Kronos, Paxar, Bel Fuse Up on Bids

123jump.com Staff
23 Mar, 2007
New York City

Averages traded higher with less than an hour of trading left in New York. European Markets closed higher led by auto and mining stocks. Vonage plunged 22% on the injuction that will prevent the company from using patented technology owned by Verizon. Existing home sales in February rose 3.9%, higher than expected, but median home prices fell and inventories of home rose 5.9% at the end of the month.

[R]3:00PM NY, U.S. Market Movers[/R]

DaimlerChrysler, Kronos, Paxar, Smithway Motor Xpress and Bel Fuse rise on bids. Bookham jumped on arranging financing for the operations.

Bel Fuse ((BELFA)), maker of magnetics-based components, received an unsolicited $480 million cash bid to acquire by electronics components producer Technitrol Inc. Technitrol said it would pay for the deal using cash on hand and debt. Shares of the company jumped 31.3%.

DaimlerChrysler ((DCX)) shares jumped 6.2% on increased speculation that it was close to selling its Chrysler Group, despite a company spokesman did not confirm any rumors.

ImClone Systems Inc. ((IMCL)), which makes the colon-cancer drug Erbitux, was lifted 11.6% on news of its competitor''s setback.

Kronos Inc. ((KRON)) said that it has agreed to be acquired by private equity firm Hellman and Friedman LLC for about $1.8 billion. Hellman and Friedman would pay $55 a share in cash. JMI Equity, a private equity firm focused on the software and business services industries, would participate in the deal alongside lead investor Hellman and Friedman. Shares climbed 13.6%.

New Century Financial ((NEWC.PK)) said it expects a $46 million loss from the termination of a $900 million financing agreement with Barclays Plc. Shares jumped 30.1%.

Paxar Corp. ((PXR)) shares jumped 18.7% after the maker of tags and labels agreed to be acquired by Avery Dennison ((AVY)). Avery Dennison expects the transaction to result in annual cost savings of about $90 million to $100 million. The deal is expected by the end of the year, and after that is projected to add to Avery Dennison''s earnings within one year.

Power-One Inc. ((PWER)) said a U.S. district court ruled in its favor by rejecting a defense raised by Artesyn Technologies that Power-One''s patents are invalid. Power-One, which said in the litigation that Artesyn infringes 82 claims in four patents, said it will now take the patent infringement suit to a jury trial scheduled for August. Shares of the company jumped 10.4%.

Smithway Motor Xpress Corp. ((SMXC)) said it agreed to be acquired by Western Express Inc. for $10.63 a share in cash, or about $54 million. Including debt, the deal is valued at about $90 million, the company said in a statement. For the fourth quarter, the company reported a loss of $42,000, or 1 cent per share, compared with a profit of $755,000, or 15 cents per share, in the year-ago period.

Synnex Corp. ((SNX)), an information technology supply chain services company, shares jumped 12% on the company''s better-than-expected forecast for the second quarter. Synnex estimated net income of $14 million to $14.7 million, or 43 cents to 45 cents per share in the quarter. It expects revenues of $1.6 billion to $1.65 billion. The company also said first-quarter profit climbed 30% with net income of $13.9 million, or 43 cents per share, exceeding Wall Street expectations. Revenue for the quarter rose to $1.59 billion from $1.5 billion in the same period a year earlier.

Urban Outfitters ((URBN)), which reported flat fourth-quarter profit earlier this month, saw shares rise 5.4% after Goldman Sachs and Wachovia analysts upgraded the retailer on signs of a turnaround at its namesake and Anthropologie chains.

Bookham Inc. ((BKHM)) slumped 10% after the telecom-equipment company said it will sell about 13.6 million shares of stock for $28.6 million in a private placement. The company will also issue warrants to buy about 4.1 million shares of stock. The warrants will have an exercise price of $2.80 a share. Bookham plans to use proceeds from the offering to fund its working capital needs.

Jabil Circuit Inc. ((JBL)) slumped 10% after the electronics-services provider gave a disappointing guidance for the third and fourth quarters, despite stronger-than-expected second-quarter revenue. For the second quarter the company posted revenue of $2.9 billion, up from $2.3 billion a year earlier. Jabil didn''t release earnings because of an ongoing investigation into its stock-option practices. The company forecast third-quarter adjusted earnings of 17 cents to 23 cents a share, with revenue of $2.9 billion to $3 billion. Wall Street had targeted earnings of 44 cents a share and revenue of $3.04 billion. For the fourth quarter, Jabil sees adjusted earnings of 29 cents to 34 cents a share, well below analysts'' forecast of 50 cents. The company predicts revenue of $2.9 billion to $3 billion, compared with Wall Street''s projection of $3.18 billion.

