Diamonds and Dogs

6/25/19

Allergan (AGN) jumping over 25% after agreeing to be bought out by AbbVie (ABBV) for approximately $63 billion, or $188.24 per share in cash & stock. The two companies are trying to diversify away from their two largest drugs, AbbVie's Humira drug for rheumatoid arthritis, the world's biggest-selling drug and Allergan's wrinkle reducer product, Botox. The deal is expected to generate significant annual operating cash flow of $19 billion, which will support a debt reduction target of $15 to $18 billion before the end of 2021, while also enabling a continued commitment to Baa2/BBB or better credit rating and continued dividend growth. This will be the third largest deal in the drug space within the last two years.

FedEx (FDX) can't win in the US/China trade tensions. FedEx is down 2% not far from a 52 low as China is considering adding FedEx to a list of so-called unreliable entities. FedEx drew the ire of Chinese officials after Huawei said that documents it asked to be shipped from Japan to China were instead diverted to the U.S. without authorization. The US government doesn't seem to be too happy with FedEx either. FedEx filed a lawsuit Tuesday against the U.S. Commerce Department, arguing the company shouldn't be held liable if it unknowingly ships items that violate the Trump administration's export restrictions, which were placed on Chinese telecommunications giant Huawei last month as the U.S.-China trade war escalated.