tv Worldwide Exchange CNBC May 13, 2014 4:00am-6:01am EDT
welcome to "worldwide exchange." i'm ross westgate. >> these are your headlines from around the world. shares in astrazeneca higher as pfizer makes a final push to convince the uk that its offer for the drugmaker has value. the hearing with british lawmakers kicking off in 30 minutes. stronger earns out of europe may help boost the market. socgen lays out a three-year
plan. >> we see russia as a large, promising market. we won't change our mind. there's more to be done in this market. and more warning signs out of china, investment, retail and factory data all disappointing in april with data hitting multiyear lows. you're watching "worldwide exchange," bringing you business news from around the globe. and a warm welcome to tuesday's edition of "worldwide exchange." plenty to come through on the show today. are you looking forward to it? >> happy tuesday. >> happy tuesday, everyone. we'll get opec's latest report. retail sales coming out of the u.s. as well. but before all of that we continue to look at m&a on the
astrazeneca/pfizer story. >> pfizer making its last push reiterating to uk jobs and r&d if the proposed deal goes ahead. the ceos of pfizer and astrazeneca are due to appear before uk lawmakers in london very shortly. the unions make their way starting in 30 minutes time. then pfizer ceo ian reed is in an an hour after astrazeneca's ceo will appear. katherine is in westminster. if we strip out some of the emotion from this story, what are the rational reasons for preventing this bid from pfizer from going ahead? >> the racheltional reasons see
be what they will talk about. they want to keep 20% of r&d in the uk for five years. i lot of people saying that may or may not be legally binding. we'll see ian reed hold over the call here, discussion of obscure uk takeover law and all sorts of different angles on this story. we'll be talking to a lot of the people here, really making the news over this story. i have one of them here. why shouldn't this takeover just be about astrazeneca shareholders getting a nice payout for their investment? >> we have to look at this from the point of view of the national economic interest, we being clear, what matters here is the impact on uk growth and jobs specifically in our
pharmaceutical sector here. what will this do for the research, science and skills base of the uk? and does this represent a long-term investment? that is as much in the interest of astra shareholders than anyone else. if this deal goes through they will receive shares in pfizer as the deal is currently constructed. the big concern people have, in pfizer, you have the largest world pharmacy company which has made since 2003 very big acquisitions. the aggregate value of those companies when acquired by pfizer was in excess of $200 billion. and now, having gobbled up those companies, pfizer is actually worth less. it has a market capitalization that is less than the value of the acquisitions they made. this is the issue that people have worries about.
is to what extent, is this going to represent value extraction from a successful british company? yes, of course, astrazeneca, people know, market makers know they've had problem in times past. this is probably one of the two or three companies which will find a cure to cancer in the next few years. people's great worry is they're going to tear the heart out of the company. in particular, it's r&d capacity. it's bad for the company, it's bad for the uk dart suit cpharm sector. we need to understand why the fate that befell the three companies will not befall astrazeneca. and also there's an issue of task. this is a transaction that is being tax driven because of the
inverse structure u.s. companies can take advantage of when they have 20% being held outside of the u.s. that is not having a transaction primarily based on a tax inversion structure. look, if there's one thing we know about british business, we have one of the best business communities in the world but we need more long term-ism, not so much of the fast buck we've seen in times past which, of course, much watching this will have seen the negative affects of over the last decade or so. >> of course. one of those deals often cited is the takeover of cadbury by kraft. your party leader has come out this morning with a sort of much stronger statement, sort of looking as though he might potentially oppose the deal. is there really much you as an
opposition party can do at the minute? >> well, look, i've never been so frustrated about being in opposition as i have during the course of the deal. you have so much -- so many more tools at your disposal in government to impact on something. there are two issues. one is to the extent that the assurances given so far by pfizer to the uk government are binding. we're scarred from our experience with kraft's takeover of cadbury. many of the company corporatiers will know only too well rule 19 of the city code on takeovers and mergers. assurances need to be kept to 12 months following the transaction. that's subject to a change in material circumstances. we know that no due diligence has been carried out by pfizer over astrazeneca. if that due diligence were to throw up anything that was surprising, i think that's probably likely to be material
circumstance to allow them to get out of the application of rule 19 of the code. i think in terms of the extent to which the commitments beforehand are legally boyning, very questioning. here in the uk, the government has the power to stop mergers on the basis of media plurality, competition and financial stabili stability. we are advocating the introduction of a discreet, specific extra category which would relate to the uk's science base and r&d. that is what we are pressing the government to introduce. they can do that. we are saying they should do it now. >> thank you for your time, of course we will also be speaking to astrazeneca chief executive
pasc pascal soriot. >> thank you. joining us, the program manager of the life sciences and health care practice at frost & sullivan. they were laying out the case of being cautious on this deal. overall, you're quite positive. why? >> one, i think it's good for the economy. from the last offer, what pfizer has given, $6 billion will be pumped into the uk economy. that's a plus. >> it's not cash, though, is it? >> 32% cash. so yes in the sense a company like pfizer is going to uk and probably one of the biggest corporate takeover in the uk. that will have a profound impact and not just an economic sense, both social and political. job cuts, yes, it's bound to
happen. it's not just in the uk. i would imagine they'll be job cuts even in sweden, for instance. >> the majority of the science community against this, that goes to your point about job cuts. if you look at the pipeline that astrazeneca is saying is part of the reason they can continue to go it alone. right now if we look at pfizer 'influence, there's a risk they influence that pipeline negatively. those drugs aren't at a stage where pfizer could come in and help them. would you agree that's a valid point? >> i don't think so. because pfizer has got its own expertise in some of these areas. what astrazeneca has in cancer as well as many of the auto immui immune diseases. this could help it with the
combined entity. >> what was the last drug pfizer on its own -- blockbuster pfizer on its own, successfully brought to the market? >> not many. pfizer as a company -- >> it's a sales force, isn't it? >> if you look historically speaking, pfizer has grown. two acquisitions. >> why is that? there must be a reason for that, right? the critics will say the reason for that is they're pretty awful at developing their own drugs, right? they have to buy other people's drugs. they bought warner-lambert's. lipitor was a lot further down in development. the concern will be actually this is a culture business. it's a culture business, right? it's not about the total number of jobs. it will be do you keep the key scientists. there's concern that those people don't want to work for people like pfizer.
a lot of the people developing lipitor left. if you're dependent on human intelligence to develop the next blockbuster an that's why you're buying the company, the people developing for you walk out the door, you've bought a lot of business with nothing in it. >> absolutely. i mean, i agree with you but this is the strategy that pfizer has been following for a long time now. and in this particular case, it's clearly a case of tax inversion, where there is the -- >> they have an accountant in their ceo, it helps. >> consolidation in the pharma industry overall will help big pharma's bargaining power with payors and big government. do you think that's a good thing? have you read the book "bad
phar pharma"? >> can we do anything about it? industry is consolidating and companies are. if you look at the past ten years or more, the number of companies have been coming down overall. this is going to increase. the reasons are obvious. >> the bigger you are, the chance you have to get a better deal. >> i guess. >> we have to say thank you. >> plenty more to come on pfizer. also on today's show, putting the "u" in the e.u. how big is the challenge? >> i can't wait when we do that segment. very excited. we will also speak to the ceo of austria's omv.
