This is an audio transcript of the Unhedged podcast episode: ‘Big deals in Big Pharma’
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Robert Armstrong There has been a wild and hectic series of M&A deals in the pharmaceuticals industry. We are now headed for a record year for pharma M&A, in fact. But sometimes, mergers are a sign of strength for an industry and sometimes they are a sign of weakness. Today on the show, drugs, politics and deal making.
This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I am Rob Armstrong, US finance commentator at the Financial Times, coming to you from a chilly and wintry New York City and joined in person by James Fontanella-Khan, our US finance editor.
James as an Italian, how are you bearing up under all this chilly weather?
James Fontanella-Khan I’m freezing. I’m not liking it at all, but hello everyone.
Robert Armstrong OK. Cold, warm or in between? What is going on with the US pharma industry?
James Fontanella-Khan Well, the pharma industry on the M&A side of things is bloody hot right now. (Robert laughs) I’ll tell you that. We’ve seen a crazy wave of deals. We’re on track for a record year and a lot is happening. I didn’t put a lot of faith last time I was on the show about this deal boom being sustained.
Robert Armstrong You were short the deal boom and it’s keeping on booming.
James Fontanella-Khan Is there a video here, no? Otherwise, I’d be eating my hat. (Robert laughs)
Robert Armstrong Oliver Barnes was on too and he was long the deal boom. And he looks right and you look wrong for now.
James Fontanella-Khan That’s why he’s been breaking all these stories because it’s like he’s trying to make it happen. He’s been on fire so why are we having so many deals, particularly in the pharmaceutical industry? Well, it’s the same old story, like Big Pharma has to hunt for new assets because these days a lot of these big guys don’t do the same amount of R&D that they used to. So that has been outsourced to a bunch of VCs backing the next . . .
Robert Armstrong The smaller companies.
James Fontanella-Khan Exactly. And . . .
Robert Armstrong So it’s a patent thing, as always.
James Fontanella-Khan It’s a patent thing.
Robert Armstrong The old drugs go off patent and they have to be replaced. And you used to replace them in-house, but now you have to hunt them down and kill them.
James Fontanella-Khan Exactly. So you’ve got a lot of guys running out of their top drugs, which are protected before they become generics. And so yes, this being in frenzy. What is phenomenal is there’s a lot of these assets out there, maybe they’re approaching, you know, the last stage of clinical trials.
And maybe, there’s one or two players looking at an asset but here we have often like four, five, six Big Pharma companies going after the same asset and you see premiums of like 300 per cent Yeah.
Robert Armstrong Cidara was an amazing story. Walk us through that one.
James Fontanella-Khan I mean, so Oli calls me a couple of days before the deal got announced.
Robert Armstrong Oliver Barnes.
James Fontanella-Khan Yeah, Oliver Barnes, our M&A reporter, and he had a tip and we started chasing it and like we’re trying to confirm and like and as he goes, he is like, oh, the asset is worth about $3bn. So, you know, go for the usual premium of maybe no, 40, 50 per cent for these assets. So maybe it’ll go up to $4bn or $5bn.
And suddenly, he’s hearing it’s a three-way horse race. And he said, JFK, I think it’s like going for $9bn. And I say, you must go. Your sources are a little weak, like can . . . just go back to your guy. And I say, no, honestly, it’s like, it’s $9bn. And we waited, we got all the confirmations that we needed, we put out the story and surely next day, the Cidara deal is confirmed. Merck bought it and yeah, it was like astonishing.
Few days later, similar thing with another company called Halda. So Cidara is kind of as a flu vaccine, Halda, instead it has a kind of a cancer drug. And again, went for $3bn, is a private company. Nobody had really heard much about it and J&J beat a bunch of other big guys out there. And then, the mother of all crazy deals was the sale of Metsera.
Robert Armstrong Yeah. I want to get to Metsera in a second. But first, let me give you some context. The pharma industry in particular and I should say the healthcare sector generally, has been underperforming the market pretty hard over the last five or 10 years.
I mean, when I first started working in finance, pharma was kind of where tech is now. You know, this is 20 years ago or whatever and it was like these companies were huge and they grew fast and they did a lot of deals and so forth. But they were like top of the world and now they’re kind of low growth and a bit beat up.
And so I think we have to acknowledge that in the background that this is an industry that’s kind of looking for its soul while tech is everything and pharma is kind of languishing in some way.
James Fontanella-Khan Well, you started the show saying, is it a sign of strength or a sign of weakness?
Robert Armstrong Yes.
James Fontanella-Khan And I think, in most cases it is a sign of weakness. In the sense that you’re running out of options and you got to restock. You gotta find . . . and a lot of these deals we can get into it, especially with the Metsera situation, they’re defensive. You’re trying to like get hold of a drug to essentially snatched away from one of your rivals.
Robert Armstrong Now let’s turn to Metsera. What makes this deal particularly interesting, of course, is that it’s in the hottest area of pharma, which is of course, weight loss.
James Fontanella-Khan Indeed.
Robert Armstrong How is its GLP-1 drug different from the others?
James Fontanella-Khan So the thing that makes Metsera different from the others is the fact that it can, with one dosage over a month, instead of every week, it can give you the same kind of results that an Ozempic gives you right now. Allegedly. I mean, there’s still . . .
Robert Armstrong Yeah, you know, a lot of game to play.
James Fontanella-Khan Exactly.
