Pfizer to pressurise AstraZeneca shareholders into talks on GBP 50-per-share offer Pfizer is hoping to force AstraZeneca to enter takeover negotiations by warning the UK-based drugs company’s shareholders it will not revise its existing GBP 63bn (EUR 77bn) offer, The Sunday Timesreported. The report cited anonymous senior Pfizer insiders who said the New York-based pharmaceuticals group is planning a “bear hug” action on its British target by stressing to Astra investors it will not up its GBP 50-per-share approach, as well as claiming Astra’s drug-development pipeline has weaknesses.
According to senior banking sources cited in the piece, Astra’s board will not enter talks until Pfizer increases its offer to at least GBP 55 per share. Pfizer is unwilling to offer more without seeing more detailed information about Astra’s product prospects, the report said. According to senior people at Pfizer, the American company is particularly keen to examine details relating to Astra’s heart treatment Brilinta, the item reported.
Meanwhile, the Mail on Sunday said industry insiders are expecting an increased bid from Pfizer before next weekend. However, people with close links to the business said it is not in any hurry to table a revised offer prior to the Takeover Panel-imposed 26 May deadline, the report stated.
Source Sunday Times
Buffett Defends Coca-Cola Abstention at Berkshire Meeting Still Says Beverage Maker's Compensation Plan Excessive, But Couldn't Back Winters's 'No' Vote
Berkshire Hathaway Inc. BRKA -0.63% held its annual meeting in Omaha, Neb., on Saturday, with Chairman Warren Buffett once again defending his decision to abstain from voting on a Coca-Cola Co. KO +0.42% equity compensation plan.
"It was the most effective way to behave for Berkshire," Mr. Buffett said in response to a shareholder question from the floor of the CenturyLink Center auditorium.
Berkshire is Coca-Cola's largest shareholder with a 9% stake, and Mr. Buffett said he withheld his vote for two reasons: He didn't want to "go to war" with the beverage maker's management, which he supports, and he didn't want to endorse a public campaign against the equity plan by a smaller Coke shareholder by voting "no."
Mr. Buffett also expressed support for the management of Bank of America Corp.BAC +1.06% , another company in which Berkshire Hathaway owns preferred stock.
Last month, the bank had to reverse course on a stock buyback and dividend-increase plan after miscalculating capital levels. "That error they made does not bother me," Mr. Buffett said in response to a shareholder question. "It doesn't change my feeling about Bank of America's risk management one iota."
Mr. Buffett invested $5 billion in Bank of America in 2011 in the form of preferred stock that paid 6% a year, and received warrants to purchase 700 million shares as part of that deal. The terms of the preferred stock were renegotiated earlier this year to allow the lender to include it as part of its capital.
The bank was forced to shelve a plan to repurchase shares and boost its dividend for the first time since 2008, after discovering an error that left the lender with $4 billion less in capital than it thought it had.
Shareholders and analysts asked several probing questions of Mr. Buffett and Berkshire Vice Chairman Charlie Munger, seeking information on recent challenges at Berkshire's railroad, how much the company pays certain top executives, as well as plans to use its enormous cash hoard.
Responding to a question from Barclays analyst Jay Gelb on how much Berkshire could spend on an acquisition, Mr. Buffett said he was willing to spend as much as $50 billion and take on debt or sell holdings from its stock portfolio if the right opportunity came along.
However, because Berkshire has more than $40 billion of cash and about half of that available to use for deals, Mr. Buffett said he didn't expect to have to sell stocks to fund a purchase. Berkshire owns multibillion-dollar stakes in companies such as IBM,IBM -1.08% Coca-Cola, American Express, AXP +0.13% Exxon Mobil and Wells Fargo. WFC -0.12%
Mr. Buffett also praised 3G Capital, the Brazilian investment firm that Berkshire partnered with last year to buy ketchup maker H.J. Heinz. 3G is known for being a ruthless cost-cutter that gets heavily involved in running the companies it owns. That approach is at odds with Berkshire, where Mr. Buffett gives the managers of subsidiary businesses wide latitude. However, Mr. Buffett said he is happy with 3G as a partner and would welcome the chance to do more deals with them.
