BP to Sell $5.6 B of Gulf of Mexico Assets, China Faces Slowdown

Arthi Gupta
10 Sep, 2012
New York City

U.S. indexes traded lower after weaker-than-estimated Chinese economic data. BP agreed to sell its non-strategic Gulf of Mexico assets to Plains Exploration for $5.55 billion. Garda agreed to be acquired by consortium for C$1.1 billion.

[R]11:10 AM New York – U.S. indexes traded lower after weaker-than-estimated Chinese economic data. BP agreed to sell its non-strategic Gulf of Mexico assets to Plains Exploration for $5.55 billion. Garda agreed to be acquired by consortium for C$1.1 billion.[/R]

U.S. indexes edged lower in early morning after the latest Chinese economic data indicated slowing economy.

In addition, U.S. Treasury decided to lower its stake to minority holding in the insurer AIG. BP Plc agreed to sell its older oil fields in the Gulf of Mexico for $5.6 billion as the oil giant races to raise $38 billion by the end of next year to pay for the oil spill.

Traders look to the Federal Open Market Committee''s two-day policy meeting beginning on September 12 for more economic cues. Other data on focus would be the retail sales and industrial production reports apart from the customary the weekly jobless claims report.

European markets turned lower after a week of surge driven by the European Central Bank’s readiness to buy euro bonds.

Bond yields on Spain and Italy rose again today ahead of the German court’s legality ruling about the setting up of rescue funds.

The Greek Prime Minister Antonis Samaras is scheduled to meet troika officials today and it is not clear if the struggling nation will win the next tranche of austerity measures.

Economic data from the world’s second largest economy too did not lift investor sentiment.

In Asian news, a slew of data released from China shows that the country’s annual consumer price inflation rose to 2% in August from 1.8% in July.

Separately, China''s trade surplus soared to $26.66 billion in August compared to $25.1 billion in July. Exports rose 2.7% annually and imports declined 2.6%.

Industrial output eased to 8.9% annually in August, from the 9.2% growth in July.

In a separate report, Japan''s gross domestic product expanded 0.2% in the second quarter compared to the 1.2% growth in the first quarter and lower than the 0.3% growth estimated initially, the Cabinet Office said today.

U.S. Treasury Intends to Sell AIG Stake

The U.S. Department of the Treasury intends to sell $18 billion American International Group common stock in a public offering, par value $2.50 a share. AIG intends to purchase up to $5 billion of its stock in the offering.

BP to Sell Non-Strategic Gulf of Mexico Assets

BP agreed to sell its interests in a number of oil and gas fields in the deepwater U.S. Gulf of Mexico to Plains Exploration and Production Company for $5.55 billion. The deal is expected to close by the end of 2012.

BP expects to divest assets with a total value of $38 billion between 2010 and 2013.

Garda to Be Acquired by Consortium

Garda World Security Corp., the security solutions provider agreed to be acquired by a consortium formed by Stephan Cretier, Founder, Chairman and CEO of Garda, and a subsidiary of funds advised by Apax Partners for C$1.1 billion in cash, including assumed debt.

As per the terms, the consortium will acquire each Class A share of Garda for C$12.00 in cash, representing a 30% premium over the closing price of the shares on September 6.

Earnings Review

Brady Corp. ((BRC)), the identification products maker reported fourth quarter net sales declined 6% to $322.5 million from $343.1 million last year. Net income for the quarter dropped 60.6% to $11.7 million or 22 cents per diluted share from $29.6 million or 55 cents per share last year.

John Wiley and Sons Inc. ((JWA)), the print and electronic books publisher reported first quarter revenue fell to $410 million, from $430 million last year. Net income in the quarter dropped 29% to $36.1 million or 60 cents per diluted share compared with $50.8 million or 82 cents per share a year before.