Pfizer walks away from $118 billion AstraZeneca takeover fight

2016-08-09 02:22:58

LONDON/NEW YORK Pfizer abandoned its attempt to buy AstraZeneca for nearly 70 billion pounds ($118 billion) on Monday as a deadline approached without a last-minute change of heart by the British drugmaker.The decision ends a month-long public fight between two of the world's biggest pharmaceutical companies that sparked political concerns on both sides of Atlantic over jobs and corporate tax maneuvers.British rules now require an enforced cooling-off period. AstraZeneca could reach out to Pfizer after three months and Pfizer could take another run at its smaller British rival in six months time, whether it is invited back or not.Pfizer's move came two hours before a 5.00 pm (1200 ET) deadline to make a firm offer or walk away, under UK takeover rules. Its decision to quit the stage, at least for now, had been widely expected after AstraZeneca refused its final offer of 55 pounds a share."Following the AstraZeneca board's rejection of the proposal, Pfizer announces that it does not intend to make an offer for AstraZeneca," Pfizer said in a short news release.The biggest U.S. drugmaker promised it would not go hostile by taking its offer directly to AstraZeneca shareholders, leaving the fate of what would have been the world's largest ever drugs merger in the hands of its target, whose board would have had to make a complete U-turn to get a deal done."We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," said Ian Read, Pfizer's chairman and chief executive.Pfizer's final offer was at a price that many analysts and investors had previously suggested would bring AstraZeneca to the table for serious negotiations. But in rejecting an earlier offer of 53.50 pounds as undervaluing the company, the British group indicated it needed a bid more than 10 percent higher, or at least 58.85 pounds per share, for its board to consider a recommendation.Pfizer had urged AstraZeneca shareholders to agitate for engagement and several expressed disappointment at its intransigence, although others - encouraged by AstraZeneca's promising drug pipeline - backed the firm's standalone strategy.AstraZeneca Chairman Leif Johansson welcomed Pfizer's decision to back down, which he said would allow the British company to focus on its growth potential as an independent company.What happens next will depend upon whether AstraZeneca's share price deteriorates in the coming weeks and how hard its shareholders push for it to revisit a deal with Pfizer. BlackRock, AstraZeneca's biggest shareholder, backed the board's rejection of Pfizer's 55 pounds a share offer, but urged it to talk again in the future.POLITICAL OPPOSITIONThe proposed transaction ran into fierce opposition from politicians in Britain, Sweden - where AstraZeneca has half it roots - and the United States over the likelihood that the marriage would lead to thousands of job cuts.Ultimately, it was price and the lack of room for eleventh-hour maneuvering by Pfizer that killed the deal. Pfizer had several reasons for taking aim at AstraZeneca for what would have been its fourth mega-merger in 14 years.Highest on the list appeared to be Pfizer's desire to take part in a recent trend of so-called tax inversions, under which it could reincorporate in Britain and pay significantly lower corporate tax. Pfizer would also be able to use tens of billions of dollars it has parked overseas, avoiding high U.S. taxes for repatriating the huge cash pile.Pfizer also had its eye on a promising portfolio of drugs in AstraZeneca's developmental pipeline, especially several potentially lucrative cancer medicines.It was this pipeline that AstraZeneca management used to make its case for Pfizer significantly undervaluing the company.Chief Executive Pascal Soriot went as far as making a 10-year forecast for a 75 percent rise in sales by 2023."As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy," Pfizer's Read said. "We will continue our focus on the execution of our plans, bringing forth new treatments to meet patients' needs and remaining responsible stewards of our shareholders' capital."The merger would have restored Pfizer as the world's largest drugmaker by sales, a position it relinquished to Swiss-based Novartis when billions of dollars in annual revenue evaporated after its top-selling cholesterol fighter Lipitor began facing generic competition in 2011.(Editing by David Evans and Mark Potter)

