GE Close to Plastics Division Sale for $11 B

Elena
18 May, 2007
New York City

General Electric advanced 1.8% amid reports that it is close to a deal to sell its plastics division for nearly $11 billion to Saudi Basic Industries Corp. Trump Entertainment rose 19% after the casino and hotel operator said it received indications that would-be suitors show interest in buying the company.

[R]9:45AM U.S market averages opened higher, boosted by merger activity.[/R]
Wall Street gained ground on Friday, boosted by takeover activity including a Microsoft Corp. acquisition of online advertising firm Aquantive and a potential divestiture by General Electric Co. Stronger-than-expected reading on consumer sentiment also contributed to the solid gains. The preliminary University of Michigan index of consumer sentiment for May came in at 88.7, vs. expectations of unchanged index at 87.1.

Shares of Aquantive ((AQNT)) surged 77% in early trading, while Microsoft ((MSFT)) lost 1.2%. General Electric ((GE)) advanced 1% amid reports that it is close to a deal to sell its plastics division for nearly $11 billion to Saudi Basic Industries Corp. Again in the Dow, Intel ((INTC)) jumped 2.3% after Merrill Lynch upgraded the stock.

Among the most notable movers, CalAmp Corp. ((CAMP)), wireless communications equipment maker, tumbled 37% after it said Q4 profit fell sharply on higher expenses and predicted Q1 net loss, citing near term challenges with one of its products. Trump Entertainment ((TRMP)) rose 19% after the casino and hotel operator said it received indications that would-be suitors show interest in buying the company.

In the first hour of trading, the Dow Jones industrial average rose 47.06, or 0.35%, to 13,523.78. The Standard & Poor''s 500 index rose 4.90, or 0.32%, to 1,517.65. The Nasdaq composite index rose 4.72, or 0.19%, to 2,544.10. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.78% from 4.76% late Thursday.


[R]9:30AM The FTSE 100 gains Friday, aided by Cadbury Schweppes and oil large-caps.[/R]

The FTSE 100 was up 40.2 points to trade at 6,619.5, its highest level since September 2000.

Advancers

Cadbury Schweppes surged 3.5% on reports that two private consortiums were preparing 8 billion pounds bids for the US drinks unit of the company. Insurer Royal & Sun Alliance was another sharp advancer, up 2.1%.

A firm oil price boosted oil companies. BG Group and Royal Dutch Shell rose 2%, while BP was up 1.7%. Cairn Energy added 3.5% as Citigroup lifted its recommendation on the stock from hold to buy.

Decliners

There were few decliners. British Airways slid 3% after a disappointing set of full-year results. Operating profit fell 13% to 602 million pounds and the airline also added it was to make a provision of 350 million pounds in its full-year accounts over a fuel surcharge investigation.

Assura, a group which develops health care facilities, announced it is performing in line with expectations for the first half of the year and the property division is continuing to work towards its targets. Assure fell 2.1%.


[R]9:00AM Stock futures pointed to a higher opening.[/R]
U.S. stock futures were pointing to a rebound after Thursday''s losses, with General Electric expected to announce the sale of a subsidiary and Dow member Verizon Communications ((VZ)) moving 1.6% higher after Citigroup upgraded its stock to buy from sell. General Electric ((GE)) added 1% in pre-market trading on reports that it is close to a deal to sell its plastics division for nearly $11 billion to Saudi Basic Industries.

In other deal news, Microsoft Corp. ((MSFT)) announced on Friday that it agreed to acquire online advertising firm aQuantive Inc. ((AQNT)) for about $6 billion in cash. Shares of Aquantive shot up 77.6% in pre-market trade. CapitalSource ((CSE)) agreed to buy Nebraska lender TierOne ((TONE)) for $652 million in cash and stock. TierOne shares jumped nearly 32% in pre-open deals. Among other stocks attracting attention before the bell, Intuit ((INTU)) soared 10% after the tax-preparation software maker posted 23% profit increase, lifted its earnings forecast and set an $800 million stock buyback plan.

On the economic news front, the University of Michigan is scheduled to release its preliminary index of consumer sentiment for May, which is expected to show a reading of 87.1, the same as in April. S&P 500 futures rose 4.2 points at 1,519.40 and Nasdaq 100 futures climbed 4.25 points at 1,894.50. Dow industrial futures gained 30 points.


[R]8:30AM Asian stocks decline across the board on a plunge in copper prices.[/R]

Asian markets ended mostly lower on Friday. Japanese Nikkei 225 finished down 0.6% at 17,399.58. Metal-processing and smelting firm Dowa Holdings slumped 4.7%, while Toho Zinc fell 2.6%. Nippon Steel, the world second-largest steel producer, fell 2.4%, while Credit Saison dipped 4.9%. Sumitomo Metal Mining, the largest nickel miner in Japan, lost 4.1 percent, its biggest drop since April 2.

Strong expectations of another interest-rate hike in China sent Hong Kong shares lower. Hong Kong Hang Seng ended down 0.4% at 20,904.84. China Mobile outperformed, though, on hopes they will soon be able to list on mainland stock markets. China Mobile, the world largest wireless mobile operator by subscribers, closed 0.5% higher. China Life fell 1.5%, while Bank of China dropped 1.2%. Hong Kong Exchanges & Clearing shed 1.2%.

The Shanghai Composite closed 0.5% lower at 4,030.25. China Merchants Bank Co., the the third biggest publicly traded lender in China, lost 2.2%. China Minsheng Banking Corp., the first privately controlled lender, fell 2.3%.

