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>> Lots of corporate actions in the

marketplace today. lots of M&A uh

activity and in the packaged good space,

one of the giants out there, Unilver uh

the food business for Unilver is going

to join with McCormack in a 44.8 billion

transaction. We want to break down this

deal. Diana Gomes joins us, Bloomberg

Intelligence senior equity analyst.

Diana, what's what's the strategy here

of of these two companies in in

combining their food businesses?

>> Hi, thank you. It is really um a

combination of bringing uh the expertise

from McCormic on the natural ingredients

side of things with um Uni Lever's uh

foods iconic brands in the in that

proteinrich um toppings. um it's it's

one of the areas where it makes sense to

to combine for that added scale and um

also reaching markets that Mark Cormick

doesn't have access at the moment

particularly in emerging markets um if

we exclude India which is out of the

equation in this in this um combination

>> we're seeing shares of McCormack fall

3.7%

what might investors be skeptical of in

this combination

It is uh a really transformational deal

for McCormick. Uh it is quite a sizable

um group of assets that they are taking

in. So the execution risk is quite high

and uh it's going to be a much more

complex uh organization to um to really

push through the the sales growth

targets that they are envisioning for 3

to 5% in by year three of the

combination com compared to about 2%

where the the companies have been

growing to in terms of the this food

speed business. So it's it would be

quite um a lot of work to to get there

>> for unilver here where do they want to

focus going forward

>> uni lever has been uni liver um uni

lever depending where in the country um

it's really been focusing more in the

personal care well-being categories uh

which tend to be less price elastic as

well It's something that can bode well

given the geopolitical macroeconomic

risk environment we are sitting on. Um

but even before that this was the

strategy for Fernando Fernandez um was

bringing that side of the business

making it a much larger proportion of

uni lever's um revenue as well. So these

uh split would uh fast forward that plan

even though we it we are at least one

year uh to go uh for the expected

completion date.

>> Diana what does this combination mean

for the other big food companies uh

globally for the Nestle for instance for

Craft Hinds which decided not to split

up its businesses as it had once been

entertaining under its new CEO.

The one of the interesting parts of this

combination of McCormick with uni labor

foods is also uh beyond the consumerf

facing business but also the food

service. Um so they bring uh strengths

from both so definitely it's going to

build their competitive force compared

to to to rivals in that space as well.

So, I'm just looking at Uni Lever. Uh,

down 5 and a half% today, down 12% year

to date. It's at a 52- week low here.

Um, what's the call around this stock?

What's the challenge for this for this

stock? Is it just simply the group uh

consumer products or is there something

specific to the company?

>> There's definitely some skepticism about

the terms of the way the foods business

is going to be split. So we we are

seeing some reaction today uh to to

that. Um it's a deal that is um

stockheavy. It's mostly stock. The the

cash consideration is only 76 billion

dollars or thereabouts um for a business

that was generating um about 22 billion

uh dollars in in revenue. So there is

some um skepticism from that

perspective. uh it's not going to be a

clear-cut um exit. Um and it's also

comes at a time of uh heightened

uncertainty. Uh so I believe that's all

playing out um a little bit in that in

that sense.

>> Stay with us. More from Bloomberg

Intelligence coming up after this.

>> You're listening to the Bloomberg

Intelligence podcast. Catch us live

weekdays at 10 a.m. Eastern on Apple

CarPlay and Android Auto with the

Bloomberg Business App. Listen on demand

wherever you get your podcasts or watch

us live on YouTube.

>> A lot of M&A in the marketplace today,

particularly in the health care space.

What else is new there? But let's break

it down uh with the resident expert Sam

Fazelli, director of research for global

industries and a senior pharmaceuticals

analyst for Bloomberg Intelligence. He

is based in London. Um Sam, let's start

with Eli Liy. They're acquiring Canta

Pharmaceuticals. Uh who is Santessa and

and why is Lily making this acquisition?

So, Santessa is a company developing a

um sleeping sleep disorder product. So,

it's a novel mechanism of action, not

entirely novel because there's already a

drug on the market that targets the same

mechanism or exin pathway in the brain,

but it's not the usual um kind of drowsy

type of drug that puts you to sleep like

the the ambiencece of this world. It's

not at all the same mechanism of action.

So here is a drug that's in development

for those for that indication and we

have a proof of concept already on a

product on the market not necessarily

flying off the shelves but doing fine.