stay tuned to find out how much of an impact this has had on the energy group. and they hope to challenge beijing's exchange rate. i feel like we've been here before. we'll be in beijing, coming up. ♪ ♪ over 1.2 billion eyeballs are on us during the two weeks at wimbledon. true tennis fans want to know what's happening, they don't want to just see what's happening, they want to know and understand why it's happening. anybody can just put data up, but we want to get a reaction, make it far more interactive.
you're watching "worldwide exchange." welcome back to "worldwide exchange." we've had comments made by the deputy governor for financial stability at the bank of engl d england. he said market liquidity won't return to precrisis levels after too big to fail has been tackled. he says we still need to do more work, still steps needed before no bank is too big to fail in the uk. the reforms have made the financial system more resilient and less risky. he does believe we need to agree on international standards on leverage ratios and need to agree on standards for net stable funding ratio across the banks, not just in the uk but more broadly on those rules. ross? we're now 17 minutes into the trading day here in europe. weighted to the upside, 7-3.
we have record close once again from the u.s., the dow and the s&p up and the best day in around about three months for the nasdaq, finally getting a rebound in some of those beaten out biotech stocks as well. into this morning's trade, the ftse 100 up 0.3%. yesterday it was up 0.3%. the xetra dax was up 1.2% during the course of monday's session, up 0.75 this morning. the cac current up 0.25, the ftse mib down 0.25. the danish jeweler, pandora at the top of the market, after raising its full-year revenue outlook. sales up in all regions. the stock doing pretty well in denmark, up 8%. airbus group, up over 4.5%, the jetmaker confirming full-year targets after posting a narrower than expected drop in first quarter earnings.
airbus says it's making progress on test flights of the a-350 jet. not such good figures for lagardere. quarter revenue down more than 6%. let's recap asia today as well. the hang seng up 0.4%, the nikkei up 2% as well. we had credit data out of china which shows credit growth continuing to ease a little bit. pboc may be fairly relaxed about that. on the bond markets, continue to see a sell-off in treasury prices yesterday. treasury yields 2.65% on the ten-year, moving away from 2.57% which we hit a couple of weeks
ago. going to be looking at retail sales and inflation data out, producer prices wednesday. cpi on thursday. going to be the big mover for treasury this week. there's something else here worth pointing out. yields between 10-year gilts, continue to see spread convergence in the periphery with bunds. ten-year uk government paper yielding 2.73%. that's also reflected as well in what's going on with euro sterling, hitting 81.43. a single month low against the pound. as far as cable is concerned, below that near 170, near that five-year high. the fundamentals in terms of yields going high, it's thought it could be the first economy out of the major cross rates to start putting up.
that is driving gilt yields and the pound higher. euro dollar, 1.3765. still above the one-month low we hit on friday at 1.3755. the french bank remains committed to its business in russia, despite the impact from sanctions and the economic slowdown the country faces. stephan is in paris. that's the problem for socgen, they are so heavily invested in russia that they can't pare back. did you get the sense that he would if he could? >> not really. socgen said it would remain committed to russia and eastern europe. the statement came just a week after the bank announced a significant charge, 520 million euros to adjust the value of its
russian bank. i caught up with the ceo of societe generale and asked him if they would remain a significant growth driver. >> we confirm our commitment to russia. we see russia definitely as a large, promising banking market. we've not changed our mind. there's more to be done in this market and in particular, for us, we are the number one -- owned bank and we think we can provide added value to the banks. the crisis currently is leading to a slowdown of the russian economy. let me just remind you, the crisis is particularly severe in ukraine but we have no -- what we see is a slowdown of the russian economy and we have to adopt to that. our growth has a strict risk and liquidity management. we will be able to implement a
strategy which will lead to a 14% -- we think we can develop growth in russia. >> are you concerned about the level of the ruble? >> not really. the majority of our businesses is done in ruble, we collect in ruble and lend in ruble. you know that's part of the strategy to, again, have self-funding strategy based in particular on the collection of deposits by retail plans for two or three years we've done that. that would reduce like any business done in the currency if it goes down. not the capacity to grow and the profitability. >> you ruled down recently the value of your russian unit. is there a new risk? you think you could announce additional charges in russia. >> what i decided in the first quarter was to take into account the decrease of the ruble, more
certainty, write down the goodwill which means the value of the assets but we have no impact on the capital as you know from a prudential point of view. the goodwill is deducted. we made money in the first quarter. going forward was important to manage the risk but it's just a question of traditional p & l with cost of risk and provision. we are confident to maintain a positive consideration of russia and that's why. we have a plan to meet 14% return on equity going forward. >> do you think russia will increase the cost of risk? >> the cost of risk has slightly increased on the first quarter. any slowdown can increase the risk. we are confident in our strategy which we focus a lot on cash services and the russian economy is also based on cash, compared with the virtual markets. we think we can deliver profitability there. >> societe generale will increase its payout ratio to 50%
within the next two to three years. up front, 40% expected this year. the bank will increase its return on equity to over 10% in 2016. that's to compare with 8.3% last year. ross? >> stephan, thanks for that. good stuff. catch you a little bit later. staying in the bank sector, the lender riding the coat tails of italy's recovery from recession as bad loans for the first time since 2008. caroline has been speaking to the ceo and asked whether the bank was better placed to pass the ecb stress test. >> since the announcement of this stress test, i think it will be done in a strict way by ecb. this is the reason why we tried to anticipate, rather than wait for that. having done a lot of provision
in the fourth quarter, confirm any high level of coverage this quarter, we feel quite confident. we go through this without major problems. but really, for the european banking sector it will be -- >> fellow italian lender has posted its eighth consecutive quarterly loss after taking 174 million euro hit in loan default charges in q1. also in this sector, credit suisse said that a long-running tax probe could cost up to $2 billion. new york's banking regulator is seeking hundreds of millions of dollars. they are reportedly seeking as much as 1.6 billion. credit suisse stock today in zurich is off 2.5%.
and citizens lao files for an ipo, looking to raise $25 million. they face pressure to sell off noncore assets. citizens operates nearly 1,400 branchs in 12 u.s. states and in its filing, the company noted the annual plan was objected to. >> have you got too many shows. >> i definitely don't have too many shoes. i have many shoes. i could never say i have too many. >> a new survey apparently says that most consumers say they overconsume. >> if we stop consuming, what would happen to the economy? do you think you have too much stuff? is a sharing society a more
caring one? let us know. join the conversation on "worldwide exchange," e-mail us, tweet or direct to us. or rather than saying i own too much stuff, is there something you can't own too much of like shoes? with red soles and other things. >> exactly. i like your style. >> when i'm reporting somewhere, there's something calming about being in a hotel and not having too much to choose from. >> you take two suitcases. one for the clothes, one for the shoes. >> i certainly only take one bag. >> still to come on the show -- >> the chinese currency, we pros to beijing with jack lew is calling on the nation to ease currency controls. stay with us.
