WEBVTT - BI Weekend: Oracle Earnings, Novo Cuts, Anglo Deal 0:00:00.280 --> 0:00:11.400 Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence 0:00:11.480 --> 0:00:13.560 with Scarletfoo and Paul Sweeney. 0:00:13.640 --> 0:00:15.720 How do you think the FED is looking at tariffs? 0:00:15.920 --> 0:00:18.119 The uncertainty of terriffs. Let's take a look at the 0:00:18.239 --> 0:00:20.119 sectors and how they performed. 0:00:19.680 --> 0:00:21.720 A lot of investors getting whip saled every day by 0:00:21.760 --> 0:00:22.759 news events. 0:00:22.440 --> 0:00:26.200 Breaking market headlines, and corporate news from across the globe. 0:00:26.200 --> 0:00:28.840 Could we see a market disruption of market events? 0:00:28.880 --> 0:00:30.920 So people just too exuberant out there? 0:00:31.040 --> 0:00:33.600 You see some so called low quality stocks driving this 0:00:33.680 --> 0:00:34.440 short term rally. 0:00:34.479 --> 0:00:39.280 Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, 0:00:39.479 --> 0:00:41.360 YouTube and Bloomberg Originals. 0:00:42.760 --> 0:00:45.360 I'm Scarletfoo and I'm normal Inda, filling in for Paul 0:00:45.360 --> 0:00:48.320 Sweeney on today's Bloomberg Intelligence Show. We dig inside the 0:00:48.320 --> 0:00:51.080 big business stories impacting Wall Street and the global markets. 0:00:51.240 --> 0:00:53.479 Each and every week, we provide in depth research and 0:00:53.600 --> 0:00:55.840 data on some of the two thousand companies and one 0:00:55.920 --> 0:00:58.560 hundred and thirty industries are analysts cover worldwide. 0:00:58.600 --> 0:01:00.680 Today, we look at one of the biggest mining deals 0:01:00.680 --> 0:01:01.520 in over a decade. 0:01:01.680 --> 0:01:03.800 Plaus Well look at why the Danish drug maker Novo 0:01:03.880 --> 0:01:06.600 Nordist is cutting about eleven percent of its workforce. 0:01:06.680 --> 0:01:09.080 But first we begin with earnings from the computer tech 0:01:09.080 --> 0:01:10.000 company Oracle. 0:01:10.200 --> 0:01:12.440 This week, the company gave an aggressive outlook for its 0:01:12.480 --> 0:01:14.800 cloud business, causing the stock to surge the most since 0:01:14.920 --> 0:01:15.960 nineteen ninety two. 0:01:16.319 --> 0:01:18.920 For more, guest host Alexis Christophers and I were joined 0:01:18.959 --> 0:01:22.959 by anor Agrana, Bloomberg Intelligence technology analyst. We first asked 0:01:22.959 --> 0:01:25.520 on Aroan to break down Oracles earnings and the company's 0:01:25.560 --> 0:01:26.400 major stock jump. 0:01:26.720 --> 0:01:28.960 Oracle is a very unique company because it has your 0:01:29.000 --> 0:01:32.200 traditional software but also a few years ago it started 0:01:32.600 --> 0:01:36.479 a cloud business called Oracle Cloud Infrastructure, something very similar 0:01:36.480 --> 0:01:39.959 to what Aws Tells or Microsoft Azure. And one of 0:01:39.959 --> 0:01:42.440 the advantages it has is it just rents out it's 0:01:42.800 --> 0:01:44.680 you know, servers for people to go out and train 0:01:44.760 --> 0:01:48.320 their AI models or you know, run their applications on it. 0:01:48.400 --> 0:01:51.200 So this is really a new business for them, you know, 0:01:51.320 --> 0:01:53.520 just came up the last few years, and that's where 0:01:53.560 --> 0:01:55.680 the biggest growth is and that's what's driving the stock. 0:01:55.920 --> 0:01:59.360 What's happening with the rest of the company, its operations, 0:01:59.360 --> 0:02:02.120 it's software bil business. Is it still cutting costs for instance, 0:02:02.160 --> 0:02:03.880 and reducing headcount. 0:02:04.480 --> 0:02:07.280 The advantage Oracle has compared to let's say a company 0:02:07.280 --> 0:02:10.720 like core v for Nebus, is that it has a 0:02:10.919 --> 0:02:15.200 very high margin database business and very high margin application business. 