Transcript: Monday, November 17, 2014

NBR ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Susie Gharib, brought to you in part by —


blockbuster healthcare acquisition with a price tag of $66 billion. And it
apparently closes the door on one of the most audacious takeover attempts
in recent history.

Japan`s economy unexpectedly contracts despite massive efforts to spur
growth. Will the U.S. feel the chill?

MATHISEN: And hanging in the balance. Do supporters in the Senate
have enough votes to approve the Keystone pipeline? What will the
president do if the Senate acts? And which companies could benefit big

All that and more tonight on NIGHTLY BUSINESS REPORT for Monday,
November 17th.

GHARIB: Good evening, everyone.

A big day for big deals today. The buzz on Wall Street was all about
two blockbuster mergers, one in the energy sector. We`ll have more on that
in a moment. The other in the health care sector.

We begin with the bigger of the two deals, generic drugmaker Actavis
agreeing to pay $66 billion for Allergan (NYSE:AGN), the company best known
as the maker of Botox. The massive price tag which amounts to $219 per
share effectively ends a month-long hostile bid by hedge fund manager Bill
Ackman, along with Canadian drugmaker Valeant for the same company.

Investors approved of the match up. Shares of Actavis rose more than
1 1/2 percent, while shares of Allergan (NYSE:AGN) jumped 5 percent.

More now on how Actavis sealed the deal.


GHARIB (voice-over): The bidding war for Botox maker Allergan
(NYSE:AGN) didn`t end up quite the way activist investor Bill Ackman was
hoping for.

BILL ACKMAN, ACTIVIST INVESTOR: It has more potential partners or
combination partners say they`re not interested in Allergan (NYSE:AGN) puts
Valeant in a stronger and stronger negotiating position.

GHARIB: Back in April, Ackman started the bidding with Valeant`s $53
billion offer, an offer Allergan (NYSE:AGN) fought off vigorously.
Ackman`s final bid topped an earlier offer from Actavis but wound up being
no match for the $66 billion deal announced today.

DAVID PYOTT, ALLERGAN CHAIRMAN & CEO: The offers never came even
close to the intrinsic value of the company. As of Friday, the implied
offer was $183, so you know, $11 billion give or take away from what
Actavis is willing to pay for us, and I really feel that this is a fair

GHARIB: So, what is Actavis buying? Growth. Sales growth at
Allergan (NYSE:AGN) has often exceeded 10 percent a year, not the norm for
most big pharmaceutical companies. How? For one thing, Botox isn`t just
about wrinkles any more. It`s being used to treat migraines, dry eye and
even neurological disorders like M.S. That`s why Allergan (NYSE:AGN)
favored Actavis and it`s commitment to earmark almost $2 billion for
research and development.

BRENT SAUNDERS, ACTAVIS PRES. & CEO: R&D is the lifeblood of our
industry. We have one of the greatest combined late stage development
portfolios in the industry, which was sustained growth for the foreseeable

GHARIB: Analysts say the deal will also cut Allergan`s taxes by
almost $300 million. That`s because Actavis recently moved its
headquarters to Ireland where tax rates are much lower than here in the

Despite the intense battles to buy Allergan (NYSE:AGN), Ackman still
made out quite well. He is Allergan`s largest shareholder. The value of
his 10 percent stake has surged, giving him a profit of more than $2


GHARIB: And Actavis says that with the acquisition of Allergan
(NYSE:AGN), the combined company will have more than two dozen new products
in late stage clinical testing.

MATHISEN: More now on the other major merger confirmed today.
Halliburton (NYSE:HAL), the world`s second largest oilfield services
company, has agreed to buy out the rival Baker Hughes (NYSE:BHI), number
three in the business, for nearly $33 billion in cash and stock. The deal
was driven by the 30 percent tumble in oil prices just since June that`s
forced energy companies to cut costs and streamline production, making less
work for both companies. Shares of Baker Hughes (NYSE:BHI) today up about
9 percent but Halliburton (NYSE:HAL) fell nearly 11 percent.

GHARIB: Another deal is also making headlines today. Pfizer
(NYSE:PFE) is teaming up with German drug company Merck (NYSE:MRK) to
develop a drug to treat cancerous tumors. Pfizer (NYSE:PFE) will pay Merck
(NYSE:MRK) $850 million, up front, plus a percentage of sales. The
drugmaker also lowered its 2014 profit outlook in part because of the
cancer treatment partnership.

MATHISEN: And yet another possible merger that was reportedly in the
discussion stage last week has apparently broken down. “The Wall Street
Journal” says that deal talks between DreamWorks Animation and the toymaker
Hasbro (NYSE:HAS) have hit a major snag over the structure of the combined
company and that those talks are not likely to resume.

