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from Breakingviews:

Grubby assets shine in $5.6 bln tax arbitrage deal

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By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Grubby assets are being given a shine in a $5.6 billion tax arbitrage deal. Mallinckrodt, a specialty drugs company, is paying a 27 percent premium for Questcor, a rival barraged by regulatory inquiries. Why do it? The transaction moves profits to Ireland, where the acquirer is domiciled for tax purposes. It may be buying as many problems as taxman savings, however.

Mallinckrodt is an odd bird to begin with. Conglomerate Tyco bought the previous guise of Mallinckrodt in 2000. Tyco reversed itself, and spun off its health operations as a company called Covidien in 2007. Last year, Covidien spun off its drugs business as Mallinckrodt. The newly independent company then bought Cadence Pharmaceuticals for $1.4 billion earlier this year. Now it is adding Questcor.

There are cost savings from merging the companies and cutting expenses, but much of the appeal lies in financial engineering. If companies in low-tax domiciles buy U.S. assets, or U.S. companies effectively become Irish through M&A, their tax bills can shrink by as much as half. For one company, Valeant Pharmaceuticals, that fueled a more than 10-fold increase in its stock price since 2008. It also helped Endo International  and Perrigo in their dealmaking.

from Breakingviews:

Baxter puts conscious uncoupling on pharma radar

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By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Baxter International has put conscious uncoupling on pharma’s radar. The $40 billion healthcare giant is separating its biotech and medical products units. Baxter’s spinoff history suggests this latest move will create value for shareholders. This, and the success of Pfizer’s and Abbott’s recent splits, will encourage other pharma giants to follow.

from Breakingviews:

Chinese remedy offers little salve for Bill Ackman

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By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

William Ackman is now tilting at pyramids in China. In the latest phase of the uppity investor’s year-long battle against Herbalife, he argued on Tuesday that the nutritional supplements and diet pill maker violated local laws that ban certain multilevel marketing strategies. The Pershing Square Capital founder raises some good questions. For all the effort, though, it’s hard to see how China will help confirm his ultra-bearish thesis.

from Photographers' Blog:

Making it as a masseuse

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Zhengzhou, China
By Jason Lee

I have to admit that I’m a massage addict. I’m hooked on the magical, relaxing effects that massage has, especially after a tiring day of shooting pictures that leaves many of my muscles sore.

My love for the art and my sense of curiosity brought me to the Chinese city of Zhengzhou to photograph the training center of a leading massage company – Huaxia Liangtse.

from Edward Hadas:

AOL, solidarity and health insurance

The head of the American internet company AOL managed to say something really stupid a few weeks ago, and to sound callous at the same time. It’s a shame Tim Armstrong came off so badly, because he was trying to deal with a serious topic.

Armstrong was trying to justify the company’s decision, since reversed, to trim its employees’ retirement benefits. He started out at a disadvantage, because the chosen cutback was sneaky. A change that sounds innocuous, moving from monthly to annual employer payments into employee pension savings accounts, is actually a way to eliminate payments to employees who leave before the end of the year. It’s hard to look honest and upfront when explaining that.

from Breakingviews:

Actavis makes pharma deals look generic

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By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

 

Actavis makes pharmaceutical deals look generic. Its $25 billion acquisition of Forest Laboratories follows a familiar formula in the sector. Uppity investor? Check. Low-tax jurisdiction? Check. Buyer’s stock rises? Check. And over $8 billion of value created means financiers will keep busy with their own prescriptions for M&A success.

from The Great Debate:

Despite stimulus, middle class still struggles

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Five years ago Monday, President Barack Obama signed the signature economic proposal of his presidency, saying that the passage of the $787 billion economic stimulus package heralded the “the beginning of the end” of the Great Recession.

The president told a Denver audience that he was “keeping the American Dream alive in our time.” But for millions of Americans, he made things worse.

from The Great Debate:

The middle class’s missing $1.6 trillion

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The United States was the world’s first middle-class nation, which was a big factor in its rapid growth.  Mid-19th-century British travelers marveled at American workers’ “ductility of mind and the readiness…for a new thing” and admired how hard and willingly they labored. Abraham Lincoln attributed it the knowledge that “humblest man [had] an equal chance to get rich with everyone else.”

Most Americans still think of themselves as middle class.  But the marketing experts at the big consumer goods companies are giving their bosses the unsentimental advice that the middle class is an endangered species. Restaurants, appliance makers, grocery chains, hotels are learning that they either have to go completely up-scale, or focus on bargains for the struggling and budget-conscious.

from Breakingviews:

Quitting tobacco, CVS has a Don Draper moment

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By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

 

CVS Caremark just had a Don Draper moment. Like the television protagonist from “Mad Men,” the second-largest U.S. drugstore chain has orchestrated a public relations splash by pulling tobacco products from the shelves at its 7,600 stores. The move will cost shareholders 17 cents a share, but the healthcare bona fides it can gain with customers against rivals like Walgreen may offset the hit.

from Edward Hadas:

How not to do healthcare

Almost every healthcare system in the world is a lesson in how not to do it. The pricing-based model fails miserably in the United States. The rationing model works almost as badly in the UK. Both fail in the core task of ensuring that the right healthcare goes to the right people.

Price systems should provide clear information to consumers and producers, helping both make sounder decisions. They can help make hard decision about what care is worth giving, but only if the prices accurately reflect the costs. But that doesn’t happen in American healthcare.

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