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lawmakers. jetmaker airbus surprised with first quarter numbers and good guidance. socgen's ceo tells cnbc the bank is committed to its business in russia, saying the region will help it meet its growth target as it lays out its three-year plan. >> we confirm our commitment to russia. we see russia definitely as a large, promising banking market. we've not changed our mind. there's more to be done in this market. investment, retail and factory data in china disappoint in april. down at multiyear lows. european equity markets an hour and a half into the trading session. the ftse was up 0.5%, the dax at
1.2%. this morning, the ftse is up 0.25%, the xetra dax up 0.6%. >> ross was talking earlier, comparison between what we're seeing in ireland and the uk. look at ireland versus the u.s. people asking whether actually the u.s. treasury level could be a flaw for some of the peripheral spreads right now. rbc enlisted this morning saying absolutely not. interesting. >> no. why in the. there's -- that would just be an artificial flaw. let's take a look at where we stand with currency markets. euro/dollar, 1.3769. just off of 1.3755. sterling, got a big day tomorrow coming up with the quarterly inflation report. now we've been talking all
morning about pfizer and astrazeneca deal, that hearing from uk lawmakers is just kicking off. it begins with comments from union heads before the ceos of pfizer and astrazeneca are going to appear. katherine is in westminster where the hearing is taking place. she's been there all morning. pfizer's ceo has laid out his case. we heard why astrazeneca believes this deal shouldn't go ahead. are they going to be able to pull a rabbit out of a hat today? >> i think we're going to see a spirited defense from astrazeneca today whenever pascal soriot appears in front of the select committee. we're going to see an equally spirited defense of pfizer's case. pfizer, of course, have already released a statement outlining some more of the reasons for the
deal. according to my market sources, that's unlikely to be enough to bring astrazeneca management to the table. let's not forget the level of attention on this deal is already huge from lawmakers, from unions, from all the stake holers, ev e holders, even though pfizer hasn't offered a price that was good enough to get astrazeneca xauf executives to the table. before they can do that, they have to, you know, prove whether their promises they have already made on uk jobs are likely to be binding or can indeed be trusted. we've already spoken to some of the union representatives who are appearing in front of the committee this morning. they're pretty cynical about pfizer in particular as an employer. they're citing, for example, job cuts at its sandwich factory
here in kent. they're also citing previous take ov takeovers, of wyath, of pharmacia in sweden. it seems like pfizer are pretty keen to winning this prize, then he's going to have to go through it. we will be talking to pascal soriot after he comes out of the select committee later on this morning. >> katherine, thank you for that. plenty more to come. mr. reed is due up, the pfizer boss, at around 10:00 a.m. it's worth pointing out, we have to remember, at the moment there is no deal, not even the bid we have was rejected. >> it's all hypothetical. they wouldn't be there unless they anticipated doing something else, either rising the bid -- there's a upon there. >> we'll have more on that as katherine says. meanwhile, signs out of the
chinese economy, investment data, retail sales and factory output growth all disappointed in april, down at multiyear lows. factory output up by 8.7% last month, the slowest growth in five years, fixed asset investment up by over 17% in the first four months of the year. that's the worst showing since 2001. retail sales posting their weakest growth in five years. that in april. this data comes as the u.s. secretary of state john kerry said he's deeply concerned by china's aggressive action in the south china sea dispute. kerry says the u.s. wants to see it resolved without escalation. jack lew is in beijing at the same time, he's calling on china to move to a market-base the exchange rate. washington has long urged china to ease controls of its
currency. eunice is in beijing for us with plenty more
on all of these stories. eunice, let's kick off first of all with mr. lew an his trip. every time a treasury secretary turns up in beijing, he talks about the strength of the currency. what the chinese government has done is gone into the markets, to make it clear that the u.n. is no longer a one-way bet for the markets. what is the direction of travel? >> so far, what u.s. secretary -- u.s. treasury secretary jack lew has been doing is really sending a cler and consistent message throughout his meetings. he is meeting with the premier. he also earlier today was meeting with other senior chinese officials. the main message is this, that he believes that china should speed up its economic reforms especially when it comes to the currency. now, for many years, as you were
talking about, for many years, bay sjeng has
been heavily criticized for unduly influencing the value of its currency. and in fact giving an advantage to its exporters. now, recently for a while, the issue had actually come off the table because of the fact that the yuan had been strengthening. what a lot of people in washington have been saying and interpreting this negative movement as is china going back to its old ways and potentially back sliding on some of these reforms. that's really the main issue here, that jack lew as well as many other economists have for this current administration. >> eunice, good to see you. we'll come back to you for more later in the program. >> christian keller, head of
research at barclays joins us now. we look at what's going on as far as the equity markets are concerned. if we translate that into emerging market credit, a bad month for emerging market credit. you say ignore seasonal trends at your peril. what's your take here? >> first of all, may is traditionally a month we've seen corrections. the backdrop in a way for emerging markets, we look at liquidity, we look at credit. emerging market credit now, if you take an index which has more investment grade in it than it had ten years ago. we now have valuations that are close to high yielding u.s. corporate credit. a lot of people look at it and send fundamentally, it shouldn't be at that value. that makes it attractive. it's something where we are choo choosy, we are picky. valuations are attractive in
emerging markets, credits, even though one has to be careful of some of them. >> just picking up on the china data that we were talking about there, clearly there is credit in china is slowing. do you think the pboc is relaxed about this? should we see this as a good sign, they're trying to get credit conditions under control. >> if you look at the numbers, nominal credit growth in china is still higher than nominal gdp growth. whenever we compare the numbers, they look slowing. the slow is in five years, three years. they have to come down. i think actually, you know, it is something that the market should, you know, should be positive about. as long as they keep, in particular, the real estate market under control. it's a very good balancing act.