Earlier, tens of thousands of Berkshire Hathaway shareholders traveled to Omaha for a day of discourse with Mr. Buffett and Mr. Munger, who were scheduled to field questions for over six hours from shareholders, a panel of analysts and another of journalists.
The session broke for lunch at noon central time, allowing shareholders to peruse the display hall nearby, where Berkshire-owned companies such as See's Candies, Dairy Queen and Fruit of the Loom were selling their wares. These temporary display booths collectively do millions of dollars of business over the Berkshire-meeting weekend, which Mr. Buffett encourages at the event he has called "Woodstock for capitalists."
The start of the annual meeting follows Friday's announcement of lower first-quarter profits at Berkshire, which were weighed down by two of the investment holding company's major businesses, including the Burlington Northern Santa Fe railroad. The railroad reported a $724 million first-quarter profit, down from $798 million in the prior year, which the company attributed to weather- and service-related challenges.
Mr. Buffett said the railroad has recently suffered from service challenges because of a big increase in volume on a route that carries oil from the Bakken shale. "We've got a lot of trains running on that line that weren't running five years ago," he said, adding that Burlington Northern would spend $5 billion in capital expenditures this year to fix the problems. The railroad's executive chairman, Matt Rose, added that Burlington was also hurt by a severe winter.
However, gains at Berkshire Hathaway's energy and utility business, as well as its manufacturing operations, helped the overall results. The $5.6 billion purchase last year of Nevada utility NV Energy by Berkshire Hathaway Energy, formerly called MidAmerican Energy Holdings Co., also helped earnings. Mr. Buffett said during the meeting that the energy business, which this week agreed to buy a Canadian power transmission unit called AltaLink from SNC-Lavalin Group for $2.9 billion, would likely be an active deal-maker.
Berkshire is a holding company that owns dozens of operating business and a massive portfolio of securities. At its core is an insurance business that brings in billions of dollars from premiums paid by customers.
A shareholder proposal that asked the Berkshire board to consider paying a dividend was roundly defeated, getting less than 2% of the vote and affirming Mr. Buffett's argument that leaving him and Mr. Munger to allocate Berkshire's capital is a better use of funds than returning that money to shareholders. He said the proposal made it sound like "shareholders were bereft of the necessities of life" because Mr. Buffett was hoarding money in Omaha.
Mr. Buffett briefly displayed a tally that broke down the vote by holders of the Class A shares and the much smaller Class Bs, which showed little variation between the two classes of stock. And even removing Buffett's own sizable stake from the calculation failed to lift the number of supporters for a dividend beyond 3%.
One shareholder asked how Mr. Buffett's son, Howard Buffett, could be trusted to defend Berkshire's "culture and morals that we hold so dear," given that he didn't stand up for Mr. Buffett's principles by voting in favor of Coke's equity compensation plan for executives.
Howard Buffett is a director of both Coca-Cola and Berkshire, and is expected to become the conglomerate's nonexecutive chairman after the elder Mr. Buffett is gone. "He's the perfect guy" to carry out the role of preserving Berkshire's culture and values, Mr. Buffett said of his son. "The nonexecutive board chairman is not there to set compensation, he's there to facilitate a change if the board decides a change is needed."
In defending his son and his stance on Coke, Mr. Buffett also said it was "almost unheard of" for board members to vote against pay plans that have been approved by compensation committees. In his 55 years of being on corporate boards on 19 companies other than Berkshire, Mr. Buffett said he has never seen directors oppose a pay plan that had been approved by the compensation committee.
"I've voted for compensation plans in various places that are far from what I would have designed myself," Mr. Buffett said. "That's the way boards work." He said attempting to push changes amounts to rude corporate behavior: "You keep belching at the dinner table, you'll be eating in the kitchen."
David Winters, chief executive at Wintergreen Advisers LLC, which owns about 2.8 million Coca-Cola shares, has argued the compensation plan, including issuing 340 million new shares and stock options over four years, could cause nearly 17% of shareholder dilution. Coke has disputed Mr. Winters's calculations.