Orient-Express Hotels Ltd. ((OEH)) shares surged 2.20% following a news report that the operator of hotels, restaurants, tourist trains and river cruises may be purchased for more than $3 billion. Chairman James Sherwood''s scheduled departure in June increases the likelihood of a transaction.

[R]2:30PM NY – Daimler Chrysler trades higher on possible sale of Chrysler unit to Magna of Canada led group.[/R]

Daimler Chrysler stock is trading 6% higher at mid-day trading in New York on possible sale of Chrysler unit. According to a report circulated by Brett Hosleton, KeyBanc Capital Markets analyst the company is in discussion to the Chrysler unit to with various companies including General Motors, several private equity groups and Canadian auto part maker. Magna makes auto parts for Chrysler and builds Chrysler cars in Europe.

General Motors is in discussion with Chrysler and looking for ways to build engines and other components together. However, General Motors has its own operational problems and unresolved issues with the labor unions and spun-off subsidiary Delphi. Even then General Motors can bring synergies in operation and sales in the U.S.

Daimler-Benz AG bought in 1998 Chrysler for $36 billion. According to Hosleton the Chrysler unit may be sold for as little as $4.8 billion. Various analyst reports suggest that Goldman Sachs has valued the Chrysler unit at $6 billion, one billion more than Magna is willing to pay. However, the cost of healthcare and retiree cost is estimated to be as high as $17 billion. And, when lack of profitability is accounted on top of this legacy cost of running Chrysler, the market value of the Chrysler Group can be construed close to zero.

It is possible that Chrysler Group may be sold for little cash payment so that DaimlerChrysler AG can get rid of the legacy cost and not affect its auto and other operations.


[R]1:00PM NY European markets closed higher, helped gains in the automotive sector.[/R]
European stocks finished in the positive on Friday, boosted by gains in the shares of automakers and oil producers which helped offset weakness in the tech sector. DaimlerChrysler shares advanced 6.4% amid continued speculation about a possible sale of Chrysler. Volkswagen climbed 6.2%, amid recurring speculation that Porsche, which already holds a 27.4% stake in Volkswagen, will buy them. Other gainers in the sector included Fiat and Renault.

A sharp rebound in crude oil prices sent oil companies higher such as BP and Royal Dutch Shell. Oil rose above $62 a barrel after the British government said that 15 naval personnel have been captured at gunpoint by Iranian forces while patrolling off the coast of Iraq. Shares in German software giant SAP fell 1.7% after Oracle filed a lawsuit in a California federal court alleging that its rival engaged in ‘corporate theft on a grand scale’ in a series of ‘high-tech raids’. Utility shares were also in focus. Germany''s E.On lost 0.6% after Spain''s Acciona said it and Enel are considering a bid offer for Spanish utility Endesa if a bid by E.On is unsuccessful. Acciona rose over 3%, while Enel slipped 1.1% in Milan.The German DAX Xetra 30 rose 0.6% at 6,899.06, the French CAC-40 index rose 0.7% at 5,634.75 and the U.K. FTSE 100 added 0.3% at 6,339.40.


[R]11:30AM U.S. stocks turned higher on unexpected rise in home sales.[/R]
Stocks turned higher Friday after an unexpected jump in existing homes sales in February added to optimism that the housing sector may not be as weak as feared. Existing home sales rose by the biggest amount in nearly three years. The 3.9% increase was the largest since a similar jump in March 2004. In corporate news, Blackstone Group has file to bring part of the firm public in an offering worth up to $4 billion. The filing allows public access to once private numbers, including the $2.27 B of last-year income. DaimlerChrysler ((DCX)) rose 5% amid reports the automaker would sell its Chrysler unit. Among earnings-inspired movers, Jabil Circuit ((JBL)) dropped nearly 10% after releasing disappointing forecasts.

On deal news front, Paxar Corp. ((PXR)), a maker of tags, labels and apparel identification products, jumped 19% after Avery Dennison Corp., a maker of adhesive labels, said it agreed to acquire the company in a deal worth $1.34 billion. Staff management software company Kronos ((KRON)) jumped 13.5% after it said Friday it agreed to be bought by private equity firm Hellman & Friedman Capital Partners VI LP and its related funds for $1.74 billion, or $55 per share in cash. The transaction is a 17.9% premium to the company''s closing stock price of $46.63 on Thursday. In late morning trading, the Dow Jones industrial average rose 31.49, or 0.25%, to 12,492.63. The Standard & Poor''s 500 index rose 3.18, or 0.22%, to 1,437.72, and the Nasdaq composite index advanced 0.91, or 0.04%, to 2,452.65. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.60% from 4.58% late Thursday.