if we take the trade data, the activity data you referred to earlier in the show, i think it's a picture where the market at least can be more relaxed than what we saw earlier in the year. >> christian, stay right there. i want to make viewers aware of the latest, as far as russia and ukraine are concerned. the eu added another leader of putin's inner circle to its black list. he's one of 13 people and two companies hit by the latest round of sanctions. pro-russia separatists have been celebrating the results of this weekend's independence vote in towns situated in eastern ukraine. germany's foreign minister will travel to ukraine to try and find a diplomatic solution. christian, what we have seen as far as the russian/ukrainian situation is concerned is regional rotation. what's the risk we see sentiment as far as russia and ukraine is concerned filter out more
broadly into emerging markets? >> well, emerging market and possibly beyond this. this could hit western europe as well. we see the trade deal went through today between france and russia on the ships. now, it seems at the moment, though, russia's a bit reluctant in a way to take it another step which would trigger sanctions further. possibly a third round of sanctions by the eu. it seems so far relatively isolated event. emerging markets have not suffered in general from it. i would expect this to say as long as we don't really move into something that seems to be unthinkable for now, which means really more broad based sanctions that would seriously really disrupt the trade between the west and russia. you know, that doesn't seem to be in the making. >> quick word, christian, about india.
the polls suggest bjp will try and form a government. i wonder whether too much is in the price, actually the difficulty of being a coalition government to try to enact the reforms, it will be too much for what investors hope. >> that's a very fair point. we've seen this particularly in equity and the currency. the problem is, if you think this is a moment of reverse hotel california, you can get out of it but never back in. what i mean by that, the government, they do get over 250, possibly over 270 majority, they would have a position where they can push through a lot of these investment projects that have been stalled in recent years. that's why people are bullish about it. it's not clear you would at some point get this retreat where you
get back into the market. this is why we are, for example, constructive on the indian rupee. that's why we think it is something you want to continue to be long. >> christian, thanks for now. we'll come back to talk about turkey. there's something interesting going on there. christian keller, head of search at barclays. still to come, putting the "u" in the eu. parliamentary elections start next week in brussels. how is that going to work? we'll find out. about speeds and feeds. it's all about latency. it's all about how fast does it run. i often sit with enterprises who ask me about how mission critical and how's the performance of the cloud. and i tell them, if you can maker gamers happy,
you're watching "worldwide exchange." japan's biggest petro chemical company, mitsubishi chemical holdings is set to buy a stake in a natural gas producer. let's get more on that. we go to tokyo. >> the nikkei news reported that mitsubishi chemical will spend $980 million to purchase a majority stake in a gas company. the chemical company raised its interest to 27% from 15% last year.
the deal will help mitsubishi chemical rise through the ranks globally to seventh place for total sales among chemical makers. they saw sales drive up $5 billion last year, thanks to the rise in demand of nitrogen, which is required when producing chemicals from shale gas. once the acquisition is complete, mitsubishi chemical will supply nitrogen to u.s. facilities. they end the trading day with an 11% rise. mitsubishi chemical shares also up 2%. ross, back to you. >> thanks for that. have a good day in tokyo. good evening. australia's government is preparing to announce its much anticipated budget for the 2014-2015 year. expect to maintain spending cuts as tony abbott tries to manage the books. >> the bottom line is, we are
left with ongoing deficits of four years of $123 billion. it is going to be a budget that makes the hard decisions. >> the government describes the current situation as a budget emergency, drastic spending cuts needed to alter the direction of australia's finances. its treasurer's first budget, but he says rather than the government cutting to the bone, all australias will need to share the pain. >> the structure of the budget will be very much around what we saw of the committee that ordered recommendations. the cost savings in the first few years are quite modest, then they started to pick up speed. >> the budget will be about making structural changes to the way government spends money. a leaner state after fairs and also the style of government assets like medibank private and
possibly australia post. >> i don't think we'll see them set out a plan to get back to surplus this year or next year but i think in the meantime, they'll be heading back to surplus. >> the treasurer has flagged changes to welfare payment with the retirement age in australia set to rise to 70 by 2035. >> i think the principle has merit in the sense that people are living longer. i also believe that you need to be careful with regard to having a blanket policy for all stars at work. >> the government is also set to impose a temporary levee on higher income earnings to help the budget get back into the black. there are concerns the so-called detlef vi could crimp the fragile domestic recovery. in particular, the discretionary retail sector. but the head of department store chain meyer sells cnbc while it may not be pobler, it is
probably a necessary move. >> sometimes you need to make tough decisions. therefore, those tough decisions will result in byproducts such as an impact in discretionary consumer spend. we're expecting that. >> infrastructure spending will likely be a big ticket item with the treasurer flagging $80 billion of federal and state funding set aside to build much-needed roads. matthew taylor, cnbc. we're listening in of course to the hearing that's going on between astrazeneca, the union officials right now speaking. what we heard so far they've warned actually that astrazeneca's pipeline could suffer under pfizer and we were talking about this earlier, the particularly as far as the cancer drugs are concerned. they're not yet at the stage where they can come in and develop them further and bring them to the market. that's a concern and that's
being discussed in the meeting right now. tomorrow, earnings from sony. the yellow shirts, the group that's against the current government as opposed to the red shirts over there. i know you're excited. >> very. >> nine days and counting before the eu parliamentary elections kick off on the 22nd. all of you citizens will be able to head to the voting booth to elect 751 members of the european parliament for the next five years. voting turnout has been fairly poor as people have tended to use their eu vote as a protest against their respective governments. that, however, might change as the eu looks to revamp their image with a marketing firm to gain popularity. the head of that firm joins us now. tasked with the job of
repositioning the eu brand effectively. you haven't been hired by the eu. >> we're an independent think tank. we can see the management of the u brand is not managed at all. we neat a strong identity for europe. this is why all the euro skeptic attacks is so easy because europe doesn't have a strong brand. >> how do you do that? what are you going to try and do? basically resell the eu and sell its importance. what is important about the eu to citizens? >> if you see what's going on in the world, there's countries, spain, catalonia wants to leave spain. we have the scottish referendum coming up. the brand eu becomes even more important and it's not a koss meting resign of the brand, it's more about telling people the truths about europe, xplaning what europe is doing for them and also show them that other
nations believe in the european union and they want it to continue. >> isn't that something that needs to be done at the national level and not at a more broad level? if you're going to communicate a message like that, it has to be down at the granular level, surely. >> yes, you hit on one of the key problems we have with the brand in europe. national governments will never go to their citizens and sell them the brand of europe because they use europe also as a scapegoat for the national problems. >> absolutely. >> that's one of the problems we have, nation states are not in charge of the brand of europe. it seems also brussels is not doing a very good job with it. >> is it also a bit late, one week away now, if you look across countries in europe, they're saying that the time for more europe in essence is over. you're kind of too late on both points. >> the time for europe is actually now. if you see what's going on with ukraine and the eu is standing firm together.
it's the eu as a whole with the u.s., going to talk to putin. in terms of being too late? no. i think it's a question of understanding what the problem of the eu is. the elections are happening now are critical for europe. the turnout of elections has been going down in every election. what we have here is an identity problem. people do not understand the eu. we have to create a strong trend. >> when people ask you, what is the eu? right? what is your answer? this is the problem. clarify what the eu is. >> the eu is a hybrid between a federation and an international organization. but that is not exciting. >> what does it stand for? what does it mean. >> go for it. give me the exciting life. >> the reason we're passionate about europe, it's managed to maintain peace for the last 70
years. imagine what happened in yugoslavia 0 years ago with massacres and genocides. europe is still a volatile area of the world. the eu maintained peace which is something that's critical and we should not forget. if you said to me why should we keep the eu, that's number one. >> look at the push back. we have to say thank you and good-bye. great to chat to you. more on that pfizer hearing right after the break. plus, a countdown to the u.s. hour as well. see you in a few moments. [ f] there's a gap out there. that's keeping you from the healthcare you deserve. but if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home...
