Abbott Labs Sells Developed Markets Generics Unit

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July 14 (Bloomberg) -- Marshall Sonenshine, chairman and managing partner at Sonenshine Partners, and Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, examine Abbott Laboratories selling its developed markets generic drug unit to Mylan in a deal worth $5.3 Billion and what it means to the current M&A market. They speak on “Bloomberg Surveillance.”

Selling its development markets excluding u.s. ran a generic pharmaceuticals.

This is valued at about $5.3 billion.

Abbott will keep its business in emerging markets, but selling off generic.

On both the generic and non-generic side, we're seeing consistent, nations and they're all about taking cost out on the r&d side or improving or distribution chain on the generic side.

Are they about capturing revenues as well because we can grow our own revenues?

I don't think there's anything evil about that.

Is this about, in some ways, not death but the demise of conglomerates?

In other words, companies whether they are in oil or pharmaceutical, they focus on one specific niche?

You could argue that is a new kind of conglomerate because when you get to larger and larger blocks of publicly traded private equity vehicles just buying more more companies within a defined space, but you're right,. we have seen a really weak m&a environment for most of this economic recovery.

For some reason, the last six to nine months, the environment has gone just vertical with activity picking up.

What is changing?

I think you to start with, jonathan, why were these markets to coupled -- de coupled?

We did not have a strong been m&a market.

Cheap money is what was propping up the equity markets, not confidence.

There is not fundamental confidence in the last several years of economic growth, without which, it is hard because it it about buying large companies.

Today, however, there's a mixed picture.

Some is about greater confidence another is the equities have been so propped up, the people want to use them.

And acceleration of margins of earnings, a better things to come.

So many people, including push back against that.

Stay first why we will see a positive second and acceleration in earnings.

My starting point is with the expectations among economists for the broad economy which is that we will see something in the neighborhood of 3% gdp growth on a going forward basis.

Last year, we had 1.9% gdp.

This year, with such a lousy first quarter, again we will be under 2%. we should see a pretty big pickup.

But this lack of revenue drives companies to focus on taxes, interest expense, focus on all these other things.

Therefore, you get this weird disconnect, which is a weak economy and better earnings.

You see the s&p 500 folks,

This text has been automatically generated. It may not be 100% accurate.


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