WEBVTT - U.S. Concrete CEO Sandbrook Expects Big Demand from Border Wall

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<v Speaker 1>Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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<v Speaker 1>Along with my co host Lisa Abramowitz. Each day we

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<v Speaker 1>bring you the most important, noteworthy, and useful interviews for

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<v Speaker 1>you and your money, whether you're at the grocery store

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<v Speaker 1>or the trading floor. Find the Bloomberg P L Podcast

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<v Speaker 1>on iTunes, SoundCloud and at Bloomberg dot com. Now, let's

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<v Speaker 1>turn our attention to what's going on in the world

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<v Speaker 1>of politics meeting reality and Lisa Brahmins, I think this

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<v Speaker 1>is a fascinating topic because when people talk about the

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<v Speaker 1>building of the wall and so on between the United

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<v Speaker 1>States and Mexico, and no one really takes that next step,

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<v Speaker 1>which says, all right, so what kinds of materials, what

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<v Speaker 1>kind of businesses? Billbrook does, he's the CEO of US

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<v Speaker 1>Concrete and he is here on the phone talking with

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<v Speaker 1>us and Bill, Uh, I want to get your take

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<v Speaker 1>first of all. And President Trump has talked a lot

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<v Speaker 1>about infrastructure spending. Do you have a sense, aside from

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<v Speaker 1>the wall, what is he prioritizing to get done? Mr

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<v Speaker 1>Lee said, Uh, he's prioritizing There's two main approaches. One

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<v Speaker 1>critical infrastructure to help in the movement of goods and

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<v Speaker 1>people UH from the places they work to the places

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<v Speaker 1>they live, from the places items are are manufactured to

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<v Speaker 1>the places they're consumed. And a list of fifty priority

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<v Speaker 1>projects was published earlier this this week from places around

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<v Speaker 1>the country. A lot of it was rail based, a

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<v Speaker 1>lot of it was bridge based, a lot of it

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<v Speaker 1>was highway based. But they were their projects that have

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<v Speaker 1>not been completed that could help aid in UH growing

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<v Speaker 1>our GDP. Actually speaking a little bit of detail, if

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<v Speaker 1>you don't mind, Bill, just in terms of how you

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<v Speaker 1>got into this business. He is in preparing for the interview,

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<v Speaker 1>I had to learn a little bit about the history

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<v Speaker 1>of of concrete and cement and composites and so on,

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<v Speaker 1>and maybe just explain a little of your projects and

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<v Speaker 1>and what expertise you have in this area. Well, sure,

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<v Speaker 1>and I'll keep it brief. My my father grew up

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<v Speaker 1>he was employed in the cement industry in the Lehigh

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<v Speaker 1>Valley of Pennsylvania, where cement was founded in the country.

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<v Speaker 1>So I grew up around cement plants. Most of my

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<v Speaker 1>former years went into the military within the Corps of Engineers.

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<v Speaker 1>Combat engineers worked on many construction projects. Left the military

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<v Speaker 1>after thirteen years and ended up in a company just

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<v Speaker 1>north of New York City in arrogates and asphalt and

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<v Speaker 1>supplied significant amount of the arrogates used in the concrete

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<v Speaker 1>and asphalt to build New York City in the in

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<v Speaker 1>the nineteen nineties and early two thousand's and then moved

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<v Speaker 1>on into a role at the US Concrete UH in

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<v Speaker 1>two thousand and eleven and took over the CEO role

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<v Speaker 1>at US Concrete and US Concrete UH where we operate

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<v Speaker 1>in California, Texas, New York City, Washington, d C, Northern

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<v Speaker 1>New Jersey. And we really concentrate on difficult to perform

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<v Speaker 1>and difficult specification in different difficult operating conditions, large infrastructure

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<v Speaker 1>and building projects. For instance, we provided the concrete on

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<v Speaker 1>the Oakland Bay Bridge, provided the concrete for the San

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<v Speaker 1>Francisco forty Niners Stateium in Santa Clara, the Freedom Tower

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<v Speaker 1>in New York, we're working on the Bay Own Bridge

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<v Speaker 1>right now. We're doing the reconstruction of Laguardi Airport. So

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<v Speaker 1>we do high, high volume, very difficult to perform and

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<v Speaker 1>produce concrete projects in the major metropolitan cities that I

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<v Speaker 1>just mentioned. Bill, There's been some discussion that there is

