DealBook Briefing: Predicting the Fallout from CVS Buying Aetna

DealBook Briefing: Predicting the Fallout from CVS Buying Aetna

- in Business

Critics corner

• Charley Grant writes: “CVS Health has taken bold action to win back investors. The potential benefits outweigh the serious risks.” (Heard on the Street)

• Robert Cyran writes, “With more than $20 billion of debt on its books, and another $49 billion lined up for the deal, CVS may find fending off Amazon puts its own financial health at risk.” (Breakingviews)


Today’s DealBook briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.


Senator Mitch McConnell, the majority leader, with fellow Republicans before a news conference on the tax bill on Capitol Hill.

Tom Brenner/The New York Times

The Senate passed its tax overhaul bill. Now what?

After persuading every Republican senator but Bob Corker of Tennessee to vote in favor of the legislation, the Senate majority leader, Mitch McConnell, and his team must now reconcile their plan with the House version. (Don’t forget: Congress needs to pass a stopgap funding measure for the government by late Friday or risk a shutdown.)

The flurry of last-minute changes, which Democrats loudly criticized, led Goldman Sachs economists to slightly raise their estimates of how much economic growth the bill would create.

But there are many issues to be sorted out, including the tax rate, whether to make the individual tax cuts permanent, how many tax brackets to have and when the new corporate tax rate should kick in.

An unexpected twist: The Senate bill unexpectedly kept the alternative minimum tax for individuals and corporations. That means that companies could lose access to a research and development tax break that is used often by manufacturers, tech concerns and drug makers, according to the WSJ.

He said it: “What the Senate did, in their befuddled mess, is drove me out of business and then bragged about the fact that they got some tax reform passed,” Robert Murray, the C.E.O. of the coal miner Murray Energy, to the WSJ.

How companies plan to spend their tax-cut money

“Simplifying the tax code will reduce compliance costs and make it possible for job creators to reinvest more of their own money in their enterprises,” Mitch McConnell wrote in a WSJ op-ed.

But it’s not always that simple. Executives at CalPortland, which mines limestone to make cement, told the NYT that the company probably wouldn’t use the extra cash to immediately hire new workers.

A scene from “The Americans,” on the FX network, which is a part of 21st Century Fox.

Patrick Harbron/FX

What prompted Disney to resume talks to buy parts of Fox?

Maybe the media giant came back to the negotiating table because it feared that Comcast was advancing in talks to buy prime 21st Century Fox assets like the Fox movie studio, cable channels like FX and stakes in the British broadcaster Sky and the Indian broadcaster Star.

The next milestone: The Murdoch family is expected to make its decision by the end of the month, Michael was told on Saturday. If the sale moves forward, it would be an extraordinary breakup of an empire that the Murdochs spent decades putting together.

The wild card: Would either a Comcast bid or a Disney bid for Fox assets run afoul of antitrust regulators? Remember that the Justice Department has cited the effects of Comcast’s takeover for NBCUniversal as a major reason for suing to block the Time Warner deal.

Investors still have a fever, and the only prescription is more Bitcoin.

Its value surged to $11,800 at one point this morning, helped in part by the Venezuelan government announcing its interest in starting its own digital currency, to be known as the “petro.”

The latest signs of the Bitcoin frenzy

• Nowhere has the public frenzy over Bitcoin been more feverish than in South Korea, prompting the prime minister to express his concern. (NYT)

• Is it time to think about Fedcoin? Central banks are increasingly looking at whether they should create digital currencies. (WSJ)

• Wall Street is about to join the fun after the C.F.T.C. gave a green light to plans to introduce Bitcoin futures. The futures will be settled by cash so traders won’t be getting their hands dirty buying the stuff directly. (Barrons)

There’s just one issue: No one’s using it, the WSJ reports.

Michael Flynn after his plea hearing on Friday in Washington.

Chip Somodevilla/Getty Images

How Robert Mueller can hit Wall Street hard.