Robert Armstrong Clinically.
James Fontanella-Khan But fundamentally, this is the big innovation among others. And then the various ways that you can consume it.
Robert Armstrong OK. Bidding war.
James Fontanella-Khan Well, we know in the world is the kind of, the original, the OG of weight-loss drugs is Novo . . .
Robert Armstrong Novo Nordisk.
James Fontanella-Khan Nordisk, which essentially this, the Danish company that kind of discovered . . .
Robert Armstrong Opened the market.
James Fontanella-Khan Yeah. Well, they discovered their diabetes drug was actually the magic drugs. The thing everybody loves is like to look lean and mean and it exploded.
Robert Armstrong So that was Ozempic and then Wegovy were their drugs.
James Fontanella-Khan Exactly. And then Lilly, Eli Lilly came up with a rival drug. And it’s been amazing.
Robert Armstrong Zepbound.
James Fontanella-Khan Exactly. And like, and Eli Lilly has literally exploded. So now it’s way bigger the Novo.
Robert Armstrong And interestingly, Novo, which just two years ago, was the biggest stock in Europe and was the stock on everyone’s lips and everybody was overweight.
This stock, since I’m looking at stock . . .
James Fontanella-Khan No pun intended.
Robert Armstrong . . . stock chart here. (Laughter) Since the middle of 2024, that stock has fallen by two-thirds.
James Fontanella-Khan Correct.
Robert Armstrong And if I can just put a total tangent into our conversation. You know what I think about when I look at Novo’s chart? Nvidia. Because, you know, everybody was like, Novo is the only company that can do this thing, this weight-loss drug, which is revolutionising everything.
Nobody ever will ever catch up. La, la, la, la, la, la. And now, it’s down two-thirds. It just rhymes to me with how everybody talks about, no one will ever catch up with Nvidia in GPUs. I’m just throwing that out there as chum. Now, back to our regularly scheduled programme.
James Fontanella-Khan Love it. But a little short from Rob Armstrong on the side.
Robert Armstrong OK. But so now we have Lily, which is killing it in weight-loss drugs.
James Fontanella-Khan Absolutely.
Robert Armstrong (Overlapping speech) Novo, which is struggling.
James Fontanella-Khan Correct.
Robert Armstrong And everybody else in the industry kind of looking along from the sidelines, like, how can I get a piece of this action?
James Fontanella-Khan A hundred per cent right.
Robert Armstrong Here’s this biotech that has a technology.
James Fontanella-Khan So let’s do a little TikTok. We love the TikToks.
Robert Armstrong That is a journalistic term for our listeners at home.
James Fontanella-Khan Thank you for saying that story.
Robert Armstrong For a story that lays out in sequential order, how a deal went down.
James Fontanella-Khan So in September, Pfizer, strikes deal with Metsera, another scoop brought to you by Oli Barnes. So that deal is really Pfizer’s opportunity to make inroads in the weight loss category.
Robert Armstrong Yes.
James Fontanella-Khan All is good. They pay about $7bn, a bit of money upfront and a little later. All seems good, we’re in September. We knew that there were a lot of companies looking at this. Usually after a deal happens, you get a proxy filing where you can see all the kind of companies, A, B, C, D.
There were a lot of companies kind of fighting for Metsera. It’s done. Everybody goes back to their normal life. And then late in October, out of the blue, Novo makes a comeback. And essentially, Novo made an offer, which was higher than the one that Pfizer made. And the board of Metsera said that after reviewing Novo’s bid, they thought it was superior to Pfizer’s bid. Now, interestingly, back in that . . .
Robert Armstrong We’re in October now.
James Fontanella-Khan Exactly. In that . . .
Robert Armstrong I’m looking at the stock price of Metsera, which you can look up at home, and it’s like a staircase going up, you know what I mean?
James Fontanella-Khan It’s a staircase to heaven.
Robert Armstrong Yeah, exactly. (Laughter)
James Fontanella-Khan For its VC backers. But interestingly, Metsera’s advisers said to Metsera that they should go with Pfizer back in September, despite the fact that at the time Novo had already made a bid which was higher in dollar values to Pfizer’s.
The reason they went with Pfizer then for a lower price was because they deemed Pfizer’s bid safer from an antitrust perspective, ie, that means when you need to get regulatory approval, they were concerned that the FTC, which would be . . .
Robert Armstrong Yes.
James Fontanella-Khan . . . the agency looking into this would’ve determined that like, well, Novo already has Ozempic.
Robert Armstrong They’re gonna corner the market in some way. It’s too much market power.
James Fontanella-Khan It’s a bit anti-competitive, and we already know that Trump is unhappy with the very high price of . . .
Robert Armstrong OK, now I’m gonna stop you right there, because as a paranoid person. I have to ask, in your opinion, and of course we can only speculate here, but let’s speculate together. Did the mere fact that Pfizer was an American company play in that calculation, or was it really just about the portfolios of the two companies and the competitive concerns? In other words, Trump being president, does that tip the scales towards the American bidder?
James Fontanella-Khan I’ll bring you the facts that I am aware of and then we can use them to kind of answer that question. The immediate reaction from the Pfizer side, when Novo kind of gate crashed the deal in October. So in September, Pfizer had an agreed deal with Metsera. In October, Novo gate crashes the deal with a higher bid.