And so here comes Lily with a

neuroscience business and it's a bolton

to their business. I mean 6 billion is I

you know I don't know a week's worth of

cash flow for for Lily. I have to do the

math so don't please multiply that by 54

and tell me Sammy you got it wrong. Um,

but it's not a lot of money. I mean, the

interesting thing, Paul, is this with if

you look at our analyst forecasts in

MODL, our consensus forecast is around

the $2 billion business in 2020 2033

2034. Guess what Lily's uh topline

revenue would be at that point?

>> Oh boy.

>> Approaching 150 billion. Of course, this

is this is seven or eight years away, so

it's probably all wrong. Nevertheless,

that's what consensus has got. So,

doesn't make a huge difference, but it's

a nice little add-on.

>> Okay. So, it sounds like this is a nice

to have, not a need to have. We've seen

companies like Merc make a lot of

acquisitions because they um Merc faces

patent expiration on some of its best

selling drugs like Kruda. Lily is not in

that position, is it? So, this feels

like it's very offensive rather than

defensive.

>> Yeah. I mean, farmer companies tend to

scrabble or scramble, sorry, at the end

in the final uh yards of the of the of

their game to try and get their um uh

pipelines all organized so that they can

cope with it. You know, it takes time to

develop these franchises. So, Lily is

doing exactly what it should be doing,

just slowly padding um this pipeline,

adding more products into it. Now, how

do you manage to deal with a drug or a

drug group that is going to go off

pattern at some point and you're selling

a 100 billion of it? I think it's very

hard to know which one of these drugs is

going to be there. But you need a lot of

products to be able to backfill that and

at some point people will start worrying

about that. But it's way too soon for us

to worry about that. With Lily, let's

just see how they do with the current

business that they have in terms of the

growth that they're getting. Sam, when a

drug goes off patent, what's the what's

the time frame for sales to fall? And to

what degree do they fall? Is there a

predictable pattern?

>> Yes, there is. And we have blueprints

that we follow when we're doing all our

modeling. Um, it depends on what sort of

deals they might have done. So as you

know uh Paul we have a very strong

patent team led by or Guspacker in our

group and they've done some work on some

of these drugs you know where people

expect Kituda from Merc for instance to

expire in 2029 they're thinking thinking

2033 right so there's room for companies

to push these things out a little bit

but eventually they happen if you're a

small molecule you tend to give have

some exclusivity with one generic

company which is legal they they have a

six-month exclusivity period when they

launch. They make a lot of money by

dropping the price a little bit. That

six month ends and suddenly you get 10

of those drugs. The small molecule type

pills that we all swallow. That's the

pattern. A little drop, 6 months later,

catastrophic drop. So, and then the

companies themselves make branded

generics, etc. to keep some of that.

Biologic is a little bit different

because it's harder to make them and

sometimes it's more complicated to make

sure that you got the right bits and

bobs in there. go a little bit smoother.

>> Sam, before we let you go, I got to ask

you about Biogen buying a Pelis for 5.6

billion. If a Lily acquisition for 7.8

billion is kind of a drop in the bucket

for that company, how meaningful is this

acquisition for Biogen?

>> Yeah, clearly a lot bigger for for

Biogen on a relative basis in terms of

market cap or money expenditure, but it

fits in with what the new CEO

Christopher Becker has been saying about

where he sees the company going. company

was broadly viewed as a neurology

business as a company that's focused on

neuro diseases and I think they're

pivoting to call it an immunology and

rare diseases. Now imu neurology still

fits in there a lot of the disease drugs

that you're using for neurology in

multiple sclerosis etc do target the

immune system because they're autoimmune

diseases. So but rare diseases sure you

get some neurological diseases that are

rare so you could treat them there. So

it fits in this in that bucket. And I

think Appelis is a is a is a reasonable

fit from that strategy perspective.

>> Stay with us. More from Bloomberg

Intelligence coming up after this.

>> You're listening to the Bloomberg

Intelligence podcast. Catch us live

weekdays at 10 a.m. Eastern on Apple

CarPlay and Android Auto with the

Bloomberg Business App. Listen on demand

wherever you get your podcasts or watch

us live on YouTube. Let's switch gears

and take a look at what's happening in

the tech sector. Nvidia, it's feels like

it's been quiet u of late, but it is

taking a $2 billion stake in Marvel

technology and uh it's deepening an

existing partnership that it has with

that company. Mandep Singh is our global

tech research head here at Bloomberg

Intelligence. Mandep uh how meaningful

is this for Marll? How meaningful is

this for Nvidia? I mean at this point of

time I feel Nvidia

uh may end up generating $150 billion in

cash for 2026. 150 billion.