U.S. factory activity slips; construction spending hits one-year low

2016-08-02 01:28:14

WASHINGTON U.S. manufacturing activity eased in July amid shrinking order backlogs and declining employment, while an unexpected drop in construction spending in June suggested second-quarter economic was probably even weaker than reported last week.The Institute for Supply Management's (ISM) report on Monday also showed manufacturers ramping up production to an 18-month high even as factories continued to draw down inventories, which some economists said pointed to moderate growth in the sector. Tim Quinlan, a senior economist at Wells Fargo Securities in Charlotte, North Carolina, said it was counterintuitive for manufacturers to step up production while cutting payrolls and running down inventories, given that production is a coincident indicator for the economy. "Perhaps the inventory drawdown has left stockrooms too spare, resulting in production increases as orders pick up," Quinlan said. "These crosscurrents are explained somewhat by the fact that we are late in the economic cycle and businesses are understandably cautious with all the various risk factors."ISM said its index of national factory activity slipped 0.6 percentage point to a reading of 52.6 last month. A reading above 50 indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy. The index has now increased for five straight months.Manufacturers reported a moderate slowdown in new orders as well as export order growth. Order backlogs contracted as did factory employment and inventories, though the pace of destocking slowed. Manufacturers also reported that their customers continued to view inventories as too high.An outright drop in business inventories weighed on economic growth in the second quarter, with gross domestic product rising at a tepid 1.2 percent annualized rate after increasing at a 0.8 percent pace in the first quarter. Manufacturing remains constrained by the lagging effects of the dollar's rally and an oil price plunge between June 2014 and December 2015, which have hurt exports and undercut business spending. With the dollar rising in recent months and oil prices slumping again, economists see little upside for manufacturing. 'HAND-TO-MOUTH' GROWTH"Any growth in manufacturing is of the hand-to-mouth variety rather than a vibrant expansion," said Michael Montgomery, U.S. economist at IHS Global Insight in Lexington, Massachusetts."With the recent strength in the dollar still not fully reflected in imports and exports yet, we will need the data to be more convincing to call this anything more than almost stalled." U.S. financial markets largely ignored the data. The S&P 500 index .SPX hit an intraday record high before falling into negative territory. Prices for U.S. government bonds fell, while the dollar .DXY rose against a basket of currencies.In a separate report, the Commerce Department said construction spending declined 0.6 percent to its lowest level since June 2015 after dipping 0.1 percent May. June marked the third straight month of declines in outlays. Economists polled by Reuters had forecast construction spending rising 0.5 percent in June after a previously reported0.8 percent drop in May. Their June estimates were largely based on the government's assumptions for private residential and nonresidential construction spending in the advance GDP report."The assumptions for June construction spending plugged into the advance GDP estimate were optimistic," said Ted Wieseman, an economist at Morgan Stanley in New York. "The government hasn't released all of their assumptions yet, but these figures look consistent with second-quarter GDP growth being revised down to 1.1 percent or 1.0 percent."  Weak spending on home building and nonresidential structures, including gas and oil well drilling, contributed to anemic growth in the last quarter.In June, construction spending was held down by a 0.6percent drop in private construction. Outlays on private residential construction were unchanged as spending on both single-family and multi-family projects fell. Private residential construction spending edged up 0.1 percent in May. Spending on private nonresidential structures fell 1.3 percent in June, the biggest decline since December 2015, after rising 0.4 percent in May. Public construction spending slipped 0.6 percent in June, dropping for a fourth straight month. Outlays on state and local government construction projects, the largest portion of the public sector segment, fell 0.5 percent, the fourth consecutive monthly decline. Federal government construction spending dropped 2.3 percent in June. (Reporting by Lucia Mutikani; Editing by Paul Simao)