0:02:15.520 --> 0:02:18.239 These businesses have gross margins, you know, let's say north 0:02:18.280 --> 0:02:21.240 of ninety percent. Now when you marry that with a 0:02:21.320 --> 0:02:24.280 massive AI infrastructure business where you need to spend a 0:02:24.280 --> 0:02:28.080 lot of money, that's problematic for somebody that doesn't have that. 0:02:28.280 --> 0:02:31.440 But Oracle has that luxury that it can spend billions 0:02:31.520 --> 0:02:33.840 of dollars. You know, before we were thinking they're going 0:02:33.880 --> 0:02:36.880 to spend you know, somewhere in the low thirty billion range, 0:02:36.960 --> 0:02:39.880 which was already higher than what they had guided, and 0:02:40.400 --> 0:02:42.839 you know, even the street was expecting. They came out 0:02:42.840 --> 0:02:44.639 and said they're going to spend over thirty five billion 0:02:45.280 --> 0:02:47.880 and you know the next financial year. So that's a 0:02:47.919 --> 0:02:50.880 lot of money going into expanding data center, buying chips 0:02:51.160 --> 0:02:54.200 by you know, creating a new infrastructure to fulfill this demand. 0:02:54.840 --> 0:02:59.480 When you look at the competition here, Microsoft, Amazon, Alphabet, 0:02:59.639 --> 0:03:03.000 what does Oracle or how does Oracle differentiate itself not 0:03:03.040 --> 0:03:06.960 only for the customer, the client, but for investors. 0:03:08.200 --> 0:03:09.760 Yeah, and one of the things I would say is 0:03:10.040 --> 0:03:12.520 everybody is having a good time in this particular party. 0:03:12.560 --> 0:03:15.000 It's not just you know, one company that's scaling it. 0:03:15.000 --> 0:03:17.639 It's just the size of their business is far smaller 0:03:17.680 --> 0:03:21.480 than it is for let's say AWS or Microsoft. You know, 0:03:21.880 --> 0:03:23.959 in the last financial year, the revenue was you know, 0:03:24.080 --> 0:03:27.120 roughly about ten billion or so. Aws's rund rate is 0:03:27.200 --> 0:03:30.359 one hundred and twenty five billion. Microsoft's business is seventy 0:03:30.360 --> 0:03:33.840 five billion. Google's business is fifty billion. So you know, please, 0:03:34.200 --> 0:03:36.040 you know, you've got to take that with the context 0:03:36.080 --> 0:03:38.960 of how big Oracle's cloud infrastructure is compared to some 0:03:39.000 --> 0:03:40.560 of the bigger vendors out there. 0:03:41.360 --> 0:03:43.320 You know, honrog it feels like Oracle kind of came 0:03:43.360 --> 0:03:47.680 from out of nowhere with its you know, contributions to 0:03:47.920 --> 0:03:50.640 the AI space and being such a big player. Certainly, 0:03:50.720 --> 0:03:54.240 the bookings of almost half a trillion dollars caught my eye, 0:03:54.240 --> 0:03:55.880 and it's more than four times what it was the 0:03:55.880 --> 0:03:58.360 same time last year. Are there any other kind of 0:03:58.440 --> 0:04:01.400 dark horses out there that you would be keeping your 0:04:01.400 --> 0:04:03.640 eye on that could be the next Oracle, which is 0:04:03.680 --> 0:04:05.080 already feels like it's the next in. 0:04:05.160 --> 0:04:08.000 VideA, Yeah, I think one of the things you have 0:04:08.040 --> 0:04:09.720 to think about it is it's not easy to come 0:04:09.800 --> 0:04:12.160 up with this structure. A lot of business like this 0:04:12.280 --> 0:04:14.760 because you need billions of dollars to create a data 0:04:14.800 --> 0:04:17.440 center or to lease out a data center, then buy 0:04:17.480 --> 0:04:21.720 equipment like in Vidia chips and computing equipment. There are 0:04:21.760 --> 0:04:24.800 a handful of companies like you know, core beav of Nebeus, 0:04:24.800 --> 0:04:28.520 which are smaller neo cloud players that specialize in renting 0:04:28.520 --> 0:04:32.120 and VideA GPUs to customers. Now, the bigger vendors have 0:04:32.279 --> 0:04:34.840 the capital that they are also expanding it. But again, 0:04:34.920 --> 0:04:37.159 as I said, given the size of the increment that 0:04:37.200 --> 0:04:39.240 they are seeing, you know, you're not getting that same 0:04:39.279 --> 0:04:39.839 growth rate. 0:04:40.640 --> 0:04:42.719 Do you think there's a little over exuberance though in 0:04:42.760 --> 0:04:45.160 the market, especially with so much talk about whether or 0:04:45.240 --> 0:04:48.760 not we are in an AI bubble and what happens 0:04:48.760 --> 0:04:49.880 if it starts to deflate. 