TheChek News Flow

The EU’s new, electronic entry-exit system is a mess, except when it isn’t

LISBON—The agent manning the passport control line warned me not to be fooled by the mercifully short line that greeted me upon arrival at Portugal’s Lisbon International Airport on the last Friday in July.

She urged me to arrive at the airport three or four hours before my return flight and head straight for border control. “Don’t shop. Come right here.”

The front-desk agents at my airport hotel, hearing too many horror stories from guests stuck in hourslong passport lines this summer, similarly suggested a god-awful-early alarm.

It was all for naught. There was no line when I got to passport control. I had two hours to kill before my flight to London.

My experience in Lisbon and relatively smooth sailing in Paris and Rome this month underscore the crapshoot travelers face under the European Union’s new automated border-control system. You might breeze through or be stuck in line for a few hours, sometimes on the same trip.

The system, officially rolled out in April, relies on facial recognition and fingerprints instead of the age-old practice of getting your passport stamped at a booth. The government says it will speed things up and improve security.

For now, though, EES, which stands for entry/exit system, has become the curse word of the summer for some Europe-bound U.S. travelers. The registration kiosks at airports can be confusing —“Just how do I scan that passport properly?”—so the process takes time and lines form. Tech glitches happen. Staffing shortages crop up. There are even reports of some older travelers’ fingerprints not being recognized.

The lines got so bad at one point that aviation-industry officials begged the president of the European Commission to ease up on the new rules through the summer. (The request was denied, but efforts to blunt the negative impact continue.)

Jason Wageman, a project manager from Poulsbo, Wash., was unaware of EES ahead of a late-June vacation to Belgium with his wife. He says the new system “swallowed” their three-hour layover in Amsterdam.

His wife had no issues at the kiosk; he was rejected and directed to a line for manual verification. That line was so long that officials started pulling out passengers with imminent departures.

“The wait in the line is not the stressful part for me,” he said. “It’s about the fact that I’m about to miss my flight.”

They made it to the gate as the plane to Brussels was boarding. The return trip through Amsterdam, by contrast, was seamless, Wageman said.

My trips to and from London and Paris, Lisbon and Rome to test the system over a peak-summer week were free of snaking lines. But there was plenty of confusion and a hodgepodge of procedures.

In Paris, the EES registration kiosks were off during my midmorning arrival from the U.S. (Airports reserve that right to manage crowds.) I was directed to a booth and got to go through the priority line because I flew premium economy. It didn’t speed things up, and the passengers using e-gates appeared to go faster. The process felt achingly slow on no sleep but only took about 10 minutes.

I wasn’t fingerprinted at the booth and still don’t understand why. I wasn’t fingerprinted the next day at Paris’ Gare du Nord train station ahead of a Eurostar train to London, either.

Yes, the rules apply to cross-border train travel, too. An agent there said I must have been fingerprinted at the airport. I wasn’t. Either way, there were multiple kiosks at Gare du Nord and I breezed through after a passport scan.

Here’s my advice if you have a trip to the Schengen-area countries in Europe or are planning one:

Build a buffer. Until the kinks are worked out, you never know what you’re going to find for passport lines when entering or leaving Europe, though one tool from a travel influencer aims to help. Make sure you build time into your schedule for long waits, especially if you have a connection.

Ditto for car services and first-day activities. Don’t schedule anything too close to flight arrival or departure. On departure, budget plenty of time for airport check-in and security. Passport control is after that.

Brush up on the EES system before your trip. You don’t want to be fumbling around at the kiosks, annoying the passengers in line behind you. For starters, the EU details it all online and created a YouTube video about it. There is no advance sign-up required, unlike the U.K.’s new entry rules.

Take particular note of passengers who can’t use the automated biometric system, including children younger than 12. That might portend longer lines. See if the airport you’re headed to has family lanes that might speed the process.

Consider VIP services. If all of this sounds like too much to handle, there are services that will escort you through the process at some airports for a fee. SkyVIP’s pitch, for example: “EES lines are getting longer, SkyVIP helps you move faster.” The price for two travelers arriving in Paris on the Friday of Labor Day weekend: $400.