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pfizer makes a final push to convince the market its offer for astrazeneca does have value. this ahead of a grilling by british lawmakers and unions warn the uk drugmaker's pipeline could suffer on pfizer's control. and deals keep coming. at&t reporting now in active talks to buy directv in a deal valued at nearly $50 billion. strong earnings out, europe's major corporates help push stocks to a six-year high. jetmaker airbus and steel firm,
both to the upside with first quarts numbers. and societe generale tells cnbc the bank is committed to russia. it will help them reach their targets with a three-year plan. >> we see russia as a large, promising banking market. we've not changed our mind. there's more to be done in this market. you're watching "worldwide exchange," bringing you business news from around the globe. warm welcome to you. we have the latest survey out. and i can tell you this morning that the german economic sentiment index is weaker than expected. 33.1. it was forecast at 41. it's 43.2 in april. that's a sharp drop lower. the current conditions index has come in at 62.1. that is better than the expected
pull of 60.5. the decline of the economic -- should be seen against the backdrop of the strong economy we had in the first quarter. there are indications that germany will not be able to maintain that particularly fast pace of growth. but they can assume that the positive underlying trend for the economic development will stay throughout the year. a bit of a drop in investor sentiment for germany but only because we've had such a strong first quarter that they say can't be maintained. i love that music. sounds like a bond movie. the reason we're playing it, the hearing of pfizer's potential buyout of astrazeneca is under way. mr. reed, the ceo of pfizer will
testify this morning. the blockbuster pipeline could risk being underdeveloped under pfizer's ownership. there's ian reed, speaking before the business select committee. joining us with his thoughts, scott muller, director of the research and development center at cass business school. there is no agreement at the moment, on the table. >> no. >> we've had a bid than been rejected. >> and a sweetened bid that's been rejected as well. >> we're talking about something that's not even on the table. >> with threats of going hostile possibly too, yes. >> i wonder, if they go hostile, right, in the uk we are fairly open to m&a deals. >> right. >> in some way shareholders or pension funds will take the view, if i get cash out, i don't really care.
if i get enough premium, i'll take that cash out, do a good deal, re-invest it in something else. not necessarily the case with pfizer. i wonder whether they'd want pfizer paper. how good are they at creating value? >> that's trabsolutely true. they had known with their acquisitions to be fairly aggressive in terms of trying to take out costs. that's one of the things that of course everybody is really afraid of right here is that they'll try to do the same thing with astrazeneca. they are a financial engineering pharmaceutical company, not one that's focused as much on development. >> which is the concern. mr. reed is an accountant by trade, right? how much can they benefit by relocating their headquarters to the uk, this inversion? >> quite a bit. i haven't worked up the fact numbers because that will depend ultimately on what the price is
that they will be able to get astrazeneca for and what will happen with their earnings. they can make substantial bottom line savings for their shareholders. they buy astrazeneca with the two-theirs or so of the price going in shares, astrazeneca shareholders would benefit from that as well, assuming they accept that price and it goes through that way. >> we have no deal on the table. the concern would be, i think, for astra's shareholders and potentially the government, is pfizer does not appear to be brilliant at developing drugs. >> well -- >> they bought warner-lambert when lipitor was in the final stages of becoming a big success. take pfizer's sales force and flog it. how good are they at retaining key research staff in and creating a climate which people who, companies they've bought, want to stay and work for them. >> that's exactly the issue. i think we've seen that as well with the governors of delaware
and maryland coming in saying, hey, wait a second. you're making promises over there in the uk. how about the promises for our people back this way. their history hasn't been great in doing that. it is a real concern. it's not surprising that in fact a union boss would be in westminster right now. >> to add to that point, the tax inversion question here, why is this hearing beginning on in the uk and not a hearing in the u.s.? >> it seems to be moving that way. i guess several michigan lawmakers in congress are in fact raising that exact point. i mean, at this point in time, for this particular bid, the horses are out of the barn. it would be very, very difficult for anyone to do with anything here in the uk or the u.s. that would affect this particular deal. really what we're looking at, what are we going to be doing for the deal? we fixed things here in the uk
post-cadbury and kraft but perhaps maybe not enough. >> carl levin is -- >> and his brother who is in congress as well. >> for all the theater we're going to see over the next two days as far as pfizer and astrazeneca, at the right price, you assume this deal is going to go ahead? >> there's always a price at which these deals will go. >> of course. there's a limit for pfizer. because they want to shift their tax base. >> there is a limit. the shareholders, the more they try to increase the price, it will probably be in shares because they have a limit on cash. pharmaceutical companies ought to be investing cash in r&d. >> that's the point. pfizer has to buy r&d. >> at&t is reportedly in activity talks to buy directv, a deal that could be completed in the next few weeks. reports say at&t could pay about
$95 a share. nearly $50 billion. that would be more than a 20% premium to directv's price before news of at&t's interest emerged on may 1st. reports say several issues still need to be worked out as to whether there should be a breakup fee and a possible role for mike white. take a look at the trading. gosh, those numbers are small. after hours, directv higher by just under 6%. scott, thoughts on this? >> again, it's interesting what's happening here. this looks like it might be a deal that isn't going to be rejected by the board in the same way that we have the astrazeneca rejection. 20% yeemium? not a great premium. i would be surprised if there wouldn't be push back, friendly push back saying you have toive good us a bit more than that. 20% is at the low end of the
range where m&a deals tend to take place. the other issues on this one, one of the things that actually really matters is in fact what happens to the management. look at publicis/omnicom. that fell apart because two ceos couldn't figure out who would sit in the corner office. >> they were saying the people below them couldn't figure it out. >> we know what that always means. so i think that issue that you just mentioned is in fact a very, very key one. >> yes. >> it isn't just him. is also the other people around there. these people, you know, do want to see -- do want to continue in that organization. directv has done a very, very good job of building up its business. it is a nice business. i was going to say little business. it isn't quite a little business these days anymore, is it? that deal because it isn't, you
know, it doesn't have some of the issues you have about what's going to happen with the work force and so on. much more complimentary than the last deal we were talking about. >> interesting. great to have you on. let's give you a look at what's on today's agenda. >> april retail sales out at 8:30 eastern. by 0.6% it will rise when you exclude autos. at 8:30, april import prices, expected to rise 0.4% as well. 10:00 a.m., march business inventories. after the close, fossil and take two interactive. let's take a look at today's other top stories. a georgia family who settled with gm last year is filing a new lawsuit.