In Australia, the S&P/ASX 200 closed 0.8% lower at 6,312.50, as miner BHP Billiton shed 2.4%. South Korean Kospi index also finished down 0.2% at 1,612.25, The Singapore Straits Times index closed down 0.4% at 3,513.28 and Taiwan Weighted Index settled down 0.1% at 8,034.14.


[R]8:15AM Microsoft agreed to acquire Aquantive for $6 billion[/R]
Microsoft ((MSFT)) announced Friday an agreement to acquire Aquantive Inc. ((AQNT)) in an all-cash deal, valuing the company at approximately $6 billion. Microsoft offered to buy the shares of the digital marketing technology provider at $66.50 each, a healthy premium to Thursday''s close at $35.87. The transactions is expected to complete in the first half of fiscal 2008. Microsoft doesn''t anticipate the transaction will have a significant impact on its previously issued financial outlook.


[R]8:00AM NY-7:00PM Mumbai Sensex finishes flat, banks, IT stocks rally.[/R]

The Sensex on BSE ended Thursday 3.70 points, or 0.03%, higher at 14,303.41.

The market-breadth was negative as 1,106 stocks advanced, 1,491 declined and only 72 stocks remained unchanged. Of the 30 stocks in the Sensex, 13 advanced, while the rest declined. The turnover on BSE was Rs crore, compared to Rs 5,951.91 crore on Thursday. On NSE, the turnover was Rs 9,810.09 crore, much lower than Rs 12,372.07 crore on Thursday.

Economic news

The wholesale price index advanced 5.44% in the 12 months to May 5 2007, lower than the the previous week’s rise of 5.66%, but higher than 4.37% in the same period last year.

BSE announced on Friday May 18 2007, it had completed the sale of 51% of equity shares to 19 domestic and overseas investors, including 10% sold to two foreign exchanges. Member-brokers of the BSE sold their shares in the exchange at Rs 5,200 per share.

Advancers

Private banks were in focus today, especially in late trading. HDFC Bank rallied 3.5% to Rs 1,072. The bank announced yesterday, its board had approved lifting additional share capital of $1 billion to meet the growing demand for loans.

ICICI Bank rallied 1.6% to Rs 951. The bank had surged in the last few days tracking the move by the Reserve Bank of India to allow banks to trade credit default swaps, which are used to hedge credit risk.

ITC and Hero Honda gained over 1% each to Rs 167 and Rs 687, respectively. Index heavy Reliance Industries was up nearly 1% at Rs 1,699. The stock struck a record high of Rs 1,705 at the end of the trading session, advancing for the third day in a row today.

Decliners

Bajaj Auto plummeted 8.5% to Rs 2,287 following a near 7% decline in yesterday''s trade. At the beginning of the trading session, the stock had come off lower level after an initial drop of 13% to Rs 2,179.

Cement stocks declined. Gujarat Ambuja shed 3.5% to Rs 119. NTPC and Dr. Reddy lost nearly 2% each to Rs 156 and Rs 666, respectively. ACC and Hindalco shed 1.5% each to Rs 875 and Rs 147, respectively.

Tata Motors fell 1% to Rs 743. Tata Motors reported today a 26% growth in net profit to Rs 577 crore in the fourth quarter of fiscal 2007, from Rs 458 crore in in the fourth quarter of fiscal 2006.


[R]6:30AM European markets advance Friday on merger talk.[/R]

European markets were higher on Friday. By late morning, Frankfurt Xetra Dax added 0.8% to 7,560.14, the CAC 40 in Paris added 0.8% to 6,074.75 and London FTSE 100 climbed 0.8% to 6,630.5. National benchmarks rose in all 17 western Europe markets that were open.

Advancers

The rumour, which lifted Shell 3.7% on Thursday, was largely rejected, but speculation continued that the sector could be ready for consolidation. Shell rose 1.4% in Amsterdam.

Other oil companies also advanced. Statoil ASA, Norway biggest oil company, gained 2.6%. Spanish Repsol, which has been the object of stakebuilding by Sacyr-Vallehermoso, the Spanish construction group, rose 1.4 %. Total of France gained 1.8%.

EADS, the European aerospace company and maker of Airbus jetliners, climbed 3.2% after Dubai International Capital, the private equity group, said it was in talks to buy a stake in the business for a fund it manages.

Bayer AG, which makes coatings and high-performance plastic at its material science unit, rallied 3.9% and steelmaker Arcelor-Mittal added 3.7% after announcing an interim dividend of 0.325 euro a share, prompting a target price upgrade by UBS.

Decliners

There were few decliners. British Airways declined 3.6% after the third-largest airline in Europe reported fourth-quarter net loss of 128 million pounds, or $253 million, after a labor dispute disrupted flights and trans-Atlantic traffic declined.

Commodities

Gold gained in London for the first time in three days on higher demand from jewelers. Gold for immediate delivery climbed $3.50, or 0.5%, to $661.15 an ounce, while silver gained 7.5 cents, or 0.6%, to $12.915 an ounce.

Crude oil retreated after reaching a three-week high in New York on speculation breakdowns and production halts mean refiners will have trouble replenishing U.S. gasoline stockpiles. Crude oil for June delivery fell 4 cents to $64.82 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for July settlement was down 46 cents at $69.81 a barrel in electronic trading on the ICE Futures exchange.

Currencies

The dollar was mostly higher against other major currencies in European trading Friday morning. The euro traded at $1.3485, down from $1.3492 late Thursday in New York. The British pound traded at $1.9725, down from $1.9743. The dollar stood 121.35 Japanese yen, up from 121.27.