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THE HEADLINES
DRUGS ARE BAD MKAY?
Opioid manufacturers are totally f*cked. There, we said it.
Let’s recap, shall we?
On Monday in Oklahoma, J&J finally got its day in court and was ordered to pay $572M in the first ruling against US drugmakers for contributing to an opioid epidemic in the state.
Earlier this year Teva and Purdue each settled out of court in the Sooner state in order to avoid going before a judge. But that’s just one set of cases, and none of the drug makers are out of the woods by any means, as there are more than 2k cases being consolidated in Ohio as we speak.
From bad to worse
The ruling against J&J actually resulted in a stock bump as the $572M ruling was much less than the $1B investors were expecting. But don’t break out the bubbly just yet. Moody’s has said that J&J is at risk of losing its AAA credit rating thanks to the other pending lawsuits. On Wednesday, Moody’s analysts changed its outlook on J&J’s credit from “stable” to “negative.” Unlike your recent STD screening, negative is bad in this case.
Between its sale of addictive drugs, lawsuits related to its talc-based baby powder, and pressure to lower prescription drug prices from US legislators, Moody’s expects the next 12 to 18 months to be pretty rough on J&J’s creditworthiness. Drug manufacturers, they’re just like us.
(Moral) Bankruptcy
The outlook isn’t much better for OxyContin maker Purdue Pharma. But not all (financial) hope is lost. The Sackler family, who owns Purdue, thinks they have a plan to get themselves out of hot water with various state and local governments across the country: bankruptcy.
The Sackler’s Purdue Pharma wants to resolve the more than 2k cases against the firm with a deal worth between $10B and $12B by entering bankruptcy proceedings and emerging as a public benefit trust corporation.
But that’s not all
As part of the deal, the Sackler’s would give up ownership of Purdue Pharma. They’d also be required to sell global pharma company, Mundipharma, and contribute another $1.5B depending on the final sales price. In total, the family would need to fork over nearly $3B.
YOU’RE CANCELED
– Boris Johnson to Parliament
While our own fearless leader is busy trying to nuke hurricanes, the UK’s new PM, Boris Johnson is enlisting the Queen, who is presumably just excited to be here at this point, to effectively shut down Parliament through October.
The current sesh will end between September 9th and 12th and the MPs (Members of Parliament) won’t head back until October 14th … or roughly two weeks before the October 31st Brexit deadline. That Boris Johnson Halloween costume is going to be lit.
This gives lawmakers little time to make a deal, almost certainly leading to a no-deal Brexit … exactly what Johnson is hoping for.
The fallout
If something seems sketchy about this, that’s because it is. BJ promised a Brexit deal upon replacing Theresa May and it appears he’ll go to any (literally any) lengths to get one done.
Johnson’s goal is to make sure that Parliament doesn’t have enough time to force another extension, thus “falling out” of the EU.
Of course, Boris could face a vote of no-confidence for not playing nice in the sandbox but his government believes he would survive the political coup.
What does it all mean?
What we do know is that all hell will break loose should the UK drop out of the EU without a plan. And that might be exactly what Johnson is counting on … knowing that the EU may come to the negotiating table to avoid that scenario …
In probably the least surprising news of the day, the pound fell nearly 1% vs. the US dollar.
IN OTHER NEWS
iStockphoto
- Hudson’s Bay finally found a taker for Lord & Taylor. Subscription clothing service Le Tote will pay just $100M for the L&T brand along with the operation of 38 stores, digital channels, and inventory. Talk about bargain shopping. L&T accounted for $1.4B of Hudson’s Bay retail sales in 2018. The Bay is excited to rid itself of “the stores for the poors” and focus on its own name brand along with Saks Fifth Avenue.
- Time for a makeover … CoverGirl owner Coty is cutting ties with its social-media-driven partner Younique after less than 2 full years of business. Coty bought a 60% stake in the company that aimed at having “presenters” showcase the makeup and sell it to family, friends, co-workers, and neighbors … Sooo a pyramid scheme? Coty is still struggling to handle the 40+ brands it purchased from Procter & Gamble back in 2016. The company’s shares rose 6% on the announcement of the split.
- Toyota announced that it is buying a 4.9% stake in the FILA of automakers, Suzuki. Surprisingly, the percentage equates to a $908M sum that Toyota will pay to its compatriot via the open market in hopes that a partnership will allow the Japanese powerhouse to gain a presence in India and Africa where Suzuki has a foothold. Suzuki will also buy a 0.2% stake in Toyota, also via public shares, a common practice for Japanese companies to show good faith.
- It hasn’t exactly been a hot boy summer for bitcoin. The crypto hit $12.6k in July only to drop below $10k yesterday. The drop appears to coincide with the self-proclaimed founder of bitcoin Craig Wright being ordered yesterday to deliver 5B worth of BTC to the estate of his late business partner, Dave Kleiman, who died from MRSA in 2013. Sketchy AF.
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