Hasbro (NYSE:HAS) shares weren`t playing around today, rising more
than 4 percent. But the curtain really did come down on shares of
DreamWorks. They lost 14 percent.

GHARIB: On Wall Street today, stocks traded in a narrow range of
gains and losses despite all that merger activity and expectations for
additional stimulus measures in Europe and Japan. The Dow added 13 points,
the NASDAQ was down 17 and a one point gain in the S&P was just enough to
notch a new record high.

MATHISEN: More now on Japan. It`s the latest global economy getting
weaker instead of stronger. Today, Japan reported really terrible economic
data despite massive, even unprecedented efforts to stimulate the economy.

Michelle Caruso-Cabrera has the story.


Economists had expected Japan`s economy to expand last quarter by more than
2 percent. Instead, the Japanese economy declined by 1.6 percent. This
after it fell a whopping 7 percent last quarter.

So, Japan is now officially in recession. Economists blamed it on a
big increase in the national sales tax earlier in the year which the
government raised from 5 percent to 8 percent back in April. They thought
those effects would have finally worn off by now, but they didn`t.

The Japanese economy has struggled for nearly two decades. When
measured in yen, the Japanese economy is roughly the same size that it was
back in the late `90s. This must be incredibly disappointing to the leader
of the plan, Prime Minister Shinzo Abe. When taking office, he promised
that both the federal government and the central bank would do much, much
more to stimulate the economy. There would be more deficit spending and
printing money.

Today`s results raise questions about the future of any further
measures. When it comes to Japan`s effect on the United States, one member
of the Federal Reserve says it just adds to the global headwinds blowing of
an otherwise improving U.S. economy.

is global growth is weakening in a number of jurisdictions. Europe is very
weak, China has weakened, Japan is weak, there`s weakness in Latin America.
We haven`t felt that here in the United States yet, but the risk really is
that we`ll begin to feel it through the trade channels or other channels.
But, again, we don`t feel it yet.

CARUSO-CABRERA: We expect to hear from the prime minister of Japan
overnight to decide whether or not he`s going to cancel another increase in
the country`s national sales tax which had been planned for next year.

For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera.


GHARIB: Well, Japan isn`t alone. The eurozone economy is also
struggling. And with the European Union likely to announce new stimulus
measures to boost the region`s economy, JPMorgan (NYSE:JPM) today
downgraded its outlook on the U.S. stock market and upgraded European
stocks. It said valuations of American companies relative to Europe are,
quote, “outright expensive” and that Europe is due to outperform the U.S.

MATHISEN: And those markets may be getting a big boost from Mario
Draghi, the president of the European Central Bank, who says the bank could
buy government bonds to accelerate growth.


expectation outlook were to worsen by itself, the council is willing and
stands ready to act. As I said before, it`s unanimous in its commitment to
undertake other unconventional measures beyond the ones being decided. The
other unconventional measures might entail the purchase of a variety of
assets one of which is sovereign bonds.


MATHISEN: After those comments earlier today, European stock markets
erased early losses, while yields on most lower-rated eurozone bonds fell.

GHARIB: It was a historic day for stocks in China and for global
investors with the new mutual market program allowing access to Chinese-
listed shares for the first time ever.

Eunice Yoon has more from the Shanghai Stock Exchange.


UNIDENTIFIED MALE: Shanghai-Hong Kong Stock Connect has begun.

excitement among investors today over what`s called the Shanghai-Hong Kong
Stock Connect. And this is a scheme which started today which allows
investors in both of these markets to invest in the other market directly.
And so, a lot of people are excited about it because it`s really seen as a
way for foreign investors to get broader access to Shanghai-listed shares.

In fact, the money that is allowed by the Chinese government into the
Shanghai market hit its daily limit because investors were buying up all
sort of mainly consumer-led stocks, such as a hard liquor company called
Moutai, as well as General Motors (NYSE:GM) partner here in China called

Now, overall, the money flows are relatively restricted. We`re
talking about kind of small numbers relative to the market size but at the
same time, it`s seen as a very significant move on the part of the
government, because it`s seen as an important step to try to open up
China`s financial system.

China`s second largest economy in the world, but a lot of people have
seen the financial system as a laggard. The financial system, as well as
the capital markets, have been largely sealed off. This is seen as a
broader part of the reform effort here in China.

And one other that was quite interesting is investors here in China,
mainly high net worth individuals who have brokerage accounts were saying
that they`re looking forward to investing directly into Hong Kong stocks to
be able to broaden their own investment portfolios and really have a larger
say in the global market.