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<v Speaker 1>a labor shortage when it comes to some of the

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<v Speaker 1>more ambitious infrastructure plan. What has been your experience or

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<v Speaker 1>your expectation with respect to whether we have sufficient workers

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<v Speaker 1>in this country to carry out some of the plans. Well,

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<v Speaker 1>I'll answer that in two ways. One, our primary workforce

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<v Speaker 1>consists of ready mixed truck drivers who have to have

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<v Speaker 1>a specialized license or commercial driver's license, and we do

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<v Speaker 1>have have to work at obtaining a sufficient number of

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<v Speaker 1>qualified drivers. The days are gone when you could just

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<v Speaker 1>hang a sign outside and say driver position available and

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<v Speaker 1>people would walk in your door already qualified. We do

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<v Speaker 1>have to do job fares and a lot of recruiting,

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<v Speaker 1>and we've had some inflationary pressures in our non union

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<v Speaker 1>uh labor rates as well in order to attract qualified drivers.

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<v Speaker 1>As far as um shortages in the construction trades I

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<v Speaker 1>hear about it, I imagine the construction trades face the

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<v Speaker 1>same thing I do with skilled workers in my ready

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<v Speaker 1>mixed truck drivers. But the reality of the situation is

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<v Speaker 1>where an historically low labor participation rate in the country

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<v Speaker 1>basically sixty one of the population, which means there's thirty

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<v Speaker 1>eight percent sitting at home some probably can't work. Uh,

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<v Speaker 1>but there's a lot of able bodied men and women

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<v Speaker 1>out there that we need to get back into the

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<v Speaker 1>workforce by providing high paying jobs to make it more

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<v Speaker 1>attractive for them to work than to actually subsist on

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<v Speaker 1>whatever means they're they're obtaining currently. Uh, Bill, I wanted

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<v Speaker 1>to get your take on the wall the President Trump

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<v Speaker 1>has proposed building on the border of US and Mexico. Uh.

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<v Speaker 1>What is your sense of what this will actually end

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<v Speaker 1>up looking like. Will it be a physical concrete wall

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<v Speaker 1>running almost fift miles along the border, or will it

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<v Speaker 1>look like something else. Well, it definitely will be a

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<v Speaker 1>physical barrier, the Uh, materials that is going to be

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<v Speaker 1>built with are to be determined. And even if it

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<v Speaker 1>would be a fence, there's still a significant amount of

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<v Speaker 1>concrete needed for the footings and foundations and the roads

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<v Speaker 1>that lead up to it and along our side of

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<v Speaker 1>that fence, So that even under the scenario that would

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<v Speaker 1>be a steel wall, we'd have a lot of concrete necessary. Now,

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<v Speaker 1>depending on the specifications, it could be precast concrete panels

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<v Speaker 1>as are in other walls in certain parts of the world.

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<v Speaker 1>It could be poured in place concrete that we would

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<v Speaker 1>supply trucks and plants for. It is to be determined yet,

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<v Speaker 1>or it can be a combination of all the above,

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<v Speaker 1>depending on the topography of the terrain where that section

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<v Speaker 1>of the wall is being built. Bill Sandbrook, thank you

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<v Speaker 1>so much for joining us. Bill Sandbrook, CEO of US

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<v Speaker 1>Concrete in Texas. We've gotten news earlier today that President

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<v Speaker 1>Trump is willing to consider removing U S sanctions against Russia.

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<v Speaker 1>We've heard a lot about Russia. We want to talk

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<v Speaker 1>to somebody who has spent a lot of time there

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<v Speaker 1>and who has reported their extensively. H Bloomberg View columnist

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<v Speaker 1>Leonid Burschitski, who has been writing extensively about Vladimir Putin

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<v Speaker 1>and some of his consequences on the nation of Russia.

