BUY SHIRE

A lot of technical selling yesterday related to the tender arbitrage; by tendering your Baxter stock you get BXLT aprrox. 7% cheaper (VWAP period from yesterday to Monday). That put pressure on the spread.

However, they are only issuing 13.7m shares, and as a result allocations are likely to be light and flowback minimal. And in addition, the stock was weak on Wednesday suggesting many will be positioned for this and have to close out bears.

From a fundamental perspective we like SHP. It trades on 12x next years earnings with a solid pipeline. The deal closing at the end of the month should be a positive catalyst. And it is a massive USD play, and given recent data points on both sides of the Atlantic, cable should continue to weaken from here.

TRADING BUY.