For most of this year, the question in deal markets was whether there was enough money. This week the question was price, and the people with the money answered it.
Take Hancock Whitney’s $3.2 billion all-stock purchase of Trustmark. The board agreed to an 18.6% premium. By the close, Hancock Whitney’s own shareholders had knocked 10% off its stock, and with it most of that premium. The market wiped out more value from the buyer than the buyer had promised to pay the seller. That is shareholders negotiating after the contract is signed.
Lenders and bond buyers want more
The lenders were just as firm. CD&R and GTCR dropped their pursuit of Global Payments because financing a roughly $40 billion buyout proved too hard. Nobody doubted the business generates cash. The problem was how much debt it would take and what lenders would charge for it. In Tokyo, Berkshire Hathaway raised about a third less in yen than it did in April and paid wider spreads, and few borrowers in the world are safer. At home, the 30-year Treasury auction tailed and left dealers holding more paper, ending a refunding week of soft bids.
Even the sellers are bargaining. Banco BPM agreed to talk with Credit Agricole only after telling the French bank its offer has to pay for the takeover premium its shareholders would give up.
Private money hasn’t gotten the memo
Meanwhile, private capital is still paying up. UFORCE’s valuation rose sixfold in eight months to $6 billion. Mirendil raised $1 billion less than a year after it was founded. And long-lived projects such as Kinder Morgan’s $7.6 billion Southeast Connector pipeline are being planned on the assumption that capital will be there when needed.
That is fine, as far as it goes. Defense and AI may well deserve their prices. But the public markets are where private valuations eventually get tested, and this week those markets were in a bargaining mood. Anthropic’s offering prices next week. It will be the clearest sign yet of whether public investors will pay what private investors have been paying.
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