Warren Buffett is everywhere at the Berkshire Hathaway shareholders meeting in Omaha, Nebraska. From cartoons to cutouts, the Oracle of Omaha was on display, as well as his company's businesses, all over the event. Mr. Buffett previously said that while he agreed with Mr. Winters's assessment that the plan was excessive, the smaller shareholder's numbers were inaccurate, and that was reason not to join Mr. Winters in voting "no" on the compensation plan.
Mr. Buffett said that based on his own calculations, Coke's plan, which includes stock options that can be exercised in four years, would lead to a dilution of about 108 million shares, or 2.5%, of the company's shares outstanding.
He based his math on Coke options being issued at the current price of around $40 a share and trading around $60 apiece when the options can be exercised in four years. "I don't like dilution, and I don't like 2.5% dilution," he said.
He added that he discussed the matter with Mr. Munger and both agreed that abstaining was the best way to proceed. "I think we handled the whole situation very well," Mr. Munger added.
The Wall Street Journal reported this week that Coca-Cola will likely revise its executive-compensation plan after it goes into effect next year, bowing to pressure from Mr. Buffett.
Mr. Buffett aired his reservations about the plan to Coca-Cola Chairman and Chief Executive Muhtar Kent after Mr. Winters launched a public campaign against the compensation plan, which nonetheless was approved by 83% of votes at Coke's annual meeting.
Mr. Buffett's role in the Coke vote is being closely watched by shareholders of Berkshire Hathaway. Mr. Buffett frequently has criticized executive pay in the past, including the award of stock-options, which he says are like lottery tickets that can provide outsize rewards. At the 2009 Berkshire annual meeting he said big shareholders can do more to keep executive compensation in line by speaking out.
At Berkshire's 2009 gathering, he said that if large investors spoke out against compensation practices, it could be more effective than having increased regulation. "The way to get big shots to change their behavior is to embarrass them," he said.
Several Berkshire shareholders, speaking earlier this week, said they were surprised Mr. Buffett didn't vote against the Coke plan as a way of sending a message.
The Questionable Link Between Saturated Fat and Heart Disease Are butter, cheese and steak really bad for you? The dubious science behind the anti-fat crusade
"Saturated fat does not cause heart disease"—or so concluded a big study published in March in the journal Annals of Internal Medicine. How could this be? The very cornerstone of dietary advice for generations has been that the saturated fats in butter, cheese and red meat should be avoided because they clog our arteries. For many diet-conscious Americans, it is simply second nature to opt for chicken over sirloin, canola oil over butter.
The new study's conclusion shouldn't surprise anyone familiar with modern nutritional science, however. The fact is, there has never been solid evidence for the idea that these fats cause disease. We only believe this to be the case because nutrition policy has been derailed over the past half-century by a mixture of personal ambition, bad science, politics and bias.
Our distrust of saturated fat can be traced back to the 1950s, to a man named Ancel Benjamin Keys, a scientist at the University of Minnesota. Dr. Keys was formidably persuasive and, through sheer force of will, rose to the top of the nutrition world—even gracing the cover of Time magazine—for relentlessly championing the idea that saturated fats raise cholesterol and, as a result, cause heart attacks.
This idea fell on receptive ears because, at the time, Americans faced a fast-growing epidemic. Heart disease, a rarity only three decades earlier, had quickly become the nation's No. 1 killer. Even President Dwight D. Eisenhower suffered a heart attack in 1955. Researchers were desperate for answers.
As the director of the largest nutrition study to date, Dr. Keys was in an excellent position to promote his idea. The "Seven Countries" study that he conducted on nearly 13,000 men in the U.S., Japan and Europe ostensibly demonstrated that heart disease wasn't the inevitable result of aging but could be linked to poor nutrition.
Critics have pointed out that Dr. Keys violated several basic scientific norms in his study. For one, he didn't choose countries randomly but instead selected only those likely to prove his beliefs, including Yugoslavia, Finland and Italy. Excluded were France, land of the famously healthy omelet eater, as well as other countries where people consumed a lot of fat yet didn't suffer from high rates of heart disease, such as Switzerland, Sweden and West Germany. The study's star subjects—upon whom much of our current understanding of the Mediterranean diet is based—were peasants from Crete, islanders who tilled their fields well into old age and who appeared to eat very little meat or cheese.
