Wall Street Down 2%, CNOOC, Nexen in $15.1 B Deal

Arthi Gupta
23 Jul, 2012
New York City

Wall Street extended global decline and dropped 2%. CNOOC agreed to acquire Canada-based Nexen for $15.1 billion. NRG and GenOn are in a $1.7 billion deal. Talisman Energy sells 49% equity interest in UK North Sea Assets. DigitalGlobe and GeoEye agreed to merge.

[R]9:55 AM New York – Wall Street extended global decline and dropped 2%. CNOOC agreed to acquire Canada-based Nexen for $15.1 billion. NRG and GenOn are in a $1.7 billion deal. Talisman Energy sells 49% equity interest in UK North Sea Assets. DigitalGlobe and GeoEye agreed to merge.[/R]

U.S. indexes sank at the opening and extended global losses as Spain worries resurfaced and regulators and Spain and Italy banned short selling.

The market turmoil deepened in early trading following more regional governments in Spain are preparing to tap the recently set up bailout fund and yield on Spanish government bonds surged to unsustainable record 7.5%.

Market indexes in Italy plunged 5% and in Spain declined 3.8% and in Germany and France dropped more than 3.5% after latest debt worries in the region unsettled investors.

In addition, the euro area government debt rose to 88.2% of gross domestic product in the first quarter from 87.3% in the previous quarter, Eurostat reported today.

CNOOC Agrees to Acquire Nexen

CNOOC Limited, China’s oil and natural gas producer agreed to acquire all of the outstanding common shares of Nexen Inc., the Canada-based energy company for $27.50 per share in cash.

The purchase price represents a premium of 61% to the closing price of Nexen’s common shares on July 20. The total consideration for Nexen’s common and preferred shares is about $15.1 billion, while Nexen''s current debt of around $4.3 billion will remain outstanding.

NRG, GenOn to Merge

NRG Energy, Inc. agreed to acquire GenOn Energy, Inc. in a $1.7 billion all-stock deal creating the largest power company in the in the United States .

Under the deal, GenOn shareholders will receive 0.1216 of a share of NRG common stock in exchange for each GenOn share of common stock, representing a 20.6% premium to GenOn’s shareholders based on NRG’s and GenOn’s closing share prices on July 20.

The combined company with an enterprise value of $18 billion will have a diverse fleet of about 47,000 megawatts of fossil fuel, nuclear, solar and wind capacity across the three competitive energy markets in the U.S.

The transaction will enhance annual combined company EBITDA by $200 million by 2014 through efficiency synergies and realize other balance sheet efficiencies of $100 million per year.

Talisman Energy Sells UK North Sea Assets Stake

Sinopec will acquire a 49% equity interest in Talisman''s UK North Sea business for $1.5 billion. The transaction is expected to close by the end of this year.

The joint venture plans to invest to improve ongoing operating performance, as well as in-fill drilling and exploration opportunities.

DigitalGlobe and GeoEye to Merge

DigitalGlobe, Inc. and GeoEye, Inc. will combine in a stock and cash transaction valued at approximately $900 million to create a global leader in earth imagery and geospatial analysis.

Upon completion of the transaction, DigitalGlobe shareowners are expected to own approximately 64% and GeoEye shareowners are expected to own approximately 36% of the combined company.

GenCorp to Acquire Pratt & Whitney Rocketdyne

GenCorp Inc. agreed to acquire Pratt & Whitney Rocketdyne from United Technologies Corporation for $550 million.

Genesee & Wyoming to Acquire RailAmerica

Genesee & Wyoming Inc. will acquire RailAmerica for an all cash purchase price of $27.50 per share to serve its industrial customers and Class I railroad partners.

Earnings Review

Coca-Cola Enterprises Inc. ((CCE)), the nonalcoholic beverages distributor reported second quarter net sales declined 8% to $2.21 billion from the prior year quarter. Net income decreased 17% to $205 million or 67 cents per diluted share from $246 million or 74 cents per share in the same quarter last year.

Halliburton Company ((HAL)), the oilfield services provider reported second quarter total revenue rose 22% to $7.23 billion from the same quarter last year. Net income edged lower 0.3% to $737 million or 79 cents per diluted share from $739 million or 80 cents per share in the prior-year quarter.

Hasbro, Inc. ((HAS)), the games and toys manufacturer reported second quarter net revenues fell 11% to $811.47 million compared to 2011. Net earnings dropped 5.7% to $43.4 million or 33 cents per diluted share compared to net earnings of $46.0 million or 33 cents per diluted share in 2011.

McDonald''s Corporation ((MCD)), the fast food restaurants operator reported second quarter revenues were flat $6.9 billion compared to a year ago. Global comparable sales for the quarter increased 3.7%, with positive comparable sales in each geographic segment.

Net income for the quarter declined 4% to $1.347 billion or $1.32 per diluted share from $1.410 billion or $1.35 per share in the same quarter last year.