Wall St. pulls back from record; utilities slump

2016-07-25 22:53:27

NEW YORK U.S. stocks fell on Tuesday as investors engaged in profit-taking to pull major indexes from record levels, while the trend of modest moves and low volume continued heading into the final trading day of the year.The day's losses were broad, with each of the ten primary S&P 500 sectors in negative territory. Utilities .SPLRCU - 2014's best sector performer - led the decline with a drop of 2.1 percent. Equities have enjoyed a solid rally of late, buoyed by strong economic data and the U.S. Federal Reserve's commitment to be "patient" about raising interest rates. The S&P 500 gained nearly 6 percent over the prior eight sessions and managed to score its 53rd record close of the year on Monday.The speed and scale of the rally provided incentive to take profits, and amplified volatility is possible this week with many market participants out for the holiday, which dampens volume. The stock market will be closed on Thursday for the New Year's holiday."It wasn’t going to take much to prompt the decline, it’s probably more resting than anything else. We’ve had a pretty significant move higher," said Stephen Massocca, managing director at Wedbush Equity Management LLC in San Francisco. "We’ve marched straight up from 1,970 or so to about 2,100 so it’s only natural that we are going to get a little bit of a pullback here."The Dow Jones industrial average .DJI fell 55.16 points, or 0.31 percent, to 17,983.07, the S&P 500 .SPX lost 10.22 points, or 0.49 percent, to 2,080.35 and the Nasdaq Composite .IXIC dropped 29.47 points, or 0.61 percent, to 4,777.44.In the latest economic data, consumer confidence rose slightly less than expected in December, while U.S. single-family home price appreciation slowed less than forecast in October. NeuroDerm Ltd (NDRM.O) soared more than 193 percent to $18.14 on heavy volume after it said data from a mid-stage study suggested that a higher dose of its Parkinson's drug could provide an alternative to treatments that require surgery. Civeo Corp (CVEO.N), which provides temporary housing for oilfield workers and miners, late Monday slashed its workforce and forecast revenue could fall by one-third as slumping crude prices force oil producers to cut costs. The stock plunged 52.6 percent to $3.92 on volume of about 56.2 million shares, the most active day in its history. Volume was light, with about 4.42 billion shares traded on U.S. exchanges, well below the 7.06 billion average so far this month, according to data from BATS Global Markets.Declining issues outnumbered advancing ones on the NYSE by 1,806 to 1,262, for a 1.43-to-1 ratio; on the Nasdaq, 1,671 issues fell and 1,031 advanced for a 1.62-to-1 ratio favoring decliners.The benchmark S&P 500 posted 25 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 107 new highs and 39 new lows. (Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

Asian shares tread cautiously, crude oil slips

2016-07-19 03:38:51

TOKYO Asian shares edged slightly lower in early Asian trade on Tuesday, as a downturn in crude oil curbed the enthusiasm from fresh record highs on Wall Street.MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched down 0.1 percent, though it was still within sight of a nine-month high touched last week. The Dow Jones industrial average .DJI and the S&P 500 .SPX both logged fresh record highs.Japan's Nikkei stock index .N225 gained 0.6 percent, as markets reopened after a Japanese public holiday on Monday and caught up to a weaker yen.A failed coup in Turkey had dented risk sentiment and bolstered the perceived safe-haven yen before it ran its course. On Monday, Turkey purged its police force after rounding up thousands of soldiers and called for the United States to hand over a cleric that the Turkish government accuses of being behind the takeover attempt.Improved risk sentiment helped the dollar climb to three-week highs against the yen. It was last down slightly on the day at 106.13 yen JPY=, after rising as high as 106.33 earlier in the session, its highest since June 24. The euro EUR= edged down 0.1 percent against the dollar to$1.1069. The European Central Bank will hold a regular policy meeting on Thursday, its last one before an eight-week summer break. It is not expected to take any additional easing steps. Instead, ECB President Mario Draghi is likely to appeal to governments to do more to bolster the euro zone economy in the wake of Britain's vote last month to exit the European Union. "We expect the ECB to steer clear from any policy action," strategists at Rabobank said. "Gauging the Brexit impact will require more time and the September meeting would appear a more logical candidate," they said, adding that questions in the post-meeting news conference are likely to focus on what options the ECB still has to ease or extend its current monetary policy.The dollar index .DXY, which gauges the greenback against a basket of currencies, was slightly higher at 96.571. Pressure remained on crude oil prices after they settled down more than 1 percent on Monday after rising stockpiles of crude and refined fuel intensified fears of another major supply glut. [O/R]Brent crude LCOc1 was slightly lower in early trading at $46.95 a barrel, after shedding 1.4 percent on Monday. U.S. crude CLc1 was down 0.1 percent at $45.20, after dropping 1.6 percent overnight.Spot gold XAU= was slightly down at $1,328.50 an ounce, after dropping as much as 1 percent on Monday. (Reporting by Lisa Twaronite; Editing by Eric Meijer)

