MedImmune Soars on $15.6 B Offer

Elena
23 Apr, 2007
New York City

Wall Street posted modest gains at opening on Monday, reflecting some profit taking after last-week strong gains, as well as news of two mega mergers, including the UK''s Barclays which agreed to buy Dutch bank ABN Amro for $91 billion in the biggest bank deal in history. In another deal, drugmaker AstraZeneca agreed to pay $15.6 billion for U.S. biotech company MedImmune. AstraZeneca shares lost 4.3%, while MedImmune surged 17.5%.

[R]9:45AM U.S. markets opened modestly higher.[/R]
Wall Street posted modest gains at opening on Monday, reflecting some profit taking after last-week strong gains, as well as news of two mega mergers, including the UK''s Barclays which agreed to buy Dutch bank ABN Amro for $91 billion in the biggest bank deal in history. Shares in ABN Amro slipped 1.4%, while Barclays dropped 2.1%. Bank of America ((BAC)) agreed to buy ABN Amro's U.S. bank, LaSalle. In another deal, drugmaker AstraZeneca agreed to pay $15.6 billion for U.S. biotech company MedImmune, sending biotechnology stocks notably higher. AstraZeneca ((AZN)) shares lost 4.3%, while MedImmune ((MEDI)) surged 17.5%.

Among blue-chip stocks, Pfizer ((PFE)) lost 1% after Prudential downgraded the stock to neutral from overweight, citing a lack of catalysts to drive the stock price higher. Exxon Mobil ((XOM)) fell 0.3% after Deutsche Bank downgraded the oil company to hold from buy, citing valuation. On the upside, Caterpillar Inc. ((CAT)) and IBM ((BM)) advanced after both were upgraded by brokers. Caterpillar rose 1.5%, while IBM gained almost 1%. In the first hour of trading, the Dow Jones industrial average was up 4.80, or 0.04%, at 12.966.78. The Standard & Poor's 500 index was up 1.56, or 0.11%, at 1,485.91, while the Nasdaq composite index was up 2.25, or 0.09%, 2,528.64. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.69% from 4.67% late Friday


[R]9:30AM London equities are little changed Monday despite M&A.[/R]
The UK market was little changed on Monday. The FTSE 100 was unable to hold opening gains, falling 0.1% to 6,483.4.

Advancers

Scottish & Newcastle led the advancers, up 2.4% on reports that Diageo and SABMiller were considering making a break-up bid for the brewer. British Airways added 0.2 % as it had reportedly approached a number of private equity groups about a possible bid for Iberia, the Spanish flag carrier.

Mining stocks advanced in line with firmer metals prices on commodities markets. Antofagasta was 1 % higher and was Vedanta 0.8% stronger. Property stocks also returned to the upside. Land Securities was 0.9% higher and Slough Estates recovered 0.7%.

Decliners

Barclays fell 1.5% after news of its offer for ABN saw shares in the Dutch Bank breached the 36.25 euros per share level of the all-paper recommended offer, up 2.2%. ABN officials are today due to hear details of a rival break-up bid from Royal Bank of Scotland, Santander and Fortis.

AstraZeneca fell 2.1% after it unveiled plans to spend $15.2 billion on the acquisition of MedImmune of the US. GlaxoSmithKline is also down 1.1%. 888 also fell after Ladbrokes walked away from a bid for the online gaming group. 888 fell more than 2%.


[R]9:15AM Asian stocks finished higher Monday with Japan ending slightly higher.[/R]
Asian markets finished mostly higher on Monday. The Nikkei 225 gained 0.02% to 17,455.37. Hoya, a tech company to report its earnings during the current earnings period, closed down 3.4%. The results were not disappointing but investors thought they were not strong enough to spark new buying incentives. Komatsu soared 4.8% after Caterpillar reported Friday better-than-expected quarterly earnings and lifted its outlook for 2007. Tokyo Star Bank gained 4.2% after reports that Lone Star Group is gearing to sell possibly its entire 67% stake in the bank.

In Hong Kong, Hang Seng Index shed 0.05% to close at 20,556.57. China Mobile and HSBC, traded in the opposite direction to each other Monday. China Mobile fell 2.8% after it reported its first-quarter results after Friday market close. HSBC continued its upward trend on a report that Saudi Arabia-based investor Maan al-Sanea, the second-largest shareholder in the bank, is considering boosting his stake in the bank. HSBC gained 0.3%.

The Korea Composite Stock Price Index, or Kospi, closed up 0.7% at 1,544.35, after hitting a new intraday high of 1,554.50 during the session. Posco, the world third-largest steelmaker by output, continued gaining, ending 3.6% higher. Heavy-equipment maker Doosan Infracore surged 5.7% and Doosan Heavy Industries & Construction, which owns 40% of Infracore, rose 2.8%. Hyundai Heavy Industries, of which the heavy equipment business accounts for about 10% of its total revenue, gained 4.9%.