As it turns out, Dr. Keys visited Crete during an unrepresentative period of extreme hardship after World War II. Furthermore, he made the mistake of measuring the islanders' diet partly during Lent, when they were forgoing meat and cheese. Dr. Keys therefore undercounted their consumption of saturated fat. Also, due to problems with the surveys, he ended up relying on data from just a few dozen men—far from the representative sample of 655 that he had initially selected. These flaws weren't revealed until much later, in a 2002 paper by scientists investigating the work on Crete—but by then, the misimpression left by his erroneous data had become international dogma.
In 1961, Dr. Keys sealed saturated fat's fate by landing a position on the nutrition committee of the American Heart Association, whose dietary guidelines are considered the gold standard. Although the committee had originally been skeptical of his hypothesis, it issued, in that year, the country's first-ever guidelines targeting saturated fats. The U.S. Department of Agriculture followed in 1980.
Other studies ensued. A half-dozen large, important trials pitted a diet high in vegetable oil—usually corn or soybean, but not olive oil—against one with more animal fats. But these trials, mainly from the 1970s, also had serious methodological problems. Some didn't control for smoking, for instance, or allowed men to wander in and out of the research group over the course of the experiment. The results were unreliable at best.
But there was no turning back: Too much institutional energy and research money had already been spent trying to prove Dr. Keys's hypothesis. A bias in its favor had grown so strong that the idea just started to seem like common sense. As Harvard nutrition professor Mark Hegsted said in 1977, after successfully persuading the U.S. Senate to recommend Dr. Keys's diet for the entire nation, the question wasn't whether Americans should change their diets, but why not? Important benefits could be expected, he argued. And the risks? "None can be identified," he said.
In fact, even back then, other scientists were warning about the diet's potential unintended consequences. Today, we are dealing with the reality that these have come to pass.
One consequence is that in cutting back on fats, we are now eating a lot more carbohydrates—at least 25% more since the early 1970s. Consumption of saturated fat, meanwhile, has dropped by 11%, according to the best available government data. Translation: Instead of meat, eggs and cheese, we're eating more pasta, grains, fruit and starchy vegetables such as potatoes. Even seemingly healthy low-fat foods, such as yogurt, are stealth carb-delivery systems, since removing the fat often requires the addition of fillers to make up for lost texture—and these are usually carbohydrate-based.
The problem is that carbohydrates break down into glucose, which causes the body to release insulin—a hormone that is fantastically efficient at storing fat. Meanwhile, fructose, the main sugar in fruit, causes the liver to generate triglycerides and other lipids in the blood that are altogether bad news. Excessive carbohydrates lead not only to obesity but also, over time, to Type 2 diabetes and, very likely, heart disease.
The real surprise is that, according to the best science to date, people put themselves at higher risk for these conditions no matter what kind of carbohydrates they eat. Yes, even unrefined carbs. Too much whole-grain oatmeal for breakfast and whole-grain pasta for dinner, with fruit snacks in between, add up to a less healthy diet than one of eggs and bacon, followed by fish. The reality is that fat doesn't make you fat or diabetic. Scientific investigations going back to the 1950s suggest that actually, carbs do.
The second big unintended consequence of our shift away from animal fats is that we're now consuming more vegetable oils. Butter and lard had long been staples of the American pantry until Crisco, introduced in 1911, became the first vegetable-based fat to win wide acceptance in U.S. kitchens. Then came margarines made from vegetable oil and then just plain vegetable oil in bottles.
All of these got a boost from the American Heart Association—which Procter & Gamble, the maker of Crisco oil, coincidentally helped launch as a national organization. In 1948, P&G made the AHA the beneficiary of the popular "Walking Man" radio contest, which the company sponsored. The show raised $1.7 million for the group and transformed it (according to the AHA's official history) from a small, underfunded professional society into the powerhouse that it remains today.
