Futures Rise on Merger Activity

Elena
06 Nov, 2006
New York City

U.S. stock futures indicated a higher start, recovering from last-week losses, with support given by retreating oil prices and acquisition activity. Four Seasons Hotels received a $3.7 billion buyout bid from investors, including Bill Gates and Saudi Arabia prince. In another deal, McKesson Corp. said it was buying Per-Se Technologies for $1.8 billion.

[R]9:00AM Stock futures pushed up on retreating oil and merger activity.[/R]
U.S. stock futures indicated a higher start, recovering from last-week losses, with support given by retreating oil prices and acquisition activity. Crude oil declined 45 cents to $58.69 a barrel. In merger-and-acquisition news, Four Seasons Hotels ((FS)) received a $3.7 billion buyout bid from investors, including Bill Gates and Saudi Arabia prince. In another deal, McKesson Corp. ((MCK)) said it was buying Per-Se Technologies ((PSTI)) for $1.8 billion, representing a 15% premium to Per-Se's closing price on Friday. Per-Se shares rose 12% before market opening. Kohlberg Kravis & Roberts and Goldman Sachs ((GS)) agreed to buy the forklift unit of Germany's Linde for $4.6 billion. OSI Restaurants ((OSI)) said it received a total acquisition bid of $3.2 billion, or $40-per-share by an investor group, which included Bain Capital and company founders. Elsewhere, Anadarko ((AP)) said it had decided to sell its Gulf of Mexico assets to Statoil ((STO)) for $901 million. Among companies affected by brokers’ comments, Dow component Home Depot ((HD)) and fellow home improvement retailer Lowe's Cos. ((LOW)) declined as they were downgraded to reduce from neutral at UBS. The broker cited growing concerns over weakness in the U.S. housing market. Dow Jones futures were recently up 41 points, S&P 500 futures rose 5.3 points and Nasdaq futures advanced 6 points.


[R]8:30AM Abbott agreed to acquire Kos.[/R]
Abbott Laboratories ((ABT)), diversified health care products make, announced on Monday it will acquire Kos Pharmaceuticals Inc. ((KOSP)) for about $3.7 billion, or $78 per shares. The deal represents 56% premium on its closing price Friday at $50.09 on the Nasdaq. Through the acquisition of Kos, which reported 2005 revenue of $751.7 million., Abbot aims at expanding it cholesterol drug holdings. Abbott expects the transaction will weaken earnings by 2 cents to 3 cents per share in 2007, not affect profit in 2008, and add to earnings thereafter. Abbott shares fell to $46.85 in premarket trading from their close Friday at $47.64 on the New York Stock Exchange.


[R]8:00AM Linde agreed to sell its forklift division for $4.58 billion.[/R]
German Linde AG, industrial-gas and engineering group, agreed to sell its forklift division, Kion Group, for 3.6 billion euros ($4.58 billion) to a group of investors, including Kohlberg Kravis Roberts & Co. and investment bank Goldman Sachs Capital Partners ((GS)). KKR and Goldman reached an agreement to assume 400 million euros of liabilities. The buyers also agreed to honor all job-security agreements that the Linde executive board and employee representatives entered into in summer 2005. The forklift division employs 20,000 and reported sales of 3.6 billion euros for fiscal 2005 The deal is subject to approval by antitrust regulators.


[R]7:30AM Asian markets end higher Monday, led by Indonesia, HK, Australia.[/R]
Asian markets closed higher on Monday. The Nikkei 225 ended 0.1% higher at 16,364.76. Shares of Softbank Corp fell 1.2% in Tokyo. Mixi Inc., social networking site, slipped 7% on concerns over growing competition.

Honda Motor gained 0.7%, while Toyota Motor rose 1%, with both shares benefiting from a weaker yen. Mazda Motor Corp rose 1.9% after reporting last Thursday that first-half net profit fell owing to one-off charges but raising its full-year forecasts. Konica Minolta Holdings jumped 11.1% after the group reported it has returned to profit in the first half for the fiscal year through September and increased its forecast for the full year.

Hang Seng Index in Hong Kong set an intraday record before retreating slightly to end up 186.86 points, or 1%, at 18,935.55. Leading the advance was China Mobile, whose shares jumped 3.4%. Sinopec Corp. rose 4.6% on speculation the stock may be added to the Hang Seng Index during a reshuffle expected after the market close Friday.

South Korea Kospi index fell 0.3% to 1,379.19 on weakness in exporters and semiconductor-related shares. Singapore Straits Times Index fell 0.4% and Malaysia KLSE Composite Index lost 0.5%. Shares traded in the New Zealand gained, with the NZX-50 benchmark up 0.3%. Taiwan Weighted Price Index fell 0.6% to 7,120.44.

Australia S&P/ASX 200 rose 0.2% to close at a record 5,444.10 on gains in energy and banks. Oil and gas producer Woodside Petroleum rose 1.7%, while shares of Macquarie Bank gained 1.7%. Indonesia JSX Composite jumped 1.7%, setting a fresh record closing high for a sixth consecutive session on strength in banking shares ahead of an expected interest-rate cut this week. Leading lender PT Bank Mandiri Tbk gained 2.7%.


[R]6:30AM European markets trade higher in early session on earnings results.[/R]
European markets were higher on Monday. By mid morning, London FTSE 100 climbed 0.6% to 6,187.3, while Frankfurt Xetra Dax gained 0.7% to 6,286.26, the CAC 40 in Paris added 0.4% to 5,358.82.

Advancers

Ryanair gained 3.8% after the group announced a forecast-beating 23.7% rise in its second-quarter net profit and raised its outlook for the full year.

Merrill Lynch upgraded Anglo-Dutch consumer goods group Unilever from sell to neutral following its better-than-expected third-quarter results last week. Unilever shares rose 2.4%.

German sportswear maker Adidas gained 2.5% after Barrons, the weekly investment newspaper, said it expected the shares to rise to around 50 euros a share next year if the company can achieve cost savings following its Reebok purchase and increase its US market share.

Ferrovial, the Spanish construction group, said it was looking at offers for its property division, even though the unit was not officially for sale. Ferrovial shares added 2.7%.

Decliners

Vivendi shares traded down 0.5%. Vivendi noted over the weekend that it had received a friendly expression of interest from KKR following press speculation. Vivendi said that it reviewed the proposal - which reports put at 40 billion euros - but that the expression of interest did not result in a proposal.

Shares in steelmaker Arcelor Mittal declined 0.7% in Paris. It said its third-quarter sales declined 1.6% compared to the second quarter, with net income up 20% sequentially.

Oil and gold

Oil prices slipped Monday after threats late last week of disruptions to production in Nigeria and the United States failed to materialize. Light, sweet crude for December delivery dropped 46 cents to $58.68 a barrel in on the NYME. December Brent crude on London ICE futures exchange fell 45 cents to $58.70 a barrel.

Gold declined from an eight-week high after gains in the dollar reduced the appeal of the metal as an alternative investment. Gold for immediate delivery fell $1.10, or 0.2%, to $626.30 an ounce early trading in London after earlier rising to $629.90, the highest since Sept. 7.

Currencies

The euro fell against the U.S. dollar on Monday, retreating below the $1.27 mark before the American midterm elections on Tuesday. In morning trading, the euro bought $1.2694, down from $1.2773 on Friday. The dollar rose to purchase 118.38 Japanese yen, while the British pound dropped to $1.8952 from $1.9086.