0:04:51.120 --> 0:04:51.320 Yeah. 0:04:51.440 --> 0:04:53.039 See, one of the things you have to remember is 0:04:53.040 --> 0:04:56.000 for Oracle, at least they have this backlock of ordos 0:04:56.040 --> 0:04:58.640 coming in and it's coming you know. For example, one 0:04:58.680 --> 0:05:01.120 of the biggest customers right now is open Ai. If 0:05:01.160 --> 0:05:04.200 Opening Eye continues to expand revenue at a good pace 0:05:04.400 --> 0:05:06.479 over the next several years, they are going to be 0:05:06.480 --> 0:05:09.320 spending a lot of money to train their models in 0:05:09.400 --> 0:05:11.320 order to stay ahead. So I think there is a 0:05:11.360 --> 0:05:13.719 lot of relationship over there. If let's say you and 0:05:13.760 --> 0:05:16.640 I don't use chat GPT as much, that would have 0:05:16.680 --> 0:05:20.039 an impact on open Aiy's revenue, That would have impact 0:05:20.160 --> 0:05:22.800 downstream revenue on all the other players, you know, whether 0:05:22.839 --> 0:05:23.840 that's in Verdiao Oracle. 0:05:24.000 --> 0:05:26.039 But frankly speaking, we are not there yet. 0:05:26.960 --> 0:05:29.120 It doesn't feel like this is a situation where it's 0:05:29.120 --> 0:05:33.039 a zero sum game Oracle wins and Microsoft, Google and 0:05:33.240 --> 0:05:34.680 Amazon lose, or is it. 0:05:36.160 --> 0:05:38.760 So there are a few companies that fall into this pocket, 0:05:38.800 --> 0:05:44.080 you know, and those include Amazon Web Services, Microsoft, Google 0:05:44.120 --> 0:05:48.560 Cloud Code, viv Oracle, and Nabius for example. So these 0:05:48.600 --> 0:05:50.920 are the ones that are seeing extra spending right now. 0:05:51.000 --> 0:05:53.039 But when you look at on the application side, you know, 0:05:53.040 --> 0:05:56.000 whether that's Salesforce or Workday, those guys are not seeing 0:05:56.000 --> 0:05:58.599 that benefit because they're not in that infrastructure game. So 0:05:58.640 --> 0:06:01.480 there's a huge difference between two vendors, or between the 0:06:01.520 --> 0:06:02.760 two category of vendors. 0:06:03.120 --> 0:06:03.520 Right now. 0:06:03.520 --> 0:06:05.719 We are more in the built phase of AI, not 0:06:05.800 --> 0:06:07.640 the implementation phase of AI. 0:06:08.240 --> 0:06:12.800 You know, it's hard to believe, Scarlett, but this stock 0:06:13.160 --> 0:06:16.679 and is now worth more than has a larger market 0:06:16.720 --> 0:06:21.120 cap than Walmart, Eli, Lilly, JP, Morgan Chase. 0:06:21.560 --> 0:06:23.560 Yeah, that is pretty remarkable, and again it feels like 0:06:23.600 --> 0:06:25.080 it kind of came from out of nowhere. 0:06:25.160 --> 0:06:27.720 You're right on that, which is why I brought up, 0:06:27.760 --> 0:06:29.880 you know, Amazon, Microsoft, right on your rog I mean, 0:06:29.920 --> 0:06:31.920 the fact that those were the names we were really 0:06:31.920 --> 0:06:34.839 talking about when it came to AI and then sort 0:06:34.880 --> 0:06:36.760 of Oracle comes out of out of the blue. 0:06:38.000 --> 0:06:41.120 Yeah, but that's the whole point this particular infrastructure. If 0:06:41.160 --> 0:06:43.920 you're going to run large models, it's very unlikely you 0:06:44.040 --> 0:06:45.360 going to do it in house. I mean, you can 0:06:45.440 --> 0:06:47.520 do it, but you required a lot of investment going in. 0:06:47.880 --> 0:06:51.839 You're better off renting out data center capacity or computing 0:06:51.839 --> 0:06:55.159 capacity from one of the cloud vendors. And Oracle has 0:06:55.200 --> 0:06:57.600 the money to spend it, and they