Pilgrim Offers $20 for Gold Kist

123jump.com Staff
21 Aug, 2006
New York City

Two large deals domninated merger news this morning. Glenborough Realty agreed to be acquired for $26 per share by funds managed by Morgan Stanley Real Estate. Pilgrims Pride made an unsolicited offer to buy Gold Kist at $20 per share. The stock of Pilgrim rose 6% and Gold Kist rose 50% on the news. Market averages at mid-day remain in the negative. European markets closed mostly lower on higher oil price.

[R]12:00PM Merger Monday shows two major deals worth $1 billion.[/R]
Glenborough Realty Trust Inc. ((GLB)) agreed to be acquired for $26 per unit, 8.2% premium from the Friday’s close price, by funds managed by Morgan Stanley Real Estate for approximate value of $1.89 billion. The deal is expected to be closed in the fourth quarter. The offer included either cash of $26 per unit or common unit in the new entity or preferred unit in the surviving operating partnership. The company with properties in the coastal market has been selling properties to reduce debt.

The Pilgrim’s Pride ((PPC)) made an unsolicited offer for Gold Kist ((GKIS)) share of $20 a share or valuing the company at $1 billion. Gold Kist shares rose 50% at the opening to $19.46 on the news. Pilgrim’s stock rose as much as 10% and at mid-day trading settled at 6.5% gain.

The direct offer to shareholders of Gold Kist represents a Pilgrim management frustration at the slow pace of negotiation. The two companies have been in negotiations for the last three months but have not been able to agree on terms of the deal.


[R]11:30AM Dollar General declined 8% on earnings revision.[/R]
Deep discount retailer Dollar General revised its earnings forecast lower. The company lowered the second quarter earnings between 14 and 15 cents from 18 and 22 cents. The company cited lower margins on recently introduced national brands, sales mix and lower than expected back-to-school sales. The stock has traded in the last one year between $22.70 and $12.60. The company stock has lost close to 40% its value in the last one year of trading.

Family Dollar Stores ((FDO)) said that it has appointed R. James Kelly, its CFO, to the post of President and CEO. The company will initiate a search for a new CFO.

Hastings Entertainment ((HAST)) reported second quarter earnings of 2 cents vs. 6 cents a year ago. The Company reported that the revenue rose 0.3% to $123.1 million on same-store sales growth of 0.5%. The company also affirmed its full-year guidance of 58 to 63 cents. The stock lost $1.30 or 18% on the earnings news.

[R]10:30AM Sensex reversed the course to rise at close.[/R]
Early morning trading in Mumbai reflected negative trend in Asia markets but market averages managed to climb back on sustained buying from local and foreign investors. Sensex-30 dropped 115 points but managed to close up 45.96 points to 11,511.98. The trading volume on BSE remained near the low range of Rs 2,520 crores, a decline from Rs 3,238 crores on Friday. Refinery and large cap stocks led the advancers in the second-half trading.

Recent fall in crude oil price attracted demand for refining company stocks. HPCL gained 5.3% to Rs 287, Indian Oil Corporation advanced 1.05% to Rs. 472 and Kochi Refinery jumped 4.3% to Rs. 161. Refining stocks have traded lower as world oil price has jumped to a record high. Prices at the pump station are controlled by the Central Government making it difficult for refining companies to predict earnings.

HCL technologies jumped 1.6% to Rs. 584.50 on earnings news. The company reported second quarter earnings of Rs 233 crore, 44% rise from a year ago on revenue growth of 25% to Rs 1,254 crore.

Initial Public Offering of GMR Infrastructure was priced at Rs. 210 and retail investors were allotted stocks at Rs. 199.50. The stock closed above the offer price at Rs 210.30 on heavy trading volume of 7.8 million shares.


[R]10:00AM Dow and Nasdaq are nearing 1% loss in the morning trading.[/R]
Most Asian markets closed lower after China raised interest rates to slow fast growing economy led by an investment boom. Hong Kong, Taiwan and Japan led the decliners in Asia. Taiwan lost 3.2%, Hong Kong dropped 1.8% and Japan fell 0.9%.

Banking stocks in Hong Kong led the broad decline in the market. Bank of China lost 0.8% and depressing other property and telecom stocks. Hang Lung Properties fell 5.5% on the 35% lower earnings. China Overseas Land & Development fell 5% on the rising rates. China Mobile, largest mobile operator in China, fell 3.6% on profit taking.

In Japan trading market average Nikkei 225 fell 0.85% on the worries of slowing U.S. economy, uncertainty in the oil market and rising rates in China. Broad decline in the market was led by earnings disappointment from online-mall operator Rakuten, the stock fell 6.5%. The telecom company Nippon Telegraph and Telephone dropped 2.2%. The company reported it plans to launch this fall social networking service. Daiwa Securities Group fell 3.7%.

Trading in other Asian markets was quiet but had a negative tone. Stocks in Taiwan came under heavy selling pressure as opposition parties expect to lead nationwide campaign to oust President Chen Shui-bian.


[R]9:00AM Market averages are expected to open lower in New York trading.[/R]
Market appears to be ready to open on a downward note after gaining every day of the last week. In the pre-market activity, weakness in European trading, fall in oil price and weak earnings guidance from Lowe’s is affecting trading sentiment.

Lowe’s Cos. ((LOW)) reported second quarter profit of 60 cents vs. 52 cents a year ago and missed the estimates of 61 cents. The company reported 11% rise in profit to $935 million in the quarter compared to $839 million a year ago on revenue growth of 12% to $13.39 billion from $11.93 billion. The same-store sales in the quarter were reported at 3.3%.

The company also cut its full year earnings per share guidance to $2.00 and $2.07 from $2.07 and $2.11. The company also said that same-store sales are likely to be between 2% and 3% lower than the earlier projection of between 4% and 5%.

In the European trading mining and energy stocks are dominating the news. France, Germany and Spain are trading fractionally lower at mid-day trading. However, the indexes in London are slightly ahead.

Newspaper report of possible bid to break up a mining conglomerate Anglo American for $80 billion has lifted mining stocks in the UK trading. Rio Tinto jumped 0.6% and Xstrata added 0.5%. BHP Billiton jumped 1.6% on the news that Chilean miners have rejected company’s offer of 4% pay increase.