So the reaction of Pfizer immediately is, this is a European company going after an American asset at a time when it already has a drug. We wanna bring down the cost of this drug for Americans. In all of their communication, the word America, America, America first was very prevalent. It was very clear that they were leaning on the fact that like regulators had to support this deal because it was an American deal and they had to oppose the European evil company.
Robert Armstrong Now here’s some words from Mike Doustdar. Am I saying that correct? That’s the new CEO of Novo Nordisk who got the job after the last guy got sacked because . . .
James Fontanella-Khan Correct.
Robert Armstrong Share prices falling through the floor. This is him talking to the FT. It became evident that Pfizer won this at a lower bidding price than we place forward. That’s when I got very upset. I felt not in America where there is free market advocacy, shareholder value creation, and there’s just something unfair. So, you know, he’s putting some aspersions on the process there.
James Fontanella-Khan 100 per cent
Robert Armstrong I would say.
James Fontanella-Khan And it’s important to, again, to bear in mind that Albert Bourla, the CEO of Pfizer, soon after Trump won the election, made it a priority to spend time with the President and to get close to the president. He spent a lot of time in Mar-a-Lago.
Robert Armstrong Yes.
James Fontanella-Khan He cut a deal with Trump on kinda the cost of some drugs.
Robert Armstrong Yes.
James Fontanella-Khan And so this was his chance, like, see if that investment . . .
Robert Armstrong Yeah. Yeah. Come back to him. So did we get to the end with Metsera? Did we get it sold at the final price? Did we finish the TikTok there?
James Fontanella-Khan No, we’re, we’re not done.
Robert Armstrong OK. Keep going, keep going.
James Fontanella-Khan So I’ve been covering this for over a decade. I cannot remember anything so insane. The back-stabbing, the press releases accusing the others of like committing, because they started suing the crap out of each other. It was like hilarious.
Robert Armstrong I didn’t know there was lawsuits.
James Fontanella-Khan No, no, that’s like. It’s like, because essentially Pfizer was trying to get Delaware to throw out Novo’s bid arguing that we have an agreed bid. They cannot just kind of gate crash. And Delaware said, we are here to represent essentially shareholder interest. And if somebody comes with a higher bid, you gotta let the bidding war go on. The show must go on.
Robert Armstrong Yes, hurrah for that. Hurrah for that. Good for Delaware. Good for the great state to Delaware.
James Fontanella-Khan And so, Delaware really did a solid to the Metsera shareholders. At some point, there’s a letter from the FTC that manages to make its way into the press. And essentially the FTC says, there’s no way Novo can get this deal done without going through us, point number one. And point number two, this deal if it goes with Novo, looks somewhat anti-competitive. So at this point, no, the FTC can make a final judgment, but it’s just like putting some vibes out there.
Robert Armstrong Yeah, pretty strong vibes. I would say.
James Fontanella-Khan Again, very unusual for that kind of letter to leak out to the press, but a few hours later, maybe, I think the day after, there was a final kind of rally of like bids and essentially, Novo had put the highest bid of just, I think $83, a little higher than 80. Pfizer matches the Novo bid. And essentially. Yeah, the Metsera guys decided we’ve been greedy enough. We went from $7bn to $10bn. We made $3bn in a couple of days.
Robert Armstrong We’ll hit the Pfizer bid, which is the safer one.
James Fontanella-Khan Exactly, yeah. And they mentioned that, you know, following the letter from the FTC, we’ve determined that we should go with Pfizer.
Robert Armstrong OK, so earlier this month we had the president coming out with a big announcement. He has this thing called, is it TrumpRx?
James Fontanella-Khan Correct.
Robert Armstrong Which is this program through which people can buy drugs at discounted rates. He had a great big announcement, which you can look up on the internet, about how he’s going to make obesity drugs radically cheaper.
Clearly, he has zeroed in and the administration has zeroed in on drug prices. As something the American people are sensitive to, and if you’re sitting there in the corner office at one of these big drug companies, this has gotta make you sweat a little bit. And I wonder if this wave of deals is a way to say, we’re under pressure. We need to get bigger and stronger. Does that story of the case make sense to you? JFK?
James Fontanella-Khan A hundred per cent. I mean, there’s no doubt that like, every CEO of a big pharma company is under pressure right now on pricing. And, you know, pricing has been an issue for every administration. Let’s not forget like Obama, Biden. Nobody likes crazy prices for crazy drugs.
Robert Armstrong No.
James Fontanella-Khan Trump has been effective at scaring the living hell out of a lot of these people. They’re all bending the knee.
Robert Armstrong Yeah, yeah. No, it’s true.
James Fontanella-Khan And the pharma guys have done the same. I mean, you made the point that, you know, there’s a broader distribution of these drugs, so it kind of makes up for the discount.
Robert Armstrong Yeah.
James Fontanella-Khan But that’s fine. That like, that’s a win for Trump, essentially. And so that pressure is gonna keep being at them
Robert Armstrong Final question before we go to the break and then to Long/Short. The last time we had a major wave of big pharma to big pharma mergers, major companies buying each other was year of our Lord 2009 when we had Roche and Genentech, Pfizer and Wyeth, Merck and Schering-Plough. These were enormous deals.
James Fontanella-Khan I wasn’t even covering deals then.
Robert Armstrong I know it was a long time ago.
James Fontanella-Khan Give me a big pharma to big pharma deal, please.
Robert Armstrong And we haven’t seen that yet. Are the conditions in place for a wave of not big to small consolidation, but big to big?
