic”, several top Wall Street bankers said.
Bermuda-based White Mountains Insurance Group Ltd had been in talks to sell itself in a transaction that would have been structured as an inversion – where a U.S.-based buyer would move its tax domicile overseas.
However, the deal fell apart after the November election partly because potential buyers worried that leaving the U.S. tax home would be seen as “anti-American,” three people with knowledge of the matter said. Potential buyers also found the target less attractive because of the likelihood of lower U.S. corporate taxes under the Trump administration, the people said.
Representatives of the $3.8 billion company declined to comment.
At least two other insurance deals have also fallen apart since the election for similar reasons, said the people, who declined to elaborate and asked not to be named because the matter is not public.
Trump’s aggressive anti-China rhetoric has also given some companies pause.
James Park, chief executive of wearable fitness device maker Fitbit Inc, said he expects all companies that have significant manufacturing operations in China, including his own firm, to prepare contingency plans.
Trump has threatened to hit China and Mexico with high tariffs and named vocal China critic Peter Navarro to lead a new White House office overseeing U.S. trade policy.
“Whether it’s taking higher costs into account or operationally preparing for moving manufacturing (out of China), companies are thinking about what to do,” Park said in an interview.