TODAY’S FAYRE – Monday, 19th May 2014

“I arise from dreams of thee
In the first sweet sleep of night,
When the winds are breathing low
And the stars are shining bright¡ª
I arise from dreams of thee, 5
And a spirit in my feet
Hath led me¡ªwho knows how?
To thy chamber-window, Sweet!

The wandering airs they faint
On the dark, the silent stream; 10
The champak odours fail
Like sweet thoughts in a dream;
The nightingale’s complaint
It dies upon her heart,
As I must die on thine, 15
O belov¨¨d, as thou art!

O lift me from the grass!
I die, I faint, I fail!
Let thy love in kisses rain
On my lips and eyelids pale. 20
My cheek is cold and white, alas!
My heart beats loud and fast;
O press it close to thine again
Where it will break at last!”

Percy Bysshe Shelley – poet – 1792-1822

There are three huge stories today. Firstly comes the never ending saga of Astra’s fight for independence. Last night Pfizer came out with a final and barnstorming offer of £55 a share – a knock out bid for the Anglo-Swedish drug titan. I am still scratching my head. In December of last year and in January there were quite a few ‘SELL’ notices out on Astra Zeneca. The drug pipeline was a real concern and it was felt that CEO Pascal Soirot was taking too long to implement radical changes. The shares languished at £35. All of a sudden cash rich Pfizer express an interest and the company supposedly rises like the Phoenix from the ashes with new drugs appearing like ants out of a hole. Cambridge is now ‘Drug Utopia!’ Last Thursday we hear confirmation of a new lung cancer drug, which could be worth $3 billion and maybe more to come! The politicians chuck their two cents worth in for expediency with a General election due in a year. Astra’s price rockets to £48 a share last week with most people believing a better and frankly irresistible will arrive…and it did with knobs on! – £55 a share!

Unless I am mistaken this represents about 22 times earnings for Astra’s shares against Pfizer at 13 times. If commercial reality has woken from its slumber, shareholders will take the money/stock and run to the hills. On the other side of the coin Pfizer in the last 15 years has made acquisitions to the tune of $240 billion and these deals have hardly enhanced Pfizer’s value to shareholders.

The has been quite a fair bit of chuntering about Deutsche Bank shortage of capital, since it remains very high profile in investment banking and trading under the shrewd and watchful eye of Anshu Jain. When the ECB eventually shows its claws on bank regulation Deutsche might look vulnerable. So good sense will prevail! Deutsche Bank raises a further €8 billion capital including €1.75 billion form the Qatari Royal family. This deal will mean Deutsche lifts its tier one capital from 9.5% to 11.8%. Qatar’s Sovereign Wealth Fund already has meaningful investments in Credit Suisse, Bank of America and Agricultural Bank of China.

Telecoms and media are all the rage now. AT&T confirmed its $48 billion did for DirecTV at $95 a share and AT&T will divest itself of America Movil.

Later this week we await details on B&M Retail’s and Saga’s respective IPOS.

The former CBI boss Sir Richard Lambert is expected to make recommendations today aimed at rehabilitating the battered reputation of British banking. No disrespect to this august gentlemen but this committee is just another quango! We already have loads of them – Sir John Vickers, BOE, FCA, Treasury Select Committee. How many more do we need? If the banks cannot get their etiquette and moral compass back on track whilst being minded by those bodies, God help them!

These are David Buik personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
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