>> So they keep giving you know 23 billion

to pretty much everyone with

>> not meaningful for Nvidia.

>> Not meaningful for Nvidia. And look

their playbook right now is to create an

ecosystem where Nvidia GPUs are

pervasive. everyone uses them in some

capacity. And in this case, Marvel is an

ASIC chip maker that does a lot of

networking work for uh an Amazon. So,

think of how Google has ramped up on

Broadcom. Amazon similarly uses Marll

for their custom chip work, networking,

etc. So by Nvidia by giving Marvel $2

billion is saying hey we want to

integrate with your ecosystem and uh you

know uh we'll we'll make uh Nvidia GPUs

compatible with uh whatever custom chips

that you have and and that is their best

way of you know really spreading their

tentacles in terms of enterprise public

cloud providers even though it's Amazon

has their custom chips uh Nvidia is

finding a way to you know uh sell

something uh to their ecosystem. Nvidia

for I guess calendar 26 the fiscal 27

year forecast is $250 billion in Ibida

and capex get this $7 billion there's

only I think I might have more capex in

7 than Nvidia

>> comparing to 660 billion for the

hyperscalers for this year

>> Nvidia is the beneficiary they're the

ones who are taking the

>> just three guys sitting in a garage is

that Nvidia and they're just selling

chips to everybody It's unbelievable.

>> I mean, look, they've been ahead and and

partly that has to do with, you know,

what they did with Melanox acquisition

back in the day. It was a company like

Marvel that they bought, you know, five,

six years back, integrated it really

well, and they've just stayed ahead of

everyone else, whether it's AMD, Intel,

or anyone else in terms of offering the

best performance per watt, which is what

everyone cares about in the world of AI.

and partnerships like this or even the

aqua hires that that they made with

Grock, you know, uh that $20 billion

aqua hire. Again, you know, Jensen is

like three steps ahead of everyone in

terms of thinking through what is coming

next and he's thinking about what is the

bottleneck when it comes to AI

performance and uh he's saying it's it's

memory. I mean some of that has to do

with uh by creating an ecosystem you'll

be able to improve uh the performance

slightly for your chip relative to what

Google TPUs will be able to do with

other chip providers and these small

increments is what has really kept

Nvidia in the lead and

>> it's not an expense it's a cheap stock

>> it's 20 times earnings

>> it's a cheap stock

>> yeah well

>> unbelievable

>> so who who has Nvidia not hooked up with

who has Nvidia not partnered with yet

that right Now it's a Google ecosystem,

the Broadcom uh Google GPU ecosystem. I

I would say that's like a parallel uh

alternative to Nvidia stack.

>> But uh again,

>> do you see that do you see there being

any kind of synergy between those two at

all? I mean, or are they just developing

separately on their own paths?

>> They they are I mean Google TPUs are in

their seventh version. So from that

perspective, they've had a ton of

progress on their own. But again, if

you're an enterprise and you are using

Nvidia GPUs, you want compatibility and

now it's inevitable that you will be

using Nvidia GPUs in some form given how

spread Nvidia is at this point. They're

like the Intel uh you know 20 years

back. I mean they everyone use used to

use Intel. Everyone is using Nvidia when

it comes to AI now.

>> Stay with us. More from Bloomberg

Intelligence coming up after this.

You're listening to the Bloomberg

Intelligence Podcast. Catch us live

weekdays at 10 a.m. Eastern on Apple

CarPlay and Android Auto with the

Bloomberg Business App.

>> Listen on demand wherever you get your

podcasts or watch us live on YouTube.

>> Let's talk JP Morgan. They announced

something called the American Dream

Initiative. I don't know what that is,

but our next guest does. Hannah Levit,

senior finance reporter for Bloomberg

News joins us here in our studio.

Hannah, what's JP Morgan Chase doing the

year with their American Dream

Initiative?

>> Yeah, hey, so thanks for having me. Um,

another initiative from JP Morgan,

they've been, you know, kind of full of

initiatives and acronyms lately. Uh,

this one, American Dream Initiative or

ADI, they're going to be investing in

local communities across six areas. Um,

and that includes small business and

housing and financial health and um, you

know, a few others. And so what it is is

small business was the one that they

focused on today in the announcement.

