Latest / Bloomberg Intelligence / Ackman Pitches $65 Billion UMG Deal to Move Listing to US

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Ackman Pitches $65 Billion UMG Deal to Move Listing to US · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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  Speaker 1: Listen on demand wherever you get your podcasts, or watch
• 0:21
  Speaker 1: us live on YouTube.
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  Speaker 2: I did not have Universal Music Group being put in
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  Speaker 2: play on my being a car but billionaire activist Bill Ackman,
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  Speaker 2: I mean, I poled that thing, bought it, sold it.
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  Speaker 2: I don't know why it's public. Billionaire activist Bill Ackman
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  Speaker 2: has proposed a bid for Universal Music Group to increase
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  Speaker 2: returns on one of his hedge fund's biggest holdings. Not
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  Speaker 2: really sure why, but our next guest does. Matthew Bloxham,
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  Speaker 2: Senior Media and Tech anais Bloomberg Intelligence is usually based
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  Speaker 2: in London, but he's here in New York, which goes
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  Speaker 2: to my theory. Yes, we're seeing a lot of London
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  Speaker 2: based VI people here, which means somebody's buying these people dinner.
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  Speaker 2: Would not come a number of their own.
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  Speaker 3: I think we should swamp. I'll go to London for
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  Speaker 3: a while and do the show from there.
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  Speaker 2: Matthew tell us what's going on here with United Music
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  Speaker 2: group and kind of what Blackman's thinking.
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  Speaker 4: Yes, look, I think a lot of shareholder has been
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  Speaker 4: frustrated for quite some time with the share price performance
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  Speaker 4: Universal Music. The numbers it's been posting performance wise have
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  Speaker 4: been pretty decent, but the share price keeps going down.
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  Speaker 4: And I think, I mean, I've had a lot of
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  Speaker 4: incoming a requires some clients over the last no, three
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  Speaker 4: or four months trying to kind of put this puzzle together.
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  Speaker 4: You know that the numbers look good, the share price
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  Speaker 4: going down. What's going on? And I think to some
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  Speaker 4: degree this is Bill Lackman, you know, expressing some public
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  Speaker 4: frustration about that kind of mismatch and trying to, I guess,
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  Speaker 4: propose a different future for Universal Music, but particularly kind
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  Speaker 4: of a more financially engineered future, so kind of sweating
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  Speaker 4: the balance sheet more, pushing leveragere two and a half
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  Speaker 4: times from one times, doing more buybacks, selling their stake
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  Speaker 4: in Spotify, just to kind of really crystallize some of
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  Speaker 4: the value that is there now.
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  Speaker 3: For what I understand this is it's sort of a
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  Speaker 3: complicated proposal they're putting together here that involves I guess
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  Speaker 3: a spack here in the US valuing the company. I
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  Speaker 3: guess it close to sixty five billion dollars. Is that
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  Speaker 3: truly a seventy eight percent premium?
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  Speaker 4: It would be, but it's very much a kind of
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  Speaker 4: paper premium. So if you look at the numbers, basically
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  Speaker 4: what they've said is that on the twenty twenty six earnings,
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  Speaker 4: they think Universal Music should trade at about twenty five
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  Speaker 4: times earnings. It currently trades on about seventeen. And so
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  Speaker 4: they've applied that mole score to the earnings, creative everything
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  Speaker 4: else out of that. So kind of really there's there's
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  Speaker 4: kind of nothing substantial there. It's not that there is
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  Speaker 4: an element of cash to the bit, but it's not
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  Speaker 4: very much, and most of that cash is basically being
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  Speaker 4: funded by leveraging up the UMG balance sheet and by
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  Speaker 4: selling the Spotify steake.
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  Speaker 3: Well, then I wonder how real is this or is
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  Speaker 3: this just is he throwing it out there to shake
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  Speaker 3: things up or can this thing really happen?
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  Speaker 4: I think he's throwing it out there to shape things up.
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  Speaker 4: And I think what we would expect to see from
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  Speaker 4: the company is perhaps, you know, kind of an acknowledgement
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  Speaker 4: that you know that there's more perhaps they could do
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  Speaker 4: to kind of crystallize the value and get it recognized
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  Speaker 4: in markets.
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  Speaker 5: But we'll see. I mean, obviously that the big.