Pfizer walks away from $118 billion AstraZeneca takeover fight

2016-07-11 23:24:02

LONDON/NEW YORK Pfizer abandoned its attempt to buy AstraZeneca for nearly 70 billion pounds ($118 billion) on Monday as a deadline approached without a last-minute change of heart by the British drugmaker.The decision ends a month-long public fight between two of the world's biggest pharmaceutical companies that sparked political concerns on both sides of Atlantic over jobs and corporate tax maneuvers.British rules now require an enforced cooling-off period. AstraZeneca could reach out to Pfizer after three months and Pfizer could take another run at its smaller British rival in six months time, whether it is invited back or not.Pfizer's move came two hours before a 5.00 pm (1200 ET) deadline to make a firm offer or walk away, under UK takeover rules. Its decision to quit the stage, at least for now, had been widely expected after AstraZeneca refused its final offer of 55 pounds a share."Following the AstraZeneca board's rejection of the proposal, Pfizer announces that it does not intend to make an offer for AstraZeneca," Pfizer said in a short news release.The biggest U.S. drugmaker promised it would not go hostile by taking its offer directly to AstraZeneca shareholders, leaving the fate of what would have been the world's largest ever drugs merger in the hands of its target, whose board would have had to make a complete U-turn to get a deal done."We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," said Ian Read, Pfizer's chairman and chief executive.Pfizer's final offer was at a price that many analysts and investors had previously suggested would bring AstraZeneca to the table for serious negotiations. But in rejecting an earlier offer of 53.50 pounds as undervaluing the company, the British group indicated it needed a bid more than 10 percent higher, or at least 58.85 pounds per share, for its board to consider a recommendation.Pfizer had urged AstraZeneca shareholders to agitate for engagement and several expressed disappointment at its intransigence, although others - encouraged by AstraZeneca's promising drug pipeline - backed the firm's standalone strategy.AstraZeneca Chairman Leif Johansson welcomed Pfizer's decision to back down, which he said would allow the British company to focus on its growth potential as an independent company.What happens next will depend upon whether AstraZeneca's share price deteriorates in the coming weeks and how hard its shareholders push for it to revisit a deal with Pfizer. BlackRock, AstraZeneca's biggest shareholder, backed the board's rejection of Pfizer's 55 pounds a share offer, but urged it to talk again in the future.POLITICAL OPPOSITIONThe proposed transaction ran into fierce opposition from politicians in Britain, Sweden - where AstraZeneca has half it roots - and the United States over the likelihood that the marriage would lead to thousands of job cuts.Ultimately, it was price and the lack of room for eleventh-hour maneuvering by Pfizer that killed the deal. Pfizer had several reasons for taking aim at AstraZeneca for what would have been its fourth mega-merger in 14 years.Highest on the list appeared to be Pfizer's desire to take part in a recent trend of so-called tax inversions, under which it could reincorporate in Britain and pay significantly lower corporate tax. Pfizer would also be able to use tens of billions of dollars it has parked overseas, avoiding high U.S. taxes for repatriating the huge cash pile.Pfizer also had its eye on a promising portfolio of drugs in AstraZeneca's developmental pipeline, especially several potentially lucrative cancer medicines.It was this pipeline that AstraZeneca management used to make its case for Pfizer significantly undervaluing the company.Chief Executive Pascal Soriot went as far as making a 10-year forecast for a 75 percent rise in sales by 2023."As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy," Pfizer's Read said. "We will continue our focus on the execution of our plans, bringing forth new treatments to meet patients' needs and remaining responsible stewards of our shareholders' capital."The merger would have restored Pfizer as the world's largest drugmaker by sales, a position it relinquished to Swiss-based Novartis when billions of dollars in annual revenue evaporated after its top-selling cholesterol fighter Lipitor began facing generic competition in 2011.(Editing by David Evans and Mark Potter)

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