Advil meets Excedrin; SoftBank IPO; Fed meeting

Posted at 3:16 AM, Dec 19, 2018
and last updated 2018-12-19 05:16:32-05

1. Advil meets Excedrin: GlaxoSmithKline and Pfizer are combining their consumer healthcare businesses in a multibillion-dollar merger.

The two pharmaceutical giants — which own household brands like Advil and Tums — said in a statement Wednesday that the new company would have combined sales of $12.7 billion a year.

Britain’s GSK (GSK) will control just over two-thirds of the joint venture, with US-based Pfizer (PFE) holding the rest.

After the tie-up, GSK said it plans to split in two by spinning off the new consumer healthcare business and listing it in London within three years. GSK’s remaining operations will be focused on making prescription medicines and vaccines.

Shares in GSK gained 7% in London.

2. Bad day for SoftBank: SoftBank’s blockbuster IPO has flopped in its market debut.

Shares in the Japanese company’s mobile telecommunications unit plunged 15% in Tokyo on their first day of trading.

SoftBank Group (SFTBY) raised about $23.5 billion by listing the wireless carrier. That makes it Japan’s biggest ever stock float — and the world’s largest since Alibaba’s (BABA) $25 billion listing in New York in 2014.

Strong demand from investors for a piece of the mobile business had prompted SoftBank to increase the number of shares it was selling.

But it went public at a tough time for stocks: Japan’s benchmark Nikkei index has fallen more than 6% since the start of December and is down about 13% from its recent high in early October.

3. Fed watch: The US Federal Reserve is expected to hike interest rates for the fourth time this year when its Federal Open Market Committee meets Wednesday.

A rate hike was long seen as a given, but new signs of economic softening and weeks of market volatility have shaken the broad consensus that rates must go up.

However, a deviation from the plan could spark another sell-off by stoking concerns that even the Fed thinks the economy is turning south.

It could also lead to worries that the central bank is bowing to the pressure from President Donald Trump, who has made clear that he opposes higher interest rates.

Watch CNN Business ‘Markets Now’ today at 12:45 p.m. ET

4. Global market overview: US stock futures were pointing higher. European markets opened mixed, following the trend set in Asia.

The Dow closed 0.4% higher on Tuesday. The S&P 500 was flat and the Nasdaq gained 0.5%.

US crude futures plunged 7% on Tuesday to $46.24 a barrel, the lowest close since August 2017. The decline continued overnight, with prices reaching just above $46 early.

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5. Companies and economics: General Mills (GIS) will report earnings before the open. Pier 1 Imports (PIR) and Rite Aid (RAD) are set to follow after the close.

Facebook (FB) is facing yet another headache after the New York Times reported the social media company offered more of its users’ data to companies including Microsoft (MSFT) and Amazon (AMZN) than it has admitted. The Times said it obtained documents that provided insights into the social network’s data-sharing arrangements with more than 150 companies.

A report on US existing home sales for November will be published at 10 a.m. ET.

6. Coming this week:
Wednesday — General Mills (GIS) earnings; Fed decision on interest rates
Thursday — Nike (NKE), Walgreens Boots Alliance (WBA) and Blackberry (BB) earnings; Bank of England meeting
Friday — Carmax (KMX) earnings; GDP third estimate.