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  Speaker 4: Fundamental risk to universal music, which is keeping that earning
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  Speaker 4: multiple down, is AI and whether in future we're going
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  Speaker 4: to be fans of real human artists fans.
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  Speaker 2: Sell Oh yeah, yeah, all right, we've got some big
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  Speaker 2: shareholders here. I'm going to go back to an old
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  Speaker 2: acquaintance mind, Vincent Belory. What does he want to do
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  Speaker 2: with the stocking? It was eighteen percent of the stock here,
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  Speaker 2: and I know there's always been concerned in this company
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  Speaker 2: and in other companies. He has holdings that he's a seller,
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  Speaker 2: he's a better seller here, and that could keep a
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  Speaker 2: lid on this thing.
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  Speaker 4: Yeah, that's certainly been a bit of an overhang. I'd
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  Speaker 4: be surprised at this level he's a seller, and it's
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  Speaker 4: even more complished than that, because fora Vendi, you know,
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  Speaker 4: owns the stake in it, and he's the kind of
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  Speaker 4: most influential shareholder in Forvendy two. So yeah, you know, obviously,
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  Speaker 4: I think he's probably playing a longer term game, kind
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  Speaker 4: of wants to get value cristicization at some point, But
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  Speaker 4: he's not the kind of person to be pressurized into
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  Speaker 4: something that doesn't fit his agenda, whatever that is.
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  Speaker 3: He also Acman says he wants to He's very adamant
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  Speaker 3: about wanting to move the listing out of Amsterdam and
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  Speaker 3: move it here to the New York Stock Exchange.
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  Speaker 6: Why is that?
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  Speaker 4: I think the principal reason is because typically companies get
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  Speaker 4: a higher multiple on earnings in the US than they
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  Speaker 4: do in Europe, and so to some degree it shouldn't
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  Speaker 4: really be this way. But by kind of shifting the
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  Speaker 4: listing from one jurisdiction to another, you magically create value
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  Speaker 4: by getting a lift in the multiple. As I said,
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  Speaker 4: I think that the big pushback on that for me
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  Speaker 4: is the AI threat. You know, we've seen multiple contraction
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  Speaker 4: for lots of industries on the back of the perceived
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  Speaker 4: AI risk, and I think that's very much in play
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  Speaker 4: here for the record labels, particularly Universal.
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  Speaker 2: There's another public trade and music company out there, Warner
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  Speaker 2: Music Group. And how do the two What are the
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  Speaker 2: valuation differences between those two?
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  Speaker 4: They're pretaby saying they're both trained on about seventeen times earnings.
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  Speaker 4: You know, I think people see them very similarly. There's
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  Speaker 4: a much lower free float in Warner. I think almost
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  Speaker 4: the kind of public company. They both face similar risks.
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  Speaker 4: I think, obviously, for the last ten years or so,
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  Speaker 4: Universe has been my finer way, the number one record
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  Speaker 4: label kind of dominates the kind of charts in terms
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  Speaker 4: of its artists. In recent times we have seen Warner
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  Speaker 4: kind of take some share, but it's kind of relatively
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  Speaker 4: gradual thing. But I think largely investors kind of see
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  Speaker 4: them both as you know, a play on the same fundamentals.
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  Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
• 5:45
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: weekdays at ten am Eastern on Apple Coarclay and Android
• 5:51
  Speaker 1: Otto with the Bloomberg Business app. Listen on demand wherever
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  Speaker 1: you get your podcasts, or watch us live on YouTube.
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  Speaker 2: What's still happening despite all of the uncertainty in the
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  Speaker 2: world is technology companies are doing deals, They are investing
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  Speaker 2: in AI, A lot of stuff going on even today.
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  Speaker 2: So we asked Man Deep Same to step in and
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  Speaker 2: Deep runs all the tech research for Bloomberg Intelligence, and
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  Speaker 2: we appreciate getting a few minutes of this time. Mandy.
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  Speaker 2: Let's start with Anthropic Broadcom Google. They're expanding a strategic
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  Speaker 2: collaboration that will allow Anthropic access to about three and
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  Speaker 2: a half gigawat's worth of computing power starting in twenty
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  Speaker 2: twenty seven. I'm just that what's going on with Anthropic
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  Speaker 2: and broad common Google?
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  Speaker 7: Yeah, I mean you remember the time when OpenAI signed
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  Speaker 7: all those deals for ten gigawatt capacity?
