UN climate change summit, Takeda investors vote on Shire acquisition
The FT's Daniel Garrahan previews some of the big stories in the week ahead, including the most crucial climate change summit since the Paris agreement, Takeda investors voting on the £46bn acquisition of Shire and US non-farm payroll numbers.
Filmed by James Sandy and NIcola Stansfield. Produced by Daniel Garrahan
Here are some of the big stories the Financial Times will be watching in the week ahead.
The United Nations holds the most crucial climate change summit since the Paris Agreement. Takeda investors vote on the £46bn acquisition of Shire in what would be the biggest ever overseas deal by a Japanese company. And we'll have non-farm payroll numbers out of the US.
First to Poland, where UN climate negotiations start on Monday. This year's climate talks, the most crucial in three years, will write the rulebook for the Paris Climate Agreement, which is approved by more than 190 countries, but vague on details. Donald Trump's desire to withdraw from the Paris Agreement, along with the fact that global emissions have been rising last year and this year, demonstrates how difficult the Paris targets will be to achieve.
China and the EU are trying to fill the leadership void left by the US. A key point of dispute is whether the rules should be different for developing and developed countries, a position advocated by China, or whether all countries should effectively have the same set of rules, a position favoured by the US and the EU.
All indications are that this year's talks are going to be quite difficult. Everyone I've talked to has been a little bit worried about how it's going to turn out. And the key reason for that is that the US obviously has said it will withdraw from the Paris Agreement. So it's playing a much more low-profile role. Without the US delegation there to sort of knock heads together and lead the charge, it could be harder to reach an agreement in Poland. This question of does the rulebook contain just one set of rules, is everyone on the same playing field, or does the rulebook contain lots of flexibility and differentiation for countries that are in different stages of development, that's going to be one of the key issues on the negotiating table.
Now, Takeda Pharmaceutical will hold an extraordinary general meeting this week, and it's sure to be closely watched. Japan's biggest drug maker hopes to win shareholder backing for its £46m takeover of Shire. Since announcing the deal for the Irish drug maker in April, shares have fallen 18 per cent. But Takeda's chief executive, Christophe Weber, has pitched the acquisition as key to catapulting the group into the ranks of the world's biggest pharmaceutical companies.
Analysts say Takeda looks well-positioned to win approval to finance its biggest ever acquisition. Glass Lewis and Institutional Shareholder Services have both advised Takeda investors to approve the takeover. While the company has also won regulatory clearance from all of its major markets, a dissident group of former Takeda employees and founding family members are campaigning against the deal.
For months, Mr Weber has mounted a public relations offensive to fend off the dissident group. The group has recently claimed to win the backing of Kunio Takeda, the former chairman and the last member of the Takeda family to run the group. Still, analysts do not believe the dissident group can gather enough support to block the deal. The main investor concern is the $48bn in net debt the company will shoulder after the acquisition.
Takeda has said it plans to reduce the debt by divesting up to 10 billion in non-core assets, and also through cost cuts and cash flow of the merged entity. At the end of the day, the big question for investors is whether Takeda has an alternative to the Shire deal to compete against global giants. And that answer will likely determine the outcome of the vote.
And finally, to the US, where non-farm payroll data for November is released on Friday. Federal Reserve chair Jay Powell said that the central bank would be watching economic data closely as it decides what to do next. Average hourly earnings are estimated to have risen 0.3 per cent month on month in November. That would follow a 0.2 per cent increase the previous month.
Meanwhile, hiring is expected to have cooled. Economists are projecting that the US economy created 205,000 jobs last month, down from 250,000 in October. The unemployment rate is expected to hold steady at 3.7 per cent.
Now, investors and the Fed watch wages for signs of inflation. While the Fed is widely expected to lift short-term rates in December, there is a lot of uncertainty about US monetary policy in coming months. Policymakers are currently grappling with questions about where the economy is headed, as the US housing market loses momentum and inflation remains contained.
Fed vice-chair Richard Clarida has said in his latest remarks that raising interest rates too quickly could risk unnecessarily clipping the US economic expansion, while moving too slowly could risk posing rising inflation expectations down the road, which would be hard to reverse and also pose financial stability risks.
And that's what the week ahead looks like from the Financial Times in London.