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Pfizer weighs £60bn bid for Astra Zeneca ( Not the full article)

American drug giant makes secret approach for struggling rival, paving way for biggest ever British takeover

PFIZER, the world’s biggest drug company, has made a tentative approach to Astra Zeneca about a possible takeover that could value its British rival at more than £60bn.

Informal conversations about a possible tie-up have taken place in recent weeks, according to senior investment bankers and industry sources.

A sale of Astra would be the biggest-ever foreign takeover of a UK business. It is the country’s tenth-largest company with 50,000 employees globally.

Astra is believed to be resisting Pfizer’s advances and no talks are currently under way, say insiders. However, Pfizer, famous for its anti-impotence drug Viagra, could come back with a fresh approach.

The New York company is keen to deploy a $70bn (£42bn) cash pile that it has accumulated in overseas subsidiaries. Repatriating the cash to America so it could be distributed to shareholders would lumber it with a colossal tax bill.

Pfizer is said to be weighing

Investors are ignoring differences between today's Vodafone and the company it was over a decade ago. The company's recent deals aren't as strategically haphazard as some investors fear.

British telecommunications operator Vodafone deserves more love from investors than it has been getting of late. Its shares have fallen by over 10% since January when U.S. giant AT&T quashed speculation that it might bid for the company.

At first glance, there are good reasons to be wary. Like many other telecom operators, Vodafone (ticker: VOD.United Kingdom) faces ever-tightening competition in mature European markets where an unseemly price war has forced down tariffs and profit margins.

Vodafone has chosen to battle this by making a series of acquisitions in Europe and elsewhere, armed with an impressive war chest earned from the $130 billion sale of its 45% stake in U.S. cellphone operator Verizon Wireless.

A MONTH AGO VODAFONE AGREED to pay €7.2 billion ($10 billion) for Spanish cable company Ono. That came less than nine months after it offered about the same amount, €7.7 billion, for Kabel Deutschland Holding (KD8.Germany), Germany's largest cable operator. The year before that it shelled out about $1.7 billion to acquire Cable & Wireless Worldwide in the U.K.

Investors might consider those moves to be entirely positive if it weren't for Vodafone's reputation for striking pricey and ill-considered transactions. George Godber, who manages the Miton Value Opportunities Fund for British-based money manager Miton Group, says: "In the early 2000s, Vodafone went on a monster spree and bought up all over the world. It paid with paper, didn't integrate properly, each country was run individually, and the shares underperformed for a very, very long time."

Some fear that Vodafone's latest purchases suffer from those same faults. Godber says the company paid 10.6 times earnings before interest, taxes, depreciation, and amortization for Spain's Ono. The figure for Kabel Deutschland came in at 12 times Ebitda, while Vodafone itself trades at only six times.

Godber, who sold Vodafone shares when AT&T (T) announced that it had no plans to bid for the company, says investors are ignoring some important differences between the Vodafone of today and the company as it was over a decade ago. The biggest change has been the arrival in mid-2008 of Chief Executive Vittorio Colao, who Godber describes as a "breath of fresh air."

Apart from the staggeringly good price Colao managed to squeeze from Verizon Communications (VZ) for Vodafone's Verizon Wireless stake, he has worked very hard to turn the company into a much leaner and fitter operation, pulling out of businesses it didn't control in countries such as France and Poland in Europe, and Japan and China in Asia.

Vodafone plans to invest over $30 billion to improve networks and services over the next two years, giving it the capacity to handle more data traffic.

THE MONEY IT HAS SPLURGED lately on acquisitions can also be excused once it is set into context. Telecom companies across Europe face the same market pressure as Vodafone and assets that are sold attract very keen interest. In France, media company Vivendi (VIV.France) agreed to sell its SFR cellphone business to Altice, which owns French cable company Numéricable Group (NUM.France), for €13.5 billion in cash and a possible further €750 million later. The bidding over SFR was hotly contested by local conglomerate Bouygues (EN.France), owner of French cellphone company Bouygues Telecom.

Cable company Liberty Global (LBTYA) was reported to be vying with Vodafone for Spain's Ono. The fact that the sellers know that Vodafone has a hefty cash pile may also have pushed them to demand a higher price.

Vodafone's recent deals aren't as strategically haphazard as some investors fear. Prior to the Ono acquisition, Vodafone had 30% of the Spanish market with 14 million clients but its margins were under pressure. Ono gives Vodafone a fixed-line operation that should help it offer price-efficient packages that include Internet, TV, and wireless.

Its purchase of Kabel Deutschland provides Vodafone similar benefits in Germany where it now has about 32 million cellphone clients, a further five million with broadband and 7.6 million with TV.

Outside Europe, Vodafone is also making significant inroads into the emerging markets that could pay dividends in years to come.