Will Paramount Leave California? Executives Say It’s on the Table

CEO David Ellison has suggested a possible move as the antitrust battle drags on over the company’s Warner Bros. deal

Paramount PSKY 1.19%increase; up pointing triangle could start moving out of Hollywood as soon as October if it can’t make progress toward settling the antitrust suit California and 11 other states brought to block its acquisition of rival Warner Bros. Discovery WBD 0.74%increase; up pointing triangle.

Paramount’s chief legal officer, Makan Delrahim, said Tuesday that a potential move out of state is on the table as it fights to close the $81 billion deal.

“Ultimately, you know, go to a place where you’re wanted,” Delrahim said at a conference sponsored by Politico.

Paramount Chief Executive David Ellison and his deputies are aiming to resolve the dispute that has delayed his quest to join Paramount, with CBS and its streaming services, to Warner, parent of HBO and CNN.

Losing Paramount would be a blow to California and the state’s entertainment production economy, which is already struggling because of the flight of film and television shoots to other states and countries that offer generous tax incentives to Hollywood studios.

California Attorney General Rob Bonta, also speaking at the conference, described Paramount’s talk of moving as “an attempt to blackmail the regulators who are daring to enforce the law.”

California and the other states, including New York and Colorado, sued in July in federal court, alleging that combining Warner and Paramount would give one company too much power over theatrical movie distribution and cable television.

Paramount argues the deal is pro-competitive and pro-consumer and would help it compete with larger technology and media companies including Disney, Netflix and Amazon.com. The proposed transaction has been cleared by the U.S. Justice Department and regulators in the European Union, the U.K. and elsewhere.

California Gov. Gavin Newsom’s office has reached out to Bonta’s office to encourage a settlement, The Wall Street Journal reported last month. Democratic gubernatorial candidate Xavier Becerra, speaking at the Politico conference, also urged a settlement, saying it would be devastating for California if Paramount left.

While Paramount executives have privately acknowledged discussing a move from California, the studio’s home for more than a century, Delrahim’s remarks are the first time the company has publicly acknowledged the possibility.

As recently as last week, Ellison met with top executives at the company to outline a possible fall move, according to a person familiar with the matter. Digital news outlet Puck first reported that meeting.

Ellison has most often mentioned Tennessee as a potential new headquarters, the Journal previously reported. That state is already a home to Oracle, the software giant co-founded by Ellison’s father and Paramount stakeholder Larry Ellison.

Other potential homes include Texas and Georgia, the person familiar with the matter said.

In October, Paramount is scheduled to begin accruing ticking fees that it would pay to Warner shareholders that amount to $650 million a quarter. Savings from moving production and operations to a more business friendly state could help offset those costs, the person familiar with the matter said.

Delrahim said the company doesn’t want to leave. The intent, he said, “is to be committed to California,” but “there’s a point at which you have a duty, a fiduciary duty to your shareholders.”

There are currently no settlement talks between Paramount and California. “We intend to go to trial and push this case to the end. We want to block this merger,” Bonta said.

How a bad trade pushed a US mortgage giant into a $2bn lifeline

Billionaire finance executive and Phoenix Suns owner Mat Ishbia forged a last-minute deal with Oaktree

Phoenix Suns NBA team owner and mortgage finance billionaire Mat Ishbia took to YouTube last Monday to deliver an upbeat analysis of the housing market from his company’s office basketball court.

Three days later, the head of United Wholesale Mortgage revealed a bad bet tied to falling interest rates dealt it a $603mn loss. UWM, one of America’s two biggest mortgage lenders by originations, also revealed that it had agreed a $2.1bn capital injection led by distressed debt investor Oaktree Capital Management, with Ishbia stumping up at least $150mn.

The swiftly arranged deal failed to stem selling in the company’s shares, which fell 30 per cent last week and are down nearly 90 per cent since its 2021 US public market listing.

“We just had to make the call to cut our losses and take the hit,” UWM board member Robert Verdun told the FT, referring to the crunch decision to raise fresh capital. He stressed he had “zero concerns about the future of the business”. Verdun is also the chief executive of Scaling Up, an executive coaching company.