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<v Speaker 1>So first, I actually just want to start off by

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<v Speaker 1>getting your take on what the implications would be for

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<v Speaker 1>Russia if the US were to ease up on sanctions. Well,

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<v Speaker 1>first of all, I don't really believe that the US

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<v Speaker 1>or Trump um is going to drop the sanctions unilaterally,

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<v Speaker 1>because that would contradict he has declared approach to dealing

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<v Speaker 1>with Russia, which is negotiating, trying to make a deal

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<v Speaker 1>you don't throw away your biggest trump card if you

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<v Speaker 1>want to negotiate to deal. It doesn't really make sense

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<v Speaker 1>in terms of you know, bargaining technique. Um. But if

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<v Speaker 1>that were to happen, it would not really have any

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<v Speaker 1>particularly serious consequences for the Russian economy because the sanctions

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<v Speaker 1>at most, by the most pessimistic estimates, take about point

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<v Speaker 1>five of GDP a year ah, and that is not

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<v Speaker 1>really a huge hindrance to Russia economically. But if the

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<v Speaker 1>sanctions were dropped, it would certainly increase Putting's legitimacy um

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<v Speaker 1>and sort of and an attempt to isolate him as

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<v Speaker 1>an international player, which is something that is really much

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<v Speaker 1>more important to putting them under financial aspect. Why Why

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<v Speaker 1>because basically bring him into the fold and major negotiations

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<v Speaker 1>and sort of give him It would give him at

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<v Speaker 1>the table, It would give him the respect that he

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<v Speaker 1>sort of craves from the West. Uh. It would immediately

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<v Speaker 1>make him a power broker in the number of regions,

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<v Speaker 1>and it would certainly make it easier for him to

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<v Speaker 1>pursue his poses in Europe. Um. The you know, the

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<v Speaker 1>the US immediate periphery, the Balkans, Eastern Europe, um, it

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<v Speaker 1>would bring him back to the table as as as

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<v Speaker 1>a you know, serious player on par with the West.

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<v Speaker 1>You wrote a column about how President Trump is a

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<v Speaker 1>master of diversionary tactics. Can you explain, give us some color. Well,

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<v Speaker 1>what I meant was the you know, the Trump teams,

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<v Speaker 1>um a pension for throwing out all sorts of stupid

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<v Speaker 1>bits of news like, uh, the idea that he was

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<v Speaker 1>going to start and a big investigation into voter fraud

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<v Speaker 1>in the election, or the entire debate about how many

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<v Speaker 1>people attended the inacuration. You know, unimportant stories that everybody

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<v Speaker 1>is discussing, uh, and that get reposted and discussed on

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<v Speaker 1>the social networks much more than the more serious issues

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<v Speaker 1>like the Keystone pipeline, even the war that Trump is

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<v Speaker 1>clearly intent on financing as he promised during the campaign. Uh,

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<v Speaker 1>These serious issues get much less play on the social

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<v Speaker 1>networks and much less discussion than the non serious bits

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<v Speaker 1>of news that they throw out. And actually, I think

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<v Speaker 1>the rumor that they're gonna unilaterally canceled the Russia sanctions

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<v Speaker 1>is part of these diversionary tactics. As the Trump administration

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<v Speaker 1>actually starts serious work on implementing some of the wildest

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<v Speaker 1>election promises that Trump made during the campaign. Leon it

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<v Speaker 1>speak a little bit if you can, about the attitudes

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<v Speaker 1>or the experiences that you've had most recently in Germany,

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<v Speaker 1>if you don't mind only in the context of the

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<v Speaker 1>visit of UK Prime Minister Theresa May taking place today.

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<v Speaker 1>Uh Angela Merkel doesn't seem to be anywhere in this picture,

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<v Speaker 1>at least not yet. Well, she's definitely not on that

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<v Speaker 1>picture because you know, the USE stand, which aligns very

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<v Speaker 1>closely with Germany's stand in this case, UM is actually

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<v Speaker 1>rather punitive to the UK in terms of the you know,

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<v Speaker 1>the terms of exit and in terms of what the

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<v Speaker 1>UK is going to be allowed to keep from you know,

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<v Speaker 1>the free trade UM status that it enjoys within the U.

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<v Speaker 1>Uh if it doesn't allow you know, the basic EU freedoms,

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<v Speaker 1>including the freedom of movement. Uh So in Berlin, there's

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<v Speaker 1>really not much that you know that May is going

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<v Speaker 1>to get from mercle. Uh. With Trump, she can probably

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<v Speaker 1>make more headway because he doesn't care about the U.

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<v Speaker 1>He doesn't like bu uh he might even want to.

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<v Speaker 1>He was. He openly celebrated when Brexit was allowed and announced.

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<v Speaker 1>Uh So, um May can actually get something from him,

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<v Speaker 1>just as a token of how he feels about Europe,

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<v Speaker 1>about United Europe, about the u UM. You know that

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<v Speaker 1>this would be done to irk someone like Merkel. Well.