GHARIB: That was Eunice Yoon reporting from Shanghai.

MATHISEN: Still ahead, the Senate is set to take up the Keystone
pipeline bill tomorrow. And if it passes, which companies could benefit.


MATHISEN: Some welcome relief for victims of Bernie Madoff. The
court appointed trustee charged with collecting funds to help compensate
victims of Wall Street`s biggest Ponzi schemer says the total recovered now
tops $10 billion.

GHARIB: General Motors (NYSE:GM) is giving vehicle owners an extra
month to file claims related to those faulty ignition switches. GM`s
program administrator, Ken Feinberg, explained why the deadline was
extended until January 31st of next year.


everybody knows about this program, and out of an abundance of caution,
we`ll extend the filing deadline one more month. I don`t think there are
many people out there, if any, that don`t know about this program.


GHARIB: Well, this comes after the family of a Connecticut woman who
died in a crash 11 years ago said they didn`t know GM had attributed her
death to the defective switches until they were notified by a reporter just
this month.

MATHISEN: Good news for the government`s mortgage insurer. It is
making money. The Federal Housing Authority is currently about $5 billion
in the black. This comes after the agency increased premiums, raised the
average FICO scores for new borrowers and went after rogue lenders.

GHARIB: Well, a very different story for the federal agency that
insures pensions for 41 million Americans. The Pension Benefit Guaranty
Corporation ran a record breaking $62 billion deficit last year, that`s
doubled the shortfall it recorded just the year before. Most of that is
due to the poor financial condition of just a handful of large multi-
employer pension plans.

MATHISEN: Well, lawmakers will tackle two issues on Capitol Hill this
week that could have a big impact on your money and business, immigration
and the Keystone pipeline.

John Harwood is in Washington for us tonight.

John, what is the president preparing to do on immigration and when?

Tyler, the president`s preparing to issue an order that, using executive
authority alone, not legislation, would grant legal status and the ability
to work in the United States for an unknown number of millions of Americans
who — or people who are now here illegally.

This would be an expansion of the DREAMer legalization that he did a
couple of years ago. In essence, it defers deportation and grants legal
status while that`s taking place. We expect it to be some time in the next
couple of weeks. It`s clear whether the president is going to get a
government funding deal with Republicans before doing it because, of
course, they`re angered by this move.

GHARIB: Yes. Tell us more on that, John. I mean, how do you think
the Republicans will respond?

HARWOOD: Well, some of them were strident Republicans in the Congress
may even call for the impeachment of President Obama. Of course,
Republican leaders don`t want that.

Others may try to shut down the government or refuse to raise the debt
limit in the next couple of months when that ripens again.

Most likely I think will be Republicans have short-term funding for
the government so as not to let the Obama administration get comfortable,
and perhaps file another legal challenge in addition to the one that`s
already in the courts.

MATHISEN: Let`s move to another highly divisive vote tomorrow. The
Senate is expected to vote on the Keystone pipeline. What do we expect?

HARWOOD: The House has already voted to approve the pipeline and push
the president to let that go forward. The Senate is going to vote tomorrow
evening. It is unclear if the Republican majority plus renegade Democrats
including Mary Landrieu who is running in a runoff election trying to hold
her seat have the 60 votes they need to move it forward, but if they don`t
have them now, they`ll most certainly have them in the next Congress in

GHARIB: So, let`s just say it does pass. How do you think President
Obama will respond to that?

HARWOOD: The president and his aides have both signaled they would
veto the initial legislation on grounds that they`re continuing their own
administrative review, but the president`s not strongly opposed to the
Keystone pipeline.

I would expect after that veto, he would see if Republicans are
willing to deal with him and give him some of his priorities in return for
him going along with Keystone. The question, of course, given what`s going
on with immigration and other issue, is there going to be my appetite for
deal making.

MATHISEN: All right. John Harwood, thanks very much. A very
interesting couple of days and weeks in store in Washington.

GHARIB: One day ahead of that Senate vote on the Keystone pipeline,
oil prices are little changed. Domestic crude was off 18 cents to $75.64 a

Now, if the pipeline is approved, what will that mean to oil prices
and which energy companies are poised to benefit the most?

Jackie DeAngelis has that story.


XL pipeline, a nearly $8 billion project that will bring oil sands crude
from Canada down to the Gulf Coast. After a slew of delays, it seems a
decision is imminent.