The series of events, which also prompted UWM to cede two board seats to Oaktree, has laid bare the strains in a company at the heart of America’s $13tn mortgage market and the vehicle that has transformed Ishbia from a financial executive to the owner of a high-profile NBA franchise.

It also marked a personal setback for Ishbia, an eccentric executive known for his heated rivalry with Dan Gilbert, the billionaire founder of UWM’s arch-rival Rocket Mortgage.

UWM, once a small lender founded in the Detroit area, has expanded rapidly since Ishbia took over from his father in 2013, as specialist mortgage firms filled the gap left by banks in the wake of the 2008 financial crisis. As it aggressively pursued market share, the company reshaped industry dynamics by forcing mortgage brokers to choose between doing business with them or Rocket.

In 2021, Ishbia took his company public through a blank-cheque merger to shore up its finances after wild swings in government debt markets triggered by the Covid-19 pandemic nearly upended UWM.

After the listing, Ishbia used his roughly 80 per cent ownership of UWM to back an even bolder bet. His new wealth helped him in 2023 lead a $4bn purchase of the Phoenix Suns, who have struggled on the court despite expensive stars such as Kevin Durant, whom Ishbia signed for his team.

The Detroit Pistons’ former standout player, Isiah Thomas, also serves on the UWM board.

Ishbia had also pledged UWM shares as part of five loans from JPMorgan totalling $2.3bn, according to US regulatory filings. After last week’s sell-off, JPMorgan requested additional collateral from Ishbia, according to a person familiar with the matter. JPMorgan declined to comment.

The hundreds of millions of dollars in annual dividends Ishbia earned from his stake in UWM have also been crucial to investments in the Phoenix Suns, according to a person familiar with its finances.

Those quarterly dividends, which remained at 10 cents per share from the time the company went public until they were suspended last week, have proven a sticking point for investors. Oaktree now has the ultimate say over the dividend policy as part of its agreement to inject capital into UWM.

A “big part of the problem” at UWM was its large dividends, said Bose George, managing director at Keefe, Bruyette & Woods — of which “more than 80 per cent went to the owner Mat Ishbia”.

The recent wobbles have raised the stakes for Ishbia, a 46-year-old Michigan native known for his motivational speeches, as he seeks to dominate the world’s biggest mortgage market.

UWM posted a slight year-on-year drop in loan origination volumes in the second quarter at a time when persistently high interest rates and elevated home prices are weighing on house sales.

With that backdrop, mortgage lenders have sought to grow their servicing businesses, which handle day-to-day management of home loans, in recent years as those tend to become more lucrative when rates are higher.

Rocket Mortgage last year acquired the country’s largest servicing business, Mr Cooper Group, in a $14.2bn transaction.

Ishbia had plotted a similar deal earlier this year, with UWM’s plans to buy Two Harbors, a large mortgage servicer. 

As part of that effort, UWM assembled a portfolio of derivatives set to gain value in the event of falling interest rates. This was designed as a way to protect UWM’s eventual takeover of Two Harbors, since mortgage-servicing companies lose out when rates fall. 

But the strategy backfired when UWM lost the deal to rival bidder CrossCountry Mortgage in March, and as US bond yields have risen sharply this year as President Donald Trump’s war in Iran stokes a fresh bout of inflation.

UWM this week filed a lawsuit against Two Harbors in US federal court, seeking $500mn in damages over an alleged breach of the merger contract. Two Harbors did not immediately respond to a request for comment on the matter.

“The market moved against us, and it’s a one-time event that won’t happen again,” Ishbia told investors last week.

UWM posted a net loss of $452mn in the second quarter.

“They were hedging an asset they hadn’t purchased yet, the deal fell apart so they ended up with a hedge that had no offset,” said George.

The deal’s collapse left Ishbia in a precarious position. The company agreed to Oaktree’s financing terms, which did not come cheap. Oaktree and Ishbia purchased $1.5bn and $150mn of preferred stock, respectively. In exchange, the investors are set to receive 10 per cent in cash annually or 13 per cent if the company prefers to pay interest in more preferred stock.

Oaktree and Ishbia will also get warrants allowing them to purchase hundreds of millions of shares at a premium to the current UWM trading price. Oaktree and Ishbia also separately agreed to backstop a $400mn common stock offering.

