Pfizer walks away from $118 billion AstraZeneca takeover fight

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

Asian shares dip, crude oil extends losses

TOKYO Asian shares slipped on Tuesday as a downturn in crude oil curbed enthusiasm from fresh record highs on Wall Street, prompting investors to take profits on recent market gains.The subdued mood was expected to extend into European trading, with financial bookmakers at CMC Markets calling Britain's FTSE 100 .FTSE to open 16 points lower, Germany's DAX .GDAXI to open down 32 points, while France's CAC .FCHI was seen down 15 points.MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.3 percent, off session lows but still moving away from a nine-month high touched last week which put it into technically overbought territory. China's yuan steadied against the dollar, a day after slipping below the psychologically important 6.7 level for the first time in more than five years. Still, traders expect downward pressure on the currency to persist.China stocks were lower, with the CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen down 0.7 percent and the Shanghai Composite Index .SSEC down 0.6 percent. On Monday, the Dow Jones industrial average .DJI and the S&P 500 .SPX both hit new peaks on hopes that declining U.S. corporate earnings are turning around. [.N]"It's hard to maintain consistent optimism when markets attain such high levels, and some profit-taking is natural," said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank in Tokyo, who noted that weaker oil prices were taking their toll on related sectors. Pressure remained on crude oil prices after they settled down more than 1 percent on Monday, as rising stockpiles of crude and refined fuel intensified fears of another major supply glut. [O/R] Brent crude LCOc1 was 0.2 percent lower at $46.86 a barrel, after shedding 1.4 percent on Monday. U.S. crude CLc1 was also down 0.2 percent at $45.13, after dropping 1.6 percent overnight, with investors mixed on oil's near-term direction. "Prices are a bit softer in the Asian trading period - traders and investors are torn which way prices are going to break. It's a knife edge between optimism and pessimism," said Ben Le Brun, market analyst at Sydney's OptionsExpress.Japan's Nikkei stock index .N225 ended up 1.4 percent, as markets reopened after a public holiday on Monday and responded to a weaker yen. In the previous week, the benchmark index had gained 9.2 percent to notch its biggest weekly gain since December 2009, helped by Wall Street as well as expectations that the Bank of Japan will deliver further stimulus as early as its next policy meeting later this month. Japanese policymakers won't go as far as funding government spending through direct debt monetization, but might pursue a mix of aggressive fiscal and monetary expansion to battle deflation, according to sources familiar with the matter.A failed coup in Turkey had dented risk sentiment and bolstered the perceived safe-haven yen before it ran its course. On Monday, Turkey purged its police force after rounding up thousands of soldiers and called for the United States to hand over a cleric that the Turkish government accuses of being behind the takeover attempt.The dollar took a step back after climbing to more than three-week highs against the yen. It was last down 0.1 percent at 106.09 yen JPY=, after rising as high as 106.33 earlier in the session, its highest since June 24. The euro EUR= was steady against the dollar at$1.1074. The European Central Bank will hold a regular policy meeting on Thursday, its last one before an eight-week summer break. It is not expected to take any additional easing steps. Instead, ECB President Mario Draghi is likely to appeal to governments to do more to bolster the euro zone economy in the wake of Britain's vote last month to exit the European Union. Some bond traders believe the ECB might address scarcity of bonds it can buy under its 1.7 trillion euro stimulus program, with more than a half of German bonds now ineligible.The dollar index .DXY, which gauges the greenback against a basket of currencies, edged slightly higher to 96.584.Spot gold XAU= was slightly down at $1,327.70 an ounce, after dropping as much as 1 percent on Monday. [GOL/] (Additional reporting by Keith Wallis in Singapore; Editing by Eric Meijer and Kim Coghill) Read more

U.S. banks' wealth management profit engine seen stalling

NEW YORK Big U.S. banks looking to wealth management to shore up their profits may have to wait for another year according to analysts, who expect market volatility to keep the business subdued throughout 2016.For years, wealth management has been banks' crown jewel - a source of high margins and growth in an increasingly challenging regulatory and market environment. But lately that jewel has been losing its luster. The biggest U.S. wealth managers have been reporting slower profit growth and slipping margins in recent quarters as confusion about markets' direction sapped demand for their services in favor of safe assets, such as cash.Now, as banks kick off second-quarter reporting this week, analysts expect more weakness this year, citing uncertainty related to Britain's June 23 decision to leave the European Union, U.S. elections and the Federal Reserve's policy."The market instability from Brexit will definitely put pressure on (wealth management) goals," said Stephen Biggar, head of financial services equity research at Argus.On Friday, Barclays analysts cut second-quarter earnings estimates for Morgan Stanley based partially on an expectation of "below trend growth" in wealth management. They also expect lower revenues at wealth units of Bank of America Corp and Wells Fargo & Co."Banks promised investors wealth management (returns), and the business has just been meh," said Ryan Caldwell, chief investment officer of Chiron Investment Management LLC in Kansas City, which invests in bank stocks.Profit margins at the wealth management arms of UBS and Morgan Stanley fell 16 percentage points and 1 point respectively in the first quarter over the same quarter last year. Wells Fargo Advisors' net income fell 14 percent last quarter over the previous year, according to financial reports. Barclays projects that Morgan Stanley's margins will stay at around 21 percent in the second quarter.Until conditions improve, "investors are going to be wondering how banks are going to drive returns," Caldwell added.Faced with market volatility and uncertainty, investors have amassed their largest cash pile since 2001 and equity holdings are at a four-year low, according to a Bank of America Merrill Lynch study released in mid-June. That trend hurts wealth managers' ability to generate fee income from managing clients' assets. The weakened wealth business leaves banks scrambling to generate profits as they have to contend with low interest rates, weak loan demand, poor trading conditions, a dearth of investment banking activity and escalating regulatory costs.Banks have long touted wealth management as a remedy - a source of a steady stream of fees from a growing pool of assets. Top executives have also promised investors fat margins from the business, betting that wealth clients will come to them for other financial services, like loans."We decided it was very important to add ballast to our institution to give us protection during a period of downside," Morgan Stanley CEO James Gorman said in June. "Wealth and asset management business is now almost exactly 50 percent of our firm revenues." Gorman has promised the wealth business will bring pre-tax profit margins of 25 percent by next year. Last quarter, however, Morgan Stanley struggled to reach a 21 percent margin and analysts doubt such lofty goals are within reach anytime soon. Compliance costs are another concern. The Labor Department estimates that a rule it issued in April will cost the wealth management industry between $10 and $31 billion in technology, legal counsel, training and new sales policy fees over the first decade.That comes on top of routine compliance expenses, including fines issued by the Financial Industry Regulatory Authority or the U.S. Securities and Exchange Commission, which have been cracking down on risky behavior."Wealth management fees are under pressure and regulators are looking at these (businesses) with more scrutiny," said Ryan Kelley, portfolio manager of the Hennessy Large and Small Cap Financial Funds in Novato, California, which invests in bank stocks. (Reporting By Elizabeth Dilts, additional reporting by Olivia Oran in New York; Editing by Lauren Tara LaCapra and Tomasz Janowski) Read more

Pfizer walks away from $118 billion AstraZeneca takeover fight

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

Pfizer walks away from $118 billion AstraZeneca takeover fight

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

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