A potential approval comes at an interesting time. The backdrop,
plummeting crude prices. West Texas Intermediate down 25 percent year-to-
date as the U.S. ramps production and the market fears of global supply

Proponents of the pipeline argue it will create countless say it will
help transport crude safely, but even if they`re right, what will it do to
crude prices?

ANTHONY GRISANTI, GRZ ENERGY: Whether approval of the pipeline is
bullish or bearish for prices has supporters on both sides of the issue.
The bulls will say that additional ways to transport crude means additional
exploration for crude and a potential lifting of the ban on exports. The
bears will say that you`re moving crude to an area that`s already well
oversupplied with crude oil.

DEANGELIS: Meantime, from an investor standpoint, there are many
stocks that could benefit from a yes vote here, especially with an energy
sector that`s been beaten down more than 10 percent in the last three
months alone. An obvious play, TransCanada, that`s a company building the
pipeline. Another, Canadian Natural Resources (NYSE:CNQ), an oil and gas
exploration company that will send product through the pipe.

Here in the U.S., refiner Valero will receive more products to refine.
It`s already benefiting from the lower leg of the pipeline that became
operational earlier this year. Then, there`s ConocoPhillips (NYSE:COP) and
also ExxonMobil (NYSE:XOM). They both have exposure do the oil sands. And
a Houston-based company to watch, Quanta Services (NYSE:PWR). It`s an
infrastructure play. One of its operating units will help build the

SEN. ROB PORTMAN (R), OHIO: I think what we`ve learned in the last
week is that the Democrats realize it`s going to happen at some point. And
so, I do think either it happens over the next couple of days by the Senate
passing it or it will happen in January when Republicans get the majority.

DEANGELIS: So, at the moment, all eyes on the Senate, then the



MATHISEN: Urban Outfitters (NASDAQ:URBN) quarterly profit tumbled by
a third in its last quarter, and that is where we begin tonight`s “Market

The apparel retailer, which owns brands like Free People, saw costs
rise. That weighed on its third quarter results. The company has
continued to offer discounts and promotions to attract customers, which has
pinched its margins. Its same store sales also continued to decline last
month. After the bell, shares initially plunged. Before the close, shares
were off just slightly. They finished at $30.83, down 2 pennies.

Tyson saw its shares rise after the chicken and beef producer posted
better than expected fourth quarter profits. The company forecast 2015
profit that could top Wall Street`s view, due to record beef prices, lower
feed costs and its recent purchase of Hillshire Farms. Sales did come in
below estimates, but investors overlooked that. Shares were almost 6
percent higher. They finished at $43.03.

Promising data on one of Merck`s drugs sent shares of that company
higher today. The company`s cholesterol lowering medicine Zetia met its
main goal in a study that tested whether adding it to an older cholesterol
drug could reduce heart risks. The drug did lower the risk of heart attack
and stroke in patients already on aggressive therapy. This in a study that
lasted almost a decade. Shares rose slightly. They finished $59.46.

GHARIB: Shares of drug maker Celldex soared on data showing that its
drug successfully shrunk brain tumors. The treatment also improved
survival rates in patients without the disease worsening. The stock popped
28 percent to $18.25.

And Facebook (NASDAQ:FB) is hoping to be a little more office
friendly. According to reports, it`s developing a new product aimed at
professionals called Facebook (NASDAQ:FB) at Work. The service will
compete with LinkedIn (NYSE:LNKD), but also with Google (NASDAQ:GOOG) Drive
and Microsoft (NASDAQ:MSFT) Office by offering tools like shared documents
for collaboration. Shares fell slightly to $74.24. LinkedIn (NYSE:LNKD)
also tumbled on the report, down more than $10 to $223.28.

MATHISEN: Well, it looks like smooth sailing so far for the second
year rollout of the Affordable Care Act`s open enrollment period on the Website.

Sylvia Burwell, the secretary of health and human services sounded
upbeat about the number of Americans looking to sign up for a health care


of open enrollment, we have seen 1 million visitors to the site. We have
had 200,000 calls to our customer center. There are those who actually
want to talk to people about it. And 20,000 of those are to our Spanish
language lines.


MATHISEN: And Bertha Coombs joins us now with more. She follows this

It sounds, Bertha, as though the federal exchanges were off to a
reasonably good start, far better than a year ago.

What about the state exchanges?

exchanges, you know, half of them last year had some tremendous problems,
quite a number of them actually revamp and rebuilt their entire systems.
And they had a fairly good result as well. Washington state, which
performed fairly well last year, they found very early on on Saturday that
they were calculating subsidies incorrectly. So, they took the site down

But nobody else seemed to have that problem. In Massachusetts, where
last year even coming into the fall there were people who they had not been
able to calculate their subsidies. They said they actually had about 3,600
people get through, fill out their applications and determine their
eligibility. So, that was a huge improvement.