The Shanghai Composite Index ended up 3.5% at a record 3,710.89. In large caps, China United Telecommunications soared 6.4%, Air China rose 9.1% and Baoshan Iron & Steel gained 5.4%. Taiwan shares ended 0.9% higher at 8,010.46 in light volume.


[R]9:00AM U.S. stock futures pointed higher on strong earnings and takeover activity.[/R]
U.S. stock futures pointed to a robust opening, with the Dow Jones industrial average expected to rise above the 13,000 mark for the first time Monday. On Friday, the Dow rose more than 150 points to 12,961.98, posting its seventh straight gain and third straight record close. The highly positive pre-market sentiment was generated by merger activity, as well as optimism about corporate profits.

A multibillion-dollar takeover deal sent European stocks sharply higher and provided a strong boost to the U.S. stock futures. British bank Barclays PLC ((BCS)) agreed to acquire Dutch bank ABN Amro NV ((ABNN)) for $91.16 billion in what would be the world's biggest bank deal. According to the terms of agreement, ABN Amro has to sell its U.S. unit, LaSalle Bank, to Bank of America Corp. for $21 billion. ABN also is holding talks with a consortium of the Royal Bank of Scotland, Banco Santander Central Hispano and Fortis over a possible counter bid. ABN Amto shares gained 1% in the pre-open, while Barclays lost 1.1%. In another merger deal, British drug maker AstraZeneca PLC ((AZN)) said it will buy U.S. drug maker MedImmune Inc. ((MEDI)) for $15.6 billion.

Earnings reports were also in focus Monday morning. Hasbro Inc. ((HAS)) said it swung to a Q1 profit, beating expectations. The second-largest U.S. toymaker posted profit of $32.9 million, or 19 cents a share, compared to a loss of $4.9 million, or 3 cents a share a year ago. Net revenue rose nearly 34%, reaching $625.3 million. The company’s shares rose 3.4% in the pre-open. Swiss pharmaceutical company Novartis SA ((NVS)) said its profit increased 11%. Companies reporting after the closing bell include cell phone chip maker Texas Instruments Inc. ((TXN)). No Dow components release earnings Monday. Ahead of Monday''''s market opening, Dow futures expiring in June rose 11.00, or 0.08%, to 13,030. The Standard & Poor''''s 500 index futures slipped 0.10, or 0.01%, to 1,493.00, while Nasdaq 100 futures rose 1.25, or 0.07%, to 1,863.75.


[R]8:00AM NY-7:00PM Mumbai Sensex finishes higher Monday, Tata Steel rallies.[/R]

The Sensex on BSE finished 30,92 points, or 0.22%, higher, at 13,928.33.

The market-breadth was negative as 1,384 stocks declined, while 1,163 advanced and 83 remained unchanged. Of the 30 stocks in the Sensex, 16 advanced, 13 declined and one stock was unchanged. The turnover on BSE was Rs 3,287 crore, lower than Rs 4,321.46 crore on Friday. On NSE, the turnover was Rs 7,695.31 crore, also lower than Rs 8,857.73 crore on Friday.

Economic news

Arcelor Mittal, the largest steel manufacturer in the world, has received approval from the U.S. and Mexican competition authorities to acquire Sicartsa from Grupo Villacero for $1.43 billion, about Rs 6,006 crore. Sicartsa is a fully integrated producer of long steel, with an annual production capacity of about 2.7 million tons and estimated iron ore reserves of 160 million tons.

Suggesting further tightening of the credit policy, the Reserve Bank today decided to suspend measures announced in October 2006 increase borrowings by companies in foreign currency.

M&A

British banking company Barclays will add thousands of new employees to its India subsidiaries following the takeover of its Dutch rival ABN Amro in a cash-and-stock deal valued at over $90 billion. While the number of new jobs have not been disclosed, reports suggest that the figure could be at anywhere between 8,000 and 10,000 jobs.

Trading highlights

Gujarat Ambuja was the most active stock with a turnover of Rs 349 crore followed by Tata Steel and Unitech. Three large block trades of 93.21 lakh shares each, at an average Rs 116.05 per share, traded in the Gujarat Ambuja Cements stock on BSE, contributed to the high turnover of the market.

Advancers

Tat Steel led the advancers, surging over 4% to Rs 558. It had advanced to a high of Rs 560, in intra-day trade. Reliance Communications advanced on expectations of robust earnings growth, powered by a strong increase in the subscriber base and an increased penetration of value-added services. Reliance Communications was up nearly 2% at Rs 465 and Reliance Energy gained over 2% to Rs 523.

ONGC gained over 1% to Rs 933. HDFC also gained over 1% to Rs 1,670. Satyam added nearly 1% to Rs 481. Infosys also advanced 0.6% to settle at Rs 2,067. Reliance Industries gained on late hours trading and managed to close 0.8% up at Rs 1,554.

