Fidelity National Deal; Gold Up, Calm Europe

Arthi Gupta, Mayank Mehta and Sanjay Barot
12 May, 2010
New York City

U.S. stocks traded higher after March trade deficit widens and private equity groups partner to acquire Fidelity National Information. Markets in Europe were calm after Spain pledged to cut expenses and the bonds of Spain and Greece gained.

[R]10:20 AM New York – U.S. stocks traded higher after March trade deficit widens and private equity groups partner to acquire Fidelity National Information. Markets in Europe were calm after Spain pledged to cut expenses and the bonds of Spain and Greece gained.[/R]

U.S. stocks advanced after market jitters cooled in Europe and bonds of Spain and Greece traded higher. Talks of $15 billion private equity buyout from a consortium of funds for Fidelity National Information also lifted sentiment. UK Prime Minister Cameron pledged to lower deficit.

Spain''s Prime Minister Jose Luis Rodriguez Zapatero said Madrid would slash civil service pay by 5% this year, freeze it in 2011 and cut 13,000 public sector jobs this year in a drive to meet European Union deficit target.

The euro edged up against the dollar while gold futures surged $22 an ounce to record $1,242.30.

[U.S. March Trade Deficit Widens

U.S. Commerce Department said today March trade deficit increased from February.

Trade deficit in March increased to $40.4 billion from $39.4 billion in February as exports rose to $143.3 billion and imports edged to $182.7 billion. The goods deficit increased to $52.9 billion and service surplus increased to $40.4 billion.

Fidelity National Buyout Bid By Blackstone-led Group

Banking and payments technology solutions provider Fidelity National Information Services, Inc. is currently said to be negotiating a leveraged buyout deal with a private equity group led by Blackstone Group LP, also including Thomas H. Lee Partners LP and TPG Capital, which values the company at $15 billion including debt, according to reports Tuesday.

A deal is reportedly expected to be reached very early next week, and private-equity firm Warburg Pincus is the largest shareholder of Fidelity with about 11% stake, while Thomas H. Lee Partners currently holds a 4% stake.

This is the second attempt by Thomas H. Lee Partners and TPG to buy Fidelity National, after the two firms tried unsuccessfully to buy the company five years ago. The three firms would be equal investors in the buyout offer.

The proposed leveraged buyout is reportedly is expected to be financed by three banks including Citigroup, Inc., JPMorgan Chase & Co., and Bank of America Corp.

Niska Gas Storage Partners Prices IPO

Niska Gas Storage Partners LLC announced the pricing of its initial public offering of 17.50 million common units at $20.50 per unit, within its previously expected range of $19.00 to $21.00 per unit.

The units will begin trading on the New York Stock Exchange on May 12 under the ticker symbol NKA. The underwriters have the option to purchase additional 2.63 million common units, at the same price, to cover over-allotments, if any.

The offering is expected to close on May 17.

Niska said that it intends to use the net proceeds from the offering to repay borrowings under its revolving credit facility and the remainder for general company purposes, including funding a portion of the cost of its expansion projects.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.2679 and increased against the Japanese yen to 93.16.

Crude oil increased $0.04 to $76.41 a barrel for a front month contract, natural gas edged higher $0.02 cent to $4.15 per mBtu and gasoline increased 0.480 cents to 220.00 cents.

Gold increased $21.00 in New York trading to close at $1,241.30 per ounce, silver closed higher $0.266 to $19.56 per ounce and copper for the front month delivery increased 2.300 cents to $3.22 per pound.

Yields on 10-year U.S. bonds increased to 3.55% and on 30-year U.S. bonds traded at 4.44%.

Stock Movers

Achillion Pharmaceuticals, Inc., the biopharmaceutical company surged 19.0%.

Ambac Financial Group, Inc., the bond insurer dropped 8.9%.

SunPower Corporation, the supplier of solar modules fell 4.3%.

Earnings Review

Electronic Arts Inc. ((ERTS)), the video game publisher said fourth quarter sales rose 14% to $979.0 million from $860.0 million a year ago. Net income in the quarter was $30.0 million or 9 cents per diluted share compared to net loss of $42.0 million or 13 cents per share a year ago.

Macy’s, Inc. ((M)), the department store operator reported first quarter sales rose 7% to $5.57 billion from $5.20 billion a year ago. Net income in the quarter was $23 million or 5 cents per diluted share compared to net loss of $88 million or 21 cents per share a year ago.

Toyota Motor Corporation ((TM)), the automaker said fiscal year 2010 revenues fell 7.7% to ¥18.95 trillion from ¥20.53 trillion a year ago. Net income in the year was ¥209.4 billion or ¥66.79 per diluted share compared to net loss of ¥437 billion or ¥139.13 per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 17.07 or 0.16% to 10,394.03, Hang Seng index in Hong Kong increased 65.98 or 0.33% to 20,212.49 and CSI 300 index in China higher 17.34 or 0.62% to 2,818.16. ASX 200 index in Australia increased 25.00 or 0.55% to 4,573.00. The FTSE Bursa KL Composite index in Malaysia closed higher 3.38 or 0.25% to 1,344.10.

The Kospi Index in South Korea decreased 7.21 or 0.43% to close at 1,663.03. SET index in Thailand closed higher 1.63 or 0.21% to 773.72 and JSE Index in Indonesia increased 34.73 or 1.23% to 2,847.62. The Sensex index in India increased 54.28 or 0.32% to 17,195.81.

Europe Markets Review

In London FTSE 100 Index traded higher 0.84 or 0.02% to 5,335.05, in Paris CAC 40 Index increased 13.10 or 0.35% to 3,706.30 and in Frankfurt DAX index traded higher 83.90 or 1.39% to 6,121.61. In Zurich trading SMI increased 28.83 or 0.44% to 6,537.83.