U.S. Stocks Rise; HP to Buy 3PAR

Arthi Gupta
23 Aug, 2010
New York City

U.S. stocks advance as mergers and acquisitions heat up. Singapore inflation soared to 3.1%. Potash Corp rebuffed BHP''s renewed $130 per share acquisition bid and Sinochem may join the fray. HP agreed to acquire 3PAR for $24 per share. HSBC offered to buy majority stake in Nedbank Group.

[R]9:35 AM New York – U.S. stocks advance as mergers and acquisitions heat up. Singapore inflation soared to 3.1%. Potash Corp rebuffed BHP''s renewed $130 per share acquisition bid and Sinochem may join the fray. HP agreed to acquire 3PAR for $24 per share. HSBC offered to buy majority stake in Nedbank Group.[/R]

Asian markets fell to a 9-month low and the European markets gained. The Department of Statistics of Singapore said the consumer price index rose 3.1% in July compared to the 2.7% increase in June.

The Australian market declined after inconclusive results from the recent elections weighed on traders. First time in 70 years Australia is facing the prospect of a hung Parliament. The proposed mining profits tax may be scrapped if the opposition Liberal Party forms the new government in Australia.

Hewlett-Packard Co. announced a proposal to acquire all of the outstanding shares of 3PAR for $24.00 per share in cash, or an enterprise value of $1.6 billion. HP said that the proposed transaction represents a 33.3% premium above the price proposed by Dell Inc.

HP said that its proposal is not subject to any financing contingency and approved by HP''s board of directors. Once approved by 3PAR''s board, HP expects the transaction to close by the end of the year.

HSBC Holdings plc reported exclusive discussions with Anglo-South African insurer, Old Mutual plc about the possible acquisition of a 70% stake in Nedbank Group Ltd, including the entire 52% stake Old Mutual owns in Nedbank.

Old Mutual said the proceeds would be used to partially reinvest in South Africa and partially in various emerging markets via Old Mutual SA, as well as to meaningfully reduce existing debt.

China-based chemical group Sinochem said on Friday that it was looking for opportunities to invest in potash overseas and would monitor BHP Billiton''s hostile $39 billion bid for Potash Corp. of Saskatchewan Inc., according to media reports. The state controlled Sinochem is China''s fourth-largest oil and gas company.

PotashCorp President and Chief Executive Officer Bill Doyle said, ""The PotashCorp Board of Directors is unanimous in its belief that the BHP Billiton offer substantially undervalues PotashCorp and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled future growth prospects.""

Brookfield Infrastructure Partners L.P. and Prime Infrastructure announced a merger agreement to create a global infrastructure company, in a transaction with an implied value of A$1.6 billion or $1.4 billion for Prime Infrastructure.

Under the terms of the transaction, Prime security holders will receive 0.24 Brookfield Infrastructure units for each Prime stapled security held, representing a price of A$4.60 per Prime Security.

PacWest Bancorp said its wholly-owned unit Pacific Western Bank acquired certain assets and assumed substantially all the liabilities of Solvang, CA-based Los Padres Bank from the Federal Deposit Insurance Corporation as Receiver of Los Padres.

Pacific Western and the FDIC signed a loss sharing deal covering future losses incurred on loans and foreclosed loan collateral. PacWest Bancorp added as per the terms of the loss sharing agreement, the FDIC would absorb 80% of losses and share in 80% of loss recoveries.

According to the terms of the transaction, Pacific Western Bank would purchase certain assets, including all loans, and assume all deposits. Also included in the acquisition was the trust and investment management services provider, Harrington Wealth Management, an unit of Los Padres Bank.

At June 30, 2010, Los Padres Bank had $870 million in assets, $534 million in loans and $771 million in deposits.

Westamerica Bancorporation announced that its wholly-owned subsidiary bank, Westamerica Bank, entered an agreement with the Federal Deposit Insurance Corporation to purchase substantially all the assets and assume substantially all the liabilities of Sonoma Valley Bank. The California Department of Financial Institutions declared Sonoma Valley Bank closed today and appointed the FDIC as receiver.