After the AHA advised the public to eat less saturated fat and switch to vegetable oils for a "healthy heart" in 1961, Americans changed their diets. Now these oils represent 7% to 8% of all calories in our diet, up from nearly zero in 1900, the biggest increase in consumption of any type of food over the past century.
This shift seemed like a good idea at the time, but it brought many potential health problems in its wake. In those early clinical trials, people on diets high in vegetable oil were found to suffer higher rates not only of cancer but also of gallstones. And, strikingly, they were more likely to die from violent accidents and suicides. Alarmed by these findings, the National Institutes of Health convened researchers several times in the early 1980s to try to explain these "side effects," but they couldn't. (Experts now speculate that certain psychological problems might be related to changes in brain chemistry caused by diet, such as fatty-acid imbalances or the depletion of cholesterol.)
We've also known since the 1940s that when heated, vegetable oils create oxidation products that, in experiments on animals, lead to cirrhosis of the liver and early death. For these reasons, some midcentury chemists warned against the consumption of these oils, but their concerns were allayed by a chemical fix: Oils could be rendered more stable through a process called hydrogenation, which used a catalyst to turn them from oils into solids.
From the 1950s on, these hardened oils became the backbone of the entire food industry, used in cakes, cookies, chips, breads, frostings, fillings, and frozen and fried food. Unfortunately, hydrogenation also produced trans fats, which since the 1970s have been suspected of interfering with basic cellular functioning and were recently condemned by the Food and Drug Administration for their ability to raise our levels of "bad" LDL cholesterol.
Yet paradoxically, the drive to get rid of trans fats has led some restaurants and food manufacturers to return to using regular liquid oils—with the same long-standing oxidation problems. These dangers are especially acute in restaurant fryers, where the oils are heated to high temperatures over long periods.
The past decade of research on these oxidation products has produced a sizable body of evidence showing their dramatic inflammatory and oxidative effects, which implicates them in heart disease and other illnesses such as Alzheimer's. Other newly discovered potential toxins in vegetable oils, called monochloropropane diols and glycidol esters, are now causing concern among health authorities in Europe.
In short, the track record of vegetable oils is highly worrisome—and not remotely what Americans bargained for when they gave up butter and lard.
Cutting back on saturated fat has had especially harmful consequences for women, who, due to hormonal differences, contract heart disease later in life and in a way that is distinct from men. If anything, high total cholesterol levels in women over 50 were found early on to be associated with longer life. This counterintuitive result was first discovered by the famous Framingham study on heart-disease risk factors in 1971 and has since been confirmed by other research.
Since women under 50 rarely get heart disease, the implication is that women of all ages have been worrying about their cholesterol levels needlessly. Yet the Framingham study's findings on women were omitted from the study's conclusions. And less than a decade later, government health officials pushed their advice about fat and cholesterol on all Americans over age 2—based exclusively on data from middle-aged men.
Sticking to these guidelines has meant ignoring growing evidence that women on diets low in saturated fat actually increase their risk of having a heart attack. The "good" HDL cholesterol drops precipitously for women on this diet (it drops for men too, but less so). The sad irony is that women have been especially rigorous about ramping up on their fruits, vegetables and grains, but they now suffer from higher obesity rates than men, and their death rates from heart disease have reached parity.
Seeing the U.S. population grow sicker and fatter while adhering to official dietary guidelines has put nutrition authorities in an awkward position. Recently, the response of many researchers has been to blame "Big Food" for bombarding Americans with sugar-laden products. No doubt these are bad for us, but it is also fair to say that the food industry has simply been responding to the dietary guidelines issued by the AHA and USDA, which have encouraged high-carbohydrate diets and until quite recently said next to nothing about the need to limit sugar.
Indeed, up until 1999, the AHA was still advising Americans to reach for "soft drinks," and in 2001, the group was still recommending snacks of "gum-drops" and "hard candies made primarily with sugar" to avoid fatty foods.
Our half-century effort to cut back on the consumption of meat, eggs and whole-fat dairy has a tragic quality. More than a billion dollars have been spent trying to prove Ancel Keys's hypothesis, but evidence of its benefits has never been produced. It is time to put the saturated-fat hypothesis to bed and to move on to test other possible culprits for our nation's health woes.