Merger Monday: AT&T and DirecTV, KKR, Deutsche Bank, MasterCard

Nichole Harper
19 May, 2014
New York City

Merger news dominated Monday trading and telecom stocks were in focus. AT&T agreed to acquire DirecTV for $48.5 billion. KKR & Co agreed to acquire Singapore based bulk container maker for $1.1 billion. MasterCard acquired online payment software developer.

[R]12:15 PM New York – Merger news dominated Monday trading and telecom stocks were in focus. AT&T agreed to acquire DirecTV for $48.5 billion. KKR & Co agreed to acquire Singapore based bulk container maker for $1.1 billion. MasterCard acquired online payment software developer.[/R]

Stocks struggled to gain traction on the first day of trading on the economic growth uncertainties and AT&T agreed to acquire DirecTV for $48.5 billion.

S&P 500 index increased 2.67 to 1,880.53 and the Nasdaq Composite Index added 17.12 to 4,107.08.

World markets were cautious in Monday’s trading after China’s slowdown weighed in Asian markets and a fall in iron ore prices also affected Australian indexes.

AT&T to Buy DirecTV for $48.5 Billion

On Sunday, AT&T agreed to acquire the satellite television operator DirecTV for $48.5 billion.

After the deal, AT&T would be the second-largest pay TV provider, following Comcast. The satellite TV operator has about 20.3 million subscribers in the U.S. and AT&T has about 5.7 million.

Merger in the telecom industry has picked up pace this year after Comcast agreed to acquire Time Warner Cable for $45 billion in February.

Sprint, now under control of Japan based SoftBank is looking for a regulatory approval to merge with T-Mobile USA.

As more viewers depart from cable subscription and find alternative ways to access video content, AT&T is looking to offer multiple ways to deliver content to subscribers.

U.S. cable industry has lost nearly 10 million subscribers in the last six years but satellite services providers have seen a slow but steady rise in its subscriber base.

European Markets

In London trading, FTSE 100 index fell 0.2% or 14.77 to 6,841.04 and in Frankfurt the DAX index gained 0.1% or 14.19 to 9,643.29.

In Paris, CAC 40 index rose 0.1% or 6.07 to 4,462.35.

AstraZeneca Plc tumbled 11.7% to 4,256 pence after the U.K.-based biopharmaceutical company rejected another “final” takeover offer from Pfizer Inc. at £55 per share or $92.48 as too low that comprised total revised valued of $117 billion.

Chairman of AstraZeneca said the offer is with minor improvement from earlier bids and continued “to fall short.”

Deutsche Bank AG dropped 2.5% to €29.98 after the Germany-based investment bank plans to raise €8 billion or $10.97 billion in a fully underwritten rights offer issued 360 million new shares and received €1.75 billion.

The Qatari royal family will buy 60 million of the shares, valued at €1.75 billion from sale stake of Qatar-based Paramount Holdings Services Ltd.

Asian Markets

The Sensex Index climbed 241.31 or 1% to close at 24,363.05 The CNX Nifty jumped 60.55 to 7,263.55.

Stocks in Tokyo declined following weak international market sentiment and core machinery orders in March increased more than expected.

Japan’s cabinet office said core machinery orders in March climbed 19.1% from February to 936.7 billion yen or $9.23 billion, record orders since June 2008.

The highly volatile data series was estimated by economists to show an increase of 6%.

The orders increased 16.1% from a year ago and the orders are proxy to capital spending in the coming six to nine months.

The Nikkei 225 Stock Average slipped 90.15 or 0.6% to 14,006.44 and the Topix index slid 9 to 1,150.07.

The yen closed lower at 101.38 against the U.S. dollar.

U.S. Stocks in Review

Johnson Controls Inc ((JCI)) climbed 3.7% or $1.65 to $46.43 after the temperature regulation systems maker plans to spin-off its $3 billion automotive-interiors business into a new company majority-owned by a China-based partner SAIC Motor Corp.

Johnson will retain a 30% interest in the new company that have total value of $7.5 billion in revenue.

KKR & Co. L.P jumped 2.5% or 54 cents to $22.99 after the investment company agreed to acquire Singapore-based Goodpack Ltd the maker of intermediate bulk containers with market value of $1.1 billion.

MasterCard Inc ((MA)) rose 12 cents to $73.87 after the payment solution provider agreed to acquire ElectraCard Services Private Limited, a subsidiary of Opus Software Solutions Pvt. Ltd., a software solutions provider for electronic payment and card systems. Terms of the agreement were not disclosed.

The transaction is expected to close in the second quarter.