Healthscope, Nokia Siemens Deal Lift Sentiment

Arthi Gupta
19 Jul, 2010
New York City

U.S. stocks trade higher after a significant sell-off on Friday. Moody''s downgrades the Ireland sovereign debt. The Carlyle Group and TPG Capital agree to acquire Healthscope for $2.7 billion. Nokia Siemens agreed to acquire wireless network infrastructure assets of Motorola for $1.2 billion.

[R]9:35 AM New York – U.S. stocks trade higher after a significant sell-off on Friday. Moody''s downgrades the Ireland sovereign debt. The Carlyle Group and TPG Capital agree to acquire Healthscope for $2.7 billion. Nokia Siemens agreed to acquire wireless network infrastructure assets of Motorola for $1.2 billion.[/R]

U.S. stocks advance, Asian markets traded lower outside China region amidst concerns of global economic recovery, and mixed trends were seen in the European markets after Moody''s downgraded the Ireland debt.

NABE reports U.S. business recovery gaining momentum. The IMF plans to raise lending resources to $1 trillion.

BP provided an update for the Gulf of Mexico oil spill incident. Obama cynical even as BP plugs oil leak in the Gulf of Mexico.

Moody''s Investor Services downgraded the credit rating of Ireland from Aa2 to Aa1, citing significant loss of financial strength as the primary reason. However, the outlook was upgraded from ''stable'' to ''negative.''

""Today''s downgrade is primarily driven by the Irish government''s gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability,"" said Dietmar Hornung, Moody''s lead analyst for Ireland. The general government debt-to-GDP ratio was at 64% at the end of 2009, up from 25% pre-crisis, and is continuing to rise.

U.S. business recovery is gaining momentum, with more jobs ahead, according to the NABE survey.

“NABE’s July 2010 Industry Survey confirms that the U.S. recovery continued through the second quarter, although at a slower pace than earlier in the year,” according to William Strauss, Senior Economist and Economic Advisor at the Federal Reserve Bank of Chicago.

The survey reported industry demand increased for a fourth consecutive quarter, although at a slower pace. Price and cost pressures were contained, allowing profits to edge higher. The labor market continued to improve, with increases in current hiring and a rise in the percentage of firms planning to add workers over the next six months. Capital spending remained stable over the past year. Credit and debt issues in Europe will likely negatively impact just over a third of the surveyed firms over the next three months.

The International Monetary Fund is planning to increase its lending resources to $1 trillion from $750 billion to improve its measures to prevent financial crises, the Financial Times reported today.

The IMF Managing Director Dominique Strauss-Kahn told the newspaper that boosting the lending to $1 trillion is a ""correct forecast"". ""Even when not in a time of crisis, a big fund, likely to intervene massively, is something that can help prevent crises,"" he said.

BP reported it continued to work cooperatively with the guidance and approval of the National Incident Commander and the leadership and direction of federal government including the Department of Energy, Department of the Interior, Federal Science Team, Bureau of Ocean Energy, Management, Regulation and Enforcement, U.S. Coast Guard and secretaries Ken Salazar and Steven Chu. At this time, the well integrity test on the MC252 exploratory well continues.

During the test, the three ram capping stack has been closed, shutting in the well. All sub-sea containment systems (namely, the Q4000 and Helix Producer systems) have been temporarily suspended.

To date, the total volume of oil collected or flared by the containment systems is approximately 826,800 barrels. Although uncertainty remains, the first half of August remains the current estimate of the most likely date by which the first relief well will be completed and kill operations performed.

President Barack Obama remains cautious in spite of efforts by BP to stem the flow of oil into the Gulf of Mexico.

""The new cap is good news. Either we will be able to stop the flow, or we will be able to use it to capture almost all of the oil until the relief well is done,"" Obama said. ""But we''re not going to know for certain which approach makes sense until additional data is in.""

""There''s still a lot of oil out there,"" he said. ""There''s still going to be an enormous cleanup job to do, and there''s still going to be the whole set of issues of surrounding making sure people are compensated properly, that the $20 billion fund is set up and is acting expeditiously.""

""The key here right now is for us to make decisions based on science, based on what''s best for the people of the Gulf -- not based on PR, not based on politics,"" he said. ""What we''re trying to do right now is to make sure that the technical folks on the ground are making the best possible decisions to shut this well down as quickly as possible.""

Healthscope agreed to be acquired by funds controlled by The Carlyle Group and TPG Capital.

Under the terms of agreement, Healthscope shareholders will receive $6.26 in cash per share, valuing Healthscope at approximately $2.7 billion. The price will be reduced by dividends that Healthscope pays to shareholders prior to completion. The board of directors Healthscope unanimously recommended the deal.

The price of $6.26 per share represents a premium of 39% to the closing price of $4.50 on May 13, 2010, the day prior to the announcement that Healthscope received an indicative proposal.

Healthscope is being advised by Goldman Sachs JBWere, Lazard and Minter Ellison.

Nokia Siemens Networks and Motorola, Inc. today jointly announced that the companies have entered into an agreement under which Nokia Siemens Networks will acquire the majority of Motorola''s wireless network infrastructure assets for $1.2 billion in cash. The companies expect to complete closing activities by the end of 2010, subject to customary closing conditions including regulatory approvals.

As part of the transaction, Nokia Siemens Networks expects to gain incumbent relationships with more than 50 operators and to strengthen its position with China Mobile, Clearwire, KDDI, Sprint, Verizon Wireless and Vodafone.