Allergan Could Be the Buyer in Pfizer DealHaving Allergan as buyer could make it easier to sidestep crackdown on inversion dealsAllergan PLC and Pfizer Inc. are considering structuring a merger of the drug companies so that it is an acquisition of Pfizer by Allergan, according to people familiar with the matter.However the deal is technically structured, the much larger Pfizer will effectively be buying Allergan and assuming a lower offshore tax jurisdiction. Allergan shareholders would receive a premium and end up with 40% to 45% of the combined company, some of the people said. The deal is expected to be mainly in stock, but it could contain a small cash component, they said.While the timing could get sped up, the two sides are likely to strike a deal in seven to 10 days—assuming the talks don’t fall apart, the people said.It is unclear why Allergan would be the acquiring entity, but the move could make it easier for the companies to sidestep a government crackdown on so-called inversion deals, in which a U.S. company buys a smaller foreign rival and moves its tax headquarters abroad. The U.S. Treasury has indicated that it could soon tighten rules aimed at discouraging such deals.The tie-up is expected to value each Allergan share at just over 11 Pfizer shares. While that means the price will move around, as of Thursday’s close it values Allergan at about $355 a share.Pfizer shares fell 3.1% to $32.29, hurt by fears of the impending Treasury crackdown. Allergan stock fell 2.8% to $302.05. Before The Wall Street Journal first reported on the merger talks late last month, Allergan stock traded at $287.04.Allergan’s market value currently stands at $122 billion, while Pfizer’s is $206 billion.
Closing Market Summary: Stocks End Flat Amid Weakness in Energy and Health Care
The stock market ended the Thursday session on a flat note after spinning its wheels throughout the day. The S&P 500 shed 0.1% after spending the day in an eight-point range while the Nasdaq Composite (unch) outperformed slightly. Despite today's sluggish performance, the S&P 500 is set to enter Friday with a solid week-to-date gain of 2.9%.
Equities began the trading day just below their flat lines due to daylong weakness in two relatively large sectors. To that point, health care (-1.6%) and energy (-1.3%) struggled from the start with the health care space responding to a 5.7% dive in the shares of UnitedHealth (UNH 110.57, -6.68) after the insurer lowered its guidance, citing exposure to public exchanges. To be fair, UNH was not the only soft spot as biotech names also lagged with iShares Nasdaq Biotechnology ETF (IBB 333.42, -5.32) ending lower by 1.6%.
For its part, the energy sector struggled throughout the day, ending well behind the broader market despite an afternoon rebound in crude oil, which narrowed its loss to 0.5%, ending the pit session at $40.54/bbl.
Elsewhere among cyclical sectors, the discretionary space ended just above its flat line, which masked a 2.1% slide in the shares of Best Buy (BBY 30.66, -0.67) after the electronics retailer issued cautious guidance. Speaking of guidance, chipmaker heavyweight, Intel (INTC 34.30, +1.14), surged 3.4% after guiding in-line and boosting its annual dividend by eight cents to $1.04. Intel's outperformance contributed to a 0.4% gain in the top-weighted technology sector while the PHLX Semiconductor Index added 0.2%. The chipmaker index was held back from registering a larger gain due to a 12.0% plunge in SunEdison (SUNE 2.86, -0.39) after Blackstone denied having interest in backstopping SUNE.
Similar to technology, the industrial sector (+0.4%) ended well ahead of the broader market. Transport stocks contributed to the relative strength, evidenced by a 1.0% gain in the Dow Jones Transportation Average.
Moving back to the countercyclical side, consumer staples (+0.3%), telecom services (+0.5%), and utilities (+1.0%) held gains throughout the day, ending near their highs.
Unlike stocks, Treasuries climbed into the afternoon before surrendering about a third of their gains. That being said, the 10-yr note settled comfortably in the green with its yield slipping three basis points to 2.24%.
Today's participation was below recent averages as fewer than 800 million shares changed hands at the NYSE floor.
Economic data reported today included Initial Claims, Philadelphia Fed Survey, and Leading Indicators:
- The latest initial claims report didn't provide any real surprises as initial claims for the week ending November 14 fell by 5,000 to 271,000 (consensus 272,000) without any special factors driving the slight improvement
- Continuing claims for the week ending November 7, meanwhile, dipped by 2,000 to 2.175 million (consensus 2.164 million)
- The four-week moving average for initial claims bumped up to 271,000 from 268,000
- Manufacturing conditions in the Philadelphia Fed region improved in November, evidenced by the General Business Activity Index rising to 1.9 from -4.5 in October while the consensus estimate called for a reading of -1.0
- This was the first positive reading in three months
- The dividing line between expansion and contraction for this particular survey is 0.0, so it can be said manufacturing activity in the Philadelphia Fed region is back in expansion territory, albeit only slightly
- The Leading Indicators report for October was up 0.6%, which is what the consensus expected
Investors will not receive any economic data tomorrow.
