European Worries Drag Global Indexes; Broadcom Acquires NetLogic

Arthi Gupta
12 Sep, 2011
New York City

U.S. indexes traded lower on euro area debt concerns. Broadcom agreed to acquire NetLogic for $3.7 billion. Colfax offered $2.4 billion for Charter International. OPEC lowered oil demand growth for 2011 on weak global economic outlook.

[R]10:55 AM New York – U.S. indexes traded lower on euro area debt concerns. Broadcom agreed to acquire NetLogic for $3.7 billion. Colfax offered $2.4 billion for Charter International. OPEC lowered oil demand growth for 2011 on weak global economic outlook.[/R]

U.S. and global indexes extended losses on Monday for the second day on the new worries about French banks and Greece. Greece lowered its annual economic decline to 5.3% from the previous estimate of 3.8% shrinkage.

The Greek government unveiled a fresh round of austerity measures amounting to €2 billion and Italy sold €11.5 billion or $15.6 billion of three- and 12-month Treasury bills at an auction today at higher yields.

The G7 ministers vowed to make strong efforts to preserve financial stability, restore confidence and support economic growth.

The Independent Commission on Banking published its final report today on how the banking sector should be reformed. The commission recommends that large UK retail banks should have equity capital of at least 10% of risk-weighted assets, 3% more than the new international Basel III minimum of 7%. The commission reiterated that this should however be completed at the latest by the Basel III date of the start of 2019.

OPEC Cuts 2011 Oil Outlook

The OPEC revised down its 2011 world oil demand growth by 0.15 million barrels per day to 1.1 mbd. The cartel trimmed its forecast to 1.3 mbd in 2012.

U.S. Bank Closures

The Federal Deposit Insurance Corp. announced on Friday the closure of one U.S. bank in Florida, namely The First National Bank of Florida, taking the count of U.S. bank closures in 2011 to 71, after the 157 bank closures in 2010.

The FDIC estimates that the cost to the Deposit Insurance Fund by the bank closure will be $46.9 million.

Broadcom Acquires NetLogic

Broadcom Corp., the semiconductor solutions provider agreed to buy NetLogic Microsystems, Inc. for $50 per share, in a transaction of approximately $3.7 billion, net of cash assumed.

The acquisition extends Broadcom''s infrastructure portfolio with a number of critical new product lines and technologies, including knowledge-based processors, multi-core embedded processors, and digital front-end processors.

Colfax Offers to Acquire Charter International

Colfax Corp., the fluid handling products manufacturer agreed to acquire Irish engineering firm Charter International Plc for 910 pence or about $14.45 per share in cash and stock. The deal values Charter''s share capital at about £1.53 billion or about $2.43 billion.

Technip Buys Global Industries

Technip SA, the French oil and gas services provider agreed to acquire offshore marine construction services firm Global Industries Ltd.for $8 per share in cash to boost its leadership in the fast-growing subsea segment of oil services. The transaction values Global Industries at $1.07 billion, including approximately $136 million of net debt.

Swatch Terminates Tiffany Contract

The Swatch Group SA, the manufacturer of watches, jewelry and accessories terminated its cooperation contracts with Tiffany citing Tiffany’s systematic efforts to block and delay development of the business.

Earnings Review

Brady Corporation ((BRC)), the manufacturer and marketer of identification solutions and specialty products reported fourth quarter revenues climbed 6.3% to $343.1 million from $322.9 million in fourth quarter 2010. Net profit in the quarter rose 37% to $29.6 million, or 55 cents per diluted share compared to net profit of $21.6 million, or 41 cents per share, a year ago.

Coca-Cola Enterprises Inc. ((CCE)), the beverages maker estimated full-year 2011 earnings a share in a range of $2.10 to $2.15, including a positive currency impact of about $0.15 per share.

The company''s board approved a new $1 billion share repurchase program which is to begin when the current $1 billion share repurchase program announced in October 2010 is completed.

Lululemon Athletica inc. ((LULU)), the athletic apparel maker reported second quarter net revenue improved 39.5% to $212.32 million from $152.21 million a year ago. Net income in the quarter surged 76% to $38.38 million or 26 cents per diluted share compared to net income of $21.79 million or 15 cents per share in 2010.

W.W. Grainger, Inc. ((GWW)), the industrial supply company said daily August sales grew 10% from the previous year, including a 1 percentage point positive contribution from foreign exchange.