ken and beth melton accuse gm of fraud by concealing crucial evidence at trial and allowing a company representative to lie under oath. they claim a lead design engineer on the chevy cobalt repeatedly testified he didn't know about any changes to the switches. that the suit says the disclosures shows assertions to be false. a gm spokesman says the company didn't act improperly in the original lawsuit. rand paul has threatened to slow approval of three of president obama's fed nominees unless lawmakers vote on a gop bill to open monetary policy decisions decisions to congressional audits. all three are certain to be confirmed but with the senate's tight schedule before the memorial day recess, it is possible the fed board could
drop from seven to three members when fed governor jeremy stein steps down this month. we'll see what happens. still to come, as the eu expands sanctions against russia, how will the measures impact yaurp's gas supply? >> we speak first to the ceo of austria's omv who recently signed a deal despite sanctions. the latest, after this break. ♪ ♪ drivers want to go further with their electrical vehicles. but you can't take a trip from lisbon to stockholm if you can't plan and re-charge along the way. the european commission is using cloud to make this possible. creating a single charging and billing network across 28 countries. so drivers can travel as far as they want to go and when they want to go.
you're watching "worldwide exchange." recap of the headlines, pfizer ceo ian reed defends his firm to british lawmakers. he says he's proud of the company's record as he attempts to sell his planned astrazeneca takeover. and the m&a keeps coming. at&t reportedly in talks to buy directv, a satellite tv provider. plus, we're not going anywhere. societe generale tells cnbc the bank is committed to russia. a couple of earnings beats this morning from the likes of
airbus and tissen group. we may see slowing momentum as far as german growth is concerned pushing through the rest of the year. u.s. futures, record close for dow industrial, dow transport and the s&p 500 yesterday. it was a mix of momentum names and value stocks rallying. we saw the russell 2000 bouncing, ending around 2.4% gains. right now for the dow futures, higher again. we can see them losing momentum over the last half an hour or so. 34 points for the dow, the s&p 500 higher by a minor 2 points. of course plenty of time to go before the u.s. markets open. ross? >> we'll see what happens to that. thanks for that. ian reed has been speaking from the business select
committee at the house of commons in london. he says he's been very proud of the company's track record. not alone in reducing employment in the industry. but he said the pipeline would certainly be stronger combined with astrazeneca. there's no doubting that. and he says the combined r&d spend would be lower after the deal. they would obviously strip out some of the costs on that as well. there's mr. reed speaking before the business select committee in the british parliament. right now, let's talk about omv. it says its clear net income was down by 14% the first three months of the year. theous austrian firm says it will continue its cooperation
despite growing pressure for further sanctions on russia. joining us, ceo at omv on the phone from vienna. thanks so much indeed for joining us. give us your sense as the russia/ukraine situation continues to deteriorate, more sanctions on russian individuals. how is that going to impact your business? >> first of all, good morning. let me mention that rush gas is flowing into austria and europe since 1968. therefore, about 50% of russian gas that comes into europe goes via austria. therefore, we're very close to see what's happening. in our days, due to the warm winter, we have quite good storage levels of gas.
the amount in austria fell to 50%. and the discussion with the russians, how to manage, how to bring gas into our storages in europe throughout the next month. >> do you think there should be more sanctions against russia? how much would that put russian supply of gas which you help to navigate at threat? >> i mentioned that we are importing russian gas since 1968. this means there's an integration of russian energy, of russian resources into european economy. i think when you have an integrated economy, you have to be very careful with sanctions. in the end you don't know the outcome. if you know this is energy that is use the not only for writing the industry but is used for heating our households, you have
to be careful when you talk about sanctions. i think you shouldn't use gas as a weapon. >> russia uses gas as a weapon, don't they, sir? >> i didn't understand. >> you said you shouldn't use gas as a weapon. russia uses gas as a weapon, don't they? >> they have been supplying us in for 50 years. they're very concerned they can keep up the position with suppliers. >> do you think there should be a uniform price paid for gas in europe so they can't put pressure on individual countries? so an eu energy price for gas. >> could we imagine there's a unified gas price in the u.s.? i think this is not part of our industry, that they have one unified gas price for whomever.
we have different suppliers, different regions, different sources. i think this doesn't make sense. >> so the energy commission has got it completely wrong? >> i don't know if they're wrong but if you ask me about my opinion, it's a different one. >> thank you, sir. good answer. ger hard roiss, thank you for chatting with us this morning. still to come on the show, facebook is looking to friend china. could the world's second biggest economy decline invitation? we'll have the details, next. [ female announcer ] there's a gap out there.
so let's simplify things. let's close the gap between people and care. fresh record close on monday for the u.s. dow and s&p 500. this morning, up 112 points, first intraday high in about a month yesterday. this morning, called up by 34 points. the nasdaq having a better day as well, up 1.8%. second best gain of the year. it's called up by four points. long way to go before the open, of course. meanwhile, the u.s. secretary of state, john kerry said he's deeply concerned by
chin in china's action in the south china sea dispute. kerry says the u.s. wants to see the dispute resolved without confrontation. has urged china and vietnam to deescalate sanctions. >> washington long urged china to ease controls on its currency. eunice is in beijing. eunice, how receptive are the chinese going to be to jack lew's comments here? they are exporters to keep happy. >> that's right. it's a really difficult balancing act that the chinese authorities will have to manage. because on the one hand they do see the need for economic reforms but on the other hand they had terrible growth figures that, you know, came out today, the april figures were looking really bad.
so you see a situation where jack lew is coming at a time when these chinese officials are going to have a lot to deal with. now, in terms of his visit, he did have a packed day with senior chinese officials and his message has been skin the, that is that he was hoping that beijing would speed ahead with its economic reforms, especially when it came to the currency. the currency has been an issue between u.s. and china. china has been criticized for its currency policy which many people believe was set lower to give exporters a boost. the issue has come off the table because the chinese yuan has strengthened. in recent months, the yuan has been weakening in what jack lew has described as negative movement. many people in washington have been critical saying the negative movement could be an indication that china is not
only back sliding on its economic reforms but also going back to its old ways. >> thanks, eunice. great to catch up with you. it might be barred in china but that is not stopping facebook for opening an office on the mainland. they may open a sales office, it makes sense if facebook wants to expand mobile ad revenue. google continues to receive about 5% of its ad revenue from chinese companies despite the fact that it seized operations there several years ago. that's interesting, isn't it? >> it is. we'll see what happens. and pfizer ian reed is on the offensive as he attempts to convince u.s. lawmakers that a takeover of astrazeneca is in the national interest. the latest from westminster, right after this. at delta we're investing billions of dollars,
pipeline could suffer following a takeover. >> we have a good pipeline. we think astrazeneca's pipeline is substantial but we believe it would be far better combined with our pipeline. at&t reportedly in active talks to provide satellite tv provider directv in a deal valued at nearly $50 billion. strong earnings out the europe's major corporates help push stocks to a six-year high. airbus and another group push to the up side. and societe generale says they are committed to russia. it takes out its three-year plan. >> we see russia definitely as a large, promising banking market. we've not changed our mind. there's more to be done in this market. you're watching "worldwide exchange," bringing you business news from around the globe.