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  Speaker 5: Yep, Well things have changed.
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  Speaker 7: The momentum has shifted towards Anthropic in a big way.
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  Speaker 7: And now we see this deal, which really is a
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  Speaker 7: reflection of the momentum that Entropic has generated from coding
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  Speaker 7: agents from enterprise. In fact, and Tropics revenue has tripled
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  Speaker 7: from nine billion to thirty billion in a span of
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  Speaker 7: four months. What this is breakneck growth that we have
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  Speaker 7: never seen, at least till the time that I've covered
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  Speaker 7: this space. And you know now they are short of
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  Speaker 7: compute capacity, so they're signing all these multi year deals
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  Speaker 7: to secure compute.
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  Speaker 8: Okay, So this might be like a basic question for
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  Speaker 8: someone who follows Ai so closely, But is this all
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  Speaker 8: because people want to use Claude like Anthropics Claude versus
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  Speaker 8: open AI's chat gept. I'm still using chat GPT. I
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  Speaker 8: don't know if I'm very behind.
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  Speaker 7: Well, so it all comes down to use case and
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  Speaker 7: what Anthropic decided, which in hindsight and hindsight is just
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  Speaker 7: a week's here, you know, seems to be a very
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  Speaker 7: smart move is really double down on coding agents as
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  Speaker 7: a use case. And this is really you know, tools
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  Speaker 7: that developers use to complete their code right, full on code.
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  Speaker 7: You know that can save them hours. And now Entropic
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  Speaker 7: has got thousand enterprise customers that are paying over one
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  Speaker 7: million dollars plus each in a span of weeks.
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  Speaker 5: They've landed all these.
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  Speaker 7: Customers just for one tool, one product that they conceived
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  Speaker 7: in weeks and they've been able to ramp that up
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  Speaker 7: so fast.
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  Speaker 2: So who are the peers for Anthropic? Again? Just remind
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  Speaker 2: me because I can't I need my float chart. Remember
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  Speaker 2: who's who here? Who are the peers or who the
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  Speaker 2: competitors for Anthropic?
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  Speaker 5: I mean on the coding side.
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  Speaker 7: You know, you can think of names like Atlasian they
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  Speaker 7: used to manage code, and coding agent is a new category.
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  Speaker 7: So when you think about you know, an agent take
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  Speaker 7: AI that's solving code end to end. This is the
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  Speaker 7: use case that everyone was waiting when they were asking.
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  Speaker 5: The ROI question. This is the ROI.
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  Speaker 7: That you know they were looking for. And think of
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  Speaker 7: the CAPEX for twenty twenty seven. Now, now that we
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  Speaker 7: have seen this revenue ramp from Entropic, I bet you
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  Speaker 7: twenty twenty seven CAPEX numbers are going.
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  Speaker 2: When of these companies coming public, when do we see them?
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  Speaker 2: Let me know who these people.
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  Speaker 5: Are in the back half of the year, and you
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  Speaker 5: know it's.
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  Speaker 2: Going to be Entropic.
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  Speaker 5: You think maybe Entropic for sure.
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  Speaker 7: Sure, I would be very surprised if they don't use
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  Speaker 7: this opportunity.
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  Speaker 2: Shat gpt exactly open Ai.
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  Speaker 5: But open Ai has got some trouble.
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  Speaker 7: Now there was a point when open Ai was the
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  Speaker 7: clear leader, they had the best growth. Well, Entropic has
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  Speaker 7: actually surpassed open Ai in terms of revenue run rate.
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  Speaker 7: Just to put it in context, open Ai raised money
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  Speaker 7: at eight hundred and fifty two billion dollars in valuation
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  Speaker 7: in the last private funding ground, Entropica was valued at
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  Speaker 7: three hundred and eighty billion. So imagine a company growing
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  Speaker 7: faster having surpassed open Ai was valued at half the
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  Speaker 7: valuation of open Ai. So I would be very curious
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  Speaker 7: to see what is the next funding round for Entropic
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  Speaker 7: look like. And I think they should narrow the evaluation
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  Speaker 7: gap that they have with open Ai.
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  Speaker 8: And then so what does it mean for Broadcom because
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  Speaker 8: we're seeing that stock hire three percent today? But do
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  Speaker 8: they does does Broadcom benefit from this this long term
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  Speaker 8: runway of.
