Three Deals Dominate on Merger Monday, Nasdaq in 8-Day Rally

Nichole Harper
23 Feb, 2015
New York City

U.S. market indexes traded sideways on Merger Monday and at least four deals on both sides of Atlantic dominated headlines. Tech stocks dominated Nasdaq index was nearly unchanged after a 8-day rally that brought the index within 2% of its all-time high.

[R]1:40 PM New York – U.S. market indexes traded sideways on Merger Monday and at least four deals on both sides of Atlantic dominated headlines. Tech stocks dominated Nasdaq index was nearly unchanged after a 8-day rally that brought the index within 2% of its all-time high.[/R]

U.S. stocks eased and investors kept focus on the latest batch of deals and earnings.

Home Loan Servicing Solutions Ltd agreed to be acquired by New Residential Investment Corp for $1.3 billion. Valeant Pharmaceuticals soared 10% after the company announced a $10 billion deal to buy Salix Pharma.

Corporate earnings outside the oil complex has met or exceeded companies of the 1,000 companies tracked by the research team of 123jump.com.

However, industry group said home sales declined more than expected and tighter supply lifted the average price of the home.

Seasonally adjusted annual rate for existing home sales in January fell 4.9% to 4.82 million, lowest since last April at 4.75 million from upwardly-revised 5.07 million in December but rose from 3.2% a year ago, the National Association of Realtors reported today.

On Wall Street trading, Tollbooth Strategy Index edged down 0.01% or 1.29 to 10,644.38.

S&P 500 index fell 2.38 or 0.1% to 2,107.95 and the Nasdaq Composite Index slid 0.40 or 0.01% to 4,955.39.

Crude oil fell $1.35 a barrel to $48.46 and gold fell $5.90 to $1,199 an ounce.

U.S. Movers

Bristol-Myers Squibb Co ((BMY)) gained 31 cents to $60.83 after the bio-pharmaceutical products maker plans to acquire privately held drug-maker Flexus Biosciences Inc for up to $1.25 billion.

Globe Specialty Metals Inc ((GSM)) soared 10.4% or $1.60 to $16.83 after the silicon metal and silicon-based alloy producer and Spain-based Grupo FerroAtlántica SA agree to merge through all-stock to form a company with a combined enterprise value of $3.1 billion.

Grupo Villar Mir the parent of FerroAtlantica will own 57% of the new company and GSM shareholders will own the rest of the 43% stake.

The transaction is expected to close in the fourth-quarter of 2015.

Valeant Pharmaceuticals Intl Inc ((VRX)) surged 13.9% or $24.20 to $197.36 after the Canada-based specialty pharmaceutical company agreed to acquire gastrointestinal drug maker Salix Pharmaceuticals Ltd in an all-cash deal valued of about $10.1 billion.

Under the terms, shareholders of Salix will get $158 per share and according to the company statement; the deal carries an enterprise value of about $14.5 billion.

European Markets

European markets struggled and investors focused on the latest merger deals and corporate earnings.

In London trading, FTSE 100 index fell 0.3% or 18.66 to 6,896.54 and in Frankfurt the DAX index gained 0.6% or 67.73 to 11,118.37.

In Paris, CAC 40 index increased 0.5% or 25.34 to 4,856.24.

British American Tobacco Plc gained 1.3% to 3,704.50 pence after the U.K.-based cigarettes maker is looking to acquire remaining stake of about 24.7% of Brazil-based Souza Cruz SA share that valued $3 billion in cash and to de-list the company.

DS Smith Plc climbed 4.3% to 362.12 pence after the U.K.-based packaging company agreed to acquire Vienna-based rival packaging company Duropack for about €300 million or $341 million from a subsidiary of One Equity Partners.

The transaction is expected to complete in second-quarter of this year.

HSBC Holdings Plc declined 5% to 575 pence after the U.K.-based bank and financial service provider reported revenues in the year ending in December dropped 5.3% to $61.25 billion from $64.65 billion a year ago period.

Net profit in the year tumbled 15.5% from a year ago to $13.69 billion compared to $16.20 billion and diluted earnings per share slipped to 69 cents from 84 cents.

Asian Markets

Nikkei index in Tokyo edged up to a new 15-year high and investors shifted focus away from the euro zone.

In an apparent politically motivated move, the U.S. imposed $14,000 a day fine on Takata Corp. Resona Holdings plans to repay debt two years ahead of schedule to Japanese government backed fund.

Market indexes in Japan closed higher and extended gains of the last week.

The Nikkei 225 Stock Average gained 134.62 or 0.7% to 18,466.92 and the broader Topix index increased 2.50 to 1,502.83.

The yen traded higher at 119.07 against one dollar.

Stocks in Mumbai trading turned lower after opening higher in thin trading. Volume picked up after one hour of trading but sentiment was cautious ahead of the release of central government budge on Feb 28.

The selling in stocks was broad based and energy and consumer goods sectors stocks led the decliners and market indexes closed down for the second day in a row.

International investors sold stocks worth nearly ₹90 crore on Friday, according to preliminary data released by exchanges.

Indian rupee rose 10 paisa to 62.32 against one dollar.

The Sensex Index dropped 256.30 or 0.9% to close at 28,975.11. The CNX Nifty slid 78.65 or 0.9% to 8,754.95.

DLF Limited slipped 3.3% to ₹146.35 after the real estate developer plans to sell 50% stake in four new housing projects to private equity firms for ₹3,000 crore.

State Bank of India fell 1.9% to ₹296.25 after the financial service provider plans to decide price of shares on preferential basis to the government for ₹2,970 crore on March 24.