have the relationship 0:06:57.640 --> 0:07:00.520 with Nvidia to get those GPUs. And on top of that, 0:07:00.520 --> 0:07:04.160 they're offering this to customers and saying here's my equipment, 0:07:04.279 --> 0:07:06.920 come and test it out the way you like it. Amazon, 0:07:06.920 --> 0:07:10.160 on the other hand, thought example sells it as a package, 0:07:10.440 --> 0:07:13.160 and that's where you're you're seeing some distinction. And also 0:07:13.200 --> 0:07:15.160 the size, as I mentioned, before our. 0:07:15.000 --> 0:07:17.920 Thanks to Honor Agrana, Bloomberg Intelligence technology analysts. 0:07:18.160 --> 0:07:20.600 We move next to news in the telecommunications space. 0:07:20.800 --> 0:07:23.680 This week, the space tech company SpaceX agreed to buy 0:07:23.720 --> 0:07:27.480 wireless spectrum from EchoStar for about seventeen billion dollars in 0:07:27.560 --> 0:07:28.400 cash and stock. 0:07:28.520 --> 0:07:31.160 And this comes weeks after EchoStar agreed to sell spectrum 0:07:31.240 --> 0:07:33.680 licenses to AT and T for about twenty three billion 0:07:33.720 --> 0:07:35.800 dollars in an all cash transaction. 0:07:36.280 --> 0:07:36.640 For more. 0:07:36.760 --> 0:07:40.320 Guest host Alexis Christopherus was joined by John Butler, Bloomberg 0:07:40.360 --> 0:07:43.240 Intelligence Senior telecom analysts. We first asked John how this 0:07:43.360 --> 0:07:44.600 deal will help SpaceX. 0:07:45.280 --> 0:07:48.800 So the key to this deal is a spectrum called 0:07:48.920 --> 0:07:54.400 AWS four. So if you look at Starlink and it's 0:07:54.480 --> 0:07:58.280 sprivals in the satellite space, they all hold spectrum, but 0:07:58.320 --> 0:08:02.960 they're not allowed to offer wireless spectrum, I'm sorry, wireless 0:08:03.000 --> 0:08:09.880 services over that spectrum. AWS four spectrum, according to the FCC, 0:08:10.800 --> 0:08:14.760 can be used flexibly. It's called flexible use spectrum, meaning 0:08:15.040 --> 0:08:19.600 the satellite providers can offer anything from mobile services to 0:08:19.800 --> 0:08:25.680 satellite data, downlinked services, video, whatever. It's open use spectrum 0:08:25.760 --> 0:08:28.080 if you want to think of it that way. And 0:08:28.200 --> 0:08:32.400 so Starlink getting its hands on this key spectrum will 0:08:32.440 --> 0:08:35.800 allow them at some point in the future to potentially 0:08:35.960 --> 0:08:39.240 enter the wireless market as a competitor to AT and T, 0:08:39.480 --> 0:08:41.440 Verizon and T Mobile. 0:08:42.200 --> 0:08:45.200 So EchoStar's shareholders seem to like this deal. What are 0:08:45.240 --> 0:08:48.160 they going to do with the proceeds? What will Echo 0:08:48.160 --> 0:08:49.640 Star do with the proceeds of the sale? 0:08:50.760 --> 0:08:53.439 So for EchoStar, it's a very good deal as well. 0:08:53.480 --> 0:08:57.240 They have really struggled to get their wireless service off 0:08:57.280 --> 0:09:00.600 the ground. They've been building this five G wireless network 0:09:01.080 --> 0:09:04.839 and have a relatively weak prepaid brand called Boost and 0:09:05.240 --> 0:09:09.680 they've really struggled there. So this brings in much needed 0:09:09.760 --> 0:09:13.720 funds for them to pay down debt. They've been a 0:09:13.760 --> 0:09:18.199 bit stretched on that front, over leveraged, and you know, 0:09:18.559 --> 0:09:21.240 this deal, together with a deal a couple of weeks 0:09:21.240 --> 0:09:23.080 ago with AT and T, is going to bring in 0:09:23.160 --> 0:09:27.000 billions of dollars to reduce debt. That's number one. And 0:09:27.080 --> 0:09:29.840 number two, it brings in fresh capital for them to 0:09:30.000 --> 0:09:33.640 invest in the business. And I have a feeling they're 0:09:33.679 --> 0:09:36.440 probably going to take a step back and reevaluate the 0:09:36.520 --> 0:09:40.400 strategy here based on the fresh funding and decide what 0:09:40.600 --> 0:09:43.439 the best avenues of growth may be going forward. 