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<v Speaker 1>I want to thank you very much. Leonid always insightful

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<v Speaker 1>joining us now. Leonid Burschitsky. He is our Bloomberg View

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<v Speaker 1>columnist in Berlin. I urge you to go to Bloomberg

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<v Speaker 1>View dot com and read his and many other Bloomberg

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<v Speaker 1>View columns. It's an interesting perspective on the world. I'm

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<v Speaker 1>pim Fox along with Lisa Abramowitz. This is Bloomberg. We've

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<v Speaker 1>heard a lot about President Trump and his worsening relationship

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<v Speaker 1>with the Mexican government. I want to bring in Eric Martin.

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<v Speaker 1>He's a Mexico government and economy reporter at Bloomberg. He

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<v Speaker 1>is in Mexico City, and Eric, I want to just

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<v Speaker 1>start with getting a sense from you. What is the

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<v Speaker 1>mood right now in Mexico Citylica's really amazing the Mexican

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<v Speaker 1>people and even rival politicians are supporting President and kapinion

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<v Speaker 1>at those decisions. You cancel his trip to Washington next week.

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<v Speaker 1>I had one analyst stating me that Donald Trump has

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<v Speaker 1>succeeded in doing what no politician has done for decades

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<v Speaker 1>in Mexico, which is really uniting all Mexicans in support

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<v Speaker 1>of a single cause and a lot of outrage at

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<v Speaker 1>the rhetoric that's being aimed at Mexico by the US,

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<v Speaker 1>at the escalation of UH, this standoff. What are they

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<v Speaker 1>united to do? What? What's sort of the objective of

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<v Speaker 1>the unity to stand up to the US. It's an

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<v Speaker 1>economy sixteen times larger than that of Mexico, but Mexico

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<v Speaker 1>is a country in which the politicians and the policy

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<v Speaker 1>makers have a lot of pride about the role that

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<v Speaker 1>Mexico plays in the world. UH. And we've seen also

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<v Speaker 1>firms like A Price Waterhouse that say Mexico will be

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<v Speaker 1>the sixth biggest economy in the world by twenty So

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<v Speaker 1>this is a country that sees itself as ascendant, is

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<v Speaker 1>on the horizon, is becoming increasingly more important and deserving

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<v Speaker 1>of respect on the world stage. Eric, can you put

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<v Speaker 1>this into the context of Mexican history. I mean, I

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<v Speaker 1>know it's you know, I don't want to do a

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<v Speaker 1>history class all the way back to eighteen twenty. But

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<v Speaker 1>having said that, you know, large parts of the United

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<v Speaker 1>States were at that time part of Mexico. Is the

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<v Speaker 1>Mexican perspective aware and and vocal about that that element

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<v Speaker 1>of the intertwined history of the two countries. Absolutely. I

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<v Speaker 1>mean you have to look back decades, potentially to the

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<v Speaker 1>administration of Talvin Coolidge to find a US administration has

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<v Speaker 1>been so hostile to Mexico. Calvin Coolidge calling Mexico in

0:15:49.200 --> 0:15:52.840
<v Speaker 1>those days Soviet Mexico if you can imagine, and an

0:15:52.840 --> 0:15:55.560
<v Speaker 1>oil exploration in the late nineteen thirties. I mean, that's

0:15:55.600 --> 0:15:58.680
<v Speaker 1>the last time that things have been this bad between

0:15:58.680 --> 0:16:01.520
<v Speaker 1>these two countries. They have cool operated so well on

0:16:01.600 --> 0:16:07.359
<v Speaker 1>a number of issues, ranging from immigration and homeland security,

0:16:07.760 --> 0:16:10.720
<v Speaker 1>you know, counter terrorism efforts, to the environment in recent

0:16:10.800 --> 0:16:14.520
<v Speaker 1>years and anti drug effort. It's just really astounding that, uh,

0:16:14.560 --> 0:16:17.640
<v Speaker 1>you know, in four working days in office, uh, Donald

0:16:17.680 --> 0:16:20.120
<v Speaker 1>Trump has brought this relationship to the level where it

0:16:20.160 --> 0:16:23.600
<v Speaker 1>currently sits. Well, and let's just talk about the relationship

0:16:23.760 --> 0:16:26.000
<v Speaker 1>and where it currently sits. I mean, we've heard a