- Nasdaq Composite +7.1% YTD
- S&P 500 +1.1% YTD
- Dow Jones Industrial Average -0.5% YTD
- Russell 2000 -3.0% YTD
{http://warmonitor.net/news/2015/09/07/russian-submarine-hauling-nuclear-warheads-en-route-to-syria/}
In what could be a major escalation in tensions between Russia and the West, Israeli media reported that the world’s largest submarine, the Dmitri Donsky, has been sent to the Syrian coast in what appears to be a heavy display of nuclear force. The submarine, deemed the “Typhoon” by NATO, is stocked with 20 Bulva intercontinental ballistic missiles, with a combined capability of carrying up to 200 nuclear warheads. The nuclear missiles have a range of over 6,000 miles, placing them well within reach of North America’s East coast.
This would likely be in response to a warning issued by the United States to Moscow over a Russian military buildup currently unfolding in Syria. Russia has dismissed these claims despite multiple intelligence sources stating otherwise. It’s also been discovered that Russia has been transporting high grade weapons over the past few months to Syrian President Assad’s forces, for use against the US-backed rebel fighters in the country. There are currently nearly a dozen nations conducting airstrikes against targets in Syria as part of a US backed coalition against ISIS. Britain and France are also considering the use of military force inside Syria in response to the Syrian refugee crisis currently taking place in Europe.
This would mark the first time that nuclear assets were brought to the table in a series of tit-for-tat scenarios since tensions between Russia and the West began to escalate following the annexation of Crimea from Ukraine last year. The introduction of this submarine is being taken as a bold message that Moscow will not allow the US to impede on its military intervention in Syria, demonstrating that Russia is willing to go through great extremes in supporting Assad’s regime.
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The Typhoon departed from its North Sea base on September 4th, and is being escorted by two anti-submarine warships. It will take approximately ten days for the underwater vessel to reach its destination. There is currently no way of knowing how the Pentagon might respond to such a move from the Kremlin, but it’s possible that the West may counter by introducing its own nuclear capabilities into the mix as a deterrent. This would likely result in a series of escalations that could gradually increase the potential for a new nuclear stand-off between the two military superpowers.
This comes at a time when just today, Russian President Vladimir Putin also placed military forces on high alert, likely for the purpose of conducting snap drills in a continued attempt to flex muscle toward the West.
EXCLUSIVE-Pfizer negotiating 2-3 pct Allergan break-up fee -sources - RTRS
19-NOV-2015 07:41:33
Nov 19 (Reuters) - Pfizer Inc PFE.N is negotiating a break-up fee in the range of 2 to 3 percent of the value of its roughly $150 billion potential acquisition of Allergan Plc AGN.N, proportionally in line with other deals, people familiar with the matter said.
A break-up fee of that order in the merger agreement would show that Pfizer and Allergan do not see regulatory risk as an existential risk to their deal, despite the U.S. Treasury planning this week to tighten the rules on corporate tax inversions, a key aspect of their plan.
The break-up fee in the Pfizer-Allergan deal would still be one of the highest ever agreed because the deal itself would be one of the biggest mergers ever. Break-up fees however are set in relation to the target company's size, and one of the people said the break-up fee in the Pfizer-Allergan deal would proportionally be at the lower end of comparable transactions.
The sources, who asked not to be identified because the negotiations are confidential, cautioned that the break-up fee and other aspects of the deal have not been finalized, and that the companies were still waiting for the Treasury to unveil its updated rules on inversions.
Pfizer and Allergan both declined to comment.
* Gameloft & Vivendi : AMF Source - Vivendi just announced they passed 15% treshold in GAMELOFT last Nov 13.
Since then, Vivendi own 17.34% of the K and 15.34% of the VR. ( or 14 745 617 shares). Intentions remains the same as the one mentionned last Nov 13.