Verdun said UWM had held talks with other investors and considered a limited $500mn capital injection from Ishbia, but decided on Oaktree to “fortify for the next decade instead of right now” and because of the firm’s knowledge of mortgage-servicing rights.

Oaktree has secured various “consent” rights that give the firm specific oversight over the management of the mortgage-servicing rights, according to securities filings and persons familiar with the deal.

“It’s market [rate] for where we’re at and the situation,” said board member Verdun. “It’s not inexpensive financing, I won’t sugarcoat it.”

Households near UK grid upgrade projects in line for lower electricity bills

Government aims to boost support for pylons and power lines needed to meet net zero targets

Households near more than 40 big grid upgrade projects will be eligible for money off electricity bills, as the UK government looks to improve support for the infrastructure needed to drive the shift towards lower-carbon energy.

The Department for Energy Security and Net Zero on Wednesday announced the first batch of projects covered by the scheme, which has been set up to fend off a groundswell of local opposition to many grid upgrades that threatens to slow their development.

The list covers planned development of or upgrades to power lines, pylons and converter stations, the vast majority of which are in Scotland and the east of England.

Households living within 500 metres will be able to save £2,500 off their electricity bills over 10 years, the government said, with more projects due to be added. Discounts will be applied only once the relevant project is fully consented and building has started. The first are expected next year.

The move marks the long-awaited culmination of recommendations made by industry veteran Nick Winser in 2023 to the then Conservative government as part of the drive to decarbonise.

Michael Shanks, energy minister, said upgrading the grid was vital for “secure, homegrown energy” and that he was “determined those communities which host pylons should benefit”.

But campaigners opposed to SSEN’s Kintore-Tealing 400kV proposed overhead power line in Scotland described the announcement as a “slap in the face” for local communities facing “ruined businesses and unsellable homes”.

“This government is either massively out of touch or is showing their contempt for affected residents and energy consumers,” said Kate Matthews at campaign group Save Our Mearns. “Residents have lived with horrific uncertainty for over three years.”

The payments will be funded by network owners, who recoup their costs from network users. The energy department said it expected payments to cost average British households roughly £4-£5 in total between now and 2044, with a peak annual payout of about 50 pence.

Britain’s electricity system needs to be upgraded and massively expanded to cope with the surge in wind farms and solar farms dotted around the country over recent years as well as the anticipated growth of electric cars and heat pumps.

Delays to projects could hinder the government’s target of decarbonising the electricity system by 2030 and mean that more wind farms are paid to switch off because their power cannot be moved to where it is needed.

However, local campaigners have objected to projects in several areas, citing factors ranging from the risk of damage to wildlife, impact on the views, noise and land use.

Critics have also voiced concerns about the cost of grid upgrades, which are funded by all electricity consumers and one factor behind Britain’s high electricity bills.

A Scottish government-mandated inquiry is under way into the Kintore-Tealing proposal after local pushback prompted area councillors to object. The inquiry is expected to make its recommendations by early January, with a final decision by Scottish ministers afterwards.

SSEN, which operates the transmission network in north Scotland, has said that the overhead line is a vital part of the wider grid upgrade and will bring investment and jobs to north-east Scotland.

South Africa’s Eskom targets data centre ‘gold rush’ for its power surplus

Chair says state-owned utility has ‘power that we cannot sell’ after ending years of blackouts

Eskom is courting the world’s biggest tech companies about providing power to their data centres, as South Africa’s state-owned utility seeks new customers for its excess energy after ending years of rolling blackouts.

The plan to capitalise on South Africa’s emerging AI “gold rush” by selling surplus capacity to “power-hungry” hyperscalers marks a dramatic recovery for Eskom, which was long synonymous with electricity outages known as load-shedding.

Eskom chair Mteto Nyati said talks with tech groups were part of a growth strategy centred on energy-hungry industries.

“We are having discussions with the Amazons, the Microsofts, the Googles. We love those discussions because those are power-hungry sectors — that’s exactly what we need right now,” he told the FT.