the pfizer ceo ian reed has been speaking before the commons business select committee this morning. he's been coming out with comments saying he's proud of the company. pfizer shut a research facility a couple years ago. he says we're not alone in reducing employment in the industry. he says the pipeline would be stronger combined with astrazeneca's and the combined r&d spend would be lower after the deal. that's also the point of m&a as you strip out costs. he said at the moment we haven't decided what the final strategy would be. 20% is re-affirming this commitme commitment, 20% of the research and development would be in the uk. how legally binding would that be? astrazeneca's ceo will be quizzed in around half an hour.
katherine is outside the house of parliament where that hearing is taking place. to remind everybody, there is no deal. at the moment pfizer is not buying astrazeneca. >> this deal has had so much discussion and gained so much traction already. actually, the managements aren't engaged. there isn't really a formal offer that astrazeneca has accepted on the table. they're not even the basis for negotiation. but of course the clock is now ticking for fizer to come back with a renewed approach. they have less than two weeks to come back with something sweeter to tempt astrazeneca shareholders and management. before they can do that, of course, they have to establish just whether there is any legal powers to are mps in this country to block this bid. there's been talk about a french
style -- in recent days, a lost the language coming out of mps and parliamentarians are much more stringent, much more potentially empty this deal before an extra deal has been put on the table. ian reed, chief executive of pfizer has been forced to defend his company's record in earlier deals. he was quizzed particularly on the impact of pfizer's acquisition of pharmacia, the swedish company in which it broke some promises it made in terms of employment. what a lot of mps are worried about, these are enforceful for the first year rather than the five years which pfizer has promised after it comes in. so what ian reed has tried to do, refocus rather than the angle of tax reduction, the angle of jobs, he's tried to refocus this on the importance of science and the importance of the pipeline for this acquisition.
>> we have a good pipeline. we believe astrazeneca's pipeline is substantial, but we believe it would be far better combined with our pipeline. part of the industrial logic is that they are successful and strong in the cv metabolic. so are we. we have oncology products. they have earlier oncology products which would combine very well with our oncology products. overall, we feel it's a strong industrial rationale on the products. the second part of the value is this push to become more efficient. >> so that is ian read, chief executive of pfizer there, trying to reinforce this bid for astrazeneca is not about tax, it's about the drugs. >> yes, well, i think they probably need the pipeline. that's the history of pfizer, they go out and buy drugs. they don't create them. they haven't created much since
viagra, really. they bought lipitor, didn't they? thanks indeed for that, katherine. plenty more to come. the deals keep coming. at&t in active talks to buy satellite company directv. the report suggests at&t could pay around $95 a share, about a 20% premium. reports of several issues need to be worked out, particularly if there should be a breakup fee. as far as individual stocks are concerned, at&t up and directv up 8%. we have news coming out of australia. they've announced their 2014-'15 budget with an economic
forecast. they're eyeing privatizations of the defense housing authority, the royal mint, the registry and the hearing as well. there are a few more surprises to come if the budget goes through. they're also raising the pension age to 70 by 2035. pension age going up in australia as well. i have a feeling pension ages are going up everywhere around the globe. >> i'm going trend. let's give you a look at how the markets are faring. the european market coming off the board. the pace of growth in germany likely to slow from here on out. you can see we now have the cac current in france, the ftse 100 relatively unchanged on the day. the xetra dax still managing to hold on to 0.5% of gains. record closes all around for the dow industrials, the dow transports, the s&p 500. it was a mixture of momentum stocks and value stocks. we saw the russell 2000 jumping
by just shy of 2.5%. we have the dow futures indicating high around 32 points for the s&p 500. a couple of points there, and for the nasdaq right now, around 4.5 points. andrew, interesting day yesterday. we saw again, record highs for the s&p 500 but we saw the russell 2000 jumping yesterday, too. it was a real mix. what's your take? >> good morning. there's been a big debate certainly over the past several weeks which is the idea, will the areas that got hit pretty hard like the momentum stocks and the small cap stocks, were they going to drag the big caps down with them or was this a sign that underlying things. the underlying fundamentals of
the overall market remain constructive. you know, our view has been that the massive rotation that we've seen, a violent rotation over the past two or three months has had more to do with valuation. a lot of those areas that were extended on a relative basis saw a lot of profit taking. but those valuations have converged quite a bit in a short period of time. and we just don't think the violent nature of the rotation will continue like we had seen kind of in march and april. >> i saw comments from one of your colleagues yesterday saying that a near term correction is inevitable. if we see the russell bounce it could incite the s&p 500 to bounce and that will push out the further correction we'll see later down the road. is that where you are right now? or do you want to see further pickup as far as the russell 2k is concerned? >> we still large caps will
outperform small caps. large caps look more attractive. but you know, no doubt we're definitely in the later cycle, later innings of this bull market. so the idea that you're starting to see turbulence, a little bit of distribution, a lit bit of a breadth divergence, not surprising. we don't think this stops the rally by any means but it shows that things are getting more selective. >> okay. when you talk about getting more selective, selective where, particularly, andrew? >> we would recommend continuing to rotate into later cycle areas. our three favorite sectors being energy, material and industrials on an equal weighted basis in our indices. there are three sectors that trade at a discount. we'd recommend continuing to rotate away from traditional area cycle areas like consumer discretionary for example. those stocks have gotten hit pretty hard. we're coming out of the soft
patch during the winter. they will have a bit of a rally, a bit of a bounce, a bit of catch up. >> because energy has been one of the best performers of the year so far. you think that continues? >> yes, we do think that will continue. if you look at earnings estimate numbers, they really come up sharply over the last four or five weeks. we still think there's a good run ahead in terms of the earnings revisions. the sector at a whole trades on par with the overall market. that's where you want to be positioned, not in areas that still trade at a premium which are the ones that got hit pretty hard this year. >> we'll come back to you fairly shortly. get a cup of coffee or o.j. and we'll be back with you. some of the other stories we're following today, reports saying fork's banking regulators is seeking hundreds of millions
of dollars. that would be in addition to fines. credit suisse is discussing this with the justice department, which is seeking 1.6 billion. prosecutors are also looking for a guilty plea from the company. credit suisse down 2.7% today. rbs unit citizens financial files to an ipo in the u.s., look dog raise about $100 million. last year, rbs said it would sell up to 25% of citizens through an ipo as the bank faces pressure from uk regulators to sell off noncore assets. accidents operates nearly 1400 branchs in 12 u.s. states. in its filing, the company noted the company objected to the plan it submitted as part of the annual stress test. and zambrano died of natural
causes. reports say he suffered a heart attack. he's considered one of the most important businessmen in mexico. he oversaw the company's expansion to over 50 companies. cemex the world's biggest supplier of cement. he was 70 years old. and why the future make-up of of the fed could be thrown very much into doubt. if i told you that a free ten-second test could mean less waiting for things like security backups and file downloads you'd take that test, right? well, what are you waiting for? you could literally be done with the test by now.
