Investors trying to divine the state of the trade war with China were heartened by optimistic comments from President Trump on Monday, sending major benchmarks higher. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) both gained about 1%. The communication services and technology sectors led the buying.
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As for individual stocks, Bristol-Myers Squibb (NYSE:BMY) and Celgene (NASDAQ:CELG) announced plans to sell a blockbuster drug to Amgen (NASDAQ:AMGN), and Target (NYSE:TGT) and Disney (NYSE:DIS) are forming a retail collaboration.
Bristol-Myers and Celgene deal a drug to Amgen
Bristol-Myers Squibb moved a step closer to completing its planned acquisition of Celgene after the companies announced an agreement to sell anti-inflammatory drug Otezla to Amgen for $13.4 billion. Investors thought the deal was a winner for everybody, sending Bristol shares up 3.3%, Celgene up 3.2%, and Amgen up 3.2%.
The U.S. Federal Trade Commission had expressed concern about the strong position that the proposed merger would create in anti-inflammatory drugs, and when Bristol-Myers announced in June that it was looking for a buyer for Celgene's fast-growing drug in order to expedite approval of the deal, its stock plummeted. Investors may have been concerned that the companies wouldn't be able to get a good price for Otezla, but today's news seemed to satisfy them. With European approval of the merger already received last month, any doubt about a successful merger completion seems to be removed.
Amgen is rich with cash and has been expected to go on a buying spree. Otezla fits with a core growth area of the company and is projected to have $1.9 billion in sales this year, with low-double-digit growth on average over the next five years.
Target and Disney team up for merchandise sales
Disney and Target announced a retail collaboration to open Disney stores within Target locations and to open a Target store at an entrance to the Walt Disney World Resort. Shares of Target rose 1.2% and those of Disney gained 2.2%.
The companies will launch "shop-in-shop" Disney stores averaging 750 square feet inside Target locations, starting with 25 U.S. spots opening Oct. 4, with 40 additional stores coming on line by October 2020. The embedded stores will sell an assortment of more than 450 items of Disney merchandise, including more than 100 products that are currently only available at Disney retail locations. The merchandise will also be available on Target's web site and mobile app.
Disney expects growth from its merchandising business, with items from Frozen 2 and Star Wars: The Rise of Skywalker boosting results this holiday season, and the leveraging of newly acquired Fox assets helping longer-term. Meanwhile, Target is on a roll, having created a successful formula for fulfillment of digital orders and giving shoppers more reasons to visit its physical stores.