And I think you know they'll be rolling

out further announcements as this thing

goes. But small business was the focus

in today's announcement. And for that

they will be investing um 80 billion

over 10 years in lending uh to small

businesses. They're trying to grow their

roster of small business clients from 7

million today to 10 million. Uh they're

hiring a thousand more small business

bankers or they have 3,000 now. Yeah.

So, um really just uh trying to, you

know, dig deeper into communities and

bring together, you know, business and

in some cases philanthropy uh that they

do

>> cuz I one of the many firms on Wall

Street I worked at JP Morgan back when

they were the Chase Manhattan Bank.

>> Wow.

>> Before the merger of JP Morgan and they

had a real small business retail focus,

the Chase Manhattan Bank did. And I felt

like now that they merged with JP

Morgan, that kind of got lost a little

bit. Do you get a sense that they're

trying to maybe reestablish that part of

the business for themselves?

>> Yeah, I mean they've stayed huge in the

consumer side. Their credit card

business is ginormous. Um they are the

biggest bank uh mortgage lender. Um, of

course we've had like the non-banks grow

size up since the crisis, but um, so

that they're big across the consumer,

but I think what they're trying to do

here is they've had these targeted

initiatives in places like Detroit where

over the past

>> it's been over a decade now it's been

hundreds of million dollars that they've

um plowed into Detroit and that that's

not, you know, some of it's flown

through, but it's it's business stuff

where it's, you know, lending to

affordable housing, things like that,

but where they they bring together um,

you know, various aspects of the

behemoth that is JP Morgan to have this

targeted effort in, you know, in that

case, Detroit, but now they're trying to

kind of replicate and go beyond that in

local communities across the country.

>> Is this I mean, this feels like it's the

business. I'm trying to think who they'd

be really competing against. I'm

thinking City,

Bank of America. Those are the ones I

think about retail, consumer, small

business. Um, is that kind of who

they're going to be going up against or

increasing?

>> It's kind of everyone. I mean BFA and

Wells Fargo are both big and small

business but then you also have the

regional banks and even you know the

more local community banks that are huge

forces in their communities. Um

>> although you know in some sense it's not

an effort to kind of take out the

community banks. It's it's more an

effort to you know grow the pie for

everyone.

>> Interesting. Like I wonder when I see a

branch open up particularly like the one

just downstairs in our building here. I

can't even think of the bank what it is

with all the technology when we do all

of our banking. I can remember the last

time I was in a branch uh because you

can do everything on your phone yet I

see branches popping up left and right.

What's the business strategy behind

that? What did the banks tell you?

>> It's funny because I have covered

banking for eight years and I uh went

into a branch recently and like got

scared. I was like I don't know how to

be in here. Right.

>> Um but JP Morgan has really like Jamie

Diamond who's been CEO for more than 20

years at this point has been always been

a big believer in the power of the

branch. Um, and so they kind of zigged

when the rest of the industry, zagged a

bit on uh the branch stuff and they've

been adding branches uh for years and

now they're in they're the only bank to

be in all lower 48 states. Is that

right?

>> Yeah.

>> So I I kind of view it as advertising if

nothing else. I mean again I think it's

a Capital One downstairs in our

building. They got a little cafe down

there. People are in there. There's

always a lot of people. So it feels like

it's an billboard, a different type of

outdoor advertising for these banks. But

>> totally, that's part of the thinking

that I've heard, you know, from them and

others is that it is advertising and

also they do some of these things that

they're going to do, you know, as part

of the American Dream Initiative, but

that they already do like some of the

coaching stuff and where there will be

events at the branches and things like

that.

>> So what's a big theme that you're

working on just for the banks? It seems

like they've got an administration

that's supportive of the banking system

in general and banks all over the place.

Is this do you get a sense of optimism

from the companies you cover?

>> Absolutely. I mean I think you know

there's a lot going on in the world but

if if you

look beyond that for a minute to the

extent that you can um I mean I wrote a

story at the end of last year about how

it was really you know

>> banks fighting back against the buy side

in private credit where banks were

growing their uh the big banks were

growing their loan books at the fastest

rate since

>> in at least a decade. it may have been

since pre- crisis. Um, but you know, so

they're they're definitely

>> enthused about the level of deregulation

and the ability to kind of

>> chip back away at the areas that

non-banks have chipped away at over the

years.

>> Yeah, I I agree. I mean, God, we used to

make a fortune off those syndicated

loans we did back in the day.

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