0:09:44.040 --> 0:09:46.760 I'm wondering if this is going to satisfy the FCC 0:09:46.920 --> 0:09:48.760 this deal, because I know that they were sort of 0:09:49.200 --> 0:09:52.160 on EchoStar's case, if you will. They wanted them to 0:09:52.280 --> 0:09:55.040 sell some of their airwaves as the company looks to 0:09:55.160 --> 0:09:57.640 roll out it's five G technology. I know they sold 0:09:58.400 --> 0:10:01.160 some spectrum licenses to at and recently. So do you 0:10:01.160 --> 0:10:03.440 think this is going to sort of take the FCC 0:10:03.559 --> 0:10:04.320 off their backs? 0:10:06.000 --> 0:10:06.440 I do. 0:10:06.559 --> 0:10:12.239 I mean, I think Starlink was working with the FCC. 0:10:12.520 --> 0:10:16.360 They had written a letter about Echo Stars under use 0:10:16.400 --> 0:10:20.840 of this spectrum. Starlink obviously really wants to get their 0:10:20.880 --> 0:10:23.520 hands on it, and I think the FCC really took 0:10:23.600 --> 0:10:26.080 their side on this one. I think they understood that 0:10:27.120 --> 0:10:31.400 echo Star, being the only owner of this flexible use spectrum, 0:10:32.040 --> 0:10:34.400 had not really put it to use to date, so 0:10:34.640 --> 0:10:37.920 in their view it was being underutilized and being such 0:10:37.960 --> 0:10:43.800 a critical asset, felt that, you know, sale might make sense, 0:10:43.880 --> 0:10:47.240 and so they really EchoStar really got into it with 0:10:47.280 --> 0:10:51.080 the FCC trying to protect those licenses. But in the 0:10:51.200 --> 0:10:53.000 end here I think, if you want to think of 0:10:53.040 --> 0:10:57.439 it this way, the FCC won the day and net. 0:10:57.640 --> 0:10:59.960 I think it's a good deal for both Echo Stars 0:11:00.600 --> 0:11:02.400 and Starlink and the FCC. 0:11:03.360 --> 0:11:06.480 Now I know SpaceX or Starlink had a deal with 0:11:06.559 --> 0:11:09.680 T Mobile, right, how is this spectrum acquisition with EchoStar 0:11:09.800 --> 0:11:10.640 different if at all? 0:11:11.440 --> 0:11:15.880 So? I think ultimately Starlink could go from being a 0:11:15.920 --> 0:11:21.200 partner with T Mobile to being a competitor of T Mobiles. 0:11:21.840 --> 0:11:24.800 As I said a moment ago, this spectrum opens the 0:11:24.840 --> 0:11:28.880 door for them to get into wireless directly without having 0:11:28.920 --> 0:11:32.640 to partner with a terrestrial carrier. The current deal with 0:11:32.760 --> 0:11:36.880 T Mobile basically has Starlink. I think the best way 0:11:36.880 --> 0:11:40.240 to think about it is they're almost like a tower company. 0:11:40.360 --> 0:11:44.480 They're providing the space based cell sites if you will, 0:11:44.640 --> 0:11:48.160 to carry T Mobile traffic, and they get paid a 0:11:48.200 --> 0:11:52.120 fee for that, but they're not earning the level of 0:11:52.240 --> 0:11:55.920 profits that you could as as a direct carrier. So 0:11:56.080 --> 0:12:00.079 down the road, Starlink, understanding this, wants to enter the 0:12:00.760 --> 0:12:03.800 cellular business directly. They have a lot to do before 0:12:03.880 --> 0:12:08.640 that that happens, but I think it longer term puts 0:12:08.720 --> 0:12:11.599 the deal with T Mobile in jeopardy. 0:12:11.880 --> 0:12:14.600 The seventeen billion dollars a fair price for this for 0:12:14.640 --> 0:12:15.640 these spectrum licenses. 0:12:15.640 --> 0:12:17.600 Do you think you know? 0:12:17.720 --> 0:12:22.560 Spectrums a very liquid market, so it's tough to gauge valuations. 0:12:22.600 --> 0:12:25.679 But in my mind, I look at it as a 0:12:25.720 --> 0:12:30.959 fair price given the potential again for Starlink to enter 0:12:31.040 --> 0:12:33.280 this huge market. Down the road. 0:12:33.559 --> 0:12:37.000 Our thanks to John Butler, Bloomberg Intelligence, senior telecom analyst. 