Eskom headed into winter with about 6 gigawatts of surplus peak capacity, its strongest reserve margin in almost a decade, after a generation recovery plan largely ended unplanned outages. That pushed South Africa past 12 months without load-shedding for the first time since 2018.

After years of rolling power cuts, businesses and households have sought alternative energy sources such as solar, while weak economic growth shrank industrial demand and eroded Eskom’s revenue base as it struggled to service its debt of about R359bn ($22bn).

“We’ve got this power that we cannot sell, that’s the reality of the situation,” Nyati said.

South Africa’s fast-growing data industry has become a major bright spot for the utility. Africa’s most industrialised economy has about 70 per cent of the continent’s data centres, thanks to its fibre infrastructure and mature financial sector.

Cloud computing and AI-driven investments are forecast to more than double South Africa’s data centre market to more than $5bn by 2031, according to Arizton Advisory & Intelligence, a US-based market research company.

Nvidia, Cassava Technologies, Huawei Cloud and Oracle Cloud Infrastructure are among major companies that have committed to investing billions of dollars in data centres across Africa.

Last month, Cape Town approved plans by US-listed Equinix to build two facilities requiring about 170 megawatts — a load approaching the roughly 189MW of total critical capacity currently run by Teraco, Africa’s largest data centre operator.

“The data centres gold rush is real. Whether Eskom is the one who profits from it, rather than just watching operators self-generate around it, is the open question,” said Chris Hattingh, executive director at the Centre for Risk Analysis consultancy.

Eskom has roughly 2,000MW of capacity in cold storage that can return online without straining the system, but planned investments could overwhelm the current grid’s capacity, analysts said.

Data centre owners, who need huge and uninterrupted amounts of energy, have also been using their own projects and purchasing power from solar farms rather than relying solely on Eskom for electricity.

“The strategy solves Eskom’s revenue problem only if it can hold on to these customers as anchor tenants rather than backup suppliers,” Hattingh said.

The data boom has intensified debate about whether South Africa can support power-intensive facilities alongside households and other businesses. Eskom has also signed discounted electricity agreements with smelters, including the Glencore-Merafe Chrome venture in April.

The company’s renewed commercial push reflects a sharp improvement in its operational performance since Nyati became chair in 2023.

Its energy availability factor — which shows the percentage of its coal-fired stations able to deliver power, rather than broken down or in maintenance — improved to 66 per cent this year, from about 50 per cent in 2023.

A R254bn debt relief package from the government has also strengthened Eskom’s finances, though it still faces pressure from municipal arrears, with local authorities collectively owing the utility about R118bn.

“If that amount is allowed to go up, all of the good work that was done . . . is going to go out of the window,” Nyati said.

An increase in capital gains taxation would act against goals to support economic growth

Britain suffers from a material investment gap. Millions of individuals are stuck in cash, watching their hard-earned savings erode from inflation while missing out on the long-term financial security that disciplined investing can create. By some estimates, more than £600bn is trapped in “excess cash” that could be invested. This hurts both wealth creation for individuals and growth prospects for the country, as deep, broad and liquid capital markets are the lifeblood of a strong economy.

No single solution can solve this problem. Investors need access to more helpful, straightforward and intuitive offerings; financial education and guidance need to reach more people across the country; and firms need to make it easy to move from cash to investment.

Government can also play a role. It has already made building a stronger retail investment culture a stated priority. It can go further through policy certainty, regulation that supports economic growth and a tax structure that encourages investment.

Recent suggestions that capital gains tax rates should be increased work against this goal. A well-established economic principle is that you get less of what you tax. If increasing investment is the goal, increasing the tax on investment returns will only hurt that goal.

In addition to hindering investment, raising capital gains tax rates to equal income tax rates misses a crucial distinction: investment returns are not economically identical to a salary. A salary is paid regularly in return for work. Investment returns are uncertain. Investors commit money that has often already been taxed, accept the risk of losing some or all of it and may wait many years before receiving a reward. Taxing the two identically would ignore that one is earned income while the other is the uncertain reward for putting capital at risk over time.