0:16:26.000 --> 0:16:29.480
<v Speaker 1>lot of pretty inflammatory rhetoric, and yet there is talk

0:16:29.600 --> 0:16:33.960
<v Speaker 1>from some ambassadors and UH and others that perhaps there

0:16:34.000 --> 0:16:37.000
<v Speaker 1>still is room to make some negotiation. This is not

0:16:37.080 --> 0:16:39.920
<v Speaker 1>heading toward a full blown trade ward. Just yet, how

0:16:39.960 --> 0:16:44.120
<v Speaker 1>serious is it? Well, the Mexican government last night and

0:16:44.240 --> 0:16:48.120
<v Speaker 1>four Minister Louis Videgora in Washington expressed optimism that they

0:16:48.160 --> 0:16:50.920
<v Speaker 1>can still reach a very good deal and very good

0:16:50.920 --> 0:16:54.760
<v Speaker 1>agreements for both Mexico and the US. Donald Trump has

0:16:54.800 --> 0:16:58.120
<v Speaker 1>previously spoken highly of Videgaray, praising him as a wonderful

0:16:58.160 --> 0:17:01.239
<v Speaker 1>man than someone which whom the US can make wonderful deals.

0:17:01.280 --> 0:17:04.159
<v Speaker 1>But this is certainly not the first step in the

0:17:04.200 --> 0:17:07.119
<v Speaker 1>start that either of these two sides probably would have

0:17:07.280 --> 0:17:11.360
<v Speaker 1>envisioned when they arranged this ill fated presidential visit next week,

0:17:11.400 --> 0:17:13.960
<v Speaker 1>which now will not take place. And you know they're

0:17:13.960 --> 0:17:16.399
<v Speaker 1>going to continue working. No one's caught off the dialogue,

0:17:16.400 --> 0:17:21.480
<v Speaker 1>but certainly a very disappointing start to these talks. Eric.

0:17:21.560 --> 0:17:26.600
<v Speaker 1>Our business executives making plans not only for their businesses

0:17:26.680 --> 0:17:34.360
<v Speaker 1>but themselves in terms of financial arrangements and future projects. Well,

0:17:34.440 --> 0:17:38.280
<v Speaker 1>certainly the business chambers are very focused on this and

0:17:38.480 --> 0:17:41.879
<v Speaker 1>on getting their allies in the business community in the

0:17:41.960 --> 0:17:45.040
<v Speaker 1>US to lobby on Capitol Hill into lobby the Trump

0:17:45.080 --> 0:17:49.240
<v Speaker 1>administration to continue NAFTA, to not impose tariffs, to not

0:17:49.359 --> 0:17:53.760
<v Speaker 1>tear apart this relationship that's grown over more than two decades.

0:17:54.359 --> 0:17:56.359
<v Speaker 1>Carlos Slim is going to be addressed in the press

0:17:56.440 --> 0:17:59.520
<v Speaker 1>later today in Mexico City, and I'm sure that he

0:17:59.560 --> 0:18:04.280
<v Speaker 1>will be asked about this. Reporters are asking questions, and uh,

0:18:04.320 --> 0:18:06.480
<v Speaker 1>you know, it's certainly something that the business community here

0:18:06.520 --> 0:18:08.760
<v Speaker 1>is very concerned. Business can be really on both sides

0:18:08.800 --> 0:18:12.800
<v Speaker 1>of the border about interruption of supply chains Virgin Mexico

0:18:12.920 --> 0:18:17.080
<v Speaker 1>and trade negotiators to diversify tradelines to other countries, the

0:18:17.200 --> 0:18:20.640
<v Speaker 1>TPP partners, for instance. But it's something you can't do overnight.

0:18:20.680 --> 0:18:23.520
<v Speaker 1>And this is a relationship that's grown up, very focused

0:18:23.520 --> 0:18:26.280
<v Speaker 1>around the US. More than eight percent of Mexican exports

0:18:26.320 --> 0:18:30.160
<v Speaker 1>got into the US. Well, thank you very much, Eric Martin,

0:18:30.200 --> 0:18:46.160
<v Speaker 1>our Mexican Government and Economy reporter joining us from Mexico City. Now,

0:18:46.200 --> 0:18:49.600
<v Speaker 1>I just imagine this one big company that would include

0:18:49.680 --> 0:18:56.280
<v Speaker 1>Charter Communications, verizing Communications, Actillian Johnson and Johnson, Luxotica and

