Wachovia Bids $26 B for Golden West

Elena
08 May, 2006
New York City

Stock futures pointed to a flat market opening, despite two major merger deals, including Wachovia''s $26 billion bid for Golden West Financial and Thermo electron''s offer of $10.6 billion for Fisher Scientific. In pre-market trading shares of Apple Computer rose 1.6% after a judge in Britain ruled that the company''s iTunes Music Store did not infringe on the trademark of the Beatles'' Apple Corps.

[R]9:00 AM Stock futures indicated a flat market opening.[/R]
U.S. stock futures traded near the flat line, following Friday’s sharp advance. Two big merger deals are expected to be in the spotlight on Monday. Over the weekend, Wachovia ((WB)), the No. 4 U.S. bank, revealed a deal to merge with Golden West Financial ((GDW)), the No. 2 U.S. savings and loan, making a bid of roughly $26 billion in cash and stock. Wachovia agreed to pay 1.051 shares of its stock, valued at $62.42 based on Friday's closing prices, plus $18.65 in cash for each share of Golden West. The price represents a roughly 15% premium to Golden West's current market value. Golden West shares were up 7.3% on Inet. In another merger deal, Thermo Electron ((TMO)) agreed to acquire Fisher Scientific ((FSH)) for about $10.6 billion in stock. The deal would create a powerhouse in making scientific supplies and equipment for the life, laboratory and health sciences industries. The price represents a 7% premium over Fisher's closing price of $73.73 on Friday. Shares of Apple Computer Inc.((AAPL)) rose 1.6% before the opening bell on Monday after a judge in Britain ruled that the company's iTunes Music Store did not infringe on the trademark of the Beatles' Apple Corps.

Crude oil prices fell below $70 a barrel on hopes tension over Iran’s nuclear program will ease. Light sweet crude June delivery lost 80 cents to $69.39 a barrel. Gasoline fell 2 cents to $2.0190, while heating oil lost 1 cent to $1.9425. Natural gas futures dropped 13 cents to $6.645per 1,000 cubic feet. London Brent declined 75 cents to $70.20. European gold futures hit new 25-year highs on weaker dollar and growth in the international money supply. In London the precious metal rose to $682 per troy ounce, up from $679.90. In Zurich gold gained to $681.55, up from $678.95. Silver opened at $13.90, up from $13.80. The U.S. dollar slipped in European trading. The euro traded at $1.2770, up from $1.2735. The dollar bought 111.15, down from 112.43 yen. The British pound was quoted at $1.8648, up from $1.8592.

Holly Corp, ((HOC)), petroleum refiner, reported Q1 net income advanced to $1.56 a share from 42 cents a share a year earlier. The company added that income from continuing operations totaled $1.04 a share and sales surged 26.7%, topping analyst estimate for earnings of 92 cents a share.

ServiceMaster Co., ((SVM)), provider of landscaping and lawn services, reported a Q1 loss of 5 cents a share, down from a profit of 4 cents a share a year-ago. On a continuing operations basis, the company earned 4 cents a share in Q1. If not for severance costs and other restructuring charges, the company earned 5 cents a share in Q1. Revenue advanced to $662.4 million from $623.8 million in the same period a year ago. Analysts’ estimate was for a profit of 4 cents a share on revenue of $666.3 million.

United Industrial Corp, ((UIC)), energy and defense company, reported Q1 earnings were 67 cents a share, down 32.4% from 84 cents a share in the same period a year ago. If not for special items, earnings would have been 69 cents a share. Sales advanced 28%. The company missed analysts’ estimate for earnings of 74 cents a share.

Thomas Weisel Partners, ((TWPG)), investment bank, reported that it reversed to a Q1 net income of 96 cents a share, on a one-time tax benefit. If not for a number of items, it would have earned 29 cents a share on 30% revenue growth. Investment banking revenue improved on a rise in transactions as well as average revenue per transaction, the company added. The company topped analyst forecasts for earnings of 28 cents a share.

American Railcar Industries Inc, ((ARII)), railcar manufacturer, reported Q1 net income of 35 cents a share on revenue growth. Q1 includes charges of $3.6 million in stock-based compensation expense related to restricted stock and stock option grants. The company missed analysts view for earnings of 40 cents a share. American Railcar's net income came to $2.5 million, but the company had a loss of 18 cents a share after deducting preferred dividends; revenue came in $130.9 million.


[R]8:15AM European markets traded mixed at mid-day.[/R]
European markets traded mixed at mid-day as declining oil prices helped markets in Germany and France hit 4 1/2-year highs, while weighed on commodity-sensitive London FTSE 100. All markets gained on strong U.S. markets close Friday after weaker jobs report helped ease interest rate concerns. The German DAX 30 rose 0.5%, supported by 2.4% gain fir Adidas-Salomon and 2% rise in the shares of retailer Metro. The French CAC 40 added 0.4%, while the U.K.’s FTSE 100 fell 0.2% as oil giants BP and Royal Dutch Shell weighed.


[R]7:45AM Asia advanced, led by China Shanghai Composite.[/R]
Asian-Pacific benchmarks surged on Monday, led by China Shanghai Composite which hit a two-year high, rising 3.95% to 1497.10. The index was boosted by gains in oil and real estate issues, following new stock rules which will permit listed Chinese companies to raise extra money on the country''s stock exchanges. Among advancers, China Petroleum & Chemical rose 6.3% and China Yangtze Power surged 6.2%. Insurance, metals and food stocks also advanced. The Nikkei climbed 0.8% to 17,291.67 after the week’s holiday, benefiting from strength in financial and heavy industries. In Hong Kong, the Hang Seng soared 1.7%, supported by metals shares which advanced along with rising commodity prices. South Korea’s Kospi gained 0.8% helped by Samsung Electronics and steelmaker Posco. Australia’s All Ordinaries rose 1.3%, with Rio Tinto and BHP Billiton each rising 3.6%.


[R]7:00 AM Tech stocks close higher after large gains.[/R]
The Nasdaq Composite Index advanced 19 points to close at 2,342. Total volume on the Nasdaq Stock Market came to two billion shares. The positive report from the Labor Department boosted market sentiment that the Fed could end its policy of lifting the interest rates.

Advancers - Activision gained 13% in the trading despite reversing to a fourth-quarter loss on the promise of booming sales of its “Call of Duty 2” product. THQ rose 4.3% after reporting swinging to a quarterly loss, owing to its upcoming game based on “The Sopranos”.Circuit City advanced 11%, following the company’s statement that its earnings have been underestimated by the market and also by the benefits the company gathers from its turnaround efforts.

Decliners - Open Text stock declined 19% due to missed analyst estimate for a quarterly earnings profits and weaker-than-expected sales. Electronic Arts was also down by 11%, following the release of its disheartening guidance. McData sank 4% in the wake of its announcement that the first-quarter profit and revenue would just meet forecasts.