Take a look at how the S.&P. 500 and the Dow Jones industrial average moved after Michael Flynn pleaded guilty and disclosed that he was cooperating with Mr. Mueller:

Wall Street’s so-called fear gauge — the Chicago Board Options Exchange Volatility Index, or the VIX, which measures expectations of how wildly the stock market will swing in the next month — jumped at almost the same time. The spike was the index’s biggest one-day jump since August.

The two stock indexes and the VIX calmed down by day’s end, perhaps because of the Senate tax overhaul’s progress to passage. But expect any future bombshell revelations from Mr. Mueller to again hit investors in the gut.

Wang Huning spoke Sunday at the opening of the fourth World Internet Conference in Wuzhen, China.

Aly Song/Reuters

China told tech C.E.O.s that it wants to control its internet.

The man who has helped shape President Xi Jinping’s policies has told the World Internet Conference — whose audience this past weekend included Tim Cook of Apple and Sundar Pichai of Google — that China had a right to regulate its own internet.

But that Communist Party official, Wang Huning, added, “China stands ready to develop new rules and systems of internet governance to serve all parties and counteract current imbalances.”

Despite the ongoing concerns about China’s close policing of its online space, Mr. Cook and Chuck Robbins of Cisco touted their commitment to the country.

Extra credit: The WSJ reported on how two of China’s top internet companies, Alibaba and Tencent, help the country spy on its citizens. And China showed off its interest in artificial intelligence, according to the NYT.

Karsten Moran for The New York Times

The latest in misconduct news.

• After firing Matt Lauer, NBC maintained that its executives were unaware of his purported sexual misconduct until they heard a detailed complaint that week. (NYT)

• Visa fired one of its top executives, Jim McCarthy, who handled partnerships, saying his behavior had violated company policy. The memo did not specify why he was dismissed. (Recode)

• Vice Media fired three employees for behavior that included verbal and sexual harassment. One was Jason Mojica, the head of the documentary films unit. (NYT)

• The hard-edge style of a Hollywood lawyer, Marty Singer, has collided with a sudden cultural shift toward empowering people who speak out against about abuse. (LAT)

How to fend off an unwanted takeover bid by 3G Capital.

The key, Paul Polman of Unilever told the FT, was that the 3G-backed Kraft Heinz (where he sits on the board) was making an ill-advised hostile takeover bid.

From Scheherazade Daneshkhu and Lionel Barber:

“Unknown to us at that time, Warren wasn’t actively involved. With the confidence he has, probably, in those people, he had delegated [the bid] to these people — that would be my best interpretation,” says Mr. Polman.

Mr. Buffett was duly bombarded. “Warren was approached by probably more people than he expected,” says Mr. Polman, declining to say who did so. “As soon as Warren discovered that this was a hostile takeover, the tone of the conversation became different.”

Revolving Door

• Thomas Barkin, a senior executive at McKinsey, has been chosen to lead the Federal Reserve Bank of Richmond, Va., according to a person familiar with the decision. (Bloomberg)

The Speed Read

• Blue Apron’s new chief executive may be well-paced to patch some of the company’s problems, but perhaps no one can fix what looks like an ailing business model. (Bloomberg Gadfly)

• Splitting the job of a chief executive can work, but only if the two bosses are self-effacing, so it makes it hard to imagine co-chief executives running Goldman Sachs. (FT)

• Oracle is bringing a public charter school onto its campus, where employees will be able to mentor students. (NYT)

• Units of HNA Group are stepping up their fund-raising in the local bond market even as borrowing costs soar, adding to the worrisome debt burden of Chinese conglomerates. (Bloomberg)

• Swiss banks have begun reporting to the SwissMoney Laundering Reporting Office suspicious account activity among some of their Saudi Arabian clients, according to people close to the situation. (FT)

Each weekday, DealBook reporters in New York and London offer commentary and analysis on the day’s most important business news. Want this in your own email inbox? Here’s the sign-up.

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Follow Andrew Ross Sorkin @andrewrsorkin, Michael J. de la Merced @m_delamerced and Amie Tsang @amietsang on Twitter.

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