Comment: Deal activity in pharma sector props up European stock markets
April 22, 2014 6:13 am
Equities in Europe up a touch, spurred on by deal activity in the pharma sector together with a respectable performance on Wall Street overnight after US markets reopened following the Easter break – the S&P500 rose 0.4%. Earnings helped US stocks– Netflix and Halliburton both reported better than expected quarterly reports. Leading indicators data hit its highest level since November last year, adding further support to stock markets.
Asian share markets overnight were mostly mixed, supported by the positive momentum in Wall Street but still capped by geopolitical tensions together with growth worries about China ahead of this week’s manufacturing PMIs. Market participants are concerned that policymakers in China are comfortable with growth slipping further which could trigger a stimulus response by the PBoC.
Here in Europe, worries about the crisis in Ukraine heating up are certainly not helping risk-sentiment but financial market participants are generally feeling upbeat on the back of some high profile deal activity in the pharma sector. GlaxoSmithKline shares rally after the group sells its oncology unit to Novartis for $14.5billion Both Glaxo and Novartis agreed to swap a number of assets which will see a combined-consumer healthcare business in a joint venture controlled by Glaxo. Additionally, Glaxo said will return around £4billion to shareholders following the restructuring of the business.
Welcome news for Glaxo shareholders; the company managed to dispose of the oncology business which was suffering against the oncology units at global peers such as Roche and AstaZeneca. The combined consumer healthcare business controlled by GSK should also cheer investors given the current strength of Novartis’s consumer healthcare portfolio.
Meanwhile at AstraZeneca, Pfizer was over a few months ago with a tentative takeover approach worth around $100b which would be the biggest ever deal in pharma industry history if it was to happen – that would be roughly around £48 per share which is 25% above AZN’s closing stock price –a decent premium. That said, talks are said to have ended and took place informally at the end of 2013. Pfizer however has valid reasons to rekindle this approach given the promising drug pipeline at AstaraZeneca.
Furthermore, a combination of both companies would help with reducing huge costs – so although talks have ended for now, market participants are expecting AstraZeneca to now be in the spotlight as an attractive takeover candidate by not only Pfizer but other global pharma firms. Looking ahead, little on the European economic agenda with the focus on US housing data and the Richmond Fed manufacturing index. In terms of earnings, Lockheed Martin, Xerox and McDonald’s report numbers.
Equities in Europe up a touch, spurred on by deal activity in the pharma sector together with a respectable performance on Wall Street overnight after US markets reopened following the Easter break – the S&P500 rose 0.4%. Earnings helped US stocks– Netflix and Halliburton both reported better than expected quarterly reports. Leading indicators data hit its highest level since November last year, adding further support to stock markets.
Asian share markets overnight were mostly mixed, supported by the positive momentum in Wall Street but still capped by geopolitical tensions together with growth worries about China ahead of this week’s manufacturing PMIs. Market participants are concerned that policymakers in China are comfortable with growth slipping further which could trigger a stimulus response by the PBoC.
Here in Europe, worries about the crisis in Ukraine heating up are certainly not helping risk-sentiment but financial market participants are generally feeling upbeat on the back of some high profile deal activity in the pharma sector. GlaxoSmithKline shares rally after the group sells its oncology unit to Novartis for $14.5billion
Both Glaxo and Novartis agreed to swap a number of assets which will see a combined-consumer healthcare business in a joint venture controlled by Glaxo. Additionally, Glaxo said will return around £4billion to shareholders following the restructuring of the business.
Welcome news for Glaxo shareholders; the company managed to dispose of the oncology business which was suffering against the oncology units at global peers such as Roche and AstaZeneca. The combined consumer healthcare business controlled by GSK should also cheer investors given the current strength of Novartis’s consumer healthcare portfolio.
Meanwhile at AstraZeneca, Pfizer was over a few months ago with a tentative takeover approach worth around $100b which would be the biggest ever deal in pharma industry history if it was to happen – that would be roughly around £48 per share which is 25% above AZN’s closing stock price –a decent premium. That said, talks are said to have ended and took place informally at the end of 2013. Pfizer however has valid reasons to rekindle this approach given the promising drug pipeline at AstaraZeneca.
Furthermore, a combination of both companies would help with reducing huge costs – so although talks have ended for now, market participants are expecting AstraZeneca to now be in the spotlight as an attractive takeover candidate by not only Pfizer but other global pharma firms. Looking ahead, little on the European economic agenda with the focus on US housing data and the Richmond Fed manufacturing index. In terms of earnings, Lockheed Martin, Xerox and McDonald’s report numbers.
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