Earlier this month it paid around $1.5 billion to take full control of its Indian subsidiary. India brought Vodafone €4.3 billion in revenue in its latest fiscal full year. In all, burgeoning telecom markets such as India, Turkey, and South Africa are home to 70% of Vodafone's clients.

Citigroup analyst Simon Weeden recommends Vodafone as a Buy with a £2.90 ($4.87) price target. He puts the expected share price return at 30.5% and the dividend yield at 5%. Vodafone closed Thursday at £2.14 on the London Stock Exchange.

The report, issued by the Ministry of Environmental Protection and the Ministry of Land Resources, said 16.1 percent of the country’s soil was polluted, including 19.4 percent of farmland. The report was based on a study done from April 2005 to last December on more than 2.4 million square miles of land across mainland China, according to Xinhua, the state news agency.

The report said that “the main pollution source is human industrial and agricultural activities,” according to Xinhua. More specifically, factory waste products, irrigation of land by polluted water, the improper use of fertilizers and pesticides, and livestock breeding have all resulted in tainted farmland, the report said.

The study found that 82.8 percent of the polluted land was contaminated by inorganic material. The most common pollutants were cadmium, nickel and arsenic, and the levels of these materials in the soil had risen sharply since land studies in 1986 and 1990. The level of cadmium had risen by 50 percent in the southwest and in coastal areas and by 10 percent to 40 percent in other regions, Xinhua reported. The soil in southern China is more polluted than in the north.

The report confirms spreading fears among many officials and ordinary Chinese that the country’s soil has been in severe decline. Its numbers also indicate a more serious problem than statistics did in a book published in early 2013 by the Ministry of Environmental Protection, “Soil Pollution and Physical Health,” which said one-sixth of China’s arable land, or nearly 50 million acres, was polluted.

Officials have become increasingly vocal about the problem in the past year. In December, a vice minister of land and resources, Wang Shiyuan, said at a news conference that eight million acres of land across China, equal to the size of Maryland, were so polluted that farming should not be allowed on it.

Hunan Province, in central China, has some of the worst soil pollution because it is one of China’s top producers of nonferrous metals. But it is also a large rice-growing area, producing 16 percent of the country’s rice in 2012, according to one market research company. Officials in Guangdong Province last year found that some rice had excessive levels of cadmium. Most of that rice was from Hunan.

It is unclear how the findings released Thursday related to a national soil survey that, according to a news conference in December where Mr. Wang spoke, was done from 2007 to around the end of 2009. Those findings have never been released, with officials calling them a “state secret.” Some environmental advocates said the survey ended in 2010 and have sought its results.

A technique called chemical vapor deposition can produce diamonds, created from gases, that are virtually indistinguishable from mined diamonds. Credit Physica Status Solidi

As a seventh grader, I was lucky to land the job of ball boy for the Brooklyn Dodgers during their annual late-March exhibition games in Miami. The experience left me with fond memories — of Roy Campanella smoking a cigar as he stroked line drives in the batting cage, of a young Sandy Koufax throwing harder than seemed humanly possible and of an aging Jackie Robinson struggling to remain in the lineup.

Oddly, however, my most vivid memory is of the Dodgers’ longtime batboy as he sat in the locker room producing autographed baseballs. He’d twist his hand at odd angles as he scrawled replicas of the signatures of Duke Snider, Pee Wee Reese and other Dodger legends. To my untrained eye, the balls he inscribed were indistinguishable from those signed by the players themselves.

Handwriting experts probably could have identified his forgeries without difficulty, but technology has progressed considerably since then. In many domains, perhaps even including signed baseballs, it’s becoming possible to produce essentially perfect replicas of once rare and expensive things.

That’s true, for example, of diamonds and paintings. Renowned art originals will always be scarce, and so will high-quality mined diamonds, at least while De Beers holds sway. But what will happen to the lofty prices of such goods if there is an inexhaustible supply of inexpensive perfect copies? Economic reasoning can help answer this question. It can also shed light on how new technologies might alter traditional ways in which people demonstrate their wealth to others, or might change what society embraces as tokens of commitment and other gifts.

First, some background about the new technologies. For many decades, the best diamond facsimile was cubic zirconia. It is similar to a diamond in brilliance and clarity but it isn’t as hard as a diamond and could never fool an experienced jeweler. Recently, though, new processes have made it possible to culture diamonds that are visually identical to mined ones.

One such process, chemical vapor deposition, produces diamonds with a heated mixture of hydrogen and methane in a chamber at very low pressures. Writing for Smithsonian Magazine shortly after the technique was developed, Ulrich Boser described having taken a sample stone to a respected diamond merchant in downtown Boston, who inspected it carefully under a jeweler’s loupe. After pronouncing it a “nice stone” with “excellent color” and no visible imperfections, the jeweler asked where it came from. When Mr. Boser said it had been cultured in a lab 20 miles away, the astonished merchant inspected it again. “There’s no way to tell that it’s lab created,” he said.

