Nikkei Slips; Astella Revises OSI Offer

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
17 May, 2010
New York City

Astellas Pharma makes a revised offer to buy OSI Pharmaceuticals. Japan

[R]5:00 AM New York, 7:00 PM Tokyo – Astellas Pharma makes a revised offer to buy OSI Pharmaceuticals. Japan’s machinery orders rise 3.6% in March. Corporate Goods Price Index rises 0.4% in April. Tokyo condo offerings jump 22.6% in April.[/R]

Japanese stocks slipped, sending the Nikkei 225 stock average to a 10-week low as commodity prices declined, yen gained, euro weakened and Asian stocks fell extending losses in global equities.

President of the European Central Bank Jean Claude Trichet warned Saturday that the markets were still fragile despite the ª750 billion bailout plan.

The yen also strengthened to 91.77 against the U.S. dollar from 92.78 yesterday, stoking fears of lower corporate earnings.

Market losses were trimmed after machinery orders rose in March, according to a government report.

Bonds fell for the first time in a month on concern the country’s rising debt will harm demand at the next two auctions for these securities.

Japan is scheduled to sell 2.4 trillion yen in 5-year notes on May18 and 1.1 trillion yen in 20-year bonds on May 20. Debt was up 4.3% from a year earlier to a record 882.9 trillion yen as of March 31.

Japan’s sovereign debt may rise to 250% of GDP by 2015 from 227.1% this year according to forecast by IMF released May 16. The report also said that doubling the consumption tax to 10% would increase the government revenue by 2.6%.

Astellas Pharma Inc agreed to buy OSI Pharmaceuticals Inc for $4 billion in cash increasing its offer from $52 a share on February 26 to $57.50 a share in order to get its first marketed cancer drug in the US along with a sales team.

Both companies’ boards have accepted the offer which requires a majority of stock to be tendered. This offer is 55% more than the ruling share price of OSI on February 26 when the original offer was made.

Orders, an indicator of business investment in the ensuing three to six month period, grew 5.4% in March from February, the Cabinet said in Tokyo today. This signals that companies are willing to spend again as they fell more confident about the country’s economic recovery.

The Japanese ports are losing market share and traffic to Chinese, South Korean and Singaporean terminals as they have lower costs. That’s hurting Japanese business and we have to fix it, said Takashi Nagayasu, parliamentary secretary for Land, Infrastructure and Transport on May 13.

Nagayasu is a member of a selection committee to select two groups of Japanese ports to be developed and brought on par with these Asian ports to attract more private money.

In Tokyo trading Nikkei 225 Stock Average dropped 2.2% or 226.75 to 10,235.76, and the broader Topix Index dropped 2.7% to 920.43.

In the first section of the Tokyo Stock Exchange 12.4 billion shares worth 765 billion yen were traded and in the second section 295 million shares worth 2.8 billion yen changed hands.

Of the Nikkei 225 index stocks, 21 gained, 201 fell, and 3 were unchanged. Nippon Telegraph led gainers in the index shares with a rise of 3.5% followed by Oji Paper gaining 2.5%.

Machinery Orders Rise 3.6% in March

Japan’s Cabinet Office reported today that the country’s total value of machinery orders received by 280 manufacturers operating in Japan increased by 3.6% or 2 trillion yen in March from the previous month on a seasonally adjusted basis.

Total orders gained 9% to 5.8 trillion yen in the January-March period from a quarter earlier but are forecasted to fall 4.7% to 5.5 trillion yen in the June quarter.

Private-sector machinery orders, excluding volatile ones for ships and those from electric power companies, rose 5.4% or 732 billion yen from the previous quarter and advanced 2.9% to 2.2 trillion yen in the three months to March.

Private sector orders are also estimated to increase 1.6% to 2.2 trillion yen in the three months to June.

The report also notes that manufacturing orders gained 3.1% to 316 billion yen in March from a month ago and jumped 13.6% to 917 billion yen in the March quarter. Manufacturing orders are projected to decline 16% to 770.9 billion yen in the April to June period.

Non-manufacturing orders jumped 12.6% to 443 billion yen in the month, but decreased 3.4% to 1.2 trillion yen in the three months to March. However, orders are forecasted to advance 14.4% to 1.4 trillion in the three months to June.

Corp. Goods Price Index Grows 0.4%

Japan’s Cabinet Office reported today that the country’s Corporate Goods Price Index gained 0.4% to 103 in April from a month earlier.

The Export Price Index rose 3% in the period on a yen basis, while import prices edged up 5.2% on the month and 10.1% on the year.


Tokyo Condo Offerings Rise 22.6%

Nikkei News reported today that the Real Estate Economic Institute Co. said the number of new condominiums on the market in the Tokyo metropolitan area increased 22.6% to 3,214 units in Aprils, rising for the third consecutive month.

Purchase contracts signed gained 79.9% to 2,568.

The company estimates about 3,900 units will go on the market in May.

Nikkei 225 Stock Average Movers

Nippon Telegraph led gainers in the Nikkei 225 index stocks with a rise of 3.5% followed by Oji Paper 2.5%, Kansai Electric Power 2.1%, Tokyo Electric Power 1.6%, Shizuoka Bank 1.4%.

Nippon Soda Co. led decliners in the Nikkei 225 index stocks with a fall of 10.2% followed by Credit Saison Co. 8.7%, Nippon Sheet Glass 8.6%, Yokogawa Electric 8%, and Taiheiyo Cement 7.4%.

Other Movers

Exporters fell as the yen rose against both the euro and the U.S. dollar. Sony Corp fell 4.5% to 2,817 yen and Toshiba Corp. dropped 2.6% to 492 yen.

Credit Saison Co. plunged 8.7% to 1,195 yen after forecasting its net income will decrease to 9 billion yen from 18.7 billion yen this fiscal year.

Energy stocks fell as crude oil prices dropped 2% to $70.2 per barrel. Mitsubishi Corp. declined 3.4% to 2,063 yen, Mitsui & Co. tumbled 3.6% to 1,318 yen and Inpex Corp. plunged 4.3% to 602,000 yen.

Nippon Sheet Glass declined 8.6% to 254 yen as its full-year net loss widened to 41.3 billion yen from 28.4 billion yen a year earlier after sales dropped 20%. The company estimates a loss of 4 billion yen in the full year to March 2011.

TDK Corp. fell 3.9% to 5,870 yen.