[R]Existing home sales unexpectedly increased by 3.9% in February.[/R]
Friday morning, the National Association of Realtors released its report on existing home sales in the month of February, showing that sales unexpectedly showed a significant increase compared to the previous month. The report showed that existing home sales rose 3.9 percent to an annual rate of 6.69 million units in February from a revised 6.44 million unit rate in January. Despite the increase, existing home sales were still down 3.6 percent compared to February of 2006. Economists had been expecting existing home sales to fall to a 6.30 million unit rate compared to the 6.46 million unit rate that was originally reported for the previous month. The unexpected increase in existing home sales was due in large part to strong sales growth in the Northeast, where sales surged up 14.2 percent. Sales rose 3.9 percent in the Midwest and 1.6 percent in the South, while sales in the West were unchanged. However, the report also showed that the national median existing-home price for all housing types was $212,800 in February, which is down 1.3 percent from the median price of $215,700 in the same month last year. The report also showed that total housing inventory levels rose 5.9 percent to 3.75 million existing homes available for sale at the end of February. This represents a 6.7-month supply at the current sales pace compared with a 6.6-month supply in January.


[R]9:45AM U.S. stocks opened flat ahead of dousing data.[/R]
Wall Street opened nearly flat on Friday, with investors waiting for the release of February existing home sales. In corporate news, Amgen ((AMGN)) fell 4.2% after the company halted a trail of colon cancer drug Vectibix. ImClone Systems ((IMCL)), which makes Erbitux, a competitor drug to Vectibix, jumped 15%. DaimlerChrysler ((DCX)) rose 4.1% amid reports the automaker would sell its Chrysler unit. Kraft Foods ((KFT))rose nearly 1% after news the company will join the S&P 500 on March 30, replacing Sabre Holdings Corp. ((TSG)).

Among companies reporting earnings news, Nike ((NKE)) fell 2.9% after the retailer posted an 8% profit jump but also said that margins in the current quarter and year would be flat or slightly down. Palm ((PALM)) gained 1% after it issued a better-than-forecast earnings report. Nevertheless, UBS downgraded its stock, citing recent stock gains.

Dow component Citigroup ((C)) received some attention amid reports that a faction within the bank is in favor of a bid for ABN Amro ((ABN)). The Dutch bank holding merger wich is talks with Barclays ((BCS)) gained 2.2%. In the first hour of trading, the Dow Jones industrial average fell 6.41, or 0.05%, to 12,454.73. The Standard & Poor''s 500 index fell 0.54, or 0.04%, to 1,434.00, and the Nasdaq composite index fell 1.45, or 0.06%, to 2,450.29. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.57% from 4.58% late Thursday.



[R]9:00AM Wall Street to open modestly higher ahead of housing data.[/R]
U.S. stock markets looked poised for moderately higher opening on Friday, awaiting key economic data on housing starts. Wall Street expects a decline in sales after jumping to 6.46 million in January. The Federal Reserve said earlier this week that an ‘adjustment’ in the housing sector was continuing, offering some relief for investors concerned about the troubled subprime mortgage market. Among companies in focus, shares of Amgen ((AMGN)) dropped 4.2% in pre-open trade after it halted a study due to poor survival in patients that used Vectibix along with Genentech''''s ((DNA)) Avastin and chemotherapy to treat colorectal cancer.

In earnings news, Nike ((NKE)) slipped 2% after the athletic apparel maker reported an 8% profit rise but issued a soft gross margin forecast. Palm ((PALM)) lost 1.1% in pre-open trade after UBS still downgraded the maker of handheld devices, citing its recent stock price run. The company reported a better-than-forecast quarterly profit. Jabil Circuit ((JBL)) dropped 8.3% after releasing disappointing forecasts. On the merger-and-acquisition news front, Acciona and Enel ((EN)) said they''re considering a joint bid for Spanish utility Endesa ((ELE)) that could top the $55 billion offer from Germany''s E.On. S&P 500 futures rose 1.3 points at 1,446.30 and Nasdaq 100 futures rose a point at 1,819.75. Dow industrial futures rose 4 points.