U.S. Stocks Decline; Pfizer Acquires King Pharma for $3.6 Billion

Darlington Musarurwa
12 Oct, 2010
New York City

U.S. stocks traded lower ahead of the minutes of FOMC meeting. Pfizer agreed to buy King Pharma for $3.6 billion. Chevron sold 23.44% Colonial Pipeline stake to the private equity group KKR. Dollar Tree agreed to buy Canada based Dollar Giant Store for more than $50 million.

[R]9:35 AM New York – U.S. stocks traded lower ahead of the FOMC meeting. Pfizer agreed to buy King Pharma for $3.6 billion. Chevron sold 23.44% Colonial Pipeline stake to the private equity group KKR. Dollar Tree agreed to buy Canada based Dollar Giant Store for more than $50 million.[/R]

Asian stocks fell as the yen rose against the dollar and China''s central bank raised reserve requirements for six large commercial banks and European markets declined awaiting U.S. Fed minutes.

China unexpectedly raised reserve requirements for six large commercial banks by 50 basis points on a temporary basis. The reserve requirement rate for the largest banks was increased to 17.5%. Currently, smaller banks have a reserve requirement rate of 15%.

OECD area unemployment rate fell to 8.5% in August from 8.6% in July, the Organization for Economic Cooperation and Development said today. OECD noted that unemployment rate in the U.S. was stable at 9.6% in September and fell 0.1 percentage point to 8% in Canada.

Pfizer Inc. and King Pharmaceuticals Inc. signed a merger agreement. As per the deal terms, Pfizer would purchase King for $3.6 billion in cash, or $14.25 per share, representing a premium of about 40% to King''s closing price as of October 11, and 46% to the one-month average closing price as of the same date.

Kohlberg Kravis Roberts & Co. L.P., the private equity firm acquired Chevron Corp.''s 23.44% stake in the Colonial Pipeline Co., in partnership with South Korea''s state-run National Pension Service. The sale valued at about $1 billion, closed on Friday.

Dollar Tree, Inc., the discount retailer signed an agreement to purchase the assets of Vancouver, British Columbia-based Dollar Giant Store (B.C.) Ltd., for about C$52 million in cash, the first expansion of its retail operations outside the United States. Under the terms of the deal, Dollar Tree will acquire 85 Dollar Giant stores including substantially all assets, inventory, leasehold rights and intellectual property.

Eli Lilly and Co., the healthcare company stated that its global Phase III trial evaluating Alimta (pemetrexed for injection) in combination with cisplatin in patients with recurrent or metastatic squamous cell cancer of the head and neck did not meet its primary endpoint.

Earnings Review

American Reprographics Company ((ARP)) lowered its annual earnings per share guidance to the range of $0.04 to $0.09 from its earlier forecast of $0.15 to $0.30.

Ciena Corporation ((CIEN)), the global supplier of telecommunications networking equipment said it still expects a sequential increase in its fourth quarter revenue of up to 5%, which, based on third quarter results, reflects a revenue range of around $390 million to $409 million. Also, the company anticipates adjusted gross margin in the low forty percent range.

Clearwater Paper Corp. ((CLW)), the producer of tissue and paperboard products announced certain preliminary financial results for the third quarter ended September 30. The company currently estimates net sales for the quarter to be between $345 million and $360 million.

Fastenal Company ((FAST)), the wholesaler of construction supplies reported third quarter net sales advanced 8% to $603.75 million, from $489.34 million in the prior year quarter. Net earnings soared 58% to $74.99 million or 51 cents per diluted share, compared to net earnings of $47.59 million or 32 cents per share in the same quarter last year.

Ford Motor Company ((F)), the automaker reported a 27% increase in sales in the Asia Pacific and Africa region for the month of September, bolstered by continued strong growth in China and India as well as launch of the new Ford Fiesta subcompact in Southeast Asia.

The company sold 78,700 units in the region, while sales for the first three quarters of the year surged 40% to 651,856 units.

Global Payments Inc. ((GPN)), the payment processor reported first quarter revenue rose 7.4% to $440.1 million from $409.9 million in the same quarter last year. Net income in the quarter dipped 15% to $49.4 million or 61 cents per diluted share, compared to net income of $57.8 million or 71 cents per share for the year-ago quarter.

Johnson Controls, Inc. ((JCI)), the automotive interiors provider announced that it expects to post solid sales and double-digit earnings improvements in fiscal 2011. The company expects earnings per share to be in the range of $2.30 to $2.45 and net sales of approximately $37 billion for fiscal 2011.

Synaptics, Incorporated ((SYNA)), the developer and supplier of custom-designed user interface solutions announced preliminary financial results for the first quarter of 2011. The company expects GAAP net income to increase over 80% from the prior year to about $18 million to $19 million, or $0.50 to $0.52 per diluted share. The company expects revenue of approximately $153 million, representing 28% growth over the prior year, and 5% growth over the preceding quarter.

Zep, Inc. ((ZEP)), the producer of cleaning and maintenance solutions reported fourth quarter revenue increased 20.2% to $161.4 million from $134.3 million in the same quarter last year. Net income in the quarter plunged 66.7% to $2.1 million or 9 cents per diluted share, compared to net income of $6.3 million or 29 cents per share for the year-ago quarter.