We yawned yesterday when Northrop Grumman bid for Orbital ATK (OA) as if was good for Northrop but no more than that.
The synergies are pretty obvious. The possibilities for Northrop Grumman and the potential to bid on new contracts it didn't have could be enormous.
No wonder the stock went higher.
But the one thing that wasn't mentioned was antitrust. Nobody said "you know what, this makes it so there are fewer competitors that could bid and drive down the price of important military equipment." It would almost sound like Pollyanna goodie-two-shoes kind of talk if someone did.
That's amazing, because a year ago, I don't think this deal would have gone through -- and if Hillary had won, I don't think the two companies would even entertain it. Not any more than United Technologies (UTX) would be able to buy Rockwell Collins (COL) to eliminate a potential competitor in some key portions of the airline business.
Now, there's not been much done between the White House and Congress. It's been pretty rancorous, and the latest posturing -- the sitdown between the President and Nancy Pelosi and Chuck Schumer -- is still one more gambit that could sour things within the Republican party. The repeal and replace horror show waste of time, the border tax fiasco, these are all distractions from two parts of the agenda that we would have expected by now -- tax reform and repatriation.
But one thing is for certain, the Congress is doing nothing to stop deals that at another time wouldn't have been proposed because they would have been opposed by the Justice Department's antitrust division simply because of market power concentration.
Ideally you want Northrop to compete with Orbital on contracts. Sure, they don't now, but why couldn't they if Northrop wanted that business so badly? You think that the government would want United Tech to own a huge part of the plane to the point where it can be too powerful a supplier and box out, say Honeywell (HON) ? The old government would find a reason because it hated big business. This government would bless anything, even the tie-ups between the health maintenance organizations and the aborted Baker Hughes-Halliburton deal.
I think that between here and year end, the notion that deals will get done without any repercussions or opposition from the Justice Department is going to be a hallmark of the stock market. Yesterday on Halftime with Scott Wapner, I was asked by my friend Pete Najarian why there was huge call volume in T-Mobile (TMUS) stock. The answer? Because anyone in the industry could buy them and I think it would be allowed. Why not? This Justice Department has shown no resistance whatsoever, no more than it is showing to the ATT (T) -Time Warner (TWX) deal, even as the President said he wanted to block it. Remember that campaign promise?
Yes, there may not be big legislative changes. But when it comes to deregulation and corporate America, the changes are real. And they are spectacular if you are a bull looking for ideas.
