Amazon, Berkshire, JPMorgan Link Up to Form New Health-Care Company

Techonomy CEO David Kirkpatrick calls the Amazon, Berkshire and JPMorgan health-care partnership "brilliant."

It’s no secret Jeff Bezos has been looking to crack health care. But no one expected him to pull in Warren Buffett and Jamie Dimon, too.

News Tuesday that Bezos’s Amazon.com Inc., Buffett’s Berkshire Hathaway Inc. and JPMorgan Chase & Co., led by Dimon, plan to join forces to change how health care is provided to their combined 1 million U.S. employees sent shock waves through the health-care industry.

The plan, while in early stages and focused solely on the three giants’ staff for now, seems almost certain to set its sights on disrupting the broader industry. It’s the first big move by Amazon in the sector after months of speculation that the internet behemoth might make an entry. The Amazon-Berkshire-JPMorgan collaboration will likely pressure profits for middlemen in the health-care supply chain.

Details were scant in a short joint statement on Tuesday. The three companies said they plan to set up a new independent company “that is free from profit-making incentives and constraints.”

It was enough to sink health-care stocks. Express Scripts Holding Co. and CVS Health Corp., which manage pharmacy benefits, slumped 6.9 percent and 4.9 percent, respectively. Health insurers such as Cigna Corp. and Anthem Inc. and biotechnology companies also dropped.

The group announced the news in the very early stages because it plans to hire a CEO and start partnering with other organizations, according to a person familiar with the matter. The effort would be focused internally first, and the companies would bring their data and bargaining power to bear on lowering health-care costs, the person said. Potential ways to bring down costs include providing more transparency over the prices for doctor visits and lab tests, as well as by enabling direct purchasing of some medical items, the person said.

“I’m in favor of anything that helps move the markets a bit, incentivizes competition and puts pressure on the big insurance carriers,” said Ashraf Shehata, a partner in KPMG LLP’s health care and life sciences advisory practice in the U.S. “An employer coalition can do a lot of things. You can encourage reimbursement models and provide incentives for the use of technology.”

“Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort,” Bezos said in the statement. “Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”

The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable costs. In the statement, JPMorgan CEO Dimon said the initiative could ultimately expand beyond the three companies.

“Our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” he said.

HTA Alliance

Amazon, Berkshire and JPMorgan are among the largest private employers in the U.S. And they’re among the most valuable, with a combined market capitalization of $1.6 trillion, according to data compiled by Bloomberg.

This isn’t the first time big companies have teamed up in an effort to tackle health-care costs. International Business Machines Corp., Berkshire’s BNSF Railway and American Express Co. were among the founding members of the Health Transformation Alliance, which now includes about 40 big companies that want to transform health care. The group ultimately partnered with existing industry players including CVS and UnitedHealth Group Inc.’s OptumRx.

Top Team

The latest effort is being spearheaded by Todd Combs, who helps oversee investments at Berkshire; Marvelle Sullivan Berchtold, a managing director of JPMorgan; and Beth Galetti, a senior vice president for human resources at Amazon.

Buffett handpicked Combs in 2010 as one of his two key stockpickers. Combs, 47, has been taking on a larger role at Berkshire in recent years, and Buffett has said that Combs and Ted Weschler, who also helps oversee investments, will eventually manage the company’s whole portfolio. Combs also joined JPMorgan’s board in 2016.

Sullivan Berchtold joined JPMorgan in August after eight years at the Swiss pharmaceutical company Novartis AG, where she was most recently the global head of mergers and acquisitions, according to her LinkedIn profile.

One of the highest ranking women at Amazon, Galetti has worked in human resources at the e-commerce giant since mid-2013, becoming senior vice president almost two years ago, according to her LinkedIn profile. As of late 2017 she was the only woman on Amazon’s elite S-team, a group of just over a dozen senior executives who meet regularly with Bezos, according to published reports. Previously Galetti worked in planning, engineering and operations at FedEx Express, the cargo airline of FedEx Corp. She has a degree in electrical engineering from Lehigh University and an MBA from Colorado Technical University.

The management team, location of the headquarters and other operational details will be announced later, the companies said.Health-care spending was estimated to account for about 18 percent of the U.S. economy last year, far more than in other developed nations. Buffett has long bemoaned the cost of U.S. health care. Last year, he came out in favor of drastic changes in the U.S. health system, telling PBS NewsHour that government-run health care is probably the best approach and would bring down costs.

