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LONDON, Nov 9 (Reuters Breakingviews) - Welcome back! For the first time in a while, the U.S. stock market is falling. The S&P 500 Index has shed 4% from its peak on October 29, while the tech-heavy Nasdaq Composite Index is down 6%. Is this a temporary blip, or the beginning of a bigger correction? Email me, opens new tab with your thoughts. If someone forwarded you this newsletter, sign up here to receive it every Saturday. OPENING LINE “It’s the question that just won’t go away among mining bankers and investors: could Rio Tinto (RIO.L), opens new tab gatecrash Anglo American’s (AAL.L), opens new tab nil-premium offer for $21 billion Canadian miner Teck Resources (TECKb.TO), opens new tab?” Sign up here. FIVE THINGS I LEARNED FROM BREAKINGVIEWS THIS WEEK NOVO COMBO There’s nothing quite like a transatlantic takeover battle to get investment bankers’ blood pumping. Last weekend I urged Week in Breakingviews readers to watch this space after Denmark’s Novo Nordisk (NOVOb.CO), opens new tab launched an aggressive offer for U.S. biotech Metsera (MTSR.O), opens new tab, trouncing a $7 billion bid from pharma giant Pfizer (PFE.N), opens new tab. In the following seven days, the fight escalated. It offers clues about how cross-border M&A deals are contested in today’s exuberant and highly politicised markets. First, a quick recap. Metsera is developing promising obesity treatments but will not generate an operating profit until 2030, according to analysts’ forecasts collated by Visible Alpha. That’s why Pfizer offered $47.50 per share in cash but also threw in a so-called contingent value right (CVR) worth $22.50 per share, which pays out if Metsera’s drugs reach certain development milestones. Enter Novo, which crashed the party by offering up to $9 billion with an unusual twist: the Danish company promised to pay, opens new tab $56.50 per share in cash immediately after signing the deal, and a CVR similar to Pfizer’s if the deal goes ahead. If Novo fails to win approval from shareholders or competition regulators, it ends up with a 50% non-voting stake in Metsera. Pfizer responded by suing both Metsera, opens new tab and Novo, opens new tab, while tweaking its offer to increase the cash component. Novo then upped its bid to almost $10 billion, Pfizer matched that figure, and Novo hiked again, Reuters reported. Late on Friday, Metsera accepted, opens new tab Pfizer’s offer of $65.60 per share in cash, plus a CVR worth up to $20.65 per share. There are three takeaways from this week-long slugfest. The first is that financial discipline is often the earliest casualty when two big companies go head-to-head. Pfizer’s most recent offer implies it will earn a return on its investment of just 6.4% in 2030. Novo, already one of two dominant suppliers of obesity treatments, may have extracted more benefits. But it could equally have ended up as a forced seller of non-voting stock in a company it was not allowed to own. The second lesson is that courts are unlikely to help. Pfizer sued to stop Metsera’s board from accepting the Novo offer and triggering the cash payout. But Delaware’s Court of Chancery refused. Though Pfizer said it would fight on, opens new tab, its decision to counterbid suggested it was not entirely confident about its legal approach. The final point is that U.S. competition authorities made what looks like a decisive intervention in Pfizer’s favour. The Federal Trade Commission quickly waved through, opens new tab the American company’s offer. It also questioned whether Novo’s approach was circumventing the U.S. antitrust process, Bloomberg reported, opens new tab. That raised the unpalatable prospect of Metsera accepting Novo’s cash payout but then being forced to return it. The Danish company on Thursday struck a deal with President Donald Trump to lower U.S. prices for obesity treatments. Yet that agreement does not appear to have helped Novo secure more favourable treatment from American competition cops. The only clear winners right now are Metsera shareholders, whose investment is worth 2.5 times more than it was two months ago. CHART OF THE WEEK Wall Street titans descended on Hong Kong this week for the Asian financial hub’s annual summit of financial leaders. When I attended the confab two years ago, the attending CEOs did their utmost to avoid talking about China’s moribund stock market and troubled property sector. This time the mood was more optimistic. However, the U.S. banks are feeling the pinch: most of the benefits of the pickup in activity have flowed to Chinese deal advisers, rather than big American firms. THE WEEK IN PODCASTS How is China faring in the artificial intelligence race? Many executives think the U.S. is still ahead. But others, like Nvidia’s (NVDA.O), opens new tab Jensen Huang, reckon the People’s Republic is winning, even though it lacks the U.S. tech giants’ raw spending power and advanced chips. That was the topic of debate on the Viewsroom, opens new tab this week, as Robyn Mak and Karen Kwok joined Aimee Donnellan and Una Galani to compare the two rivals. On The Big View, opens new tab, I talked to John Studzinski, the veteran financier and philanthropist who is vice chairman of the fund management giant PIMCO. We talked about his career in finance, and how to motivate people to share their wealth. PARTING SHOT As climate negotiators convene in Brazil this weekend for the annual United Nations climate summit, it’s easy to be pessimistic. Trump is winding back green policies in the United States, while U.N. Secretary-General António Guterres has effectively declared dead the goal of limiting global warming to 1.5 degrees centigrade above pre-industrial levels. Yet there are points of light amid the gloom – even if it takes longer than climate activists had hoped. Want to receive The Week in Breakingviews in your inbox every Saturday? Sign up for the newsletter here. Follow Peter Thal Larsen on Bluesky, opens new tab and LinkedIn, opens new tab. For more insights like these, click here, opens new tab to try Breakingviews for free. Editing by Liam Proud; Production by Oliver Taslic Breakingviews Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time. Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors. Peter is Global Editor of Reuters Breakingviews, based in London. He was previously EMEA editor, and before that spent four years in Hong Kong as Asia Editor, where he oversaw the launch of Breakingviews’ Asian edition. Prior to joining Reuters in 2009, Peter spent 10 years at the Financial Times, including five years as the paper’s banking editor, leading its award-winning coverage of the credit crunch. Between 2000 and 2004 Peter reported for the FT from New York, where he covered a range of stories including the 9/11 attacks and their aftermath. A Dutch national, Peter has degrees from Bristol University and the London School of Economics.