James Fontanella-Khan Yes. The conditions have never been better. And it goes back to the point you were making earlier about these executives being under pressure by the current executive to lower drug prices.
Robert Armstrong And under pressure from the market because their share prices are not in great shape.
James Fontanella-Khan And so going back to the original question, is it a good sign, a bad sign, defensive or offensive?
I think if they can make an argument to the administration that by allowing big pharma to big pharma M&A. So bringing together two giants will lower the price of drugs. Cha-ching. The deal will go through.
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Robert Armstrong We’ll be right back with Long/Short.
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Listeners, welcome back. Today we have a very special edition of Long/Short with extra speculative elements. The Nasdaq is down 7 per cent from its highs of late October, and what we are all wondering here at Unhedged World headquarters is whether the AI bubble is popping while we speak.
So, James, rest of the year, are you long or short? The Nasdaq?
James Fontanella-Khan I’m going long.
Robert Armstrong Woo.
James Fontanella-Khan I’m a believer
Robert Armstrong That’s why we bring you on. That’s why we bring you on the show, James. Guns blazing.
James Fontanella-Khan And the reason I’m long is because this is a rare opportunity to buy a bit of that dip and it will sail back up to the top.
Robert Armstrong I will preface my answer by saying nobody can predict stock price is over six week period, but that won’t stop me from predicting them. And I am short. I think the momentum is broken in these tech stocks and we’re gonna get a meaty correction into the end of the year. And what happens in 2026 is anyone’s guess. Listeners, we will be back in your ears with more guesses this Thursday.
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Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. Topher Forhecz is the FT’s acting co-head of audio. Special thanks to Laura Clarke, Alistair Mackie, Gretta Cohn and Natalie Sadler. FT premium subscribers can get the Unhedged newsletter for free. A 30-day free trial is available to everyone else. Just go to ft.com/unhedgedoffer.
NZAOA, a group of 87 institutional investors managing USD 9.2 trillion in assets committed to achieving net zero across investment portfolios by 2050, welcomes the Summary Note on Presidency consultations and the Eleventh Letter from the Presidency published on 16 and 17 November respectively. NZAOA signatories have supported the UNFCCC Process, including through participating in the Baku to Belém Roadmap to 1.3T process and the Sharm el-Sheikh Dialogue.
Market momentum behind net zero is evident and the economic case for net zero remains strong. By the end of 2024, NZAOA signatories had deployed a total of $743 billion in climate solutions, representing 8% of their total asssets undr management, showing a strong commitment to supporting the transition to a low-carbon economy. Signatories are developing innovative approaches to climate investments, including in emerging markets.
To maintain positive momentum, policymakers gathered at COP should provide roadmaps to ensure that the promises of the 2023 Global Stocktake translate into concrete delivery. These must support mobilising investment, lending, and underwriting decisions, and enable corporate action, strengthening the transition from negotiation to implementation.
NZAOA particularly welcomes action in the areas of:
Accelerated NDC Implementation Clarity, demand signals, and certainty for investors is critical to ensure financial flows are mobilised. Effective implementation of Nationally Determined Contributions (NDCs) and COP outcomes, underpinned by national policies and transparent reporting, creates clear policy signals and pipelines of investable projects. Their subsequent consistent implementation builds credibility and enables long-term investors to confidently allocate capital.
International cooperation and active engagement with private sector International cooperation is needed to accelerate implementation and economic transformation. New and innovative approaches are required to unlock finance and support for emerging markets. Asset owners are working to develop attractive financing solutions that meet the needs of different stakeholders. Further acceleration of these successes hinges on collaboration between private and public sectors.
Enabling policy environment Investors are making progress to account for and manage climate risk, in line with their fiduciary duties, but they are dependent on an enabling policy environment. Supportive policies can contribute to improving the risk and return profiles of investments while also closing value chain gaps. Reforming multilateral architecture remains important to improve financing climate action, including high costs of capital, limited fiscal space, unsustainable debt levels, high transaction costs and conditionalities for accessing climate finance. NZAOA has published expert papers that identify impediments and solutions for private capital mobilisation.
BELEM, Brazil (AP) — At the U.N. climate talks in Brazil, artificial intelligence is being cast as both a hero worthy of praise and a villain that needs policing.
Tech companies and a handful of countries at the conference known as COP30 are promoting ways AI can help solve global warming, which is driven largely by the burning of fossil fuels like oil, gas and coal. They say the technology has the potential to do many things, from increasing the efficiency of electrical grids and helping farmers predict weather patterns to tracking deep-sea migratory species and designing infrastructure that can withstand extreme weather.
WATCH: How the next wave of workers will adapt as artificial intelligence reshapes jobs
Climate groups, however, are sounding the alarm about AI’s growing environmental impact, with its surging needs for electricity and water for powering searches and data centers. They say an AI boom without guardrails will only push the world farther off track from goals set by 2015 Paris Agreement to slow global warming.
“AI right now is a completely unregulated beast around the world,” said Jean Su, energy justice director at the Center for Biological Diversity.
On the other hand, Adam Elman, director of sustainability at Google, sees AI as “a real enabler” and one that’s already making an impact.
If both sides agree on anything, it’s that AI is here to stay.
Michal Nachmany, founder of Climate Policy Radar, which runs AI tools that track issues like national climate plans and funds to help developing countries transition to green energies like solar and wind, said there is “unbelievable interest” in AI at COP30.