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  Speaker 7: I mean clearly, anything touching entropic ecosystem right now should
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  Speaker 7: do well, whether it's Broadcom, whether it's Google on the
• 10:24
  Speaker 7: chip side, Google as a standalone chip company will have
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  Speaker 7: a sizeable revenue from this entropic deal. And that's where
• 10:32
  Speaker 7: you know in video or anything touching open AI will
• 10:36
  Speaker 7: probably see some headwind at least on the back of
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  Speaker 7: this news.
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  Speaker 2: How often does like an entrop How often does this
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  Speaker 2: technology evolved? How quickly does it evolve? Like if I
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  Speaker 2: buy a piece of software today, or I'm not even
• 10:49
  Speaker 2: sure what I'm buying. I'm not buying a piece of software,
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  Speaker 2: I'm buying some AI product. Yeah, how long is that
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  Speaker 2: relevant for before some new technology comes along and makes
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  Speaker 2: it irrelevant? Like I don't buy something else.
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  Speaker 7: These companies are releasing new features every week. In fact,
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  Speaker 7: this coding agent product, as I said, was consumed in
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  Speaker 7: a matter of weeks, and so the next model release
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  Speaker 7: from open ai could be you know better than Entropic.
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  Speaker 7: The problem that open ai may run into is enterprise.
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  Speaker 7: You know, contracts are very sticky. Once you start using
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  Speaker 7: a product and it's a new product, new category, you're
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  Speaker 7: not going to rip and replace. And that's where what
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  Speaker 7: Entropic is doing with coding agents. It's gonna be sticky
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  Speaker 7: revenue because companies are signing, assigning million dollar plus contracts. Now,
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  Speaker 7: They're not just gonna go back and start using open
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  Speaker 7: ai if their next product is better. So this is
• 11:47
  Speaker 7: sticky and that's why I think Entropic has created a
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  Speaker 7: new category. Whereas open ai was focused on the consumer side.
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  Speaker 7: They did really well with chatchipet subscriptions, but they missed
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  Speaker 7: out on this opportunity in terms of focusing on coding
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  Speaker 7: agents and enterprise.
• 12:03
  Speaker 5: Stay with us.
• 12:04
  Speaker 2: More from Bloomberg Intelligence coming up after this.
• 12:10
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 12:14
  Speaker 1: weekdays at ten am Eastern on Apple, Coarclay, and Android
• 12:17
  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
• 12:20
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 12:24
  Speaker 2: It's another day, which means it's another m and a
• 12:26
  Speaker 2: trade in the healthcare space. Jilliad Sciences agrees to buy
• 12:29
  Speaker 2: private German biotech Tubulus in a deal worth up the
• 12:33
  Speaker 2: five billion dollars to boost its portfolio and cancer drug development.
• 12:37
  Speaker 2: Let's start there with Sam Fazzelli, covers all the healthcare
• 12:39
  Speaker 2: stuff for Bloomberg Intelligence. He's based in London, lives in France,
• 12:43
  Speaker 2: I think, but he's in New York. Go figure here,
• 12:45
  Speaker 2: today's we got him in studio.
• 12:47
  Speaker 6: Sam.
• 12:48
  Speaker 2: What's Jilliad doing here? What are they buying here? And
• 12:50
  Speaker 2: what's the strategy?
• 12:52
  Speaker 9: Friscus Can I just say, I'm so happy to be here.
• 12:54
  Speaker 2: You know, I love I know you you I mean.
• 13:00
  Speaker 5: I tell you what.
• 13:00
  Speaker 10: The door my flight door opened at sixteen fifty last night.
• 13:04
  Speaker 10: I was in the cab at seventeen fifteen. That is
• 13:08
  Speaker 10: twenty five minutes.
• 13:09
  Speaker 9: Door to door to the cab. Where are these TSA issues?
• 13:12
  Speaker 10: I'm not belittle in that now, but it didn't affect
• 13:14
  Speaker 10: me so unhappy if you were exit special air unspecial
• 13:19
  Speaker 10: special especially, So what's Gilly are doing? This is the
• 13:24
  Speaker 10: second deal they've done in the past a few months,
• 13:26
  Speaker 10: a couple of months, I would say they are continuing
• 13:30
  Speaker 10: to build an increasingly oncology focused They do have various
• 13:35
  Speaker 10: assets as you know, in HIV and oncology, and they've
• 13:38
  Speaker 10: been building this out. This is a very interesting acquisition.