0:12:37.320 --> 0:12:39.319 Coming up, Well, look at how the US's ability to 0:12:39.360 --> 0:12:42.439 assess data on climate change is being impacted by the 0:12:42.440 --> 0:12:43.280 Trump administration. 0:12:43.600 --> 0:12:46.760 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:46.800 --> 0:12:49.280 depth research and data on two thousand companies at one 0:12:49.360 --> 0:12:50.440 hundred and thirty industries. 0:12:50.480 --> 0:12:53.400 You can access Bloomberg Intelligence via Bigo on the terminal. 0:12:53.520 --> 0:12:54.480 I'm Normal Indo. 0:12:54.400 --> 0:12:56.880 And I'm Scarlet Food. This is Bloomberg. 0:13:00.440 --> 0:13:04.840 Is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney on 0:13:05.040 --> 0:13:06.079 Bloomberg Radio. 0:13:06.800 --> 0:13:09.120 I'm Scarlet Foo and I'm normal in a filling in 0:13:09.160 --> 0:13:11.839 for Paul Sweeney. We move next to a major deal 0:13:11.920 --> 0:13:12.880 in the mining industry. 0:13:13.080 --> 0:13:15.800 This week, the global mining company Anglo American agree to 0:13:15.840 --> 0:13:18.920 acquire Canada's natural resource company tech Resources. 0:13:19.040 --> 0:13:21.560 It's a so called zero premium deal and this deal 0:13:21.559 --> 0:13:24.400 will create a more than fifty billion dollar company and 0:13:24.440 --> 0:13:26.960 one of the biggest mining deals in over a decade. 0:13:27.040 --> 0:13:29.520 So for more guest host Alexis Christophers and I were 0:13:29.559 --> 0:13:33.280 joined by Richard Burke, Bloomberg Intelligence senior basic materials analysts. 0:13:33.480 --> 0:13:36.960 We first asked Richard what a zero premium transaction actually is. 0:13:37.720 --> 0:13:40.240 So what they've done is it's a merger of equals, 0:13:40.400 --> 0:13:43.360 and it's kind of interesting even though it's it's labeled 0:13:43.440 --> 0:13:48.120 mergers equal that American Angle shareholders are going to end 0:13:48.240 --> 0:13:53.600 up owning Butts two thirds of company roughly, and tech 0:13:53.720 --> 0:13:58.080 is shareholders going to end up owning a third company. Well, 0:13:58.120 --> 0:14:00.960 it's gonna be headquarter in Canada, the board is going 0:14:01.040 --> 0:14:04.079 to be fifty to fifty the city, and the management's 0:14:04.080 --> 0:14:06.760 gonna be fifty to fifty. So even though it's kind 0:14:06.760 --> 0:14:11.280 of you know, no premium merger equals kind of you know, 0:14:11.360 --> 0:14:14.959 the the governance issues kind of point to merger of 0:14:15.000 --> 0:14:18.920 equals and that's really probably structured in order to get 0:14:19.120 --> 0:14:23.640 approved by the Investment Act Kada Investment Act. And also 0:14:23.800 --> 0:14:28.200 the Kevil family that owns Tech has two classes shore olders, 0:14:28.200 --> 0:14:31.520 class Class A and Class B. Class A is super 0:14:31.600 --> 0:14:36.000 voting rights. He's owned, he owns majority of those shares, 0:14:36.280 --> 0:14:39.600 so he has to approve this deal. In the past, 0:14:39.640 --> 0:14:42.080 he you know, Glenn Corter, when Glencourt tried to buy 0:14:42.120 --> 0:14:45.840 them about two years ago, he kind of vetoed the deal. 0:14:45.960 --> 0:14:47.920 So the deal and go through. So there's kind of 0:14:47.960 --> 0:14:51.440 a unique structure this deal to kind of you know, 0:14:51.560 --> 0:14:54.160 fitted through final approval makes sense. 0:14:54.360 --> 0:14:57.120 Okay. So there was also language in the statement of 0:14:57.120 --> 0:14:59.200 this so called merger of equals that would allow both 0:14:59.240 --> 0:15:02.920 firms to con that are unsolicited proposals and for the 0:15:03.000 --> 0:15:05.160 deal to end if there's a better offer. Does that 0:15:05.200 --> 0:15:09.200 mean they're angling for some counter offer from someone else. 0:15:09.200 --> 0:15:13.800 Well, I think it would be a hard press, I doubt, 0:15:14.080 --> 0:15:16.760 in order to get it through the Canadian Investment Act, 0:15:16.800 --> 0:15:20.160 which you know, copper is now being considered