What may appear to be a modest tax increase is more material than most realise. Consider someone investing £100,000 outside a tax-advantaged account and earning a 10 per cent return over one year. Assuming their £3,000 annual capital gains allowance has already been used, a £10,000 gain taxed at 24 per cent (the current capital gains tax rate) leaves them with £7,600. Taxed at 45 per cent, it leaves them with £5,500. The tax rate has risen by 21 percentage points, yet the investor’s after-tax return has fallen by almost 28 per cent.

People respond to incentives, and a significantly increased tax on investment returns changes the risk-reward calculation. Surveys have shown that UK consumers already overestimate by as much as seven times the probability of losing money from investing over a 10-year period. For households already hesitant to invest, a much smaller share of any return could be enough to keep their money in cash. Others might defer selling investments, concentrate more heavily on tax shelters or look to other markets with more favourable tax treatment.

These factors extend to private markets. Entrepreneurs and business owners often rely on private investment to give them the capital they need to grow. Thriving businesses create jobs, products and services that benefit consumers, and the dynamism that marks the world’s strongest economies. A higher capital gains tax will reduce projected returns for investors, diminishing both their willingness and capacity to deploy capital in the UK.  

Britain needs a capital gains tax regime designed for today’s circumstances. The government cannot ask people to invest more, entrepreneurs to take more risk and capital to back growing businesses while planning to take a much larger share of any reward. Any reform must therefore examine holding periods, the effect of inflation, tax allowances and how capital gains tax fits alongside Isas, pensions and general investment accounts.

There is a wider point about confidence. Investors are more willing to commit capital and take risk when the rules feel stable and understandable. Repeated speculation about major changes to capital gains tax, pensions or Isas encourages caution. It gives people another reason to wait when what we need them to do is plan, invest and build wealth over time.

The government has rightly emphasised its goal to spur economic growth and retail investment participation. It needs to follow through by judging any reform against a straightforward test: will it help more people invest with confidence and allow more capital to reach productive businesses? The answer to that question will do much to determine whether the UK’s investment culture strengthens or stagnates.

How AstraZeneca’s $400bn tie-up with US rival Bristol Myers unravelled

A merger between the giant drugmakers would have marked a return to pharma megadeals

AstraZeneca chief Pascal Soriot had repeatedly told investors he did not need a big deal to clinch his $80bn revenue target by the start of the next decade. But behind the scenes, Soriot was chasing a mega-merger.

Soriot had gained little traction in pursuing a transformative tie-up in recent years, with preliminary overtures to top executives at US rivals rebuffed, according to several people familiar with the matter.

In Chris Boerner, chief executive of US-based Bristol Myers Squibb, Soriot found a partner willing to contemplate a bold transatlantic tie-up.

The two companies held talks throughout the spring and summer. By early August, discussions over a mostly share-based deal in which AstraZeneca would buy BMS at a premium had reached a serious stage, some of the people said.

At the end of July, AstraZeneca had a market value of £196bn ($264bn), compared with BMS’s $133bn, underscoring the scale of the proposed transaction.

The two sides were nearing an agreement on price and discussions were under way with large US banks about financing the multibillion-dollar cash component.

Talks were advanced enough that AstraZeneca and BMS were eyeing an announcement date of mid-August, the people said.

Legal and financial advisers were working frantically to deliver on that target date.

But after the FT reported on August 2 that the companies were in talks over a $400bn tie-up that would create the world’s biggest drugmaker by revenues, 67-year-old Soriot’s hopes of sealing the blockbuster transaction unravelled.

By the time London markets opened on Monday August 3, AstraZeneca’s board of directors was already preparing to pull the plug.

News of the deal sent shockwaves through the pharma industry and the UK, where AstraZeneca, the FTSE 100’s second-biggest company, is viewed as a crown jewel of British industry.

Jitters among officials in Whitehall were acute enough that a cross-government team was set up to monitor developments, led by Varun Chandra, the top business adviser to the UK’s prime minister, and his team in Downing Street and the Cabinet Office, some of the people said.

Officials feared AstraZeneca could use a merger to become the latest British company to shift its centre of gravity to the US.

Shares in AstraZeneca slid, closing down 9 per cent on August 3, marking the worst trading day for the British drugmaker since the coronavirus pandemic shook markets in March 2020.

