Spain’s migrant crisis exposes serious challenges for young Moroccans

0:02Good morning from the Financial Times. Today is Tuesday, August 11th, and this is your FT News Briefing. Wall Street and NVIDIA are working on a whopper of a financing deal, and we hear why pharma megamerger talks collapsed. Plus, Spain's migrant crisis has exposed serious challenges for young Moroccans.

0:24Malaika Kanaaneh Tapper: Even those who had been through really harrowing experiences crossing the border into Ceuta, done, only to be sent back, said that they were more than willing to try again despite the danger. I'm Victoria Craig, and here's the news you need to start your day.

0:48The world's biggest financial groups are teaming up with NVIDIA on one of Wall Street's most ambitious lending efforts ever. The company announced late Monday it has signed a Memorandum of Understanding with finance industry titans including Apollo Global, BlackRock, and Goldman Sachs. They'll create a$500 billion funding package for developing AI infrastructure like chips and data centers. Right now, most of the leading American AI models rely on NVIDIA chips. The company often provides financial backing to help AI partners raise debt in capital markets. That in turn helps boost NVIDIA's revenue, but it's raised concerns about concentrated risk in the sector.

1:29As for the deal, it's still subject to final approvals. Shares of NVIDIA fell about 1 % on Monday after the FT first reported the agreement.

1:43From one deal now to another, a potential blockbuster merger between pharmaceutical giants AstraZeneca and Bristol-Myers Squibb has been put on ice. Last week, we told you the pair were in talks to combine in what would have been one of the industry's biggest ever deals. But investors were not so pleased with that idea. Oliver Barnes, one of our deals reporters who helped break that story for the FT, joins me now to talk about what happened. Hi, Oliver. Hey, thanks for having me. So your reporting found that the companies actually wanted to announce this deal in mid-August. So what happened? Why did the talks break down?

2:17Well, in a nutshell, it unraveled in part because the news got out there, right? with these cross-border, very stock-based transactions, which are very large. They've been out of favor in the pharmaceutical industry for quite a few years now. If you look at the pharma industry, in the late 90s and early 2000s, we saw this kind of wave of consolidation, which created many of the big drug makers we know today. It created AstraZeneca, it created Merck, it created Pfizer. Many of those deals didn't create a whole load of value for investors. So they've kind of gone out of vogue. So the investor reaction to the idea of AstraZeneca, even entertaining this, was very bad.

2:58We should say AstraZeneca and Bristol-Myers Squibb declined to comment for your most recent story out today. But aside from mega deals being out of vogue in the pharma world, you also report that investors were worried about patent cliffs, which is when patents for drugs expire and then they can go generic. And there were also some concerns that this deal was just a way for the British company AstraZeneca to re-domicile essentially in the U.S., right? Yeah, because, I mean, when you look at AstraZeneca, you have like a high-growth company that set a very ambitious target of reaching$80 billion in revenues by the start of next decade.

3:33When you look at Bristol-Myers Squibb, it's like the industry laggard, right? It's the sickest of all the children, right, which has the biggest patent cliff in the next few years. So a lot of investors looked at it. It's like, why would a high growth company buy a company with a load of drugs coming off patent? And the reason a lot of people have come to is like, is it part of AstraZeneca's pivot to the US, right? Most of their revenue is already in the US. The industry center, it's like orbital centers in the US. So it's not totally illogical to think that. But still, I imagine if this were ever to happen, they would need to square off with investors like other reasons for this, not just like empire building and moving your frontier towards the US.

4:11So is this something that could be revived at some point or was the investor worried just too much to overcome? So according to our reporting, following the FT story last weekend, so more than a week ago now, the AstraZeneca board, which is under the leadership of Pascal Sorio, who's their CEO, took the decision to terminate talks. So for the time being, I think we can say this isn't coming back. But there's a phrase in, you know, the deal world, which is a deal never dies, right? We've known for a long time that Pascal Saurio, the CEO of AstraZeneca, has wanted to do something big. And he's made overtures to other, you know, C-suites of US farmer rivals.

4:53So yes, investors haven't reacted phenomenally well to this. And yes, it's dead for the time being. But when you have a CEO set on an idea, I don't think we can discount the possibility that something transformative could happen in the future. So is combining with Bristol-Myers the only way to reach its aggressive revenue target, or could it shift focus to another potential target? If you believe Wall Street consensus, AstraZeneca can achieve that target of$80 billion in revenues by 2030 without any deals. Like there's enough organic growth, and there's been a frenzy of biotech deals, much smaller ones, one, two,$3 billion deals over the past couple of years.