“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Buffett said in Tuesday’s statement. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”

By –Bloomberg

Broadcom Said to Plan $120 Billion Qualcomm Bid, Reuters Says

An attendee passes the Broadcom Corp. pavilon on day two of the Mobile World Congress in Barcelona.

Broadcom Ltd. plans to raise its hostile takeover offer for semiconductor rival Qualcomm Inc. to about $120 billion from $105 billion, Reuters reported, citing people familiar with the deal that it didn’t identify.

Broadcom is scheduled to meet with its advisers later Sunday to put finishing touches on an offer of $80 to $82 a share, up from the previous $70, Reuters reported, citing two of the people.

The revised offer, which amounts to about a 14 percent increase, would enlarge what was already the biggest-ever technology deal. Qualcomm had rejected Broadcom’s initial $105 billion bid, which Chief Executive Officer Steve Mollenkopf said “isn’t even in the ballpark.”

Broadcom CEO Hock Tan may decide to significantly change the terms at the last minute, Reuters reported, adding that the companies didn’t immediately respond to requests for comment. Broadcom and Qualcomm also didn’t immediately respond to a request for comment from Bloomberg News.

From – Bloomberg

Alibaba Buys Stake in Wanda Film in $1.2 Billion Share Sale

Alibaba Group Holding Ltd. has agreed to buy a stake in Dalian Wanda Group Co.’s cinema operator as billionaire Wang Jianlin’s real estate-to-entertainment conglomerate turns to another Chinese tech giant and a government-backed company for investments totaling about 7.8 billion yuan ($1.2 billion).

Alibaba is to pay 4.68 billion yuan for a 7.66 percent stake in Wanda Film Holding Co., making the e-commerce giant the second-biggest shareholder, Wanda Film said Monday in a regulatory filing. Beijing Cultural Investment Holdings, controlled by the Beijing government, will pay 3.12 billion yuan for a 5.11 percent stake.

This is Wanda Film’s first major sale of shares to external investors after listing on the Shenzhen bourse in 2015 and comes as the group’s billionaire founder Wang is selling off assets from real estate to hotels to help pay down debt. The fundraising also comes in the midst of an asset restructuring at Wanda Film, whose shares have been suspended from trading since July.

Alibaba and Cultural Investment agreed to pay 51.96 yuan a share, in-line the 52.04 yuan last closing price in July.

Investing in Wanda could help Alibaba founder Jack Ma play a larger role in China’s film industry, forecast to become the world’s largest box-office by 2020. In 2016, Alibaba Pictures Group Ltd. bought a stake in Amblin Partners, the outfit backed by Steven Spielberg to work together on production, marketing and distribution both globally and in China. Billionaire Ma is competing with Tencent Holdings Ltd.’s Pony Ma Huateng, as both invest in movie and TV production.

This is the second time in a week that a Chinese tech giant has invested in Wang’s Wanda Group, which has been under Chinese government scrutiny for "irrational" outbound investments. Last week, a consortium led by Tencent agreed to buy a 14 percent stake in Dalian Wanda Commercial Management, formerly known as Dalian Wanda Commercial Properties Co., for $5.4 billion, easing pressure on the unit to complete a listing by September.

In addition to the investments, Wanda Film will cooperate with Alibaba and Cultural Investment on areas including film distribution, marketing, financing as well as pre-screening advertising and online ticketing, according to the filing.

From – Bloomberg

Musk Sends Tesla to Space as World's Most Powerful Rocket Debuts

SpaceX launched its new Falcon Heavy rocket for the first time, a major milestone in the company’s quest to grow its customer base and fund Elon Musk’s vision of making life multiplanetary.

With hordes of fans gathered along the Florida space coast and millions watching on SpaceX’s webcast, the new rocket rumbled aloft shortly after 3:45 p.m. local time Tuesday. It cleared the launch pad without blowing up -- a feat Musk had said would be enough to deem the mission a win -- and continued on to deliver the chief executive officer’s cherry red Tesla Roadster toward an Earth-Mars elliptical orbit around the sun.

Falcon Heavy is a large, reusable launch vehicle that will allow closely held SpaceX to bid on heavier payloads than it can with its Falcon 9, such as big commercial satellites and national security missions. Its 5 million pounds of thrust are the most since the Saturn V used for Apollo moon missions in the late 1960s and early 1970s.

The strides Musk has made rendering Falcon 9 launches more routine -- SpaceX pulled off 18 last year -- has helped make it one of the word’s most richly valued private companies.