A chorus of investors, puzzled by the idea of AstraZeneca even entertaining a mega-merger, revolted against the potential agreement.

By the evening of August 3, AstraZeneca’s board, led by chair Michel Demaré, had issued the order to terminate the discussions. Neither company has formally commented on the talks.

AstraZeneca and BMS declined to comment for this article.

A deal between the drugmakers would have marked a pivot back to the swashbuckling era of tie-ups between giant drugmakers at the turn of the millennium, which minted many of today’s heavyweights including AstraZeneca, GSK, Merck and Pfizer.

The last wave of consolidation drew to a close at the end of the last decade with BMS’s own $74bn takeover of biotech Celgene, a deal that provoked significant investor backlash and has failed to yield returns some investors hoped for.

“This feels like an idea from a bygone era,” said Kosta Kleyman, a healthcare investor at Columbia Threadneedle, a shareholder in both AstraZeneca and BMS. “Why would AstraZeneca, which is viewed as having impressive growth, want to buy Bristol’s patent cliff when they could be buying promising biotechs?”

The talks have stoked investor fears about AstraZeneca’s confidence in its pipeline, which is among the industry’s deepest with a series of major oncology studies expected to report in the next 12 months.

BMS is also staring down a patent cliff, with nearly half of the company’s revenues under threat from patent expirations as soon as 2028 — which could have further complicated matters for AstraZeneca.

Investors have also raised questions about Soriot’s strategy as he enters his 15th year in the top job.

“In my eyes this would have been a mistake,” said Lukas Leu, a portfolio manager at Zurich-based ATG Healthcare Investments, an AstraZeneca shareholder. “Soriot already has his legacy and he has done really well in the past few years. There’s no need for something big like this.”

On top of political concerns in the UK, the deal faced other obstacles. Investors worried about the antitrust scrutiny a transaction of such a large size would have garnered. The companies both have large, well-regarded oncology divisions.

The deal was also becoming more expensive for AstraZeneca even before the FT’s report on the talks sent its shares falling.

BMS last month reported upbeat second-quarter results, prompting a rise in its share price, while AstraZeneca’s nerve damage drug Wainua did not meet its main goal in a trial on patients with heart disease, hurting its share price.

Despite the investor backlash against the potential BMS deal, Soriot’s tenure has in many ways been defined by large-scale dealmaking.

Less than two years into the top job, Soriot fought off a £69bn takeover offer from US rival Pfizer. The pushback against Pfizer’s swoop became a rallying cry for a turnaround at AstraZeneca, then an industry laggard, with Soriot promising to nearly double revenues to $45bn by 2023.

Thanks to a lucrative partnership with Japan’s Daiichi Sankyo over an important cancer drug and a $39bn acquisition of rare-disease drugmaker Alexion Pharmaceuticals, AstraZeneca breezed past its 2023 target.

A year later, Soriot set a new target of $80bn in sales by 2030, which many analysts expect the company to meet. AstraZeneca generated $58.7bn in revenues last year.

A combination with BMS would have vaulted the combined company to more than $100bn in annual revenues. It also would have further shifted AstraZeneca’s centre of focus towards its biggest market, the US, and away from the UK.

Soriot has been vocal in his criticism about the UK public health system’s reluctance to pay for the best medicines and about investors’ scrutiny of his £17.7mn pay package, despite it being less than many US rivals.

In February, AstraZeneca listed its shares on the New York Stock Exchange, boosting the status of its US listing in a bid to broaden its international investor base even as it retained its UK headquarters.

A merger would likely have been accompanied by a major cost-cutting drive, analysts said. But it also would have left AstraZeneca exposed to BMS’s shrinking revenues from blockbuster drugs, chief among them blood thinner Eliquis, which is set to face generic competition by 2028.

“The financial synergies are relatively easy to model, but history suggests the harder challenge is preserving scientific innovation and research productivity while integrating two organisations of this size,” said Evangelos Assimakos, a senior investment director at Rathbones, an AstraZeneca shareholder.

For one BMS shareholder, who asked not to be named, the logic of a combination with a superior rival was clear. But for the British drugmaker, “it feels like Astra is just trying to get out of England”.