0:18:56.840 --> 0:19:02.280
<v Speaker 1>are I guess there you have somebody where sunglasses, perhaps

0:19:02.520 --> 0:19:07.160
<v Speaker 1>doing an ad for a cable network, uh and perhaps

0:19:07.440 --> 0:19:10.159
<v Speaker 1>getting a band aid from Johnson and Johnson. I'm talking

0:19:10.200 --> 0:19:13.360
<v Speaker 1>mergers and acquisitions and here to help us is Nancy

0:19:13.400 --> 0:19:18.560
<v Speaker 1>Haven's Hasty President, chief investment officer of Haven's Advisors. Nancy,

0:19:18.600 --> 0:19:21.440
<v Speaker 1>thank you for being here. Um did I mangle all

0:19:21.480 --> 0:19:23.960
<v Speaker 1>that correctly? Did I put that all into us? Do

0:19:24.000 --> 0:19:27.320
<v Speaker 1>you put all the pairs together appropriately? All right? So

0:19:27.440 --> 0:19:30.119
<v Speaker 1>tell us your give us your a little bit of

0:19:30.119 --> 0:19:33.080
<v Speaker 1>your background so that people understand your perspective and mergers

0:19:33.080 --> 0:19:37.439
<v Speaker 1>and acquisitions. Describe what was like, and tell us what

0:19:37.480 --> 0:19:42.479
<v Speaker 1>you believe this current environment is like. Okay. Um, I

0:19:42.520 --> 0:19:48.800
<v Speaker 1>have been in engaged in merger arbitrage for uh thirty

0:19:48.920 --> 0:19:54.120
<v Speaker 1>some years, and um, I find it incredibly fascinating and fun.

0:19:55.040 --> 0:20:00.879
<v Speaker 1>Um I think two th sixteen was extremely interesting. Um

0:20:00.920 --> 0:20:05.080
<v Speaker 1>it was. Can I just break in Haven's Advisors bear Stearns,

0:20:05.359 --> 0:20:08.080
<v Speaker 1>just getting people, the professionals, so that we know where

0:20:08.080 --> 0:20:11.920
<v Speaker 1>we're standing. Sorry. I spent fifteen years at bear Stearns,

0:20:12.359 --> 0:20:14.960
<v Speaker 1>and I started my own hedge fund twenty years ago

0:20:15.240 --> 0:20:19.520
<v Speaker 1>called Haven's Advisors. UM at any rate? In two thousand

0:20:19.520 --> 0:20:23.760
<v Speaker 1>and sixteen, UM, every by almost every measure, EM and

0:20:23.800 --> 0:20:26.320
<v Speaker 1>A was down. Global m and A was down. Sev

0:20:27.520 --> 0:20:29.960
<v Speaker 1>large deals that had a value in excess of a

0:20:30.000 --> 0:20:34.120
<v Speaker 1>billion dollars were down. Nine North American deals were down.

0:20:35.840 --> 0:20:40.160
<v Speaker 1>Cross border deals which fared the best were down three. However,

0:20:40.800 --> 0:20:46.000
<v Speaker 1>Chinese deals, those in which China Chinese company wasn't acquirer

0:20:46.560 --> 0:20:49.200
<v Speaker 1>more than double. They were two to two point two

0:20:49.240 --> 0:20:51.720
<v Speaker 1>times what they had been in two thousand and fifteen,

0:20:51.960 --> 0:20:54.399
<v Speaker 1>and it was by far the highest level that we

0:20:54.440 --> 0:20:59.080
<v Speaker 1>had ever seen for Chinese acquirers. Nancy and I want

0:20:59.200 --> 0:21:04.280
<v Speaker 1>to feedback on that is their concern among M and

0:21:04.280 --> 0:21:08.960
<v Speaker 1>A professionals you speak to that the current administration stands

0:21:09.359 --> 0:21:13.760
<v Speaker 1>towards China will dampen prospects for these types of cross

0:21:13.840 --> 0:21:17.440
<v Speaker 1>border deals in the year or two ahead. Um, there

0:21:17.720 --> 0:21:24.600
<v Speaker 1>is always more concern fundamentally, regardless of administration about Chinese deals.