• 13:41
  Speaker 10: I have to say. It's a private German company. I've
• 13:43
  Speaker 10: met them.
• 13:44
  Speaker 9: Two or three times. Listen to their presentation.
• 13:47
  Speaker 10: It's in a space Paul, that had been kind of
• 13:51
  Speaker 10: thought of, maybe China's taken over all of it, the
• 13:54
  Speaker 10: ADC's antibody drug conjugate world, and that there isn't really
• 13:59
  Speaker 10: much to play for here. So they build this company
• 14:02
  Speaker 10: four hundred and one million dollars, the biggest European Series
• 14:06
  Speaker 10: C ever announced about a few months ago. And now
• 14:09
  Speaker 10: I'm going to come back to that and connect you
• 14:10
  Speaker 10: all up and in a space that you think China
• 14:13
  Speaker 10: has overtaken the rest of the world in Europe, and
• 14:16
  Speaker 10: here comes to Gilliad buying it for a hefty price,
• 14:19
  Speaker 10: right that one hundred one million. I don't know what
• 14:21
  Speaker 10: the valuation was at that time, but this is a
• 14:24
  Speaker 10: good deal for the investors.
• 14:25
  Speaker 8: And what kind of treatments are they now going to
• 14:28
  Speaker 8: be able to offer with this acquisition.
• 14:30
  Speaker 10: Yeah, so Gillad already has a well known true delv
• 14:37
  Speaker 10: ADC antibody. So what do you do is that you
• 14:39
  Speaker 10: put the drug that's a chemotherapy often that you want
• 14:42
  Speaker 10: to avoid having the overall exposure in your body to
• 14:46
  Speaker 10: an antibody that homes in on a tumor. That's the
• 14:48
  Speaker 10: principle much harder than in reality to make work. So
• 14:52
  Speaker 10: here what they're doing is buying a brand new, a
• 14:54
  Speaker 10: pretty broad profile platform and two drugs with it.
• 14:58
  Speaker 9: So it's it's it's exactly in their wheelhouse.
• 15:03
  Speaker 2: All right, Let's move on to the weight wall stuff,
• 15:05
  Speaker 2: because that's always in the news. Novo nord school price.
• 15:08
  Speaker 2: It's new high dose w GOV which is what we
• 15:11
  Speaker 2: use in the household at three ninety nine a month
• 15:14
  Speaker 2: for cash pay patients, undercutting the cost of most doses
• 15:18
  Speaker 2: of rival Eli Lily is zep bound. Is this just
• 15:21
  Speaker 2: another example where this market it is we're now moving
• 15:23
  Speaker 2: on to really competing on price.
• 15:24
  Speaker 10: Yeah, but they have been pulled for a while, and
• 15:26
  Speaker 10: you know a lot of the times we don't actually
• 15:28
  Speaker 10: see the price that people are paying because it goes
• 15:30
  Speaker 10: to a different channel, the rebates, the discounts, you know,
• 15:33
  Speaker 10: all that story of how everybody is so focused on
• 15:36
  Speaker 10: the list price and where actually people are getting the
• 15:40
  Speaker 10: the is a much lower price at least through the insurance,
• 15:42
  Speaker 10: So it is not a surprise. It's going to keep happening.
• 15:46
  Speaker 10: Novo needs to get its footing back in here. And
• 15:48
  Speaker 10: it's interesting that it's happening just the week after that
• 15:51
  Speaker 10: Lily has been approved to launch their oral drug. Right, wow,
• 15:56
  Speaker 10: and that's the first week or two. This friday, I'd
• 16:00
  Speaker 10: see some of the prescriptions flow through. Everyone's focused on
• 16:03
  Speaker 10: that how strong a launch will that be?
• 16:06
  Speaker 2: That even though you have to take this pill daily,
• 16:09
  Speaker 2: people take pills all the time. It's no big deal
• 16:11
  Speaker 2: that this is going to really open up the market.
• 16:13
  Speaker 9: Is that?
• 16:13
  Speaker 6: Yeah?
