Paw Print Rewind #031

Editor’s Note: This is the Paw Print Rewind, a daily recap of the top news headlines.

Anthem buying Cigna to create biggest U.S. health insurer

Anthem

Anthem will buy Cigna for about $54.2 billion to create the largest U.S. health insurer by membership and accelerating the industry’s consolidation from five national players to three.

The proposed acquisition comes after Aetna agreed to buy Humana for $37 billion.

Buying Cigna will help Anthem reduce costs and negotiate lower prices with doctors and hospitals, according to Anthem.

“The lack of a competitive health insurance market allows the few remaining companies to exploit their market power, dictate premium increases, and pursue corporate policies that are contrary to patient interests.”

-The American Medical Association (AMA)

Under the deal, which expects to be closed by the companies in the second half of 2016, Anthem CEO Joseph Swedish would serve as the combined companies’ CEO and chairman. Cigna CEO David Cordani would be president and chief operating officer.

“Strategically and financially, it’s very attractive, but they will face regulatory scrutiny. They also both possibly face divestitures and may have to make concessions to consumers to make the merger go through.”

-Ana Gupte, Leerink Partners analyst

41% of U.S. metropolitan areas already have a single health insurer with a commercial market share of at least 50%, according to the AMA.

“It is imperative that we closely examine changes in the healthcare market, and what has caused these changes, to ensure that consumers are not harmed.”

-Mike Lee, Utah senator (R)

WTO slashes tariffs on IT goods; implementation held up

The World Trade Organization has finalized a list of 201 information technology (IT) products to be freed from import tariffs in a $1.3 trillion deal, according to the organization, but it is still short of the critical mass of countries needed to put it into force.

The first global tariff-cutting deal in 18 years will mean consumers should pay less for products like computers, touchscreen devices, videogame consoles, and hi-fi systems, while companies will see cuts in the cost of machine tools and components.

“Today’s agreement is a landmark.”

-Roberto Azevedo, World Trade Organization director-general

The value of trade involved was worth seven percent of the global total, according to Azevedo.

The products included include new-generation semiconductors, GPS navigation systems, medical products like magnetic resonance imaging machines, printed circuits, and satellites, according to the WTO.

Once in force, the agreement will update the Geneva-based company’s 18-year-old Information Technology Agreement to add the 201 products to the list of goods covered by zero-tariff and duty-free trade.

Removing tariffs on $1.3 trillion of trade is expected to give a $190 billion boost to the global economy.

However, five of the 54 WTO members responsible for the deal (Taiwan, Turkey, Thailand, Colombia, and Mauritius) failed to sign up, leaving the deal short of a quorum, measured as 90% of world trade in those products, needed to bring it into force for all 161 WTO members.

“The majority have already confirmed their participation. We expect those participants who didn’t, that they will soon, and others who haven’t even participated before have expressed their interest in joining.”

-Roberto Azevedo

“This was the best possible outcome.”

-Michael Punke, U.S. Ambassador

More than $100 billion of U.S. exports alone would be covered by the updated agreement, according to U.S. trade representative Michael Froman.

“ITA’s expansion is great news for the American workers and businesses that design, manufacture, and export state-of-the-art technology and information products, ranging from MRI machines to semiconductors to video game consoles.”

-Michael Froman, U.S. trade representative

“This deal will cut costs for consumers and business – in particular for smaller firms, which have been hit especially hard by excessive tariffs in the past.”

-Cecilia Malmstrom, EU trade commissioner

Tech companies like General Electric, Microsoft, Intel, Texas Instruments, and Nintendo are among those expected to benefit from the deal.

“[The deal] definitely impacts Intel and that’s important, but also as important are the other technologies that it covers that were not even dreamt of when the original ITA was negotiated.”

-Lisa Malloy, Intel communications director

AbbVie’s revenue below expectations on lower Humira sales

abbvie

 

AbbVie’s quarterly revenue was lower than analyst expectations for the first time in six quarters, sparking concerns over slower growth for its flagship Humira arthritis drug.

Total Humira sales were $3.54 billion in the quarter that ended on June 30th, which is down 7.6% from a year ago, according to the North Chicago, IL-based company.

The drug accounted for 55% of the company’s revenue in the latest quarter.

AbbVie blamed changes in shipment timing and a strong dollar for a 14.3% drop in international sales in the three months before June.