“Everyone is also a little bit scared,” Nachmany said. “The potential is huge and the risks are huge as well.”
Many sessions on AI
The rise of AI is becoming a more common topic at the United Nations compared to a few years ago, according to Nitin Arora, who leads the Global Innovation Hub for the United Nations Framework Convention on Climate Change, the framework for international climate negotiations.
The hub was launched at COP26 in Glasgow to promote ideas and solutions that can be deployed at scale, he said. So far, Arora said, those ideas have been dominated by AI.
The Associated Press counted at least 24 sessions related to AI during the Brazil conference’s first week. They included AI helping neighboring cities share energy, AI-backed forest crime location predictions and a ceremony for the first AI for Climate Action Award — given to an AI project on water scarcity and climate variability in the Southeast Asian nation of Laos.
Johannes Jacob, a data scientist with the German delegation, said a prototype app he is designing, called NegotiateCOP, can help countries with smaller delegations — like El Salvador, South Africa, Ivory Coast and a few in the Association of Southeast Asian Nations — process hundreds of official COP documents.
The result is “leveling the playing field in the negotiations,” he said.
In a panel discussion, representatives from AI giants like Google and Nvidia spoke about how AI can solve issues facing the power sector. Elman with Google stressed the “need to do it responsibly” but declined to comment further.
Nvidia’s head of sustainability, Josh Parker, called AI the “best resource any of us can have.”
“AI is so democratizing,” Parker said. “If you think about climate tech, climate change and all the sustainability challenges we’re trying to solve here at COP, which one of those challenges would not be solved better and faster, with more intelligence.”
WATCH: Key takeaways from COP30 halfway through the UN climate summit
Princess Abze Djigma from Burkina Faso called AI a “breakthrough in digitalization” that she believes will be even more critical in the future.
Bjorn-Soren Gigler, a senior digital and green transformation specialist with the European Commission, agreed but noted AI is “often seen as a double-edge sword” with both huge opportunities and ethical and environmental concerns.
Booming AI use raises concerns
The training and deploying of AI models rely on power-hungry data centers that contribute to emissions because of the electricity needed. The International Energy Agency has tracked a boom in energy consumption and demand from data centers, especially in the U.S.
Data centers accounted for around 1.5% of the world’s electricity consumption in 2024, according to the IEA, which found that their electricity consumption has grown by around 12% per year since 2017, more than four times faster than the rate of total electricity consumption.
The environmental impact from AI, specifically the operations of data centers, also includes the consumption of large amounts of water in water-stressed states, according to Su with the Center for Biological Diversity, who has studied how the data center boom threatens U.S. climate goals.
She said these operations will increase the national emissions of the U.S., historically the world’s largest polluter.
Environmental groups at COP30 are pushing for regulations to soften AI’s environmental footprint, such as mandating public interest tests for proposed data centers and 100% on-site renewable energy at them. “COP can not only view AI as some type of techno solution, it has to understand the deep climate consequences,” Su said.
Associated Press writer Seth Borenstein in Belem, Brazil, contributed to this report. The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org This story was produced as part of the 2025 Climate Change Media Partnership, a journalism fellowship organized by Internews’ Earth Journalism Network and the Stanley Center for Peace and Security.
A free press is a cornerstone of a healthy democracy.
Cleary Gottlieb is advising Grupo Aeroportuario del Pacífico S.A.B. de C.V. (GAP), which operates 12 airports across Mexico’s Pacific region, including the major cities of Guadalajara and Tijuana, the tourist destinations of Puerto Vallarta, Los Cabos, La Paz, and Manzanillo, and six other mid-sized cities, on its proposed $2.2 billion business combination to internalize the technical assistance and technology transfer services historically provided by its strategic partner and to integrate Cross Border Xpress (CBX), the landside terminal in San Diego connected to Tijuana International Airport via a pedestrian bridge that enables a fast, convenient, and secure border crossing.
The transaction, which is expected to be submitted for shareholder approval in December 2025, is a central component of GAP’s “GAP 2.0” strategic initiative. Through a series of mergers and related transactions in Mexico and the United States, GAP would consolidate several affiliated entities and obtain full ownership of CBX, which has become a key driver of passenger traffic at the Tijuana International Airport and an important cross-border connector between Mexico and the United States.
This transaction represents an important step for GAP. Internalizing the technical assistance and technology transfer services will support the continuity of functions that have been essential to the operation and development of GAP’s airports, while bringing these capabilities directly into the company as it enters its next phase of growth. The integration of CBX further strengthens GAP’s platform by incorporating a unique, dollar-denominated cross-border terminal that has become a key driver of passenger traffic at the Tijuana International Airport and a strategic connector between Mexico and the United States.
Cleary is acting as U.S. counsel to GAP across all U.S.-related aspects of the transaction, including corporate structuring, securities and corporate governance matters, cross-border regulatory considerations, and preparation of disclosure materials filed with the SEC and Mexico’s CNBV. The transaction required regulatory approvals, including clearance from the Committee on Foreign Investment in the United States (CFIUS) and under the U.S. Hart-Scott-Rodino Antitrust Improvements Act (HSR).