• 16:13
  Speaker 10: I mean, so the thing is that it doesn't give
• 16:15
  Speaker 10: you as much weight loss as the job. The job
• 16:18
  Speaker 10: is super powerful, right, But so you could think about
• 16:21
  Speaker 10: it in many different ways.
• 16:22
  Speaker 9: I'll just add it to my box.
• 16:23
  Speaker 10: You know a lot of people have these boxes with
• 16:25
  Speaker 10: their vitamins and minerals and all that I just added
• 16:27
  Speaker 10: in there.
• 16:28
  Speaker 9: Ticket. It doesn't have any food restrictions or anything. So
• 16:31
  Speaker 9: you get some side effects.
• 16:32
  Speaker 10: But and maybe you do it after you've done your
• 16:37
  Speaker 10: major weight loss, so you've got your three pounds, four pounds,
• 16:41
  Speaker 10: ten pounds that you wanted to lose, and you're feeling
• 16:43
  Speaker 10: great and you don't want to be taking the job anymore.
• 16:45
  Speaker 10: Although a lot of people are fine with the injection,
• 16:48
  Speaker 10: it just helps.
• 16:49
  Speaker 9: There are needle phobic people it helps.
• 16:51
  Speaker 8: And what's the expectation for Is the pill necessarily going
• 16:54
  Speaker 8: to be cheap and.
• 16:56
  Speaker 10: The job, well, it should be for the patient like
• 16:58
  Speaker 10: what they're I don't think so. I think that would
• 17:00
  Speaker 10: be a really odd thing for them to massively undercut massively.
• 17:04
  Speaker 10: But I think you can play with pricing there, especially
• 17:07
  Speaker 10: as it's got probably better margins than the injectable.
• 17:10
  Speaker 2: I mean is are these weight loss drugs as popular
• 17:14
  Speaker 2: outside of the US as they are.
• 17:15
  Speaker 5: In the US?
• 17:16
  Speaker 9: Absolutely?
• 17:17
  Speaker 10: In the UK, you know, we are a backward country
• 17:20
  Speaker 10: sometimes when it comes to medicine at least, which try
• 17:23
  Speaker 10: wait for two years before things get approved. There's a
• 17:25
  Speaker 10: massive self pay market.
• 17:27
  Speaker 5: All right.
• 17:28
  Speaker 2: I have messing for a friend here. Okay, is there
• 17:30
  Speaker 2: a baldness drug potentially?
• 17:34
  Speaker 10: Well, when you find one, can you let me know.
• 17:36
  Speaker 10: I mean this is there is already marketed drugs for
• 17:39
  Speaker 10: it first, but.
• 17:40
  Speaker 2: Something that's as effective as we go.
• 17:43
  Speaker 10: So once you've lost it, I think you just have
• 17:45
  Speaker 10: to gracefully accept your fate.
• 17:48
  Speaker 9: If you're in the process of losing it. There are
• 17:50
  Speaker 9: approved drugs. You can use it to fluff out.
• 17:53
  Speaker 2: There's follygles, but there's no there's nothing in the pipeline.
• 17:57
  Speaker 10: That's just so don't forget that. As we go up
• 18:01
  Speaker 10: the evolutionary tree, we don't really need hair.
• 18:04
  Speaker 9: So perhaps it's evolution that's taking place here, right.
• 18:07
  Speaker 8: Have you heard that that's a good perspective.
• 18:08
  Speaker 5: I've never heard that.
• 18:11
  Speaker 2: A good way to look at it.
• 18:12
  Speaker 8: You mentioned China when when you first came in, the
• 18:15
  Speaker 8: FDA is trying to streamline clinical trials. What does that
• 18:19
  Speaker 8: mean for you? Know how the US competes with China and.
• 18:21
  Speaker 9: I separately needed desperately needed.
• 18:23
  Speaker 10: It takes months, if not a year or so to
• 18:26
  Speaker 10: start a first in human clinical trial, all for the
• 18:29
  Speaker 10: right reasons, but a lot of it is red tape.
• 18:31
  Speaker 10: So what China has been able to do is to
• 18:34
  Speaker 10: really streamline that process. So it's so much cheaper to
• 18:37
  Speaker 10: go over there. Imagine if you gain nine months or
• 18:40
  Speaker 10: a year in your development plans and you can get
• 18:42
  Speaker 10: an answer very much quicker there as patients are enrolled
• 18:45
  Speaker 10: in your trials. So this is not about risking people.
