S&P 500 at New Record on Monday Deals

Nichole Harper
12 May, 2014
New York City

Tech stocks led the S&P 500 index to a new high and deal news dominated Monday trading. Allergan rejected Valeant Pharmaceutical unsolicited offer. Hillshire Brands agreed to acquire Pinnacle Foods for $4.3 billion.

[R]11:30 AM New York – Tech stocks led the S&P 500 index to a new high and deal news dominated Monday trading. Allergan rejected Valeant Pharmaceutical unsolicited offer. Hillshire Brands agreed to acquire Pinnacle Foods for $4.3 billion.[/R]

Stocks on Wall Street opened higher after deal news dominated in New York and European trading.

S&P 500 index increased 0.7% or 13.63 to 1,892.11 and the Nasdaq Composite Index gained 1.3% or 53.01 to 4,124.88.

Hillshire Brands to Buy Pinnacle Foods for $4.3 Billion

Hillshire Brands agreed to acquire Pinnacle Foods for $4.3 billion in cash and stock. Including the debt, the deal is valued at $6.6 billion.

The deal is expected to close around September.

Hillshire, formerly the food unit of Sara Lee Corp, offered $18 in cash and one half of its shares for each Pinnacle share. Pinnacle shareholders will control 33% stake in the merger company.

The offer valued Pinnacle at $26.48 a share, about 20% premium to Friday’s closing price.

Blackstone Group LP, the leverage buyout group, took Pinnacle for about $2.2 billion in 2007 and the company was relisted on the New York Stock Exchange in 2013.

Blackstone is expected to generate at least $2 billion of profit on investments of $700 million in Pinnacle in 2007 and 2010. Pinnacle also paid huge management fees and high interest rates to Blackstone.

Ukraine Separatists Claim Huge Support in Referendum

Separatists in Ukraine completed a referendum and more than 90% of voters in Donetsk and Luhansk supported to form a new republic and align with Russia, according to a news agency in Russia.

The vote was hastily arranged and was conducted despite the call to postpone the referendum from Russian President Vladimir Putin.

There were no international election monitors and there was only one question on the ballot that was printed on a regular paper with no registration mark.

Russian government spokesman welcomed the decision but the government in Kiev condemned the election and the European Union imposed sanctions on companies for the first time.

U.S. and European Union rejected the referendum and deemed the voted illegal and the government in Kiev called the latest vote a “criminal farce.”

Indian Elections

Market indexes in Mumbai soared 5.5% in two days of trading after investors speculated BJP led alliance is likely to form the most stable government in three decade.

India completed its month-long Lok Sabha election and 9,667 candidates competed for 543 seats. Of the eligible 814 million voters, more than 60% voted in Parliamentary elections.

Rupee strengthened for the second week and reached to a nine-month high of 59.013 against one dollar and the Sensex index closed at a record high.

The Sensex Index soared 556.77 or 2.4% to close at 23,551. The CNX Nifty jumped 155.45 to close at 7,014.25.

Asian Markets

Stocks also advanced in China and Hong Kong but market indexes in Japan closed down after current account surplus dropped to the lowest in three decades.

The Nikkei 225 Stock Average gained 50.07 or 0.3% to 14,149.52 and the Topix index fell 7.60 to 1,157.91.

The yen closed at 101.89 against the U.S. dollar.

The Ministry of Finance said Japan’s current-account surplus in the year ended March tumbled 81.3% to 789.9 billion yen from 4.2 trillion yen a year ago, the lowest since finance ministry recording comparable data in 1985.