The Cleary team includes partners Jorge Juantorena and Kyle Harris, and associate Isabella Dominguez, with assistance from law clerk José Juan Vázquez Orendain and international lawyer Nicolás Marván. Partner Chase Kaniecki and associates B.J. Altvater and Alexi Stocker advised on CFIUS matters. Counsel Steven Kaiser and associate Eun Joo Hwang advised on HSR matters.
Meta defeated a major challenge to its business on Tuesday when a US judge ruled that the company does not hold a monopoly in social networking.
The case, brought by the US Federal Trade Commission, could have forced the tech giant to spin off Instagram and WhatsApp, with the former FTC chair accusing the company of operating a “buy or bury” scheme against nascent competitors. The tech giant bought WhatsApp for $19bn in 2014. Losing either the image-based social network, which generates an estimated half of Meta’s revenue, or the world’s most popular messaging app could have done existential damage to Meta’s empire.
The US district judge James Boasberg issued his ruling on Tuesday after the historic antitrust trial wrapped up in late May.
“The landscape that existed only five years ago when the Federal Trade Commission brought this antitrust suit has changed markedly,” Boasberg wrote, citing the rise of TikTok in particular as evidence of competition in the social networking market. Boasberg also chided the FTC, which brought the case against the tech giant, for failing to account for the YouTube video platform as meaningful competition. “Even if YouTube is out, including TikTok alone defeats the FTC’s case,” he wrote.
Jennifer Newstead, Meta’s chief legal officer, wrote at the start of the trial: “It’s absurd that the FTC is trying to break up a great American company at the same time the administration is trying to save Chinese-owned TikTok.”
The judge’s decision follows two separate rulings that branded Google an illegal monopoly in both search and online advertising, dealing a regulatory blow to the tech giant that for years enjoyed nearly unbridled growth.
In contrast to the victory over Google, the ruling in Meta’s favor dampens the regulatory crackdown initiated by the US government to rein in tech giants, some of the largest and most powerful corporations in the world. The FTC has also sued Amazon for anticompetitive practices. The US justice department has filed suit against Apple, accusing it of operating a “broad, sustained and illegal smartphone monopoly”.
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The FTC “continues to insist that Meta competes with the same old rivals it has for the last decade, that the company holds a monopoly among that small set, and that it maintained that monopoly through anticompetitive acquisitions”, Boasberg wrote in his ruling. “Whether or not Meta enjoyed monopoly power in the past, though, the agency must show that it continues to hold such power now. The court’s verdict today determines that the FTC has not done so.”
With 10%-plus drops off their recent closing highs, Amazon and Nvidia shares have joined Tesla shares in correction territory. Meta’s stock is already in a bear market.
Amazon’s stock is now off more than 12% from its recent closing high.
Shares of Amazon and Nvidia entered correction territory on Tuesday as the technology sector’s selloff intensified.
The recent pressure on Amazon’s stock (AMZN) means it has essentially wiped out all the gains it saw following the company’s third-quarter earnings report. Those earnings originally seemed to change the tune around the stock, solidifying the company as one that’s benefiting from artificial intelligence.
And while that may still be true, Wall Street seems less preoccupied with finding AI winners given increased scrutiny of the cost of the technological buildout. Amazon recently completed a $15 billion debt deal, partly to finance its AI ambitions.
Read: As Amazon raises $15 billion in a bond deal, investors worry about companies taking on too much AI debt
Meanwhile, the selloff in Nvidia shares (NVDA) comes as that company prepares to report earnings on Wednesday afternoon.
“Numbers and expectations are very well telegraphed,” said Jeffrey Favuzza, a tech, media and telecommunications strategist with Jefferies. But there’s still “a lot of excitement” around Nvidia, he added, while predicting a “buy-the-dip mentality,” as earnings could prove to be a clearing event for the market.
Other Big Tech stocks have swiftly fallen out of favor as well. Tesla’s stock (TSLA) is already in a correction, which is defined as a drop of 10% or more from a recent closing high. And since Nov. 4, Meta’s stock (META) has been in bear-market territory, which is categorized as a 20%-plus decline off recent closing highs.
See also: The lone bear on Meta’s stock foresaw its struggles – and sees more trouble ahead
Looking outside the group of megacap tech stocks known as the Magnificent Seven, shares of Broadcom (AVGO) and Advanced Micro Devices (AMD) entered corrections earlier in November, while Oracle’s stock (ORCL) has been in a bear market since Oct. 30. It closed Tuesday at 33% off its recent highs.
Oracle shares have given back all the massive gains they saw after the cloud company’s last earnings report, when it disclosed 359% growth in its remaining performance obligations, a measure of business that has been contracted but not yet recognized as revenue.
“Basically that entire RPO backlog that OpenAI gave them and committed to is now completely out of the stock,” Favuzza said.
Apple (AAPL) and Alphabet (GOOG) (GOOGL) shares have held up better, both off less than 3% from their recent highs. Apple has been more disciplined than the other Big Tech players when it comes to AI spending, so it’s not subject to the same investor worries about the cost of AI financing. And Alphabet is “still the most crowded long on a tactical basis” within the Magnificent Seven, according to Favuzza.
“They seem to be firing on all cylinders from the product-innovation side now that there’s a little bit less concern on the antitrust side,” he told MarketWatch. A judge in September declined to issue steep penalties in a monopoly case that could have forced the divestiture of Chrome.
More from MarketWatch: Google’s Gemini 3 is finally here. Can it power Alphabet’s stock even higher?