• 18:48
  Speaker 10: This is about just getting rid of some bureaucracy and
• 18:50
  Speaker 10: allowing companies to catch up with the way that trials
• 18:54
  Speaker 10: are done in China. You take away one more competitive
• 18:58
  Speaker 10: advantage from China.
• 18:59
  Speaker 2: Are all parties here in the US on board with
• 19:02
  Speaker 2: this strategy and the pharmaceutical companies the effect that ensure.
• 19:07
  Speaker 10: That the farmer companies would love it insurance. I don't
• 19:10
  Speaker 10: think they at that stage of the development of a drug,
• 19:12
  Speaker 10: they don't care. They wait for the very end of it.
• 19:14
  Speaker 10: But certainly the FDA, this is the FDA talking about
• 19:17
  Speaker 10: it now, right.
• 19:17
  Speaker 5: So we do need this.
• 19:19
  Speaker 9: We need this to.
• 19:20
  Speaker 10: Take away one more competitive advantage from or disadvantage in
• 19:24
  Speaker 10: the US.
• 19:26
  Speaker 2: Thirty seconds, So how should we think about the West
• 19:28
  Speaker 2: versus China in terms of pharmaceuticals and biotexts and all
• 19:31
  Speaker 2: that stuff.
• 19:32
  Speaker 10: You need to constantly look over your shoulder. The research,
• 19:36
  Speaker 10: the science, the capability is on par and rapidly rising,
• 19:41
  Speaker 10: and there is a massive push by the government there
• 19:44
  Speaker 10: because they can also have the luxury of being able
• 19:48
  Speaker 10: to plan for five, ten, fifteen years.
• 19:50
  Speaker 5: Stay with us.
• 19:51
  Speaker 2: More from Bloomberg Intelligence coming up after this.
• 19:57
  Speaker 1: You're listening to the Bloomberg Intelligence part. Catch us Live
• 20:01
  Speaker 1: weekdays at ten am Eastern on Apple Coarclay and Android
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• 20:08
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 20:11
  Speaker 2: One thing that continues to move forward is AI investments
• 20:15
  Speaker 2: in AI, and that includes investments in data centers that
• 20:19
  Speaker 2: has just been a huge growth. Here we hear about
• 20:21
  Speaker 2: that from all different angles. Lloyd Arnold covers this. He's
• 20:24
  Speaker 2: a BNF data center reporter joining us here.
• 20:29
  Speaker 5: Lloyd, I know you're out.
• 20:30
  Speaker 2: With a piece of work here. AI data center build
• 20:34
  Speaker 2: advances at full speed. Five things to know? What are
• 20:37
  Speaker 2: the five things to know about this rapid buildout in
• 20:40
  Speaker 2: data centers across across the world.
• 20:42
  Speaker 6: Actually, first is we're seeing a huge amount construction. We're
• 20:48
  Speaker 6: seeing a huge amount of capacity being connected, and that's
• 20:52
  Speaker 6: continuing to accelerate. This is driving purchases of clean energy.
• 20:56
  Speaker 6: It's also driving purchases of natural gas and lemal generation.
• 21:01
  Speaker 6: This is help being driven by or more capacity or
• 21:05
  Speaker 6: more capital allocated by the big tech companies, by big
• 21:09
  Speaker 6: data center developers. And we're expecting this to continue as
• 21:13
  Speaker 6: confidence in newcomers to this space and the biggest AI
• 21:16
  Speaker 6: companies have positive margins, so a lot of this demand
• 21:21
  Speaker 6: is likely to be sustained, you.
• 21:23
  Speaker 2: Know, Arnold.
• 21:23
  Speaker 3: A front page of the Wall Street Journal today has
• 21:26
  Speaker 3: a write up about cities and states that are now
• 21:30
  Speaker 3: taking direct aim at data centers, including states like Maine, Georgia.
• 21:35
  Speaker 3: They're saying, wait a minute, we need to do more
• 21:38
  Speaker 3: studies on what the impact of these data centers are
• 21:40
  Speaker 3: going to mean for communities and for the environment. How
• 21:43
  Speaker 3: much is that going to be a hurdle for companies
• 21:46
  Speaker 3: wanting to expand in the way they want to expand
• 21:49
  Speaker 3: and at the level they want to expand.
