AIG Raises $17.9 B in AIA IPO; American Express, Schlumberger Net Rises

Arthi Gupta
22 Oct, 2010
New York City

U.S. stocks traded higher after upbeat earnings. AIA raised $17.9 billion through a public offering in Hong Kong. HP acquired ArcSight for $43.50 per share. Caterpillar and GE acquire companies. American Express net surges 70% and Schlumberger earnings soar more than double.

[R]9:45 AM New York – U.S. stocks traded higher after upbeat earnings. AIA raised $17.9 billion through a public offering in Hong Kong. HP acquired ArcSight for $43.50 per share. Caterpillar and GE acquire companies. American Express net surges 70% and Schlumberger earnings soar more than double.[/R]

Asian markets traded mixed ahead of the G-20 meeting in South Korea and the European markets declined. Kansas Fed President Hoenig warned more easing could threaten recovery.

GE Healthcare agreed to buy Clarient for $580 million.

The world's top finance chiefs are gathering today for a two-day summit in the South Korean city of Gyeongju, where currency tensions are set to dominate talks.

U.S. Treasury Secretary Timothy Geithner called on G20 nations to ease currency tensions. In a letter to other finance ministers obtained by Bloomberg News, Geithner asked G20 nations to promise ""to refrain from exchange rate policies designed to achieve competitive advantage by either weakening their currency or preventing appreciation of undervalued currency.""

His remarks were widely interpreted as a direct pressure directed at China and let its currency rise against the dollar.

Kansas Fed President Thomas Hoenig said the Federal Reserve should resist the temptation to ease policy further as injecting more liquidity into the economy could have adverse implications.

Furthermore, he stated he was ""very unhappy"" with the near-10% U.S. unemployment rate, but warned that extending a second round of quantitative easing could create more headaches for policymakers.

The Conference Board Leading Economic Index for the U.S. increased 0.3% in September, following a downwardly revised 0.1% increase in August, and a 0.2% increase in July, the research firm said on Thursday.

The total cost to American taxpayers of bailing out government agencies mortgage Fannie Mae and Freddy Mac could more than double to $363 billion, the Federal Housing Finance Agency said on Thursday. The federal regulator said the costs could vary based on future changes in house prices. To date, U.S. has injected $148 billion in two agencies.

American International Group, Inc. said in its regulatory filing with the SEC that its Asian life insurance unit American International Assurance Group Ltd. raised gross proceeds about $17.8 billion, or about HK$138.3 billion, through its initial public offering in Hong Kong. The offering is seen as the largest IPO in Hong Kong, and the third-largest offering globally.

According to AIG, AIA determined the price for the public offering of about 7.03 billion ordinary shares at HK$19.68 per share, at the top-end of its indicative range. AIG is raising the money to repay the financial aid it received from the U.S. government during the financial crisis. The offering will leave AIG with a 33% stake in AIA.

PMC-Sierra Inc. said it signed an agreement to acquire Wintegra Inc., a provider of integrated network processors optimized for mobile backhaul equipment, for a net purchase price of $213 million.

Caterpillar Inc., the construction and mining equipment giant announced a deal to buy MWM Holding GmbH, a German supplier of alternative engines, from private equity firm 3i for €580 million, or approximately $810 million in cash.

Ventas, Inc., the healthcare real estate investment trust announced a deal to acquire the real estate assets of privately-owned Atria Senior Living Group for a total purchase price of $3.1 billion. The consolidation comprises $1.35 billion in Ventas common stock, with a fixed 24.96 million shares, as well as $150 million in cash and the assumption or repayment of $1.6 billion of Atria's net debt.

Ventas expects the portfolio to generate around $640 million in revenues in 2011 and net operating income, after management fees and operating expenses, to range between $186 million and $196 million.

Hewlett-Packard Co. said it completed acquisition of ArcSight, a security and compliance management company for $43.50 per share, or an enterprise value of $1.5 billion.

GE Healthcare, a unit of General Electric Co., and cancer diagnostic company Clarient Inc. said it agreed to acquire Clarient for about $580 million, net of cash and investments.

Earnings

Amazon.com, Inc. ((AMZN)), the online retailer said third quarter net sales increased 39% to $7.56 billion from $5.45 billion in the same quarter of last year. Net income in the quarter increased 16% to $231 million or 51 cents per diluted share, compared to net income of $199 million or 45 cents per share in the prior-year quarter, as more customers tend to shop online.

American Express Company ((AXP)), the financial services company reported third quarter total revenues, net of interest expense gained 17% to $7.0 billion, compared to $6.0 billion in last year period. Net income in the quarter surged 71% to $1.08 billion or 90 cents per diluted share, compared to net income of $632 million or 53 cents per share in the same period last year, helped essentially by increased cardmembers spending.

Baidu.com, Inc. ((BIDU)), the Chinese Internet search provider said third quarter revenue rose 76% to RMB2.256 billion, from RMB1.279 billion in the year-ago quarter. Net income in the quarter surged 2141% to RMB 1.047 billion or RMB 3.00 per diluted share, compared to net income of RMB 492.86 million or RMB 1.41 per share in the same quarter a year ago.

Chipotle Mexican Grill, Inc. ((CMG)), the Mexican food restaurant operator reported third quarter revenue increased 23.0% to $476.9 million from $387.6 million last year. Net income in the quarter rose 39.9% to $48.2 million or $1.52 per diluted share, compared to net income of $34.5 million or $1.08 per share a year ago.

Nestlé S.A. ((NSRGY.PK)), the world's largest food maker, reported 4.5% real internal growth in sales for the nine months of fiscal 2010, driven by growth in all regions and categories, with double-digit organic growth in emerging markets. The company also maintained it forecast of around 5% organic growth in fiscal 2010 Food and Beverages business.

SanDisk Corporation ((SNDK)), the flash memory card maker said third quarter revenue rose 32% to $1.23 billion from $935.17 million in the same quarter last year. Net income in the quarter soared 39% to $322.1 million or $1.34 per diluted share, compared to net income of $231.2 million or 99 cents per share for the year-ago quarter.

Schlumberger Ltd. ((SLB)), the oilfield services provider reported third quarter revenues grew 26% to $6.85 billion from $5.43 billion in the third quarter of 2009. Net income in the quarter soared 120% to $1.73 billion or $1.38 per diluted share, compared to net income of $787 million or 65 cents per share in the previous year, reflecting a gain on its investment in M-I SWACO.