MATHISEN: I`m wondering if things continue like this going so well,
will the exchanges have to have a big marketing push to remind people to
sign up? Because it`s just not going to be in the headlines that much.

COOMBS: Right. You know, it`s a high class problem to have. You
certainly want the Web site to be working well, but at the same time out of
sight, out of mind. Jonathan Wu, who is the CEO of a consumer Web site
called ValuePenguin, says, you know, last year, it was always in the
headlines, so you did get that big push going into December when people
were looking to apply.

Now, they`ve really got to generate a lot more activity, a lot more
news because it`s basically working. So, it`s no longer really a headline
story, at least early on here.

MATHISEN: Two related questions I`m going to ask you to answer
quickly. Do we know who is signing up? And do we know what — and these
are related, do we know what the premium increase will likely be this year?

COOMBS: It depends on where you are. In some markets actually, the
premiums have come down. There`s a benchmark premium where they set those
subsidies. And one of the things that everyone is that saying even if you
had — you liked your plan from last year, it behooves you to look through
and shop, because all of the prices are going to be in fluctuation, and
especially if you`re dependent on a subsidy, you want to make sure that you
find something that matches your subsidy and that you don`t just
automatically re-enroll.

MATHISEN: So, the plan you had in this calendar year may not be the
best priced or best one for you next time.

COOMBS: It might not be. It behooves you to go through and shop and
rework the numbers.

MATHISEN: Bertha, thanks so much. Bertha Coombs reporting.

GHARIB: And coming up on NIGHTLY BUSINESS REPORT, finding creative
ways to accelerate medical research, at a time when government funding for
science is coming under pressure.


MATHISEN: And finally tonight, with government funding for medical
research under pressure, the annual Partnering for Cures Conference took
place in New York City today on how best to secure industry and
philanthropic funding for medical advances.

Meg Tirrell has more.


Sonia Vallabh knows firsthand the urgency of seeing the fruits of medical
research. Four years ago, she lost her mother to what turned out to be a
genetic disease — fatal familial insomnia.

risk for having inherited that disease. And we decided right away to get
tested. I think we figured we were going to be thinking about it either
way, as we wanted the knowledge either way. And so, we got the test done
and we learned that I have it.

TIRRELL: Now, Sonia and her husband Eric Minikel are on the quest to
change her disease`s path. They both begun careers in medical research,
and founded a nonprofit called the Prion Alliance, dedicated of discovering
a treatment or cure.

They joined a thousand others today across industry, government and
research at the Milken Institute`s Partnering for Cures Conference in New
York. It`s a community focused on finding creative ways to accelerate

Something Chairman Mike Milken knows well.

MIKE MILKEN, MILKEN INSTITUTE CHAIR: You can move things very quickly
today. And that`s greatly due to this enormous investment by the American
people over the past 20 years, there are fundamental changes going on.

TIRRELL (on camera): Milken is known for his work in prostate cancer.
And now, his organization is spurring work across a spectrum of diseases
from Alzheimer`s to drug-resistant bacterial infections to rare diseases,
like the one Sonia and Eric are now battling.

(voice-over): Yet, researchers warn that pressure on federal founding
could slow progress.

all the promise of medical research, the last ten years have seen a drop in
the investments in the U.S. and bio medical research through the NIH, about
20 percent loss in purchasing power. That has basically slowed down

TIRRELL: As for Sonia, her mother passed away around the age of 50.
Sonya, now 30, says she`s optimistic about their mission.

VALLABH: It`s such an exciting time to be in science. I feel lucky
about it every day. There are no guarantees for me and we`ll see. I think
— I really do believe that it`s a matter of time. We just don`t know how
much time.



GHARIB: And that is NIGHTLY BUSINESS REPORT for tonight. Thanks so
much for watching. I`m Susie Gharib.

MATHISEN: And thanks from me as well. I`m Tyler Mathisen. You`ll
have a great evening, everybody. And we`ll see you right back here
tomorrow night.


Nightly Business Report transcripts and video are available on-line post
broadcast at The program is transcribed by CQRC
Transcriptions, LLC. Updates may be posted at a later date. The views of
our guests and commentators are their own and do not necessarily represent
the views of Nightly Business Report, or CNBC, Inc. Information presented
on Nightly Business Report is not and should not be considered as
investment advice. (c) 2014 CNBC, Inc.

This entry was posted in Transcripts. Bookmark the permalink.

Leave a Reply