-Emily Bary
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
After years of sustained growth, the technology services sector is under pressure. Average industry growth has slowed to about 2% to 3% (compared with 4% to 5% growth before Covid-19), margins have fallen by more than 200 basis points, and valuations have reverted to pre–Covid-19 levels.
AI and its productivity benefits may be the most visible disrupters, but other forces are also reshaping the industry:
Technology is becoming a core function of every business, as evidenced by the greater investments that many multinationals are making in their own global capability centers.
Economic nationalism and the rise of a post-global trade system create uncertainties (particularly regarding tariffs) that increase pressure on spending and dampen demand for tech services. The trend also brings fresh challenges for hiring foreign labor in the IT industry, disrupting supply dynamics.
Demographic shifts are reshaping the talent pool as populations age in major economies such as Europe and Japan. Rising job protection may make it harder to shift work to tech service firms, while mounting healthcare and insurance payouts will add cost pressures and squeeze discretionary spending.
The global energy transition will increase cost pressures on sectors such as oil and gas and manufacturing as they invest capex into new forms of energy. In these and other industries, the need to redesign processes will put pressure on spending.
The competitive landscape is also shifting: In addition to other tech service competitors, AI platforms such as OpenAI and Palantir are eroding traditional services, and hyperscalers are developing platform- and application-level services that compete directly with tech services.
These trends pose real risks to the tech services industry. Bain’s research suggests that continuing to operate with a business-as-usual approach could erode revenue by 30% or more as work gets automated or replaced by AI. Firms stand to lose 5 to 7 points of EBIT margin from deal discounting to win more work, which could contribute to an enterprise value loss of 45% to 50% over the next five years.
But these trends also create new opportunities—more than enough to offset the risks:
AI is at the heart of many of these changes, and the process of integrating AI into existing workflows will create a surge in demand for AI services.
At the same time, the rising importance of tech across every aspect of the enterprise extends the range of activities that will require tech services.
All of these trends create an immediate and midterm demand for tech services to help organizations adapt to changing conditions.
The next generation of IT service leaders will pull away fast(see Figure 1). Bain’s research estimates that leaders are poised to grow by 8% to 10%, sustain or expand margins, and increase revenue multiples by 3 to 3.5 times. These spoils will go to service providers that can decisively transform their organizations by reshaping their offerings, delivery models, P&L structures, and operating systems.
Leading tech service providers could increase revenue and market share as lagging providers fall further behind
Source: Bain & Company
Forces shaping tech services
The trends reshaping the IT services industry are leading to a rethink of how these firms operate and where growth will come from.
Trillion-dollar AI economy:
AI is no longer an add-on; it’s becoming a core capability across enterprise and software-as-a-service platforms. As industrial strength multimodal models (e.g., large language models and small language models) gain traction, demand is rising for high-quality annotation, validation, and data ops capabilities.
Another enormous opportunity is that the modernization of apps still running Cobol—all 200 billion to 800 billion lines of active code—is less time consuming and more feasible with help from AI, which can identify the business logic in old code and translate it into more modern languages. This creates new opportunities for core modernization in industries such as banking.
AI is also moving to the edge, enabling low-latency inferencing and smarter controllers. All of this is fueling unrelenting data center growth, including critical investments in underlying technologies such as communications infrastructure, power, and cooling.
A surge in demand for application-specific chips to power AI applications will create new opportunities for tech services in chip design, verification and validation, and packaging.
Tech at the core of every business:
Business process transformation is becoming faster, thanks to AI-first models that go beyond automation and redesign processes (e.g., mortgages and claims) from the ground up. Transforming processes and avoiding pilot overkill is critical for enterprises to see returns from AI.
End-to-end transformation is also being reshaped with AI-enabled platform services that allow for more standardized and repeatable outputs. Agentic systems are coming online, which will allow these to run more autonomously.
Across industries and product categories, customers are seeking out greater convenience and features. For example, in the automotive industry, as vehicles advance from partially to fully autonomous (advanced driver assistance systems level 3 to 5), tech services firms will play a role in enabling those features.
Underpinning all of these and other opportunities is data—modernized, productized, and made AI-ready—the management of which is likely to become a large area of spending in tech services.
Post-globalization and expanding role of governments:
A massive reconfiguration of spending patterns and innovation hubs is underway. Supply chains are becoming more intelligent, agile, and transparent, supported by embedded decision making that allows systems to make choices without waiting on human intervention. This creates the opportunity for more spending across the various steps of the supply chain (planning, sourcing, manufacturing, fulfillment) that tech services companies could tap into.
Across the globe, governments are developing policies that create more secure and predictable environments for digital assets such as cryptocurrency and stablecoins, encouraging the adoption of blockchain. New centers of investment are opening up, including Japan and the Middle East.
Countering the trend for moving operations back onshore, an increase in offshoring and nearshoring is also possible due to the rising costs of H-1B visas.
Demographic shifts upend traditional talent pools:
There is a rising need for drastic efficiency gains to address the emerging global workforce imbalance in aging economies such as Japan and Europe.
There is an increase of robots and agents in physical and digital environments.
Energy transition and surge in green infrastructure:
Powering the AI transformation requires extensive changes to the energy infrastructure.
Interest in nuclear energy is picking up again, particularly to meet the needs of hyperscale data centers.
At the same time, green energy continues to gain momentum, with massive investments flowing into grid modernization and next-generation storage technologies.
