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"Merger Monday" Returns: Pfizer Buying Array, T-Mobile-Sprint on Ice?

Monday, June 17, 2019

Market indexes are up slightly in this morning’s pre-market session, looking to follow-through on last week’s overall close in the green. News on two major mergers in their respective industries are taking headlines, along with a fresh regional economic read.

The Empire State Manufacturing index for June tumbled to -8.6, following a May headline of +17.8. This is reportedly the single-largest one-month drop in the history of the New York state survey, as well as its first negative read in over two years. New orders in particular were down 12% in the month.

This is the latest in new economic data suggesting a downtrend in domestic production, in part due to a slowing global economy and partly due to the ongoing U.S.-China trade war. But “bad news” reads like this going forward in the near-term are likely to be construed as “good news,” in that it raises the likelihood of the Fed cutting interest rates.

The Federal Open Market Committee, which makes the decisions on nominal rates, meets this week, after which a new statement by Fed Chair Jerome Powell is expected. Only a very small portion of analysts anticipate a rate cut this week, but that number goes up greatly for the odds of a cut at the committee’s July meeting.

Return of “Merger Monday”

Big Pharma staple Pfizer PFE has agreed to buy Boulder, CO-based Array Biopharmaceuticals ARRY for $48 per share, for an overall enterprise value of $11.4 billion. Shares of Array have zoomed up 60% in today’s pre-market on the news, to all-time highs. Array has drugs that treat cancer, specifically colorectal cancer, which would fit well with Pfizer’s overall cancer treatment portfolio.

T-Mobile/Spring Merger on the Rocks?

The long-awaited merger between telecom giants T-Mobile U.S. TMUS and Sprint S may have hit another snag recently, with 10 state attorneys general challenging the legality of the deal. Put together, a new T-Mobile/Spring company would have the highest number of subscribers overall, and its acceleration into the 5G space is what has gotten investors excited about the merger.

According to reports, the joined company would roll out 5G technology to 97% of all Americans, including 85% of rural locales. But the state litigators are concerned with competition in the greater telecom space, even as officials from each of the companies said the deal will keep a cap on prices for three years. This is an ongoing story, so stay tuned.

Mark Vickery
Senior Editor

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