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Amazon’s Push Into Business E-Commerce An $18 Billion Opportunity?

Amazon ( AMZN ) is pushing deeper into business-to-business e-commerce, which one analyst estimates could add $18 billion in company revenue by 2020. The B2B unit, Amazon Business , began as Amazon Supply in 2012. The initiative was rebranded in April 2015 and Amazon — which posted 2015 revenue of $107 billion — recently indicated it reached more than $1 billion in annual sales, with 300,000 customers. Bank of America Merrill Lynch analyst Justin Post estimates Amazon Business will reach gross merchandise volume of $3.5 billion this year, resulting in revenue of $3 billion. He anticipates GMV of $8 billion next year and revenue of $6.4 billion. By 2020, estimates Post, Amazon will hit GMV of $25 billion and $18.6 billion in revenue. “Based on recent management comments, Amazon Business appears to be ready for prime time, and we wouldn’t be surprised if Amazon invests in marketing to raise awareness as Amazon’s procurement systems improve,” said Post in a research note. According to market research firm Frost & Sullivan, the U.S. B2B market is expected to reach $1 trillion in sales by 2020, and $6.7 trillion globally. “We think B2B provides significant runway for growth, which could help Amazon sustain its growth rates and premium valuation for many years,” wrote Post. He has a buy rating on Amazon stock, and a price target of 840. Amazon stock was near 705, up more than 1%, in afternoon trading in the stock market today , after touching a record high above 722 on May 12. It’s an IBD Leaderboard stock. Amazon Business sells a broad line of goods, such as office supplies, tools, industrial equipment, tractor equipment and office products. Competitors in the B2B e-commerce sector include Staples ( SPLS ), HD Supply Holdings ( HDS ), Office Depot ( ODP ), Grainger ( GWW ) and Fastenal ( FAST ).

Allergan, Pfizer Rise After Scrapping Merger Over Inversion Rules

Pfizer ( PFE ) and Allergan ( AGN ) confirmed Wednesday that they are ending their $160 billion merger agreement after the U.S. Treasury unveiled new rules to curb tax inversion deals Monday. Ireland-based Allergan rose 3.6% after initially selling off in pre-market trading on the stock market today . CEO Brenton Saunders told CNBC that Allergan has a bright future as a standalone firm. Allergan plunged 14.8% Tuesday to 236.55, hitting the lowest levels since late 2014, amid concerns that the new rules imperiled the deal. Pfizer rose 3.8% after gaining 2.1% to 31.36 on Tuesday. “Pfizer Inc. today announced that the merger agreement between Pfizer and Allergan plc has been terminated by mutual agreement of the companies,” the drug giant said in a statement . “The decision was driven by the actions announced by the U.S. Department of Treasury on April 4, 2016, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement.” U.S. companies have a strong incentive to redomicile overseas to reduce their exposure to America’s unusually high corporate tax rates and global reach. Pfizer’s board reported voted to scrap the deal given that there would no longer be tax benefits. Saunders said the new rules blindsided Allergan, and felt that they unfairly targeted his compnay, though it was not named specifically. The Treasury set restrictions on”serial inverters” — and Allergan has a history of inversion deals. Allergan is run from New Jersey, but has its official headquarters in Dublin. Pfizer will pay $150 million in merger-related expenses. Pfizer CEO Ian Reed said in a statement the drug giant may go ahead with a corporate split: “We plan to make a decision about whether to pursue a potential separation of our innovative and established businesses by no later than the end of 2016” The Obama administration has become more aggressive going after big mergers. The Justice Department is suing to block the merger of  Halliburton ( HAL )– Baker Hughes ( BHI ), which said they’ll fight the DOJ’s action.  But Baker Hughes shares rebounded 8.9% Wednesday after sliding 5.1% on Tuesday on reports that the DOJ would take action. Halliburton popped 7% intraday  after climbing 0.2% Tuesday. Meanwhile, the FTC is in the midst of a court battle seeking to block Staples ( SPLS ) from buying office supplies rival Office Depot ( ODP ).