“We have seen no impact of Remicade’s biosimilar on Humira sales.”

-Richard Gonzalez, AbbVie CEO

The company reported sales of $277 million of the hepatitis C treatment drug Viekira Pak in the United States.

AbbVie’s revenue rose 11% to $5.48 billion in the second quarter.

Excluding special items, the company earned $1.08/share.

Teva buys Allegan’s generic business for $40.5 billion, drops Mylan bid

Teva Pharmaceutical Industries Limited

Teva Pharmaceutical Industries will pay $40.5 billion in cash and stock for Allergan’s generic drugs business.

“Allergan’s business is more high-end [than Mylan]. It’s a more interesting business, a profitable business, and it’s well managed.”

-Gilad Alper, Excellence Nessuah analyst

Allergen will use the $36 billion in net proceeds from the generics sale to help fund further acquisitions, according to company CEO Brent Saunders.

“We can accelerate our timing on transformational M&A.”

-Brent Saunders, Allergan CEO

Aesthetics, eye care, central nervous system disorders, and gastrointestinal therapies were cited by Saunders as potential future deal areas.

Baidu profit weighed down by offline mobile services push

Baidu

Baidu’s selling, general, and administrative expenses jumped 81%, mainly due to promoting “online to offline” services, while R&D costs rose 56.2% primarily due to hiring more personnel.

The Beijing-based company’s net profit rose 38.3% to $2.57 billion, with the mobile business contributing half of the revenue.

Net income attributable to Baidu rose 3.2% to $568.56 million. On a per share basis, the company earned $1.58/American depositary share.

McGraw Hill Financial buying SNL Financial for $2.23 billion

McGraw Hill Financial

McGraw Hill Financial, the parent company of Standard & Poor’s rating agency, is buying data company SNL Financial for about $2.23 billion.

The deal will strengthen McGraw Hill’s S&P Capital IQ data analysis unit, according to the New York-based company, particularly in providing information on banking and insurance.

Tax benefits of about $550 million will mitigate the acquisition’s financial impact, according to a McGraw Hill statement.

McGraw expects the deal to add to diluted earnings per share in 2016, according to the company, excluding amortization and special items.

SNL Financial, owned by private equity firm New Mountain Capital, has about 3,000 employees in 10 countries.

Evercore Partners and Goldman Sachs acted as financial advisors and Wachtell, Lipton, Rosen & Katz, along with Clifford Chance LLP were McGraw Hill Financial’s legal advisors. SNL Financial received legal counseling from Fried, Frank, Harris, Shriver & Jacobson LLP.

BlackRock dives into private deals as banks shy away

BlackRock

BlackRock is looking for energy and infrastructure projects in the U.S., Mexico, and Asia that its institutional clients can invest in, according to company institutional business head Mark McCombe.

BlackRock is trying to build a name for itself in private financing deals to attract and please yield-hungry clients like U.S. pension funds, according to McCombe.

“We are doing more direct deals, so it means our name is going to be more prominent and hopefully, people will see the name and approach us with more deals.”

-Mark McCombe, BlackRock institutional business head

The New York-based company is also looking for more deals in asset management technology, like its investment in Wall Street-backed research and data digital marketplace Symphony Communications Services.

“We love energy and we love anything that has the characteristics of becoming too expensive for the banks to warehouse.”

– Mark McCombe

Gaddafi’s son, eight others sentenced to death: Libyan court

Saif al-Islam, Muammar Gaddafi’s most prominent son, and eight other former officials have been sentenced to death over war crimes including killing protesters during the 2011 revolution that ended Gaddafi’s rule.

The former Gaddafi regime officials sentenced to die by firing squad include former intelligence chief Abdullah al-Senussi and ex-prime minister Baghdadi al-Mahmoudi, according to Tripoli state prosecutor’s office chief investigator Sadiq al-Sur.

The trial process and outcome drew condemnation abroad, with Human Rights Watch calling it riddled with legal flaws and carried out amid widespread lawlessness undermining the judiciary’s credibility.

Eight former officials received life sentences and seven got 12-year jail terms each, according to al-Sur. Four of the 37 defendants were acquitted, while others got shorter jail terms.

The sentences can be appealed and must be confirmed by Libya’s Supreme Court.

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