0:21:24.640 --> 0:21:29.480
<v Speaker 1>The information out of China on Chinese companies is much

0:21:29.520 --> 0:21:33.120
<v Speaker 1>more opaque, so it makes it more difficult in general

0:21:33.520 --> 0:21:38.280
<v Speaker 1>to invest in deals that involve a Chinese company. On

0:21:38.359 --> 0:21:40.720
<v Speaker 1>top of that, now, as you point out, we have

0:21:40.800 --> 0:21:44.000
<v Speaker 1>a new administration and Trump. Trump has made it more

0:21:44.119 --> 0:21:49.600
<v Speaker 1>than clear how he feels about Chinese acquirers, Chinese almost anything,

0:21:50.240 --> 0:21:54.440
<v Speaker 1>and as a result, UM, he we are all worried

0:21:54.640 --> 0:21:59.119
<v Speaker 1>about what he will do or will impose. Um, he

0:22:00.040 --> 0:22:04.160
<v Speaker 1>does have limitations, he has to follow the law. Companies

0:22:04.160 --> 0:22:07.719
<v Speaker 1>that are not being treated fairly can go back and

0:22:08.400 --> 0:22:11.159
<v Speaker 1>back to court or go to court if they are sued,

0:22:11.520 --> 0:22:16.840
<v Speaker 1>and and they can make the transaction happen anyway, because

0:22:16.960 --> 0:22:20.440
<v Speaker 1>unless laws are passed, which has not happened yet and

0:22:21.280 --> 0:22:25.560
<v Speaker 1>could and takes an enormously long time. UM, we we

0:22:25.600 --> 0:22:29.960
<v Speaker 1>won't have any framework that if in fact, totally prevents

0:22:30.200 --> 0:22:33.840
<v Speaker 1>Chinese companies from doing business in this country. I'm going

0:22:33.880 --> 0:22:36.680
<v Speaker 1>to pull you down into the weeds just a little bit, Nancy,

0:22:36.760 --> 0:22:39.920
<v Speaker 1>because I'm wondering if there are any of these combinations

0:22:39.960 --> 0:22:43.200
<v Speaker 1>you'd like to potentially talk about in terms of investments.

0:22:43.200 --> 0:22:47.880
<v Speaker 1>So I mentioned Charter Communications in Verizon, Actilian and Johnson

0:22:47.880 --> 0:22:53.919
<v Speaker 1>and Johnson, the Luxotica and are deal. That means, you know,

0:22:54.040 --> 0:22:56.680
<v Speaker 1>French and Italian interest coming together. What what what were

0:22:56.680 --> 0:22:59.240
<v Speaker 1>you looking at right now? Well, Um, we're looking at

0:22:59.280 --> 0:23:06.840
<v Speaker 1>all of them. UM. With respect to UM the Charter deal, UM,

0:23:06.880 --> 0:23:10.720
<v Speaker 1>that is in a potential potentially that is an extraordinarily

0:23:10.760 --> 0:23:15.360
<v Speaker 1>preliminary stage, if it's in any stage at all. UM.

0:23:15.400 --> 0:23:18.679
<v Speaker 1>There it's clear that they have had some sort of

0:23:18.680 --> 0:23:22.919
<v Speaker 1>discussions over the last six months. But it's also clear

0:23:23.000 --> 0:23:26.199
<v Speaker 1>that or one news source came out this morning that

0:23:26.280 --> 0:23:28.320
<v Speaker 1>said there was nothing going on right now, and the

0:23:28.359 --> 0:23:31.359
<v Speaker 1>stock is down as a result. Today. We don't tend

0:23:31.440 --> 0:23:35.439
<v Speaker 1>to invest in any pre deal pretty much ever, because

0:23:35.440 --> 0:23:39.840
<v Speaker 1>they're very, very risky and UM. But in this particular case,

0:23:40.359 --> 0:23:43.719
<v Speaker 1>Charter is a highly levered company that just did a

0:23:43.720 --> 0:23:48.639
<v Speaker 1>big deal with Time Warner. It has major overlap with Verizon.

0:23:49.240 --> 0:23:53.879
<v Speaker 1>Neither company has low leverage UM. I think generally analysts

0:23:54.080 --> 0:23:59.040
<v Speaker 1>are not excited about the transaction. Analysts Verizon analysts that

0:23:59.200 --> 0:24:02.560
<v Speaker 1>is UM. They do admit that it will give the

0:24:02.640 --> 0:24:07.639
<v Speaker 1>companies into additional growth, but they don't They do believe

0:24:07.680 --> 0:24:11.240
<v Speaker 1>there are big challenges, and especially since Verizon has always

0:24:11.240 --> 0:24:14.120
<v Speaker 1>had a strategy of rolling out five G and they're

0:24:14.119 --> 0:24:16.960
<v Speaker 1>not sure they want investment going into Charter right now.

