U.S. Stocks Rise; IBM to Buy Netezza

Arthi Gupta
20 Sep, 2010
New York City

U.S. stocks gained on renewed global economic optimism. France based conglomerate Safran SA agreed to acquire U.S. based L-1 Identity Solutions for $1.6 billion. Sahara India may bid for MGM Inc for $2 billion. IBM agreed to buy Netezza for $27 a share.

[R]9:35 AM New York – U.S. stocks gained on renewed global economic optimism. France conglomerate Safran SA agreed to acquire U.S. based L-1 Identity Solutions for $1.6 billion. Sahara India may bid for MGM Inc for $2 billion. IBM agreed to buy Netezza for $27 a share.[/R]

Asian markets traded mixed and European stocks climbed. BP said it successfully completed well kill operations in the Gulf of Mexico.

L-1 Identity Solutions Inc., the personal identity protection solutions provider agreed to be acquired by Paris-based aerospace and defense firm Safran SA for $12 per share in cash or $1.6 billion, including its outstanding debt.

The per share price represents a premium of 24% over L-1''s closing stock price on the NYSE on September 17 and a premium of 66% over the closing stock price on January 5, the day prior to its announcement of strategic alternatives review process.

According to L-1 Identity, the businesses to be sold to Safran are expected to have combined estimated fiscal year 2010 revenues of $486 million.

In another deal, BAE Systems, Inc., the U.S. affiliate of UK based BAE Systems plc agreed to acquire the stock and membership interests of the entities comprising the L-1 intelligence services businesses for a purchase price of approximately $295.8 million in cash and approximately $7.2 million of certain assumed obligations for a total value of $303.0 million. These businesses include SpecTal, LLC, Advanced Concepts, Inc., and McClendon, LLC.

The businesses are expected to have combined estimated fiscal year 2010 revenues of $234.0 million and adjusted EBITDA of $32.5 million (excluding the impact of transaction costs relating to the sale of the business).

The sale to BAE Systems is expected to close in the fourth quarter and the Safran deal is expected to close in the first quarter of 2011.

Indian conglomerate Sahara India Pariwar is in discussions to acquire the Hollywood studio Metro-Goldwyn-Mayer Inc. for $2 billion or Rs.9,400 crore.

Sahara''s bid comes after the 86-year-old studio received its seventh debt-repayment extension to October 29 from a consortium of 140 creditors, led by JP Morgan Chase.

International Business Machines Corp. agreed to acquire Netezza Corporation in a cash transaction at a price of $27 per share or at a net price of about $1.7 billion, after adjusting for cash.

IBM added that the acquisition expands its information and analytics offerings, including services available through IBM''s Business Analytics and Optimization Consulting organization.

BP plc, the British energy giant announced on Sunday the completion of the """"""""Bottom Kill"""""""" procedure to permanently seal the blown-out Macondo oil well in the Gulf of Mexico. The company confirmed that both the casing and annulus of the well were sealed by cement pumped through the relief well, and it will now go ahead to complete the abandonment of the well.

Earnings Review

Illinois Tool Works Inc. ((ITW)), the industrial products maker on Friday confirmed its earnings and revenue growth outlook for the third quarter and fiscal year 2010. The company reiterated its third-quarter earnings per share from continuing operations outlook range of $0.72 to $0.84 and revenue growth in a range of 9% to 13%.

For fiscal year 2010, the company continues to project income per share from continuing operations between $2.82 and $3.08. The 2010 full-year forecast continues to assume total revenue growth in a range of 11% to 13%.

Lennar Corporation ((LEN)), the homebuilder reported third quarter total revenues rose 14.5% to $824.98 million, from $720.73 million in the prior-year quarter. Net earnings generated in the quarter were $30 million, or 16 cents per diluted share, compared to a net loss of $171.6 million, or 97 cents per share in the year-ago quarter.

TECO Energy, Inc. ((TE)), the holding company for regulated utilities and other businesses announced that it is reaffirming its 2010 earnings per share forecast range of $1.25 to $1.35, which was previously updated on August 5, 2010.

TPC Group, Inc. ((TPCG)), the chemical products maker reported fourth quarter revenues surged 104% to $531.8 million from $260.9 million in the previous year, with average selling prices up 108% year over year. Net income in the quarter soared 85% to $14.4 million or 80 cents per diluted share compared to net income of $7.8 million or44 cents per share a year ago.

Whiting Petroleum Corporation ((WLL)), the independent oil and gas company on Friday lowered its production outlook for the third quarter of 2010, saying that production was impacted by pipeline maintenance on the Enbridge system. However, the company maintained its full-year production guidance.

The company forecast production for the third quarter in a range of 6.00 million BOE to 6.20 million BOE and full year production guidance in a range of between 23.4 million BOE and 23.7 million BOE.