5:36And AstraZeneca's largely sat on the sidelines. So there's a world in which we could see them get involved in trying to buy more promising biotechs. But I think the concern this raises for investors is they've long looked at AstraZeneca as a drug maker with a pretty replete pipeline, with lots of promising drugs in late stage development. And this raises some questions of, is AstraZeneca as confident in its pipeline as they suggest they are? Really interesting stuff. Oliver Barnes, our deals correspondent. Thanks so much for your time. Thank you.

6:13Summer travel season might be in full swing, but at some major European airports, globetrotters are not moving all that fast. Data obtained by the FT shows peak wait times two European hubs have doubled since last year. That's thanks to a chaotic rollout of a new electronic border system in the EU. It requires passengers from the UK and other non-EU countries to register with their fingerprints, photo, and personal information when they first arrive. The idea is to catch people overstaying visas and those wanted for crimes, but delays, technical glitches, and hardware problems have led to long lines, and some airports have temporarily turned off parts of the checks during peak times.

6:56This all comes as tourists are flocking to Spain for tomorrow's total solar eclipse. It's the first visible from continental Europe this century. If the airport queue weren't enough, hotel prices in some cities have more than doubled due to the surge in tourism.

7:18In an interview with the FT today, Sweden's prime minister said Spain's amnesty for more than one million irregular immigrants is a quote, very bad idea. He warned it could push Europe into another migration crisis and call into question the bloc's free movement zone. He's the latest EU leader to sharply criticize Spain after tens of thousands of people flooded Ceuta about a week ago. Most of them returned home to Morocco within hours. But the crisis is exposing economic difficulties in the North African nation. The FT's Malaika Tapper has been reporting on the ground in Morocco's capital, Rabat.

7:54She joins me now. Hi, Malaika. Hi. So many of the people who swam to Ceuta a week ago said that they would try to do so again. Just walk us through the economic situation in Morocco that's making it so unbearable for these young people?

8:11Malaika Kanaaneh Tapper: I think that the main economic indicator is the really high unemployment rate. So overall, unemployment is at about 13%, but among young people, it's more like 37%. So that's an incredibly high number of people who can't find steady work. But also even those who do have jobs, Many of them want to emigrate because the jobs that they're in just aren't giving them the lifestyle that they want to live. And you spoke to several young people. What are some of the stories that they shared with you? Yeah, so I spoke to one woman who works in a building that kind of exemplifies how Morocco has built up some really impressive infrastructure and kind of glamorous office space.

9:00Malaika Kanaaneh Tapper: but when she goes home from her job, she lives in a dark room that she shares with another woman. They sleep on the floor on blankets and she barely has enough money to scrape by. So it kind of shows how people aren't benefiting economically the way that you would expect. Really difficult situations for some of those people. You mentioned some of these gleaming office buildings that are popping up in Morocco, but it seems like there's really this sort of two-sided economy. Walk me through what that's like. Yeah. On the one hand, the Moroccan economy has seen relatively steady growth over the past decades and poverty rates have gone down.

9:42Malaika Kanaaneh Tapper: But at the same time, the Moroccan public sector investment has focused heavily on roads, high-speed trains, and sports infrastructure, including stadiums for the 2030 World Cup, which it's going to co-host. And those investments have been criticized by some because while they are incredibly impressive buildings and structures that will attract tourists and foreign visitors, they don't actually translate into better living conditions for the majority of people. So what does the Moroccan government need to do to sort of bridge this gap? The Moroccan government has acknowledged these social disparities and has promised that it's going to do more to create jobs and improve social services.

10:30Malaika Kanaaneh Tapper: So the World Bank said that about two-thirds of investment in Morocco was estimated to come from the public sector. One economist I spoke to in Rabat said that the private sector had been discouraged from making long-term investments, the kind that would create really good jobs for people, because of how centralized the government's control over the economy was and how little competition there was. So one of the things that economists have said that the government can do is make investments that will translate more directly into long-lasting jobs with higher pay for people. Now, we haven't seen meaningful improvement on the ground in terms of employment opportunities yet, but that's not to say that things couldn't change in the future.

11:18The FT is Malaika Tapper from Rabat for us. Thanks so much for your time. Thank you so much.

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