U.S. Stocks Up; Endo to Buy American Medical Systems for $2.9 B

Arthi Gupta
11 Apr, 2011
New York City

U.S. indexes gained ahead of first quarter earnings season. U.S. government averted shut-down crisis as lawmakers agree on spending cuts. Endo agreed to acquire American Medical Systems for $2.9 billion. TimberWest Forest agreed to be purchased for C$1.03 billion.

[R]9:45 AM New York – U.S. indexes gained ahead of first quarter earnings season. U.S. government averted shut-down crisis as lawmakers agree on spending cuts. Endo agreed to acquire American Medical Systems for $2.9 billion. TimberWest Forest agreed to be purchased for C$1.03 billion.[/R]

The U.S. stocks traded higher after a last minute deal between lawmakers and the U.S. president averted government shutdown. The move was widely expected but a bigger fight looms as the U.S. needs to raise borrowing limit in the coming weeks.

European indexes edged lower after crude oil and metals traded near recent highs. Asian markets tumbled after a magnitude 7.1 aftershock rattled Northeast Japan and a tsunami warning issued for Ibaraki prefecture.

China reported first quarter trade deficit of $1.02 billion compared with a surplus of $13.91 billion in the quarter a year ago, General Administration of Customs of China said. The first quarterly deficit in seven years was driven by higher costs of energy and commodities prices.

Japan''s core machinery orders fell a seasonally adjusted 2.3% on a monthly basis in February compared to a 4.2% increase in the January, the Cabinet Office said. The orders are expected to fall further in March on the triple disaster that struck the island nation on March 11.

African Union Peace Plan for Libya

Libya''s beleaguered Moammar Qadhafi regime on Sunday accepted an African Union peace plan for resolving the eight-week old stand-off with rebels demanding its ouster, reports quoting South African President Jacob Zuma said.

The highlights of the proposed plan include an immediate cessation of hostilities, uninterrupted humanitarian aid, talks between government and rebels for finding a political solution to the issue and ensuring safety of foreign nationals remaining there.

However, Libyan rebels were in no mood to accept an African Union ceasefire plan unless Gaddafi quit.

U.S. Congress Leaders Avert Government Shut-Down

A government shut-down that threatened to take effect at midnight on Saturday was averted with a last-minute agreement reached on a federal budget.

The initial announcement of the budget deal did not include substantial details, but Congressional leaders stated that the accord calls for spending cuts of $78.5 billion below the president''s 2011 budget proposal. The deal also includes an agreement on policy riders.

The bigger fight looms between lawmakers in the next few weeks to raise borrowing limit to pay for the government expenses.

NYSE Rejects Nasdaq/ICE Bid

NYSE Euronext Board unanimously reaffirmed its commitment to a $9.7 billion merger with Deutsche Börse AG announced in February. The Board rejected the $11.3 billion proposal by NASDAQ OMX Group Inc. and IntercontinentalExchange Inc. to break up NYSE Euronext.

However, NASDAQ OMX and ICE reaffirmed interest in acquiring NYSE Euronext given the benefits to stockholders of all three companies.

Endo Acquires American Medical Systems

Endo Pharmaceuticals Holdings Inc. announced a deal to acquire American Medical Systems Holdings Inc. for $30 per share or about $2.9 billion in cash. The purchase price of Endo includes the assumption and repayment of $312 million of American Medical''s debt.

Endo expects the acquisition to fulfill its strategy to build scale in devices and services business segment.

TimberWest Forest Agrees for Acquisition

TimberWest Forest Corp., the Canadian timber and land management company agreed to be acquired by two Canadian pension funds, British Columbia Investment Management Corporation and the Public Sector Pension Investment Board for C$1.03 billion in cash, including assumed debt. The purchase price is equal to C$6.48 per existing unit.

Level 3 Acquires Global Crossing

Level 3 Communications, Inc. said it entered into an agreement to acquire Global Crossing Ltd. in a tax-free, stock-for-stock transaction. The transaction is valued at $23.04 per Global Crossing common or preferred share, or approximately $3.0 billion, including the assumption of approximately $1.1 billion of net debt as of Dec. 31, 2010 based on Level 3''s closing stock price on April 8, 2011.

The combined company will operate a unique global services platform anchored by fiber optic networks on three continents, connected by extensive undersea facilities.

Earnings Review

Regis Corporation ((RGS)), an operator of hair care salons reported third quarter revenue declined 1.1% to $581 million compared with $588 million a year ago, along with a 2.3% reduction in same-store sales, as cold weather and a shift in Easter holidays adversely impacted store traffic.

ScanSource, Inc. ((SCSC)), a distributor of specialty technology products forecast third quarter sales to be in the range of $608 million to $617 million from the prior range of $630 million to $650 million.

The Shaw Group Inc. ((SHAW)), the engineering service provider reported second quarter total revenues dropped 12.3% to $1.42 billion from $1.62 billion in the same quarter last year. Net income in the quarter plummeted 98% to $1.20 million or 1 cent per diluted share compared to net income of $61.51 million or 72 cents per share in the prior-year quarter.