Bloomberg Intelligence Podcast

Episode Title: Merger Monday for Banks and Biotech
Date: October 27, 2025
Hosts: Scarlet Fu and Paul Sweeney

Overview

This episode of Bloomberg Intelligence dives into the latest waves of M&A activity in both the regional banking and pharmaceutical biotech sectors, with additional coverage of the potential impact of Hurricane Melissa on Caribbean insurance markets. Senior Bloomberg analysts break down what’s driving these deals and discuss the strategic, financial, and regulatory implications for investors and sector players.

Key Discussion Points and Insights

1. Banking M&A: Huntington’s Expansion into Texas

Guest: Herman Chen, Senior Analyst, U.S. Regional Banks
Segment Start: [01:36]

• Huntington's Deal Activity

  • Huntington Bancshares has just closed its acquisition of Veritex, marking an entry into Texas.
  • Now, it's doubling down by acquiring Cadence, which substantially increases its Texas footprint and provides exposure to other southeastern markets (e.g., Birmingham, Tupelo, Arkansas, Missouri).
  • “Texas is really the prize.” —Host [02:20]

• Super-Regional Status and Regulatory Impact

  • With these acquisitions, Huntington becomes a so-called “super regional,” operating in 21 states and crossing the $250 billion asset threshold.
  • This triggers heightened regulatory scrutiny, particularly around liquidity and reporting.
  • “It will clear the 250 billion asset mark, which is a step up in regulation... but overall shouldn't mean too much for Huntington.” —Herman Chen [02:38]
  • Anticipated deregulatory efforts from the Fed could work in Huntington’s favor.

• Broader M&A Wave

  • The environment, partially influenced by Trump administration policies, is conducive to more deals. Similar transactions include Fifth Third buying Comerica and PNC acquiring Denver First Bank.
  • “We are expecting some deregulatory efforts from the Fed... more transactions to come.” —Herman Chen [02:38]

• Strategic Upside

  • Huntington is shifting from its slow-growth Midwest base to higher-growth southern markets, aiming to boost its return on tangible equity by 200 basis points.
  • “The greater scale, the better growth demographics, really will fall to the bottom line.” —Herman Chen [03:40]

• Texas: Hotspot for Regionals

  • Surge of deals focused on Texas-based institutions: “That seems to be the area of choice for these regionals and we're seeing that activity really pick up.” —Herman Chen [04:32]

2. Pharma M&A: Novartis Acquires Avidity Biosciences

Guest: Sam Fazelli, Director of Research - Global Industries, Senior Pharma Analyst
Segment Start: [07:27]

• Novartis Bags Avidity for $12 Billion

  • Acquisition aimed at replenishing Novartis’ late-stage pipeline amid major patent expiries (specifically Cosentix, which will lose exclusivity around 2029–2030).
  • “They need assets and products to feed it.... this is exactly what Novartis is doing. $12 billion for Avidity Biosciences.” —Sam Fazelli [08:00]

• Strategic and Financial Rationale

  • Avidity offers three rare disease products at different development stages—high strategic value for future revenue streams, less scrutiny on pricing since they are rare disease drugs.
  • Move is seen as a smart fit, both technologically and in terms of timing for sustaining Novartis’ growth.
  • "[This deal] tick[s] so many boxes that it was worth doing, particularly as it fits also with their internal assets and their approach to some of the other diseases." —Sam Fazelli [09:46]

• Deal Size and Strategy Shift?

  • Historically, Novartis has focused on “tuck-in” deals (<$5B). This acquisition is more sizable—does it signal a shift?
  • “...in my world, a tuck in is 3 to 5 billion dollars... But they all give you this caveat. We will be opportunistic.” —Sam Fazelli [09:46]

• Patent Expiries: Structural Industry Challenge

  • Multiple drug companies are grappling with waves of patent runoffs (“patent cliff”), but the process is normal; it helps governments finance new therapies.
  • “It’s not quite a cliff, it’s a hill that age... The companies get rewarded for 10 to 12 years, then it becomes generic.” —Sam Fazelli [10:54]

