US markets look set to open relatively unchanged following yesterday’s Fed-induced surge aided by oil prices remaining steady at levels reached soon after violence broke out in Iraq.
Futures suggest the Dow Jones will open 6 points lower at 16,900 with the S&P 500 expected to open unchanged at 1,956 and the Nasdaq 4 points higher at 3,808.
With the Fed leaving investors content that a rise in interest rates isn’t coming any sooner despite higher consumer price inflation and lower unemployment and the price of oil hovering at the top of recent ranges but not heading much higher, US stocks are back making all-time highs.
Shire (LONDON:SHP), the Irish pharmaceutical company has gained from hiring Citigroup (NYSE:C) as advisor for any takeover bids. Yesterday it pushed even further on speculation that it would be US pharmaceutical rival Allergan (NYSE:AGN) who would make the offer.
The main motivation for Allergan’s possible bid appears to be largely to fend off the offer from Valeant Pharmaceuticals (NYSE:VRX) pharmaceuticals and hedge fund Pershing Square Capital. Shire have reportedly already declined a bid from Allergan earlier in the year so the timing of a second attempt months later implies it’s a defensive move.
The other advantage will be more favourable tax conditions in Ireland than the US. This was a big advantage to the Valeant offer, the company pays aggressively low taxes in Canada by shifting intellectual property to tax shelters in the Caribbean.
While Allergan shareholders will be debating which tie-up they prefer, it will be down to Shire shareholders to decide. Stakeholders and politicians were not too impressed with tax as a motivation for a deal between Pfizer (LONDON:PFZ) and Astrazeneca (LONDON:AZN) so the Allergan-Shire combination may suffer a similar fate.
- Amazon.com (NASDAQ:AMZN) will likely be in play again today on the release of its first smartphone, the Fire.
- BlackBerry (NASDAQ:BBRY) is expected to report a first quarter loss at 26c per share on revenue of $963.17m
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