U.S. Stocks Lower; Agrium to Buy AWB

Arthi Gupta
20 Aug, 2010
New York City

The U.S. stocks traded lower and markets in Asia closed sharply down. Agrium agreed to acquire AWB Ltd for $1.1 billion. McDonald''s offered yuan denominated bonds in Hong Kong. Colfax agreed to buy Baric Group. Nokia agreed to acquire privately held Motally.

[R]9:35 AM New York – The U.S. stocks traded lower and markets in Asia closed sharply down. Agrium agreed to acquire AWB Ltd for $1.1 billion. McDonald''s offered yuan denominated bonds in Hong Kong. Colfax agreed to buy Baric Group. Nokia agreed to acquire privately held Motally.[/R]

Asian and European markets declined. First Niagara Financial and NewAlliance Bancshares announced merger agreement.

St. Louis Federal Reserve President James Bullard speaking in Arkansas said that core inflation remains at low but manageable levels. Bullard noted that current conditions do not justify quantitative easing, and that the Fed should move in a disciplined, pragmatic way if required to further support the economy.

Nokia Corp. said it would acquire Motally Inc., a privately-held US-based company. The transaction is expected to close during the third quarter of 2010.

Motally''s mobile analytics service offers in-application tracking and reporting, and is designed to enable developers to optimize the development of their mobile applications. The service offering is planned to be adapted for Qt, Symbian, Meego and Java developers, and Nokia plans to continue serving Motally''s existing customer base.

Agrium Inc., the Canadian fertilizer and agricultural products distributor announced that it entered into a definitive deal to buy AWB Ltd. at A$1.50 per share or $1.1 billion in cash.

First Niagara Financial Group Inc. and NewAlliance Bancshares, Inc. reached a merger agreement, valued on a fixed exchange ratio of 1.10 shares of First Niagara stock for each NewAlliance share. As per Wednesday''s close, this represents $14.09 per NewAlliance share, or an approximate total transaction value of $1.5 billion, including transaction expenses.

The merger of NewAlliance into First Niagara would be a cash-and-stock transaction creating a top-25 U.S. bank by assets. The combined bank would have more than $29 billion in assets, including more than $14 billion in loans, as well as $18 billion in deposits. NewAlliance has $8.7 billion in assets, including $4.9 billion in loans, as well as $5.1 billion in deposits.

The deal, which is expected to close early in the second quarter of 2011, is expected to be accretive to First Niagara''s earnings per share excluding transaction expenses in 2011 and accretive by approximately 4% to 5% in 2012, the first full year of ownership.

McDonald’s Corp. said it will issue $29.4 million of yuan-denominated bonds in Hong Kong, becoming the first non-financial foreign company to make such an offering.

The company sold 200 million yuan of 3% notes to institutional investors in Hong Kong. The notes have a maturity date of September 2013. The company will use the proceeds to help fund its expansion in China, including the opening of new restaurants.

Colfax Corp. acquired the Morpeth, UK-based Baric Group, a supplier of highly engineered fluid-handling systems primarily for lubrication applications in the oil & gas, petrochemical and power generation markets.

Colfax expects the transaction to be accretive over the next 12 months. Annual pro forma sales for 2010 are projected to be about 14 million pounds Sterling and current backlog, which has been increasing, is about 28 million pounds Sterling.

Blue Coat Systems, Inc. entered into a memorandum of understanding to settle two purported derivative lawsuits alleging claims on behalf of the company against certain individual defendants and its independent audit firm relating to the alleged backdating of stock options at the company between 1999 and 2006 and alleged insider trading in 2004.

The memorandum of understanding provides for payment to the company of a total sum of $4,164,208 by certain individual named defendants, who were former officers or directors of the company, and the insurers for all of the named defendants.

It further provides that the company will implement certain governance practices and will issue shares of its common stock valued at $1.775 million to plaintiffs’ counsel to compensate for attorneys’ fees and expenses incurred in connection with the lawsuits.

Earnings Review

Aeropostale, Inc. ((ARO)), the teen apparel discount retailer said second-quarter net sales increased 9.2% to $494.7 million from $453.0 million in the year ago period. Net income in the quarter edged higher 13% to $43.6 million or 46 cents per diluted share, from net income of $38.6 million or 38 cents per share in the second quarter last year.

Ann Taylor Stores Corp. ((ANN)), the specialty retailer of women’s apparel net sales grew 2.8% to $483.5 million from $470.2 million in the prior-year quarter. Net income in the quarter was $18.6 million or 31 cents per diluted share, compared with a net loss of $18.0 million or 32 cents per share in the second quarter of 2009.

Blue Coat Systems, Inc. ((BCSI)), the provider of application delivery networking reported first-quarter net revenue rose 6% to $122.48 million from $115.98 in the first quarter of fiscal 2010. Net income in the quarter grew 248.9% to $13.92 million or 29 cents per diluted share, compared with a net income of $3.99 million or 9 cents per share a year ago.

Dell Inc. ((DELL)), the PC maker stated second quarter net revenue climbed 22% to $15.53 billion from $12.76 billion in the same quarter last year. Net income in the quarter increased 16% to $545 million or 28 cents per diluted share compared to net income of $472 million or 24 cents per share in the prior-year quarter.

Foot Locker, Inc. ((FL)), the athletic footwear and apparel retailer reported second quarter sales decreased 0.3% to $1.096 billion from $1.099 billion last year on comparable-store sales rise of 2.5%. Net income in the quarter was $6 million or 4 cents per diluted share, compared to break-even performance last year.

Hewlett-Packard Company ((HPQ)), the technology company said third quarter net revenue gained 11.4% to $30.73 billion from $27.59 billion in the same quarter last year. Net income in the third quarter rose 6% to $1.8 billion or 75 cents per diluted share, compared to net income $1.7 billion or 69 cents per share for the year-ago quarter.

Intuit Inc. ((INTU)), the business and financial management solutions provider stated fourth quarter net revenue increased 18% to $537 million from $457 million a year ago. Net loss in the quarter narrows 32.4% to $48 million or 15 cents per diluted share, compared to net loss of $71 million or 22 cents per share in the previous year.

Marvell Technology Group Ltd. ((MRVL)), the chip maker stated second quarter net revenue soared 40% to $896 million from $641 million in the second quarter of fiscal 2010. Net income in the quarter surged 279.3% to $220 million or 33 cents per diluted share, compared to net income of $58 million or 9 cents per share in the prior year quarter.

Salesforce.com, Inc. ((CRM)), the provider of customer and collaboration relationship management services reported second quarter revenue rose 25% to $394.3 million from $316.0 million in the year-ago quarter. Net income in the quarter fell 31% to $14.7 million or 11 cents per diluted share, compared to net income of $21.2 million or 17 cents per share last year.

The Gap Inc. ((GPS)), the specialty retailer reported second quarter net sales increased 2.2% to $3.32 billion from $3.25 billion in the prior-year quarter. Net income in the quarter rose 2.6% of $234 million or 36 cents per diluted share, compared to net income of $228 million or 33 cents per share in the year-ago quarter.