Decliners

Cigarette large-cap ITC led the decliners, down 2.6% to Rs 156, on volumes of 17.18 lakh shares. It had also hit a low of Rs 154.85. Hindustan Lever slipped 1.6% to Rs 202. Bajaj Auto lost over 1% to Rs 2,409. Maruti also slipped 1.2% to Rs 767.4 and Tata Motors dipped 0.7% to Rs 717.8.

Banks declined, ahead of the Reserve Bank of India monetary policy meeting tomorrow. SBI lost 1.4% to Rs 1,060, HDFC Bank dipped 0.7% to Rs 987.4 and ICICI Bank was off 0.2% to Rs 913.

Pharmaceutical large-cap Ranbaxy Laboratories lost 0.4% to Rs 342.05. The company has invested more than $20 million in the Romanian subsidiary, Terapia Ranbaxy, in an attempt to make the subsidiary part of its strategy to expand into Europe and the Commonwealth of Independent States.


[R]7:45AM Barclay’s agreed to acquire ABN Amro for $91.16 billion.[/R]
The U.K.’s Barclays PLC announced Monday that it agreed to acquire Dutch ABN Amro NV in a deal worth 67 billion euros, or $91.16 billion to create the world''s fifth-largest bank and the second-biggest in Europe behind HSBC Holdings. Barclays is offering 3.225 of its shares for each ABN Amro shares, valuing the Dutch bank at 36.25 euros a share including a previously-announced 0.60 euros final dividend. The offer is a 33% premium to the price on March 16, the last day before the announcement that the two financial institutions were in deal talks. The world’s biggest bank takeover followed a month of serious negotiations.

According to terms of agreement, ABN Amro would sell its U.S. unit LaSalle, to Bank of America Corp. for $21 billion. Despite the agreement, ABN said it will go ahead with meetings with representatives from Royal Bank of Scotland PLC, Spain''s Banco Santander Central Hispano SA and Belgian-Dutch bank Fortis NV. A lot of analysts expect a rival to outbid the offer. The group expects see $4.8 billion in annual cost savings by 2010. Approximately 12,800 jobs will be cut from the combined work force of 217,000. About 10,800 others are likely to migrate to cheaper offshore locations. ABN Amro shares climbed 1.1% to 36.70 euros in morning trading. Shares in Barclays lost 1.4% in London.


[R]6:30AM European shares advance Monday on ABN Amro M&A[/R]
European markets advanced on Monday. The German DAX Xetra 30 index rose 0.1% at 7,347.57, the U.K. FTSE 100 index rose 0.1% at 6,492.70 and the French CAC-40 index increased 0.2% at 5,949.47, a morning after the first round of the French presidential election.

Advancers

ABN Amro, a Dutch bank, gained 1.7% after it agreed to the largest-ever banking takeover from the Barclays worth around 67 billion euros, or $91.2 billion. Scottish & Newcastle shares rose 2.4% after reports that SABMiller and Diageo held detailed talks about a joint bid for the U.K. brewer. Novartis added to pharmaceutical sector earnings news. Its shares rose 1.8% after it announced that its first-quarter net income rose 11% to $2.17 billion, with sales up 18% to $9.82 billion.

Food company Nestle also held to its fiscal year earnings guidance on Monday. Shares rose 1.7% after Nestle said that it is still expecting organic growth of between 5% and 6% this year, with improved constant currency earnings before interest and tax margins for the fiscal year.

In the auto sector, BMW shares rose 2.5% after J.P. Morgan upgraded the company to overweight from neutral on Monday. Peugeot also rose 0.8% after reports that the French automaker could be planning to restructure in France after the presidential election, a move that could affect around 10,000 jobs.

Decliners

Barclays dropped 1.7 % after the bank bid for the Dutch bank. AstraZeneca lost 1.4 %. The maker of the Nexium ulcer medicine agreed to buy MedImmune to gain flu vaccines and an antiviral medication for babies. Societe Generale SA declined 2 % after second-biggest bank by market value in France denied it was in merger talks on April 20.

Oil and precious metals

Crude oil advanced on concern supplies from Nigeria will be disrupted just as demand for gasoline is surging. Crude oil for June delivery rose 42 cents, or 0.7 %, to $64.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for June gained 86 cents, or 1.3 %, to $67.35 a barrel in electronic trading on the ICE Futures exchange.

Gold fell from an 11-month high after the dollar advanced against the euro, denting investor demand for the precious metal as an alternative investment. Silver also declined. Gold for immediate delivery dropped $1.60, or 0.2 %, to $690.35 an ounce. Silver declined 4.5 cents to $13.895 an ounce. Palladium for immediate delivery fell 50 cents to $384.50 and platinum dropped $4 to $1,324 an ounce.

Currencies

The U.S. dollar was mostly higher against other major currencies in European trading Monday morning. The euro traded at $1.3562, down from $1.3601 late Friday in New York. The British pound traded at $1.9986, down from $2.0036. The dollar fetched 118.44 Japanese yen, down from 118.74.