In significant ways, the new cultured stones are actually better than many mined diamonds. The Gemological Institute of America classifies them as colorless or near colorless Type IIa stones, a premium category that includes only 2 percent of natural diamonds. The new stones also sidestep environmental and human-rights concerns that have plagued mined diamonds in recent years.

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Progress has been almost as striking in the duplication of oil paintings. Chemical and spectral analysis of original works can now identify paint compounds and hues precisely. A Cornell University electrical and computer engineering professor, C. Richard Johnson Jr., and his collaborators have been developing ways to identify an artist’s signature brush stroke style by applying statistical modeling to 23 original works by Vincent van Gogh. To date, their efforts have been used mostly to help detect forgeries, but they will inevitably serve future copiers as well. Robots can already produce near-perfect copies of simple paintings. Skilled forgers have been fooling experts for centuries, but going forward, those artisans won’t keep pace with smart machines and 3-D printing.

Not even perfect replicas, however, will extinguish strong preferences for original paintings and mined diamonds. In the short run, price premiums for such goods are likely to persist, as collectors scramble for certificates of authenticity.

Longer term, those premiums may prove fragile. Wearing large diamonds, for example, will no longer be likely to signal significant wealth or attract admiring glances. Some people will ask, why not buy cultured stones and spend the difference on things that actually matter — or that are, at least, truly scarce? No matter how many new skyscrapers are jammed into the city, there will only be so many penthouse apartments with sweeping views of Central Park. When some of the superrich start using money formerly spent on diamonds to bid for those apartments, other bidders will feel pressure to follow suit.

Prices of famous paintings will be more stubborn. But replication technologies will be applied not just to artworks but also to certificates of authenticity. Even billionaires would be reluctant to pay $100 million for a Picasso of uncertain provenance.

Tumbling prices will transform many longstanding social customs. An engagement diamond, for instance, will lose its power as a token of commitment once flawless two-carat stones can be had for only $25.

Replication technologies also raise philosophical questions about where value resides. How heavily, for example, should museums invest in ownership of famous works? (As noted in my last column, this question looms large in Detroit’s current bankruptcy proceedings.) Perfect replicas would enable local museumgoers to see the Mona Lisa without having to cross the Atlantic. But would the experience of seeing the painting — a perfect copy or even the original somewhere other than the Louvre — be rendered less special?

Perfect replicas would enable even the poorest fans to own autographed baseballs. Original or a copy? No one would know the difference, not even an expert. But would a 10-year-old be just as delighted to receive one for his birthday as I once would have been?

Technology won’t eliminate our need for suitable gifts and tokens of commitment, of course. And such things will still need to be both intrinsically pleasing and genuinely scarce. But technology will change where those qualities reside.

Venture capitalists poured $9.5 billion into US startup companies during the first quarter, the highest quarterly total seen since 2001 when the dot-com bubble burst, according to a new report.

Software developers were the biggest beneficiaries of the boom, accounting for $4 billion of the fresh funds. File-sharing service Dropbox got $325 million, landing the biggest deal of the quarter in its fourth round of funding.

Vacation rentals site Airbnb and mobile messaging service TangoMe tied for second place with deals valued at $200 million each.

Biotech firms placed a distant second, collectively attracting less than $1.1 billion in seed money. Media and entertainment companies got $743 million, according to the MoneyTree report by the National Venture Capital Association and PricewaterhouseCoopers.

Share prices of tech giants such as Netflix, Twitter and Facebook have fallen lately, raising speculation that another bubble is threatening Silicon Valley.

But if Airbnb is any indication, the momentum hasn’t lagged for startups. The site has landed another $500 million from private-equity firm TPG, valuing the company at $10 billion, according to reports Friday.

Indeed, the torrid growth in funding is being fueled by bigger deals: While the number of first-quarter deals was up just 4 percent from a year earlier at 951, they spurred a 57-percent jump in terms of dollars.

California-based startups attracted the most funds, with 406 firms accounting for nearly $5.5 billion. By comparison, 88 companies in Massachusetts raised $960 million for second place, while 97 firms in New York got $754 million.

Cover story: Positive on HD: Shares could come to life in the months ahead, especially if the housing market, a crucial driver of revenue and profit, shows sustained signs of improvement. An uptick in housing, market-share gains at the expense of an ailing SHLD, and substantial supply-chain improvements could help lift the stock to $95 in the next 12 months from a recent $77. 