Eight imperatives for success in IT services
While the opportunities ahead are enormous, tech service providers won’t capture them with a business-as-usual mindset. The sector is likely to keep shifting toward winners-take-most dynamics, fueled by the heavy investments required to master AI and reimagine business models. For firms that commit to the right bets and move decisively, the payoff can be far greater(see Figure 2).
Winners could grow their business at twice the rate of market growth
Source: Bain & Company
Strategy shift: Gone are the days of defining strategy at a vertical and geographic level based on attractiveness and ability to win. Strategy today needs to take a more focused approach, identifying opportunities at the intersection of specific industries, geographies, and spending themes. This approach, which we call “micro-battles,” unlocks AI-led transformations with hyper-specialized expertise accompanied by broad-based horizontal technology capabilities. Transforming the mortgage origination process in US banking offers one good example. Tech service companies should identify 15 to 20 micro-battles in which they aspire to be a top player in that niche.
Multiservice solutions: To succeed in the market, companies need to bring together offerings that span multiple areas of the business, not just one team or capability. These solutions should be tailored to tackle specific high-priority challenges—for instance, the micro-battles referenced above. That means combining expertise in areas such as service design, technology, industry knowledge, data, and operations. To really make it work, companies have to be strategic about where they invest money and how they deploy talent. For example, delivering on claims process transformation in property and casualty insurance in the US means bringing together service design to redesign the claims process with the best of AI and automation, platform partnerships with core systems (e.g., insurance tech providers Guidewire or Duck Creek), custom app development, and next-generation operations embedded with AI to be able to stitch together an outcome for the client.
Revamped go-to-market model: The limiting factor in change will be how the front line adapts. AI-led services call for fundamentally different customer conversations and delivery motions that will require not just investments in offerings and partnerships but also new skills for the front line. Resetting the go-to-market model entails new roles for the front line as customer advisers and experts, new capabilities for risk management and developing more complex solutions, and deep integration with technology ecosystem partners. As in all transformations that introduce new processes, a continuous loop of frontline learning and feedback is essential.
Platform-based delivery and value-based pricing: Agents with a human in the loop are rapidly becoming part of the delivery model, helping teams shift from custom, one-off solutions to more scalable, composable, and interoperable platforms. For example, custom app development has relied heavily on individual skills and lacked a consistent way to efficiently measure progress. Now, providers are moving toward a more unified view of the software development life cycle, using platforms to improve speed, efficiency, and clarity around outcomes. Similarly, modernization efforts are becoming more automated. Instead of relying on manual effort and institutional memory to understand legacy systems, AI can generate knowledge graphs and automate much of the work. These platform-based delivery models will help shift pricing away from hourly metrics to value-based models in which customers reward providers for achieving target outcomes.
Talent strategy: As automation absorbs tasks, as companies localize talent (e.g., to keep pace with changing visa requirements), and as employee expectations change, talent strategy needs to evolve. Without a reimagined talent model, the traditional delivery pyramid could morph into a costlier diamond structure. To stay ahead, companies must rethink their talent strategy—building competency-based career architectures, extending these frameworks to clients, and investing in developing capabilities that go beyond technology, such as creative problem-solving, domain expertise, and forward-deployed engineering. Equally critical is redefining the employee value proposition to create a more geographically and culturally diverse workforce and to appeal to Gen Z workers. Incremental tweaks to HR models won’t suffice; firms must irreverently challenge outdated policies, rigid career paths, and traditional approaches to coaching, replacing them with more flexible, purpose-driven, and individualized talent experiences.
Culture reset: Responding to this moment and capturing the opportunities calls for a major cultural shift. As both customer demand and talent supply fluctuate, tech services need to respond by moving from homogenous teams to diverse talent across skills, backgrounds, and cultures. From rigid hierarchies to flatter, faster teams. From layers of oversight to more hands-on doers. From siloed functions to agile, cross-functional collaboration. From command-and-control to empowered frontline decision making. And from a people-first mindset to a tech-first stance—not just for customers but within the organization.
Partnership: Successfulproviders will offer a differentiated proposition to partners, working together to align offerings, create joint account plans, and invest together in IP. Partners are willing to invest if service providers bring in a repeatable approach to process transformation.
M&A: Leading tech service firms will take advantage of M&A opportunities to differentiate themselves and their offerings, particularly in areas that allow them to leapfrog competitors in the race to realize value from AI, such as data management and other AI platforms. Accordingly, developing acquisition and integration excellence is a nonnegotiable.
To fund all eight of these imperatives, tech service companies will need to become leaner, focusing investments on the muscle of the organization. Better delivery comes through improving margins of fixed-price projects, and better operations result from taking a zero-based approach to deploying AI across all internal functions, including talent, HR, finance, procurement, and so on, to free up 200 to 300 basis points of margin.
Resetting tech services
The tech services industry is at a turning point. Growth has slowed, margins are under pressure, and new players—especially AI-native ones—are shaking up the competitive landscape. And it’s not just about AI. Global structural shifts such as economic nationalism, aging workforce populations, and energy transition are reshaping demand and talent dynamics and changing how and where value gets created.
The risks are real: Bain’s research shows that firms that continue with business as usual risk major value erosion—as much as 50%—but those that act boldly can capture outsized gains. The next wave of winners could grow twice as fast as the market by redefining strategy, modernizing delivery, and reinventing talent strategy. For tech service firms, the moment of transformation is now.
