Corona Capital: Drugs, Gold miner, Japan food M&A
26/08/2020 10:53
(The authors are Reuters Breakingviews columnists. The
opinions expressed are their own.)
By Breakingviews columnists
LONDON/HONG KONG, Aug 26 (Reuters Breakingviews) - Corona
Capital is a column updated throughout the day by Breakingviews
columnists around the world with short, sharp pandemic-related
insights.
LATEST
- Vaccines
- Gold miner
- Japanese restaurant chain deal
PREVENTATIVE ACTION. Many medicines have unfortunate side
effects. Drug companies advertising in America often have to
list ailments such as chronic diarrhoea and vivid nightmares
when selling cholesterol medication. But the makers of any new
Covid-19 vaccinations have no such list and may not for many
years. That is prompting the European pharmaceutical industry’s
vaccines lobby to push for legal protection https://www.ft.com/content/12f7da5b-92c8-4050-bcea-e726b75eef4d
from lawsuits if there are any problems, according to the
Financial Times.
Safeguards may be necessary. Vaccines typically take years
to develop, which usually gives enough time for any unforeseen
side effects to surface. But the rapid spread of Covid-19 and
its impact on the global economy means companies like
AstraZeneca AZN.L and Sanofi SASY.PA have begun making
vaccines even before receiving regulatory approval. Any push for
legal protection may strengthen the fear of vaccines. That would
undermine the fight against Covid-19 from the outset. (By Aimee
Donnellan)
JOLLY METAL. The pandemic is burnishing Russian gold miner
Polymetal International’s POLYP.L allure. The 9 billion pound
company on Wednesday reported https://www.polymetalinternational.com/en/investors-and-media/news/press-releases/26-08-2020-a/?month=&q=&year=2020¤t=1
first-half net profit of $381 million, a 149% increase from a
year earlier. Surging global demand urn:newsml:reuters.com:*:nL1N2BO0W1 for the yellow
metal has been a boon urn:newsml:reuters.com:*:nL8N2EH1KM. Polymetal’s average gold
price rose 25% during the period. Having costs in Russian
roubles and Kazakh tenges, which have both weakened, drove costs
lower. The launch of a lower cost mine also helped.
Extra glitter comes from increased transparency of the
company’s dividend policy, which now commits to payouts of half
of net income. That’s what the Russian government required of
state-controlled enterprises to line its coffers, but will come
with less political risk. Shares in the FTSE 100 company, which
has a 67% free float, have risen 62% so far this year. Even if
investors’ appetite for safe-haven assets ebbs, Polymetal’s
dividend will be a draw. (By Dasha Afanasieva)
CHEQUE, PLEASE. Japan’s comfort-food restaurant chain Ootoya
2705.T is delaying its hunger pangs. Larger rival Colowide
7616.T , which operates fast-food “izakaya” chains and other
restaurants, has extended its hostile bid for Ootoya after
failing to get enough shares by Tuesday’s deadline urn:newsml:reuters.com:*:nL4N2FR2QS.
Colowide, which already owns 19% of the target, now says it will
only proceed with the purchase if it can increase its ownership
to 40%, down from a previous threshold of at least 45%.
Investors have until Sept. 8 to tender their shares.
Ootoya’s dogged resistance is noteworthy, given the
attractive 46% premium Colowide was offering to the
undistributed share price in July. Covid-19 may be one factor:
restaurant chains across Japan have been battered by
stay-at-home measures, so joining one now may seem unappetising.
Even so, Ootoya’s revenue in the quarter ending June plunged 48%
year-on-year, while a recent tie-up with online grocer Oisix Ra
Daichi 3182.T will take time to pay off urn:newsml:reuters.com:*:nL4N2FG1G4. The
company may struggle to keep holding out. (By Sharon Lam)
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UPDATE-BREAKINGVIEWS-Corona Capital: KFC ditches finger lickin’
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(Editing by Swaha Pattanaik and Oliver Taslic)