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Welcome to Read Sunday, your essential source for a concise and impactful weekly Business & Finance recap. Dive into the pivotal market highlights from the week, distilled for your convenience, and stay tuned for the thought-provoking editor's piece that rounds off your Sunday with insightful perspectives.

Market Recap

This Week’s Headlines

Public Markets

• Short sellers have increased their positions in restaurant stocks by $815 million. Concerns about higher interest rates affecting consumer spending and the impact of weight-loss drugs on consumer behavior are driving this trend. Major companies like McDonald’s, Chipotle, Darden Restaurants, and Starbucks have witnessed the largest increases in short positions during this period. The total short interest in the restaurant industry now amounts to $12.2 billion. (BBN)

• Microsoft has disclosed in an 8-K filing that it has received Notices of Proposed Adjustment from the Internal Revenue Service (IRS) for an additional tax payment of $28.9 billion. The dispute centers on how the company allocated its profits across different countries and jurisdictions during the period from 2004 to 2013. Microsoft has pointed out that the IRS's proposed adjustments do not take into account the $10 billion in taxes the company has already paid during that period. (CNBC)

• Comcast and Disney have enlisted the services of investment banks to assess the value of Hulu, marking a crucial stage in the ongoing process of consolidating ownership of the streaming service. Comcast, holding a one-third stake in Hulu, has chosen Morgan Stanley, while Disney, owning the remaining two-thirds, has engaged JPMorgan Chase. The purpose of these banks is to determine a fair value for Hulu, in accordance with a 2019 agreement that grants either Disney or Comcast the option to compel Disney to purchase Comcast's 33% stake. (CNBC)

• Today, the sovereign fund acquired approximately $65 million worth of shares in four major Chinese banks, including Industrial & Commercial Bank of China Ltd and Bank of China Ltd. Additionally, the fund has pledged to further increase its holdings in these banks over the next six months. (NDAQ)

Economy

• The United States has stated that Iran will not have immediate access to the $6 billion held in a Qatar bank as part of a recent prisoner exchange. Furthermore, the U.S. maintains the right to potentially freeze the account entirely. The issue of Iran's access to these funds has gained attention, especially in light of recent hostilities involving Iran-backed Palestinian Hamas militants attacking Israel, resulting in casualties and hostage-taking in the Palestinian Gaza Strip. (RET)

• Hyland Software, an Ohio-based business software company, had relied on Credit Suisse for arranging loans for several years. However, after Credit Suisse's collapse in March, Hyland changed its approach and secured a $3.4 billion loan from less prominent investment firms like Golub Capital, which specialize in "private credit," a trend on Wall Street. The shift in corporate lending is influenced by higher interest rates resulting from the Federal Reserve's policy, impacting how loans are structured. As rates rose, some banks, including Credit Suisse and Silicon Valley Bank, encountered challenges, causing them to reduce lending. In response, private credit fund managers have taken on a more prominent role, financing substantial loans for American corporations. (WSJ)

• The largest remaining private Chinese property developer is facing significant financial trouble, which, on its own, may not trigger a broader Chinese debt crisis. However, it has the potential to weaken Beijing's efforts to stabilize the housing market. Furthermore, the growing strain on banks' balance sheets due to the property market downturn could complicate efforts to stabilize other sectors of the economy. (WSJ)

• The Biden administration revealed its intention on Friday to allocate up to $7 billion for establishing seven regional hubs across the United States. These hubs will be focused on the production and utilization of hydrogen, a clean-burning fuel that has the potential to power ships and factories without generating greenhouse gas emissions. (NYT)

Mergers & Acquisitions

• The private equity industry, which had experienced consistent growth for several years, is facing a reversal in its trajectory this year. Factors such as persistent higher interest rates, inflation, and the looming possibility of a government shutdown have dampened deal-making and exit activities. Research from PitchBook Data reveals that these challenges in the third quarter have extended the trends observed in the U.S. private-equity sector during the first half of the year. (WSJ)

• The UK competition watchdog has given its approval for Microsoft Corp.'s $69 billion acquisition of Activision Blizzard Inc. This marks the removal of the last major global regulatory obstacle and paves the way for the completion of the largest gaming deal in history. (BBN)

• Illumina Inc. has announced that if the company loses in either of its final appeals in U.S. or European courts, it will promptly divest its cancer test maker, Grail. Conversely, if Illumina wins both cases, it will reevaluate Grail's assets, potentially leading to the integration or divestment of all or part of the unit. (RET)

• Exxon Mobil Corporation and Pioneer Natural Resources have revealed a definitive agreement for ExxonMobil to acquire Pioneer in an all-stock deal worth $59.5 billion. This equates to $253 per share based on ExxonMobil's closing price on October 5, 2023. Pioneer shareholders will receive 2.3234 shares of ExxonMobil for each Pioneer share at the transaction's conclusion. The implied total enterprise value of the deal, encompassing net debt, is approximately $64.5 billion. (EXXON)

• Bristol-Myers Squibb has announced its acquisition of cancer drugmaker Mirati Therapeutics for a potential $5.8 billion. This move aims to diversify Bristol's oncology business and incorporate drugs that can potentially compensate for anticipated revenue losses from patent expirations in the coming years. The acquisition includes Mirati's portfolio of drugs designed to target specific cancer-causing genetic factors, such as the recently approved lung cancer drug Krazati. (CNBC)

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