Benoît Potier says there is a ‘very compelling’ strategic case for takeover bid
Benoît Potier, chief executive of Paris-based Air Liquide, had reached the most sensitive phase of negotiations to buy Airgas of the US when the terrorist attacks of November 13 hit his home city, killing 129 people.
He was at home, watching the terrible news come in all night. “Your kids are out having parties: my daughter was in one of those restaurants just a week ago. So it’s a big shock,” he said.
The terrorist attacks provided a sombre backdrop for the final stages of the negotiations, but the two companies concluded a deal, resulting in Tuesday’s announcement of Air Liquide’s agreed takeover of Airgas for $13.4bn including debt.
The deal is an ambitious move, one of the largest acquisitions of a US materials company by a European group. It will make Air Liquide the world’s largest supplier of industrial gases, which include oxygen, nitrogen, hydrogen, carbon dioxide and helium, used in industries such as manufacturing, construction and healthcare.
The initial reaction from the stock market, though, was unenthusiastic. Air Liquide’s shares fell 7 per cent on Wednesday, as investors digested what was described by David Silver, an analyst at Morningstar, as a “generous” price. They also worried about Air Liquide taking on more debt to increase its exposure to US manufacturing, which has shown unimpressive growth this year, in part because of the commodity price slump.
Mr Potier believes that adverse reaction will prove shortlived. “We lost 7 per cent, which is not good,” he told the Financial Times in New York on Wednesday. “But we just need to wait another week or so, and give time to absorb the news, and the time it takes to recognise the value.”
There is no doubt that the offer looks attractive for Airgas shareholders. At $143 in cash per share, it is at a 51 per cent premium to the average Airgas share price over the past month.
It is also double the $70 per share that Air Products, another US gases company, offered to pay in a hard-fought hostile takeover battle in 2010-11. That bid eventually failed when a court in Delaware upheld Airgas’s “poison pill” defence.
Since then, the S&P 500 index has risen 56 per cent, and Air Products shares by about the same amount, while Airgas’s stock has increased 117 per cent.
The Air Liquide deal is a personal vindication for Peter McCausland, who founded Airgas in the early 1980s and is now executive chairman.
“They’ve made a good offer for our shareholders, and we’re all about creating value,” he told the FT.
He and Mr Potier agree, though, that the bid terms are justified by the “very compelling” strategic case for the deal.
First, said Mr Potier, although Airgas’s core business of distributing “packaged” gases, in cylinders or other small quantities, might seem unglamorous, it was actually a very attractive market. There was plenty of repeat business, cash flow was strong, and Airgas has been successful in adding sales of related products and services alongside its gas distribution.
“The merchant business is not exciting: it is a little bit cumbersome, boring,” said Mr Potier. “[But] this is a simple, small but very, very efficient business.”
Putting Air Liquide’s production and bulk sales together with Airgas’s distribution would create a vertically integrated company that can capture opportunities for profit wherever they emerge, he added.
Second, there is a real prospect that technology will shake up the gas distribution business. The “industrial internet” — equipment fitted with sensors and communications to generate data that can be analysed to improve performance — is likely to mean that significant long-term productivity gains will be possible in the gas cylinder business, Mr Potier believes.
Third, the deal sharply increases Air Liquide’s exposure to the US, which is expected to be the best market for industrial gases in the developed world over the next half-decade. In 2014 the company made 24 per cent of its revenues in the Americas. Adding in Airgas, which makes almost all of its sales in the US, that proportion would rise to 42 per cent.
Although US manufacturing has been affected by falling commodity prices, which have hit demand for products such as mining equipment and the steel tubes used in oil and gas wells, Air Liquide still expects the US industrial gases market to grow by about 4.4 per cent every year from 2014 to 2020. That is much faster than the expected annual growth of 2 per cent to 2.5 per cent in Europe, and just 1 per cent to 2 per cent in Japan.
Air Liquide’s executives are confident the potential pitfalls of the deal are surmountable. US antitrust regulators may order some asset sales, Mr Potier expects, but the amounts are likely to be “reasonable”.
Paying for the deal means Air Liquide taking on a lot of debt: essentially the entire $13.4bn price as a bank bridging loan. That will be refinanced as soon as possible through bond sales, bank loans and a €3bn to €4bn share issue, so the company can keep an A or A-minus credit rating.
With ample liquidity making the deal possible, said Mr Potier, this was actually a good time to be buying Airgas, in spite of appearances.
“We’ve been absorbing the shock in the US of the low oil price, and I don’t know exactly how long it will take, but the US market is going to rebound,” he said.