Prudential Terminates AIG Deal

Arthi Gupta, Mayank Mehta and Sanjay Barot
02 Jun, 2010
New York City

U.S. stocks trade higher following sharp sell-off in late trading session yesterday. Prudential terminates deal to acquire Asian insurance unit of AIG.

[R]9:10 AM New York U.S. stocks trade higher following sharp sell-off in late trading session yesterday. Prudential terminates deal to acquire Asian insurance unit of AIG.[/R]

World markets witnessed mixed trading with modest losses amid concerns about global economic recovery. Investors are still jittery as concerns about Europe continue to haunt market sentiment despite steady flow of positive economic data. The announcement for criminal and civil investigations into the Gulf oil spill has rattled investor confidence.

Amgen gets FDA approval to market osteoporosis drug Prolia. Alimentation Couche-Tard begins tender offer to acquire Casey''s General Stores for $36.00 per share in cash.

Prudential plc said it is in negotiations with American International Group, Inc. for the termination of the agreement to acquire AIG''s wholly-owned Asian insurance unit, American International Assurance Co. Ltd. On March 1, AIG announced the deal to sell Hong Kong-based AIA to Prudential for about $35.5 billion in cash and stock. The transaction was approved by the boards of both companies and was expected to close by the end of this year.

Alimentation Couche-Tard Inc. announced that it commenced a tender offer, through an indirect wholly owned subsidiary, to acquire all of the outstanding shares of common stock of Casey''s General Stores Inc. for $36.00 per share in cash. The transaction has a total enterprise value of approximately $1.9 billion on a fully diluted basis, including net debt of Casey''s of approximately $29 million.

Couche-Tard''s all-cash offer represents a 14% premium over the closing price of $31.59 per share of Casey''s on April 8, 2010, the last trading day prior to the public disclosure of Couche-Tard''s proposal.

The tender offer is scheduled to expire on Friday, July 9, 2010, unless extended.

U.S. Attorney General Eric Holder announced yesterday that U.S. federal authorities have already launched criminal and civil investigations into the oil spill in the Gulf of Mexico, stressing that anyone found to have violated relevant laws would face the harshest punishment.

BP Plc had expressed hopes of succeeding in its ongoing efforts to contain the oil leak from the damaged oil well in the Gulf of Mexico within the next 24 hours.

"If everything goes well, within the next 24 hours, we could have this contained," BP''s chief operating officer Doug Suttles said while addressing reporters in Louisiana yesterday."

BP is currently attempting to carry out a high-risk operation to cap the oil leak in the Gulf of Mexico following the failure of its "top-kill" operation to deal with the worst environmental disaster in American history.

In the latest operation, BP aims to lower a marine riser package containment system (LMRP) to siphon off oil and gas leaking from the damaged oil well in the sea floor to a container ship berthed on the sea surface.

However, chief operating officer Doug Suttles warned that the operations does not guarantee success as it was being carried out under some "5,000 feet of water, and very small issues take a long time to fix."

BP''s ongoing efforts are aimed at capping the ruptured deep-sea well, at least temporarily, before the hurricane season starts. Weather agencies have warned that winds forecast for later this week could drag the oil spill towards the Mississippi and Alabama coasts, which have until now suffered less environmental damages than Louisiana''s shore.

Earlier in the day, U.S. President Barack Obama described the oil spill as "the greatest environmental disaster of its kind in our history" and threatened legal action against those responsible for the leak.

The U.S. Food and Drug Administration said that it has approved Amgen Inc.''s Prolia, an injectable treatment for postmenopausal women with osteoporosis who are at high risk for fractures. Prolia is manufactured by Amgen Manufacturing Limited, a subsidiary of Thousand Oaks, California-based Amgen Inc.

The FDA was scheduled to complete the review by July 25 of Amgen''s application to market denosumab. The FDA decision comes nearly two months ahead of the scheduled date.

On 28th May, European Commission has granted marketing authorization for Prolia for the treatment of osteoporosis in postmenopausal women and for the treatment of bone loss associated with hormone ablation in men with prostate cancer at increased risk of fractures.