The Goodyear Tire & Rubber Company priced its offering of an additional $100 million aggregate principal amount of its 8.25% senior notes due August 15, 2020. The notes will be sold at 100.75% of the principal amount. Goodyear expects the offering to close on August 25.

The offering, together with the company''s previously announced issuance of $900 million of 8.25% senior notes due 2020, increases the total aggregate principal amount of these 8.25% senior notes due 2020 to $1 billion.

Goodyear plans to use the net proceeds from the offering, together with current cash and cash equivalents to redeem $260 million in principal amount of its outstanding of 9% senior notes due 2015.

ITT Corp. received its second enhanced night vision goggle production contract from the U.S. Army Research, Development & Engineering Command Acquisition Center. The company said it was selected as one of three companies to design, develop and manufacture ENVGs through this follow-on award. The firm-fixed-price contract has a potential value of $260 million.

NV Energy, Inc. and Great Basin Transmission LLC, an affiliate of LS Power, said they signed an agreement to jointly construct and own a 500 kilovolt transmission line in Nevada. According to the agreement, NV Energy would own 25% of the One Nevada Transmission Line and purchase Great Basin''s share of capacity under a long term agreement.

The transmission line would provide access to isolated renewable energy resources in parts of northern and eastern Nevada. Additionally, it will connect NV Energy''s northern service area with its service area in southern Nevada, which would enhance overall energy-sharing efficiencies and renewable energy utilization.

Citigroup Global Markets, Inc. is continuing to be pursued for securities arbitration claims, the Securities Law Firm of Klayman & Toskes said on Friday. The firm said the claims, with the Financial Industry Regulatory Authority''s Office of Dispute Resolution, were on behalf of investors who sustained losses in Smith Barney/Citi Private Bank''s ASTA and MAT Funds.

In connection with the marketing of the funds, Citigroup provided their clients with presentation materials concerning these products. However, the presentation materials are alleged by the claims to be false and misleading in that the strategy to be employed would not protect investors as suggested by the ratings of the underlying investments.

Further, the firm said it believed Citigroup failed to implement risk management strategies to prevent the funds'' management from investing the funds'' assets in risky and speculative investments.

Earnings Review

Corinthian Colleges, Inc. ((COCO)), the post-secondary education company said fourth quarter revenue surged 36.6% to $482.7 million from $353.5 million in the same period last year. Net income in the quarter increased 46% to $33.85 million or 38 cents per diluted share, compared to net income of $23.19 million or 27 cents per share in the last year quarter.

Hibbett Sports, Inc. ((HIBB)), the sporting goods retailer said second quarter net sales rose 13.6% to $139.82 million from $123.12 million on comparable store sales rise of 11.9%. Net profit in the quarter soared 261.3% to $4.01 million 14 cents per diluted share as against net income of $1.11 million or 4 cents per share in the same quarter a year ago.

Hormel Foods Corporation ((HRL)), the meat and food products firm reported third quarter revenue sales rose 10% to $1.73 billion compared to $1.57 billion in the prior-year quarter. Net earnings in the quarter grew 11% to $85.37 million or 63 cents per diluted share compared to net income of $77.17 million or 57 cents last year.

Liberty Bell Bank ((LBBB.PK)), the banking institution said second quarter net income generated was $34,000 or 1 cent per diluted share, compared with a net loss of $211,000 or 8 cents per share in the prior-year quarter. Net interest income for the quarter rose 20% to $1.40 million from $1.16 million in the year-ago quarter.

Sanderson Farms, Inc. ((SAFM)), the fully integrated poultry processing company reported third quarter net sales fell 3.1% to $489.1 million from $504.8 million for the same period a year ago. Net income in the quarter declined 16% to $36.1 million or $1.55 per share compared to net income of $43.0 million, or $2.06 per share for the third quarter of fiscal 2009.

The J. M. Smucker Company ((SJM)), the jelly and coffee maker stated first quarter net sales edged lower 0.4% to $1.047 billion compared to $1.051 billion last year. Net income climbed 4.9% to $102.88 million or 86 cents per diluted share compared to net income of $98.06 million or 83 cents per share in the previous year.