0:24:17.320 --> 0:24:22.040
<v Speaker 1>When I talk with private equity UH executives or people

0:24:22.200 --> 0:24:25.480
<v Speaker 1>in the industry, one concern about M and A volumes

0:24:25.520 --> 0:24:28.440
<v Speaker 1>this year, it's just how high valuations are. There aren't

0:24:28.520 --> 0:24:34.000
<v Speaker 1>as many attractive targets given where stocks are. How much

0:24:34.119 --> 0:24:35.760
<v Speaker 1>do you think is away on the total volume of

0:24:35.760 --> 0:24:39.080
<v Speaker 1>eminate is here? Well, I actually am very optimistic about

0:24:39.480 --> 0:24:41.760
<v Speaker 1>volume for this year. First of all, we have we

0:24:42.000 --> 0:24:43.920
<v Speaker 1>it looks like we will have a much much better

0:24:43.960 --> 0:24:50.040
<v Speaker 1>regulatory environment UM. Trump's initial appointees for the FCC chair

0:24:50.800 --> 0:24:55.640
<v Speaker 1>and UM for the Attorney General. That's Mr pie right,

0:24:56.000 --> 0:24:58.679
<v Speaker 1>so we would by the way pointed, he's on the

0:24:59.160 --> 0:25:03.080
<v Speaker 1>FCC currently, so he will be able to assume the

0:25:03.400 --> 0:25:07.400
<v Speaker 1>chairman's role without any immediately exactly. And by the way,

0:25:07.440 --> 0:25:09.760
<v Speaker 1>we'd also love him to come on the program anytime.

0:25:09.880 --> 0:25:13.240
<v Speaker 1>So well, he is he is clearly a very pro

0:25:13.560 --> 0:25:18.800
<v Speaker 1>business bent UM and he's been vocal in his opposition

0:25:19.320 --> 0:25:25.440
<v Speaker 1>to net neutrality UM. And also Jeff Sessions made some

0:25:25.640 --> 0:25:29.800
<v Speaker 1>real comments in his hearings about Attorney General Attorney General

0:25:29.920 --> 0:25:33.600
<v Speaker 1>how h M and A should be handled from a

0:25:33.680 --> 0:25:40.600
<v Speaker 1>regulatory standpoint, and he was a fairly strict UM statutory person,

0:25:41.160 --> 0:25:43.439
<v Speaker 1>which is good news because it means that we'll be

0:25:43.520 --> 0:25:48.119
<v Speaker 1>using traditional measures for anti trust. But it's also clear

0:25:48.240 --> 0:25:52.000
<v Speaker 1>that in general the Trump administration is very uh on

0:25:52.320 --> 0:25:55.840
<v Speaker 1>pro regulation, so that will make it very good. We're

0:25:55.840 --> 0:25:57.520
<v Speaker 1>going to have to leave it there, unfortunately. I can

0:25:57.560 --> 0:26:00.679
<v Speaker 1>talk to you all afternoon. Nancy Haven's Hasty, President and

0:26:00.800 --> 0:26:05.560
<v Speaker 1>Chief Investment Officer of Haven's Advisers on the outlook for

0:26:05.600 --> 0:26:14.000
<v Speaker 1>merchants and acquisitions. Thank you so much. Thanks for listening

0:26:14.000 --> 0:26:17.000
<v Speaker 1>to the Bloomberg P and L podcast. You can subscribe

0:26:17.000 --> 0:26:21.639
<v Speaker 1>and listen to interviews at iTunes, SoundCloud, or whatever podcast

0:26:21.640 --> 0:26:24.679
<v Speaker 1>platform you prefer. I'm Pim Fox. I'm out there on

0:26:24.720 --> 0:26:27.920
<v Speaker 1>Twitter at pim Fox. I'm out there on Twitter at

0:26:28.080 --> 0:26:31.040
<v Speaker 1>Lisa Abramo. It's one before the podcast. You can always

0:26:31.119 --> 0:26:33.240
<v Speaker 1>catch us worldwide on Bloomberg Radio