you're watching "worldwide exchange." he attempts to sell his planned astrazeneca takeover. and the m&a keeps coming as well. at&t reportedly in talks to buy satellite tv provider directv. and we're not going anywhere. societe generale says the bank is committed to russia. room at the next federal open market committee meeting in june could have several empty seats if the u.s. senate doesn't take action soon. what's going on? jackie deangelis has details for
us in the states. good to see you. we could be down to three or four members here? >> that's exactly right. senator rand paul is threatening to slow the approval of three of president obama's fed nominees. paul wants law marks to vote on a republican sponsored bill to open monetary policy decisions to a congressional audit which fed officials say threatens their political independence. if he succeeds in putting this hold on the nominees, these are stanley fisher, lyle brainard and jerome powell, it would force the senate first on limiting debate and then final approval. all three received bipartisan support and are threatened to be confirm. with a tight legislative calendar ahead of the memorial day recess, it's likely to the board will drop to three for the first time in the central bank's 100-year history as stein is
stepping down. he's currently the only member of those panels. the deplegs of the board members is shifting the balance of power on the fomc. a majority of votes at the march and april meetings were cast by the regional bank presidents who get five spots on the fomc on a rotating basis. unlike the fed board, fed bank presidents are selected by business leaders in each region and aren't subject to senate approval. now, the partisan divide in washington has made it harder to push any presidential nominees through congress. this we know. compare that to when president roosevelt named six men to a newly created fed board in 193. that was in 1936. how simple it was back then. >> yes. pfizer ceo tells uk lawmakers he's proud of his
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if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care. u.s. futures are indicating weaker. we get a continuation of the rally with the dow and s&p closing up to fresh record highs. the s&p up 18. the best three months for the nasdaq, that this morning is called higher by about around 3 points this morning. the s&p around 2 points above fair value. the pfizer ceo ian read has been speaking before the commons business committee this morning.
he says he doesn't see any substantial antitrust issues in the deal. he's pretty proud of the company's track record. there will always be some job cut somewhere in the world. overlapping research naturally leads to cost cutting. they're yet to tlesh out the final strategy. they haven't been able to look at the astrazeneca books. at the moment it's worth remembering there is no deal on the table at all. there's no agreement to do anything. >> he made this comment, 20% of the research and development will remain in the uk. this is what he had to say about the firm's drug's pipeline. >> we believe astrazeneca's pipeline is instant but we believe it would be far better combined with our pipeline. part of the industrial logic is they are successful and strong in the cv metabolic. so are we. we have oncology products and they have earlier oncology
products which would combine very well with our oncology products. overall we feel it was a strong industrial rashal on the products. the second part of the value evaluation is this push to become more patient. >> joining us is jason koeppen, andrew berkeley still with us as well. jason, thanks for joining us. in your view, how much of pfizer's move here is because actually it needs, desperately needs new drugs added to its pipeline in the pipeline doesn't look great and they're not particularly great at developing drugs. how much of it is dictated by the fact they can save tax by inversion, changing their headquarters and they don't have to repatriate. >> it's hard to put numbers on it but i think you can say one
third, one third, one third. clearly pfizer continues to suffer from the loss of patent expiration in lipitor. that left a big hole, acquisition of astrazeneca won't immediately fill that hole but it certainly will in the out years. there are strategic tax advantages. one of the problems of u.s. global-based pharma, cash gets lost overseas. there's heavy taxation on the e repatriation. there's the cost savings and rationalization. this has been the m.o. of big pharma for the past 20 years. pfizer probably does it better than just about any other company. certainly it's been acquisition driven in terms of its lead products. that's how it got lipitor. >> yes. the issue with astrazeneca, its products are far less developed. all they have to do is come in
and basically get the sales force out there. they are brilliant at that. how much execution risk is there do you think with them coming in and taking over astrazeneca if that's what happens and seeing the drugs through to completion, trials and delivery? execution risk in terms of m&a and one this size is always a factor. this is what pfizer does extremely well. in terms of astrazeneca, they have a strong pipeline. we see almost 20 phase three assets that could come to the market over the next five years. certainly in the next two years, very robust pipeline. and pfizer technically can do a lot of engineering. remember they'll pick up crestor. it's a plug and play given their exposure with lipitor in that franchise. i think pfizer sees the synergy. i think you had a lot of positioning between the companies in terms of negotiating price.
>> i suppose the issue is whether at the end of the day, andrew, is whether shareholders in astrazeneca want to take pfizer paper. would you? >> well, i mean, i think if you look that your alternatives, essentially, if they can squeeze value out of this, if there are cost reductions, redundancies where they can add shareholder value, certainly putting some cash to work and creating this new entity, you know, i think would be a benefit for both sides. >> a lot of ifs in there. >> there are some ifs in there. thank you, good to see you. believe but concise and good analysis. that's just about it for today's edition of "worldwide exchange." ibm is holding thea meeting on
good morning and welcome to "squawk box." pfizer making its case to british lawmakers about why the astrazeneca deal makes sense. at&t reportedly ready to offer nearly $50 billion to acquire directv. and more records on wall street, the dow and s&p both rally to a new high. it's tuesday, may 13th, 2014. "squawk box" begins right now. good morning. welcome to "squawk box" right here on cnbc, i'm andrew ross sorkin along with joe kernen,
kayla tausche is with us this morning. becky has the day off. big news, at&t officially in active talks to acquire directv, telecom giant reportedly closing in on a deal valued at close to $50 billion, $48 billion is the number. could be announced in the next couple of weeks. at&t could offer as much as $95 a share for the satellite tv provider which would put the value of that deal at 48 billion. there were other reports saying at&t would go as high as $100 a share. directv is working with advisers to evaluate a possible combination following a recent takeover approach from at&t. take a look at shares of at&t right now this morning, looking at 36.53, down slightly in the premarket. this can have huge implications, this deal, for the come cast time warner cable deal, one of the reasons at&t and directv are going forward is to
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