• Financial Impact

  • The deal will be earnings dilutive for Novartis in the near-term (2026), due to accounting for intellectual property rights; positive earnings contribution expected around 2029–2030 as acquired drugs come online.
  • “There will be dilution next year, but... positive contribution maybe from 27, 28 onwards, definitely 29, 30 as these drugs hit the market.” —Sam Fazelli [11:53]

3. Insurance and Hurricane Melissa: Focus on Jamaica

Guest: Matthew Palazzola, Senior Analyst, PNC Insurance
Segment Start: [14:50]

• Hurricane Melissa Looms Over Jamaica

  • Hurricane Melissa—a Category 5 storm—threatens significant damage, potentially surpassing the last major storm of this magnitude (Hurricane Gilbert, 1988).
  • Data for Jamaica is limited; adjusted for inflation, previous major storm damages are in the “mid single digit billions”—Melissa could be worse.
  • “The way Melissa is shaping up could be a lot worse than that actually.” —Matthew Palazzola [15:22]

• Insurance Penetration and Risk

  • Low insurance penetration for Jamaican households means most damages will not be covered by insurance; the insured losses likely centered on key resorts or commercial properties.
  • “There’ll be a wide gap between the economic losses and insured losses... resorts and things like that will have insurance... but people’s homes... just don’t have insurance.” —Matthew Palazzola [16:29]

• Main Reinsurers at Risk

  • Most coverage heavily ceded (transferred) to big reinsurers, potentially including Lloyd’s of London, Bermuda-based companies, Swiss Re, and Munich Re.
  • “A lot of the business might not be written by the domestic companies... the Bermuda reinsurance companies... big European companies like Swiss Re, Munich Re...” —Matthew Palazzola [17:03]

• 2025 Hurricane and Insurance Market Trends

  • Overall, 2025’s hurricane season has so far been mild in the U.S.—resulting in lower catastrophe losses for insurers.
  • Despite low hurricane activity, insurance premiums remain inflated due to broader structural issues: cost inflation, building material prices, and regulatory environments in places like Florida and California.
  • “The issues behind home insurance haven’t necessarily been the large losses. It’s been inflation and building materials... poor regulation in certain markets...” —Matthew Palazzola [19:04]

• Property & Casualty Stock Trends and M&A Outlook

  • P&C stocks have underperformed despite favorable catastrophe trends; valuations remain high but fundamentals are softening.
  • M&A unlikely due to uncertainty over long-term liabilities: “Losses from the past have been higher than companies expected... biggest obstacle to M&A for PNC Insurance.” —Matthew Palazzola [20:43]

Notable Quotes & Memorable Moments

• “Texas is really the prize.” —Host [02:20]
• “We are expecting some deregulatory efforts from the Fed... more transactions to come.” —Herman Chen [02:38]
• “The greater scale, the better growth demographics, really will fall to the bottom line.” —Herman Chen [03:40]
• “$12 billion for Avidity Biosciences. And then what they're getting here is three products that are at different stages of development but very soon to hit the market. All rare diseases.” —Sam Fazelli [08:00]
• “It’s not quite a cliff, it’s a hill that age. But this is, this is how it should be.” —Sam Fazelli [10:54]
• “The way Melissa is shaping up could be a lot worse than that actually.” —Matthew Palazzola [15:22]
• “There’ll be a wide gap between the economic losses and insured losses.” —Matthew Palazzola [16:29]

Timestamps for Key Segments

• Regional Bank M&A (Huntington/Cadence): [01:36] – [05:08]
• Pharma/Biotech M&A (Novartis/Avidity): [07:27] – [12:30]
• Hurricane Melissa/Insurance Markets: [14:50] – [20:43]

Episode Tone

The hosts and analysts maintain a conversational yet data-driven tone, blending analytics with clear, accessible explanations of industry trends and why they matter to investors and executives.

Summary Takeaway

This episode is a deep dive into the forces reshaping key sectors via strategic M&A: banks are racing to scale up in growth markets amid regulatory and competitive pressures, while pharma giants like Novartis use bold acquisitions to defend pipeline gaps due to looming patent expiries. Meanwhile, insurers grapple with nature’s unpredictability and structural cost pressures, as Hurricane Melissa tests old risk models in the Caribbean. Packed with expert analysis, it’s essential listening for anyone following these dynamic industries.