a critical 0:15:20.200 --> 0:15:24.360 material critical mineral. Canada has said they don't want to 0:15:24.360 --> 0:15:27.840 see any of their mining companies go away. So would 0:15:27.880 --> 0:15:30.920 somebody come in who can pay that much, be willing 0:15:31.080 --> 0:15:34.320 or to PHP or Rio Tinto, be willing to move 0:15:34.400 --> 0:15:38.440 their headquarters from where they're at to Canada. I highly 0:15:38.520 --> 0:15:41.040 doubt it. So, but I think you have to put 0:15:41.080 --> 0:15:43.840 that language in the deal that hey, we're open to. 0:15:44.360 --> 0:15:47.640 So it's like boilerplate, language plate and also prevent that 0:15:47.720 --> 0:15:50.240 you know't get sued by shareholders that you have to 0:15:50.280 --> 0:15:52.080 go out and looked at for all deals. 0:15:52.160 --> 0:15:52.400 Right. 0:15:52.640 --> 0:15:55.160 Do you think that this deal though, between Anglo American 0:15:55.200 --> 0:15:57.440 and Tech is going to be the thing that sort 0:15:57.440 --> 0:16:01.160 of ignites more M and A in this industry? 0:16:01.520 --> 0:16:04.000 I think you know, they used to be saying I 0:16:04.080 --> 0:16:06.800 used to cover oil and gas industry years ago before 0:16:07.800 --> 0:16:09.960 more focused on Melson mining. There's you used to be 0:16:10.040 --> 0:16:12.520 on saying it's cheaper draw on Wall Street and then 0:16:12.760 --> 0:16:16.560 drill up in the field. And that seems to be 0:16:16.640 --> 0:16:21.320 happening in If you look at how much it costs 0:16:21.360 --> 0:16:25.200 to you know, get a new copper, deposit up and 0:16:25.200 --> 0:16:28.360 writing also how many years were permitting and all the 0:16:28.440 --> 0:16:33.840 other things that happens, you can see that maybe you 0:16:33.920 --> 0:16:36.400 sit down and look at this and say, Okay, maybe 0:16:36.560 --> 0:16:39.680 cheaper draw out, you know, mine on Wall Street, then 0:16:39.760 --> 0:16:40.440 go out and make the. 0:16:40.480 --> 0:16:44.080 Mine our Thanks to Richard Bork Bloomberg Intelligence Senior Basic 0:16:44.120 --> 0:16:45.840 materials analysts. 0:16:45.280 --> 0:16:47.600 We now moved to some news in the pharmaceutical space. 0:16:47.880 --> 0:16:50.280 This week, the Danish drug maker Novo Nordis announces it's 0:16:50.280 --> 0:16:53.720 cutting nine thousand jobs globally. This equals about eleven percent 0:16:53.720 --> 0:16:56.440 of its workforce. The company also cut its profit forecast 0:16:56.520 --> 0:16:58.560 for the third time this year as it fights to 0:16:58.560 --> 0:17:00.440 recover ground in the obesity dry market. 0:17:00.720 --> 0:17:03.200 For more on this, guest host Alexis Christophers and I 0:17:03.280 --> 0:17:06.240 turned to Sam Fazzelli, Bloomberg Intelligence, Director of Research for 0:17:06.280 --> 0:17:10.320 Global Industries and senior pharmaceuticals analysts. We began by asking 0:17:10.359 --> 0:17:13.240 Sam to talk about the larger changes taking place at NOVO. 0:17:13.640 --> 0:17:15.520 The story here is that this is not the first 0:17:15.520 --> 0:17:17.840 time they've lowered guidance for the year. I mean this 0:17:17.920 --> 0:17:20.840 time there's an impact on the EPs front from obviously 0:17:20.840 --> 0:17:24.040 the cost of restructuring, assuming they can get it all 0:17:24.080 --> 0:17:26.400 done this year, but it's a pretty chunky one. Nine 0:17:26.440 --> 0:17:28.800 thousand people, about eleven percent of the workforce, and a 0:17:28.840 --> 0:17:29.320 lot of that. 0:17:29.240 --> 0:17:30.600 Coming from Denmark. 