U.S., World Markets Focus on Euro; KKR Acquires Del Monte Foods

Arthi Gupta
26 Nov, 2010
New York City

U.S. indexes traded lower tracking weaker world markets. European sovereign debt problem has now shifted focus to Belgium, Portugal and Spain as leaders work with Portuguese leaders to seek aid. KKR-led consortium agreed to acquire Del Monte Foods for $5.3 billion.

[R]9:35 AM New York – U.S. indexes traded lower tracking weaker world markets. European sovereign debt problem has now shifted focus to Belgium, Portugal and Spain as leaders work with Portuguese leaders to seek aid. KKR-led consortium agreed to acquire Del Monte Foods for $5.3 billion.[/R]

World markets slid on rising debt concerns in the euro-zone and tension between the Koreas heightened by a four-day joint naval exercise between the U.S. and South Korea in the Yellow Sea on Sunday.

The European Central Bank and a majority of euro-zone nations are urging Portugal to formally apply for a bailout from the European rescue fund, Financial Times Deutschland reported today.

Without disclosing sources, the paper said by putting pressure on Portugal to seek aid, the ECB aims to prevent a collapse of Spain. Spain is Portugal’s largest trading partner and Spanish banks have the most exposure to Portugal.

However, Spanish Prime Minister Jose Luis Rodriguez Zapatero told in an interview with RAC1 radio today that there was ""absolutely"" no chance that Spain will need a bailout like that required by Greece and Ireland. He rejected speculation that his country will eventually have to accept an EU bailout to plug the gap in its public finances.

China will probably cut its target for new lending to 7 trillion yuan next year from this year''s 7.5 trillion yuan, while conducting an active fiscal policy to maintain economic growth of at least 8% in 2011, the official Shanghai Securities News reported on Friday, citing sources.

Australian Central Bank Governor Glenn Stevens signaled today that policy rates are ""appropriate'' in the near term. He told the House Representatives'' economics committee that Australia faced inflation risks over the medium-term due to the mining boom and limited spare capacity in the economy.

Del Monte Agrees for Acquisition

Del Monte Foods Co. agreed to be acquired by an investor group led by funds affiliated with private equity firm Kohlberg Kravis Roberts & Co., Vestar Capital Partners and Centerview Partners in a transaction valued at about $5.3 billion, including the assumption of about $1.3 billion in net debt.

Under the deal, which was unanimously approved by Del Monte''s board, KKR, Vestar and Centerview will acquire Del Monte for $19.00 per share in cash.

Harbinger Capital Cuts Stake in New York Times

Harbinger Capital Partners, the hedge fund trimmed its stake in The New York Times Co. to 2.58% or 3.75 million shares, the company said in a filing on Wednesday with the Securities and Exchange Commission.

CPI International Sold for $525 Million

CPI International, Inc. announced today the signing of a merger agreement under which the company will be acquired by an affiliate of Veritas Capital Fund IV for $19.50 per share in cash. The transaction is valued at approximately $525 million.

World Bank Announces Grant to Haiti

The World Bank announced a $10 million emergency grant to Haiti to help the country combat the spread of the cholera epidemic. The number of current confirmed cases in the country is estimated to be nearing 50,000.

The lender said the aid will fund the work of various non-profit organizations operating in the country, while also bolstering government health agencies.

Earnings Review

American Woodmark Corporation ((AMWD)), the kitchen cabinets and vanities maker reported second quarter net sales increased 3% to $107.61 million from $104.07 million in the comparable period a year ago. Net loss in the quarter widened 40% to $7.38 million or 52 cents per diluted share, compared with a net loss of $5.28 million or 37 cents per share last year.

NRG Energy, Inc. ((NRG)), the wholesale power generation company said it currently expects 2011 adjusted operating earnings in a range of $1.75 billion to $1.95 billion. Free cash flow before growth investments is expected to be between $825 million and $1.025 billion.