Prolia has been approved in all 27 European Union member states plus Norway, Iceland and Liechtenstein.

Amgen and GlaxoSmithKline have announced, last year, a collaboration agreement to jointly commercialize Prolia for postmenopausal osteoporosis in Europe, Australia, New Zealand and Mexico once the product is approved in these countries.

As per the deal, Amgen will commercialize Prolia''s postmenopausal osteoporosis and oncology indications in the U.S. and Canada and for all oncology indications in Europe and in other specified markets.

AMGN closed yesterday''s regular trading at $50.76 down $1.02 or 1.97% on a volume of 7.227 million shares on the Nasdaq, and in the after hour trading the stock price increased to $52.50 up $1.74 or 3.43%.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.2234 and increased against the Japanese yen to 91.96.

Crude oil decreased $0.48 to $72.10 a barrel for a front month contract, natural gas edged higher $0.01 cent to $4.26 per mBtu and gasoline decreased 0.950 cents to 197.30 cents.

Gold decreased $3.70 in New York trading to close at $1,223.20 per ounce, silver closed lower $0.146 to $18.40 per ounce and copper for the front month delivery decreased 6.300 cents to $3.00 per pound.

Yields on 10-year U.S. bonds increased to 3.28% and on 30-year U.S. bonds traded at 4.18%.

Stock Movers

Advanced Micro Devices, Inc., the computer-processor maker rose 0.61%.

Baxter International Inc., the maker of treatments for immune system disorders fell 1.6%.

Canadian Solar Inc., the maker of solar power cells and modules plunged 17.7%.

Lions Gate Entertainment Corp. fell 1.9%. The independent film studio said it narrowed its fiscal-year loss to 17 cents a share from $1.53.

Earnings Review

Collective Brands, Inc. ((PSS)), the footwear retailer said first quarter sales rose 2% to $878.8 million from $862.9 million a year ago. Net income in the quarter rose 42.6% to $54.2 million or 83 cents per diluted share compared to net income of $38.0 million or 59 cents per share a year ago.

Lions Gate Entertainment Corp. ((LGF)), the entertainment company said full year sales rose 7.5% to $1.58 billion from $1.47 billion a year ago boosted by a significant revenue growth in the television business, which offset a decline in revenue from motion picture business. Net loss in the full year was $19.5 million or 17 cents per diluted share compared to net loss of $178.5 million or $1.53 per share a year ago.

Separately, the company said that its shareholders again rejected the offer by Carl Icahn and certain of his affiliated entities to acquire all of Lionsgate common shares for $7.00 per share in cash, stating the offer is inadequate. Less than 4% of shareholders tendered into the offer.

EnerSys ((ENS)), the industrial battery maker said fourth quarter sales rose 14.6% to $450.5 million from $393.2 million a year ago. Net income in the quarter rose 612% to $17.8 million or 36 cents per diluted share compared to net income of $2.5 million or 5 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 108.59 or 1.12% to 9,603.24, Hang Seng index in Hong Kong decreased 25.15 or 0.13% to 19,471.80 and CSI 300 index in China higher 13.36 or 0.49% to 2,757.53. ASX 200 index in Australia decreased 32.10 or 0.73% to 4,381.00. The FTSE Bursa KL Composite index in Malaysia closed lower 6.95 or 0.54% to 1,276.02.

SET index in Thailand closed higher 8.76 or 1.18 % to 749.68 and JSE Index in Indonesia increased 9.06 or 0.33% to 2,733.68. The Sensex index in India increased 169.81 or 1.02 % to 16,741.84. The markets in South Korea were closed today.

Europe Markets Review

In London FTSE 100 Index closed lower 55.92 or 1.08% to 5,107.38, in Paris CAC 40 Index decreased 47.11 or 1.34% to 3,455.97 and in Frankfurt DAX index traded lower 61.61 or 1.03% to 5,919.66. In Zurich trading SMI decreased 9.50 or 0.15% to 6,307.10.