0:17:31.400 --> 0:17:33.960 If you read the essence of the press release that 0:17:33.960 --> 0:17:35.320 they put at there's a couple of things that they 0:17:35.320 --> 0:17:35.639 bring out. 0:17:35.640 --> 0:17:38.000 They want to invest more on R and D Well. 0:17:38.520 --> 0:17:40.160 What I think this is telling you is that the 0:17:40.200 --> 0:17:42.960 growth that they had planned for the next five years, 0:17:43.200 --> 0:17:45.320 they may be thinking maybe that won't come as test 0:17:45.359 --> 0:17:48.480 as we were expecting it because of competition from Lily, 0:17:49.000 --> 0:17:52.399 compounders and other products potentially coming to market to the 0:17:52.440 --> 0:17:54.119 pace that they were hoping. So if you want to 0:17:54.200 --> 0:17:55.919 keep investing in R and D, you need to liberate 0:17:55.960 --> 0:17:58.920 some cash. And also it looks like that they're also 0:17:58.920 --> 0:18:01.560 thinking about changing the world that they're doing their marketing 0:18:02.040 --> 0:18:04.359 because of the different channels that they're getting involved with 0:18:04.400 --> 0:18:07.119 now direct to consumer, that is not something that Prauma 0:18:07.200 --> 0:18:09.719 has done very often before. In fact, only Lily had 0:18:09.760 --> 0:18:13.160 done it prior to this, also for obesity drugs, So 0:18:13.240 --> 0:18:15.280 maybe the costs of that are different. And there's an 0:18:15.320 --> 0:18:17.320 element that they keep that they've referred to in there, 0:18:17.359 --> 0:18:24.879 which is a culture of performance related reward, and you 0:18:24.880 --> 0:18:27.119 think to yourself, well, what was it before? So it 0:18:27.200 --> 0:18:30.719 seems like that they want to make it much harder 0:18:30.760 --> 0:18:33.840 focus on you've got to deliver because we need the growth. 0:18:34.080 --> 0:18:35.280 So that's the interesting wle to. 0:18:35.240 --> 0:18:37.679 Watch, you know, Sam, I think to a lot of 0:18:37.720 --> 0:18:41.800 casual investors who don't deep dive into you know, Novo 0:18:41.880 --> 0:18:44.439 Nordisk the way you might say, would look at this 0:18:44.480 --> 0:18:47.679 and say, listen, they have the most popular weight loss drugs, right, 0:18:47.720 --> 0:18:51.280 will go vi Ozempek. Why is this company having these 0:18:51.320 --> 0:18:55.280 problems when you drill down or is it just a 0:18:55.359 --> 0:18:58.399 problem with having to scale too quickly? Is it that 0:18:58.400 --> 0:19:02.159 the company isn't nimble enough, just sort of change with 0:19:02.200 --> 0:19:03.280 the times. 0:19:04.000 --> 0:19:07.239 Well, Nobodordisk has been a poster child of how you 0:19:07.280 --> 0:19:11.560 grow from a small company selling to a relatively basic 0:19:11.600 --> 0:19:14.840 set of products twenty thirty years ago to one that's 0:19:14.880 --> 0:19:17.840 become essentially one of the innovators in this space. They 0:19:17.920 --> 0:19:19.960 brought the first JL we want to market, so we 0:19:20.040 --> 0:19:22.680 can't fault them for that. It's just that I think 0:19:22.720 --> 0:19:25.399 this growth that they had to go through where the 0:19:25.560 --> 0:19:27.359 planning was done, you know a lot of I mean, 0:19:27.400 --> 0:19:30.200 we have one hundred billion dollar market potential for more 0:19:30.320 --> 0:19:34.800 obesity as a whole, right, So it's just difficult, I think, 0:19:34.840 --> 0:19:37.600 to judge into this space. And maybe the previous CEO 0:19:37.640 --> 0:19:39.919 had looked and said, I'm pretty sure we're going to 0:19:39.920 --> 0:19:42.200 be fifty percent of that market. We need to plan 0:19:42.280 --> 0:19:46.320 for that growth. And then two things changed. Competition from 0:19:46.359 --> 0:19:49.359 really is superintense. They have what I would call it 0:19:49.359 --> 0:19:51.760 a better drug in terms of the efficacy profile that's 0:19:51.800 --> 0:19:54.960 been shown in head to her trials. And then of 0:19:55.000 --> 0:19:57.480 course you've got on top of that compounders that don't 0:19:57.520 --> 0:20:00.760 seem to be don't seem to be going way, they 0:20:00.840 --> 0:20:04.560 keep taking cheaper generics or generics manufactured, they'll try to 0:20:04.600 --> 0:20:08.320 making the drugs. So that's where I think the new 0:20:08.400 --> 0:20:11.920