Business Irish

Thursday 26 April 2018

Pfizer-Allergan break-up lets markets eye M&A

Traders work on the floor of the New York Stock Exchange. Photo: Reuters
Traders work on the floor of the New York Stock Exchange. Photo: Reuters

European stock markets rose by late afternoon yesterday, boosted by pharma companies as the $160bn mega-merger between Pfizer and Allergan unravelled as President Obama sought to thwart tax-focused corporate mergers.

The giant would have had its headquarters in Ireland.

News that the rug had been pulled from under the merger sent shares in UK drug companies such as Shire and AstraZeneca higher as mergers and acquisitions activity was put back in focus.

A rebound in oil prices and data from China also helped stocks.

Traders said the pharma sector in the UK was rallying on the possibility that British drug companies might be back in play.

"The possibility now is that Pfizer goes shopping again, and you might be prepared to develop a case that maybe a firm like Shire becomes the bid target," said Chris Beauchamp, market analyst at IG.

"The implications of the new rules would have to be worked out, but if you've got cash sloshing around the sector, people are wondering who will benefit."

There were several broker notes from the likes of Credit Suisse, saying that Shire's bid for Baxalta is likely go ahead despite the new ruling.

In Ireland, the Overall ISEQ Index had dipped slightly by late afternoon and was just 0.53pc lower near the close, at 6,189.82.

Stocks that were active included Ryanair, which shed 3.8pc, or 53 cent, to €13.32 as the closing bell loomed.

It fell as EasyJet's passenger numbers disappointed investors. Shares in the Ryanair rival declined about 3pc.

Airlines were among biggest fallers on the FTSE. Traders said the figures showed that Easyjet was underperforming the likes of Ryanair, which produced stronger figures last month.

"Budget airline EasyJet's latest figures disappointed investors," AJ Bell investment director Russ Mould said.

"Passenger numbers rose in March but the load factor fell after the airline was forced to cancel hundreds of flights, principally due to strike action in France," he noted.

British Airways and Aer Lingus owner IAG was down 2.5pc in London.

Back on the ISEQ, Bank of Ireland was 2.7pc lower at 25 cent as the end of the session neared, while both CRH and C&C were on track to claw back some of the losses they notched up on Tuesday.

The UK's FTSE-100 was 1.1pc higher, while France's CAC-40 was up 0.7pc. Germany's DAX was 0.6pc higher. Miner Glencore shed 1.2pc after agreeing to sell 40pc of its agricultural business to Canada's state pension fund to cut debt.

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