Fresh $6b bid rocks Paramount takeover saga

Good morning. Here's what happened overnight and what you need to know today.

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1.

Paramount play: Edgar Bronfman Jr, heir to the billionaire Canadian entrepreneur, made a competing USD4.3 billion ($6.4 billion) bid to acquire Shari Redstone’s National Amusements and a minority stake in Paramount, The Wall Street Journal reported. Citing sources, the Journal said Bronfman’s offer includes a USD400 million fee to break the deal National Amusements- Redstone’s family vehicle controlling Paramount Global- and Paramount have already agreed to with David Ellison’s production company, Skydance Media. Similar to Skydance’s offer, the new bid values National Amusements at USD1.75 billion and includes a USD1.5 billion investment into Paramount’s balance sheet. Paramount’s special committee now must determine if Bronfman’s proposal is superior to Skydance’s before the go-shop period, which allows other potential buyers to submit offers, ends on Wednesday. (WSJ)(Capital Brief)

2.

Rally stalls: Stocks in the northern hemisphere took a breather on Tuesday halting an eight-day rally that had returned the S&P 500’s to near-record highs. The index dropped slightly after an eight-day run-up of nearly 8%, which had reversed sharp losses in early August. Factors such as lower trading volumes, concerns about an overextended rally, and anticipation of key economic events ahead of Thursday’s payroll data and a key speech by Fed Chairman Jerome Powell have weighed on the market, analysts said.Goldman Sachs and Barclays, however, predict continued momentum in the coming weeks. “If incoming data remains well behaved allowing volatility to ease and the Fed embarks on the cutting cycle next month, there is room for systematic exposure to stabilize and turn around,” Bloomberg quoted Barclays analysts as saying. (Bloomberg)

3.

Yatch tragedy: Morgan Stanley International chairman Jonathan Bloomer, British tech entrepreneur Mike Lynch and Clifford Chance partner Chris Morvillo are among those feared dead after their luxury yacht sank off Sicily’s coast on Monday. The Bayesian superyacht sank near Porticello after a tornado struck the vessel as Lynch was celebrating his recent acquittal from fraud charges. Six passengers, including Bloomer- who is also chairman of insurer Hiscox- Lynch, Lynch's daughter Hannah, Morvillo and his wife Neda, remain missing. The Italian coast guard, aided by military ships, helicopters and remotely operated underwater vehicles, is continuing the search, according to media reports. Authorities are investigating the sinking, with the UK’s Marine Accident Investigation Branch sending inspectors to assess the situation. The UK ambassador has flown to Palermo to support victims’ families. (Bloomberg)

4.

X-cess debt: Elon Musk's USD13 billion ($19.27 billion) loan to acquire Twitter, now X, has become the worst merger-finance deal for banks since the 2008-09 financial crisis, according to The Wall Street Journal. Seven banks, including Morgan Stanley, Bank of America, Barclays and other French and Japanese lenders provided the funds in October 2022, expecting to offload the debt quickly. However, Musk’s polemic public stance and X’s poor financial performance have left the loans “hung” on bank balance sheets, with some banks marking down their value by hundreds of millions of dollars. Data from PitchBook LCD indicates this is the longest "hung" deal since the 2008 crisis, the paper said. The banks continue to receive hefty interest payments, but the deal and ensuing write-downs have dented bank profits and affected compensation. (WSJ)

5.

Robotaxi push: Waymo, Alphabet's autonomous robo-taxi service, has doubled its paid rides to 100,000 per week within three months, as it expanded services across San Francisco, Los Angeles and metro Phoenix, Reuters reported citing company executives. The milestone follows Alphabet's June announcement of a multi-year USD5 billion investment in Waymo, amidst ongoing scepticism and regulatory scrutiny surrounding autonomous vehicle technology. Waymo's fleet of about 700 vehicles is unique in running uncrewed robotaxis that collect fares in the US. Competition is set to increase, with Tesla expected to reveal its robotaxi plans in October, and rivals like GM's Cruise, Amazon's Zoox, and China's WeRide ramping up their efforts. (Reuters)

6.

Fat fighter: Eli Lilly & Co.’s weight-loss drug Zepbound smashed the risk of developing diabetes in a three-year study involving over 1,000 obese and prediabetic patients, lowering it by 94%, the company said Tuesday. The study, the longest of its kind for its blockbuster drug Zepbound, revealed that patients on the highest 15mg weekly dose also lost 23% of their body weight over 176 weeks. Preliminary results from the first 72 weeks of the study were published in medical journals in 2022. But the new data reinforces “the potential clinical benefits of long-term therapy for people living with obesity and pre-diabetes,” the company said in a statement. Eli Lilly's shares surged as much as 4.9% following the release. (Capital Brief) (Eli Lilly statement)(Bloomberg)

7.

Tax hike: US Vice President and Democratic presidential candidate Kamala Harris plans to raise the corporate tax rate from 21% to 28% if elected, her campaign said Monday. The move, first proposed by President Joe Biden, would boost government revenue while ensuring billionaires and big corporations pay their fair share, they said. The plan would partially reverse the Trump administration’s corporate tax rate cut from 35% to 21%, and contrasts with his pledge to further slash the rate to 15% if he wins the election. Last week, Harris said that if elected, she would seek to cut taxes for the middle class and families with children, boost incentives for first-time homebuyers and ban so-called “price-gouging” by food and grocery retailers. The tax hike could reduce the US deficit by USD1 trillion over a decade, according to the Committee for a Responsible Federal Budget. (Reuters)(FT)

8.

Marketplace compromise: Britain's Competition and Markets Authority (CMA) accepted Meta's revised commitments on data usage for Facebook Marketplace advertisers. Originally, Meta allowed advertisers to opt out of having their data used to improve the Marketplace. The new proposal, however, guarantees that all advertiser data will not be used for that purpose, removing the need for an opt-in or opt-out option. The CMA said these revisions exceed the initial commitments and ensures advertiser is “worse off”. The CMA's investigation, which began in 2021, focused on whether Meta had an unfair advantage in areas like online classified ads and online dating due to its data practices. Meta's changes follow a similar commitment by Amazon last year to maintain a fair competitive environment by not using marketplace data from rival sellers. (CMA statement) (Reuters)