Greece Approves Austerity Plan; BJ's Wholesale in $2.8 Billion Deal

Arthi Gupta
29 Jun, 2011
New York City

U.S. indexes rose after the Greek parliament voted in favor of austerity measures. Bank of America agreed to pay $8.5 billion to settle claims on mortgage-backed securities. BJ''''s Wholesale agreed to a leveraged buyout for $2.8 billion.

[R]10:50 AM New York – U.S. indexes rose after the Greek parliament voted in favor of austerity measures. Bank of America agreed to pay $8.5 billion to settle claims on mortgage-backed securities. BJ's Wholesale agreed to a leveraged buyout for $2.8 billion.[/R]

Global indexes gained after the Greek parliament voted in favor of austerity measures despite stiff opposition from lawmakers and government workers unions. The vote ensures the implementation of €28 billion austerity measures and a €50 billion privatization plan.

Greek Prime Minister George Papandreou secured the passage of the measures with 155-to-138 vote that will secure the next tranche of aid worth €12 billion from the European Union and the International Monetary Fund

Greece is facing €6 billion bonds repayment in August and also facing budget shortfall as early as July.

Japan's industrial output rose 5.7% in May compared to the 1.6% rise in April, the Ministry of Economy Trade and Industry reported on Wednesday. The manufacturing recovered at the fastest pace since 1953 as industries gear up to increase production after the devastating March 11 triple disaster.

U.S. Consumer Confidence Weakens

The Conference Board said its consumer confidence index for the U.S. fell to 58.5 in June from an upwardly revised 61.7 in May.

The present situation index fell to 37.6 in June from 39.3 in May and the expectations index declined to 72.4 in June from 76.7 in May.

U.S. Home Prices Rise

U.S. home prices showed a notable decrease in April compared to the same month a year ago, according to a home price index that tracks metropolitan cities.

The S&P/Case-Shiller 20-City Composite Home Price Index, which measures home prices in 20 major metropolitan areas, fell at an annual rate of 4% in April compared to a revised 3.8% drop in March.

U.S. Mortgage Activity Declines

The U.S. Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell 2.7% in the week ended June 24, following a 5.9% decline the previous week.

Refinancing applications fell 2.6%. Fixed 30-year mortgage rates averaged 4.46% in the week, down from 4.57%.

Coca-Cola FEMSA, Tampico Merge Bottling Operations

Coca-Cola FEMSA S.A.B. de C.V., the largest public bottler of Coca-Cola Co. agreed to acquire the beverage division of Grupo Tampico S.A. De C.V. in an all-stock deal that has an aggregate enterprise value of 9.3 billion Mexican pesos or $790 million, including 2.75 billion Mexican pesos or $233 million of debt.

Campbell Soup Slashes Jobs

Campbell Soup Co. plans to cut about 770 jobs and exit the Russian market as part of a series of initiatives to improve supply chain efficiency and reduce overhead costs across the company.

Bank of America Settles Claims

Bank of America Corp. agreed to pay $8.5 billion to settle claims by a group of investors who lost money on mortgage-backed securities that were purchased before the sub-prime crisis. The bank will also set aside $5.5 billion to cover future claims.

The settlement ended the nine-month fight between 22 investors that collectively hold $56 billion in mortgage securities.

The bank also said it will take second-quarter charge between $8.6 billion and $9.1 billion or 88 cents to 93 cents a share.

BJ's Wholesale Agrees for Acquisition

BJ's Wholesale Club, Inc., the warehouse club chain agreed to be acquired by a consortium led by private equity firms Leonard Green & Partners, L.P. and CVC Capital Partners for $51.25 per share in an all-cash deal of about $2.8 billion.

Earnings Review

General Mills, Inc. ((GIS)), the global manufacturer and marketer of consumer foods said fourth-quarter net sales rose 2.8% to $3.63 billion compared with $3.53 billion in the previous year. Net earnings in the quarter increased 51% to $320.2 million or 48 cents per diluted share compared to net earnings of $211.9 million or 31 cents per share last year.

Illinois Tool Works Inc. ((ITW)), the industrial products maker forecasts second quarter earnings per share from continuing operations of $0.95 to $1.01, but maintained its revenue growth forecast of 17% to 20%.

For fiscal year 2011, the company forecasts earnings per share from continuing operations of $4.08 to $4.26, but maintained its revenue growth outlook of 16% to 18%.

Nike, Inc. ((NKE)), the athletic shoes and apparel maker targets fiscal year 2015 sales of $28 billion to $30 billion, up from its March outlook of $27 billion.

Progress Software Corporation ((PRGS)), the enterprise software company said second quarter revenues rose 6% to $134.7 million from $127.7 million in the prior year. Net profit in the quarter dropped 5.3% to $18 million or 26 cents per diluted share compared to net profit of $19 million or 29 cents per share last year.

Synnex Corporation ((SNX)), the provider of business process outsourcing services reported a second quarter revenues grew 22.8% to $2.496 billion from $2.032 billion last year. Net profit in the quarter increased 26.6% to $31.4 million or 85 cents per diluted share compared to net profit of $24.8 million or 70 cents per share a year ago.

The Shaw Group Inc. ((SHAW)), the engineering service provider reported third quarter revenues dropped 17% to $1.490 billion from $1.790 billion in the year-ago quarter. Net loss in the quarter was $70.0 million or 89 cents per diluted share compared to a profit of $68.2 million or 79 cents per share in the year-ago period.