• 21:52
  Speaker 6: Main in particular, probably not a huge hurdle based on
• 21:56
  Speaker 6: BNS data. There are no construction projects in and no
• 22:00
  Speaker 6: plan date. Centers in Maine or generally, shifting community attitudes
• 22:05
  Speaker 6: are a headwind. This is largely tied to power pricing,
• 22:09
  Speaker 6: which is part of what's driving some data center developers
• 22:12
  Speaker 6: toward natural gas. BINGOS tracking about one hundred gigawatts of
• 22:17
  Speaker 6: data center it capacity associated with on site generation that
• 22:21
  Speaker 6: removes reliance on utilities and hopes to shield consumers from
• 22:26
  Speaker 6: higher power prices.
• 22:28
  Speaker 2: Lloyd I hear a lot of folks asking when is
• 22:32
  Speaker 2: it going to be enough? Are we going to know
• 22:33
  Speaker 2: when we have enough data center capacity. Because of the
• 22:37
  Speaker 2: question I think some people starting to ask, is are
• 22:39
  Speaker 2: we overbuilding here? How do we track that?
• 22:45
  Speaker 6: That's a really real question. It is an unknown. The
• 22:49
  Speaker 6: things we're looking at are how are the AI companies performing,
• 22:54
  Speaker 6: Are they continuing to get higher uptake? Are they continue
• 22:57
  Speaker 6: to get more users? And how are the neoclas performing.
• 23:00
  Speaker 6: So these are companies such as core Weave, such as
• 23:03
  Speaker 6: Mebius who are very very exposed to AI workloads and
• 23:07
  Speaker 6: developing data centers to serve them. While those companies continue
• 23:10
  Speaker 6: to perform, well, that's a strong sign demand is hot.
• 23:15
  Speaker 3: And I must apologize, Lloyd, I called your Arnold earlier.
• 23:18
  Speaker 3: Did not mean to call you by your last name,
• 23:19
  Speaker 3: but that's what happens. Called sometimes when people have last names, that.
• 23:22
  Speaker 2: Can be a first names exactly.
• 23:23
  Speaker 3: I'm sure it's not the first time, Lloyd, but sorry
• 23:26
  Speaker 3: it had to be me. Talk to us about the
• 23:28
  Speaker 3: connection between building of data centers and the energy markets,
• 23:32
  Speaker 3: because they need a whole lot of energy to make
• 23:34
  Speaker 3: those data centers work.
• 23:37
  Speaker 6: Not troble flue and lexis. Actually it happens a lot
• 23:40
  Speaker 6: in terms of energy. Data centers are huge energy customers.
• 23:44
  Speaker 6: That's a big part of why people are interested in
• 23:47
  Speaker 6: they center build out. At present, this means data center developers,
• 23:52
  Speaker 6: big tech giants like Microsoft, Meta, Amazon, and Google. These
• 23:58
  Speaker 6: companies are hugely active in the clean power purchase agreement market.
• 24:03
  Speaker 6: They made up over half of that market globally last
• 24:06
  Speaker 6: year and over seventy percent in the US. So that's
• 24:10
  Speaker 6: one really big impact. And the mob of the other
• 24:12
  Speaker 6: story is this growing reliance on natural gas for data centers.
• 24:18
  Speaker 6: So now that seems to be a US story, but
• 24:21
  Speaker 6: lots not stats into campuses are planning to be powered
• 24:24
  Speaker 6: on site by gas engines and gas turbines.
• 24:27
  Speaker 2: Thirty seconds left, Lloyd. Is this primarily a US story
• 24:31
  Speaker 2: data center buildout or is it global?
• 24:35
  Speaker 6: This is primarily a US story for now. We are
• 24:38
  Speaker 6: seeing increased projects globally, but this US concentration is really
• 24:45
  Speaker 6: because the biggest players get these tech giants and the
• 24:48
  Speaker 6: big AI labs creating new demand, companies like OpenAI, Anthropic XAI,
• 24:53
  Speaker 6: they're all American companies. That's seeing a consolidation of a
• 24:58
  Speaker 6: market already skewed to the US further into the US.
• 25:03
  Speaker 6: Over two thirds of construction pipeline we see in the
• 25:06
  Speaker 6: Americas for now. Longer term, we're likely to see you
• 25:10
  Speaker 6: demand in a lot of emerging markets.
• 25:14
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• 25:22
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