Following the launch, SpaceX accomplished a feat never before seen in space history, re-landing multiple rocket cores back on earth. Two touched down on land in tandem, and the plan for the third was for it to settle back on an unmanned drone ship in the Atlantic Ocean. The video feed on the drone ship cut out before the company could confirm its fate.

“A private company just outperformed every government on earth,” said Greg Autry, a professor at the University of Southern California and a former NASA White House liaison. “This is bigger than anything Russia or China is doing. No one else is even close.”

Hawthorne, California-based SpaceX already has paying customers committed to flying with Falcon Heavy, including commercial satellite operators Arabsat, Inmarsat and Viasat, according to its launch manifest. The U.S. Air Force also chose Falcon Heavy for its STP-2, or Space Test Program 2, mission, though the vehicle still needs to go through certification.

Musk outfitted his Roadster with cameras to capture views of the car as it floated through space. Behind the wheel was “Starman,” a dummy clad in the same suit that astronauts will wear during SpaceX’s Crew Dragon flights to the International Space Station.

A nearly indestructible disk carrying a digital copy of Isaac Asimov’s science fiction book series, Foundation, is also on board, plus a plaque engraved with the names of SpaceX’s 6,000 employees.

The successful test flight means that SpaceX can move forward with missions for paying customers. Musk said Monday the first one should take place within three to six months.

From – Bloomberg

SoftBank in Talks to Buy Stake in Reinsurance Giant Swiss Re

SoftBank Group Corp.’s Chief Executive Officer Masayoshi Son is warming to an industry that’s long been a favorite of billionaires looking to diversify their business empires.

SoftBank could purchase as much as a third of Swiss Re AG, one of the world’s largest reinsurers, according to people familiar with the discussions who asked not to be identified because no agreement has been reached. The transaction could be valued at more than $10 billion. Swiss Re confirmed the talks and said they are at a very early stage.

Son would be following business titans including Warren Buffett in buttressing their conglomerates with healthy cash flows from reinsurance. The billionaire has been racking up a dizzying array of investments over the last year, as he reshapes Japan’s largest mobile-phone carrier and majority owner of Sprint Corp. into a force in the technology world.

SoftBank, which has raised $93 billion of its planned $100 billion Vision Fund, has taken stakes in businesses including ride-hailing, chipmaking, office-sharing, satellite-building, robot-making, even indoor kale-farming. The company may try to offer Swiss Re’s insurance products directly to consumers, including to people who drive for Uber Technologies Inc. or utilize office space from WeWork Cos., two of its investments, according to the Wall Street Journal, which reported the discussions earlier.

SoftBank shares fell less than 1 percent in early trade in Tokyo on Thursday. Swiss Re closed at about 90 Swiss francs Wednesday, for a market value of 31 billion francs ($33 billion). Its American depositary receipts soared 8.7 percent to $25.75 in New York.

“There is no certainty that any transaction will be agreed, nor as to the terms, timing, or form of any transaction,” Zurich-based Swiss Re said in a statement Wednesday. A spokesman for SoftBank didn’t immediately respond to requests for comment.

Reinsurers help insurers shoulder the costliest risks, like claims from hurricanes and earthquakes. Recently, however, the industry has faced some major challenges. A glut of capital -- and new ways Wall Street dreamed up to transfer risk -- has pushed down the prices that the companies can charge for coverage.

Even so, reinsurance has remained attractive to big-money investors. Buffett has used the “float” -- or premiums held by such businesses before paying claims -- to fuel his stock picks and acquisitions at Berkshire Hathaway Inc. Exor NV, the investment company for Italy’s Agnelli family, bought control of Bermuda reinsurer PartnerRe Ltd. two years ago as a way to diversify holdings, which range from Fiat Chrysler Automobiles NV to the publisher of the Economist magazine. Hedge-fund managers from David Einhorn to Dan Loeb have also started reinsurers in recent years.

“Reinsurance, especially through a high-class outfit like Swiss Re, is attractive for several reasons,” David Havens, an analyst at Imperial Capital, said in a note to clients. Higher interest rates could help boost earnings, the industry is generally uncorrelated to others, and “Swiss Re is a gem of a company with top-flight management, generally solid results, a strong balance sheet and global diversification.”

SoftBank has already taken steps in the home insurance industry, investing last December in Lemonade Inc., a New York-based startup that uses artificial intelligence and bots to minimize paperwork and speed up the claims process for renters and homeowners.

From – Bloomberg

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