Features: 

1) Many go-go stocks have taken a hit in recent weeks, but investors should avoid buying most of them on the dip, since they remain too pricey (Worth it: GOOG, RHT; Not Worth It: AMZN, CMG, FB, NFLX, TWTR); 

2) Positive on RTN: Shares are still on an upward trajectory and could rise another 20-30% if the defense contractor continues to beat earnings estimates and its modest multiple increases a bit; 

3) Cautious on SRPT: Shares of orphan drug maker could soar if the FDA gives an early go-ahead to its drug for Duchenne muscular dystrophy, a disease for which there are no effective treatments and for which Eteplirsen has shown promising results. 

Comcast and Time Warner Cable have entered negotiations to hive off cable assets worth up to $20bn in a deal with Charter Communications that aims to allay Washington’s concerns about their proposed merger.

Comcast and TWC have held talks with Charter about a deal involving between 3m and 5m subscribers during recent days, according to people familiar with the matter.

The options include the straight sale of subscribers and a scenario where Comcast and TWC spin off subscriptions into a new company and sell Charter a substantial minority stake. A combination of the two is also under consideration.

The discussions are at an early stage and no deal is certain, the people cautioned.

A deal to buy the subscriptions would mark a big victory for Charter, the company backed by cable industry veteran John Malone, which was thwarted in its attempt to buy TWC in February after Comcast emerged with a surprise bid. TWC has roughly 12m subscribers.

The all-share deal has fallen in value since it was announced from $45.2bn, or $158.82 a share, to less than $40bn as Comcast’s stock price has declined. The combined group would have 33m subscribers and supply up to 40 per cent of US households with high-speed internet access.

In a gambit designed to mitigate an immediate backlash from regulators, Comcast said it was prepared to sell 3m subscribers at the time of announcing the deal. Comcast’s chief financial officer said that the 3m subscribers would be worth at least $17bn.

At the time of the deal, relations between Comcast and Charter were said by people close to the two companies to be severely impaired. Charter had pursued its $132.50 per share bid for TWC on the basis that it believed Comcast had ruled itself out of the running.

Comcast executives made contact with their Charter peers in the days after the company made its offer public, but the talks over the subscription sales only started recently, according to people familiar with the matter.

Industry observers have speculated that it is likely that Comcast will give up more than the 3m subscribers it had offered in attempts to clear the deal with regulators.

“Once you offer something up, you only offer more up, you don’t offer less up. It is the starting point of the negotiations,” said Amy Yong, an industry analyst with Macquarie.

“There is nothing legally that requires them to give up the 3m subscribers as the deal stands,” she added.

Ms Yong noted the subscribers that Comcast will probably give up could come from the footprints of both Comcast and Time Warner Cable and that they are not likely to be from the top metro areas, such as New York City and Los Angeles.

The subscriber sale negotiations come just days after Comcast and TWC outlined the arguments for their proposed merger before regulators. Comcast is the largest provider of high-speed internet services to US households.

New York’s top lawman — who first alluded to Virtu when he announced his probe of the controversial trading in early March — sent the firm a letter seeking information about its practices, a source familiar with the matter told The Post.

In the uproar that intensified following the March 31 publication of Michael Lewis’ “Flash Boys,” Virtu had already pulled its initial public offering. Now it has to respond to Schneiderman.

“The letter seeks information about special arrangements the companies have with dark pools and exchanges, their trading strategies and whether they practice latency arbitrage,” said the source.

So-called latency arbitrage was mentioned in Lewis’ blockbuster as a method of legal front-running practiced by high-frequency traders.

High-frequency trading involves fully automated trading using rapid movements in and out of stocks — often for less than a second.

By gaining even a millisecond’s timing advantage, high-frequency trading guarantees enormous revenue and forces large investors to develop complicated and expensive defensive strategies to conceal their orders from parasitic traders, Schneiderman said in a public speech last month.

Although Schneiderman did not mention Virtu by name, he questioned its lofty earnings, which were revealed in its offering prospectus.

“Some high-frequency traders appear to trade with virtually no risk,” he said.

“Last week, a large high-frequency trading shop disclosed that it made money on every trading day over the course of four years,” Schneiderman said, an oblique reference to Virtu, which disclosed the earnings in its regulatory filing. “Out of 1,238 trading days, they made a profit on 1,237 of those days.”

Virtu was founded by former New York Mercantile Exchange Chairman Vincent Viola in 2002. It is one of the largest high-frequency traders.

He could not be reached for comment.

In the debate surrounding Lewis’ book, protagonist Brad Katsuyama called Virtu one of the “good high-frequency traders.”

Katsuyama last year launched a new exchange, called IEX, to thwart the high-frequency traders by slowing down trades so they could not jump ahead of investors.

Virtu is one of the few that began to use IEX.

Other firms that have received similar letters from Schneiderman include Jump Trading, Chopper Trading and Tower Research Capital, according to Bloomberg, which first reported the Virtu letter.

Separately, Providence, Rhode Island, has sued Bank of America, the New York Stock Exchange and dozens of other exchanges, brokers and traders, over the practice, Bloomberg reported.