Merger Deals Boost Stock Futures

Elena
29 May, 2007
New York City

U.S. stock futures were indicating a positive opening on Tuesday after a three-day weekend. Pre-market sentiment was lifted by merger activity, including a $95.5 billion hostile bid for ABN Amro from a group led by Royal Bank of Scotland. In other deal news, Archstone-Smith is close to a $20 billion acquisition by Tishman Speyer and Lehman Brothers. URS Corp. agreed to buy engineering and design company Washington Group for $2.6 B in cash and stock.

[R]9)0AM Merger activity boosted pre-market sentiment.[/R]

U.S. stock futures were indicating a positive opening on Tuesday after a three-day weekend. Pre-market sentiment was lifted by merger activity, including a $95.5 billion hostile bid for ABN Amro ((ABN)) from a group led by Royal Bank of Scotland. In other deal news, Archstone-Smith ((ASN)) is close to a $20 billion acquisition by Tishman Speyer and Lehman Brothers ((LEH)). URS Corp. ((URS)) agreed to buy engineering and design company Washington Group ((WNG)) for $2.6 B in cash and stock.

In earnings news, Vodafone Group ((VOD)) announced narrower full-year loss due to cost cutting and strong growth in emerging markets. On the economic agenda, the Conference Board is due to report its May index of consumer confidence, while Standard & Poor's is expected to release its home price index. The futures contact for the Dow Jones Industrial Average last was up 25 points at 13,552. The futures contract for the S&P 500 and the Nasdaq 100 last were 3 points higher at 1,520.30 and up 2.5 points at 1,895.5.


[R]8:30AM Royal Bank of Scotland made a hostile bid for ABN Amro.[/R]

A consortium led by Royal Bank of Scotland PLC ((RBS)) announced on Tuesday an agreement to make a hostile bid of 71.1 billion euros ($95.5 billion) for ABN Amro ((ABN)), outbidding a friendly offer from Barclays PLC. The group offered 11% more cash compared to an earlier bid of 27.30 euros a share, and in total the improved bid was worth more than the all-stock offer from Barclays. RBS, Santander and Fortis offered 30.40 euros in cash and 0.844 RBS share for each ABN Amro share, valuing the Dutch bank at 38.40 euros a share.

The banks said that they made the offer on the condition that ABN Amro shareholders would reject the company''s proposed sale of its LaSalle Bank division to Bank of America ((BAC)) for $21.5 billion. ABN Amro''s shares fell 0.6%, shares of RBS fell 1.1%, while Barclays shares rose 0.8%.


[R]7:30AM NY-6:30PM Mumbai Sensex rallies Tuesday on strong Reliance Industries.[/R]

The Sensex finished 110.32 points, or 0.77%, higher at 14,508.21.

The market-breadth was positive as 1,357 stocks advanced, while 1,213 stocks declined and only 102 stocks remained unchanged. Of the 30 stocks in the Sensex, 22 advanced, while the rest declined, The turnover on BSE was Rs 4,573 crore, slightly higher than Rs 4,241 crore on Monday. On NSE, the turnover was Rs 9,340.58 crore, almost unchanged from Rs 9,320.08 crore on Monday.

Economic news

The government today announced that it was considering a scheme to refund the local taxes and levies to labor-intensive industries with little import component to counter the impact of the soaring rupee, which hit a nine-year high yesterday.

Prime Minister Manmohan Singh, concerned about the slowdown of the agriculture sector, has told the Chief Ministers that the government is willing to support their plans for enhancing productivity in the segment.

The annual monsoon rains, vital for the economy of the country, hit Kerala, four days ahead of the normal date of June 1.

Trading highlights

Orbit Corp was the most-active stock with a turnover of Rs 208.40 crore followed by Unitech and Reliance Industries. New issue, real estate company Orbit Corporation, surged 15.13% to Rs 252.60 on huge volumes of 84.38 lakh shares.

Advancers

BHEL and Cipla soared nearly 5% each to Rs 2,856 and Rs 219, respectively. Pharmaceutical large-cap Cipla was in focus today and enjoyed strong buying momentum, after it was hit in the past few weeks, for posting poor fourth-quarter fiscal 2007 results. BHEL had struck a record high of Rs 2,889.90 in intra-day trade. The company had reported 32.54% increase in net profit in the fourth-quarter of fiscal 2007 to Rs 1,150.37 crore from Rs 867.95 crore in the comparable period a year earlier, after trading hours on May 25 2007.

Larsen & Toubro surged 4% to Rs 1,857. L&T reported 50% rise in net profit in fourth-quarter of fiscal 2007 to Rs 701 crore from Rs 467 crore a year earlier. Ranbaxy and Reliance Communications rallied over 2% each to Rs 390 and Rs 521, respectively. Ranbaxy Laboratories, the wholly owned subsidiary of Ranbaxy Laboratories, acquired the US rights to a group of 13 dermatology brands from Bristol-Myers Squibb Co for $26 million on Monday, May 28 2007.

Reliance and HDFC Bank advanced 1.8% each to Rs 1,755 and Rs 1,145, respectively. Reliance was highly volatility, as it traded in a range of Rs 1,711.95 to Rs 1,765.80. SBI, Grasim, Hindustan Lever, Tata Motors and Reliance Energy advanced around 1% each at Rs 1,322, Rs 2,509, Rs 203, Rs 741 and Rs 555, respectively.

Decliners

HDFC shed 1.7% to Rs 1,813. Gujarat Ambuja and NTPC declined 1% each at Rs 115 and Rs 161, respectively. Bajaj Auto was down 0.5% to Rs 2,192, NTPC was off almost 1% to Rs 161, and ITC shed 0.7% to Rs 165.

[R]6:30AM European stocks inch higher Tuesday on Vodafone and deal offers.[/R]

European markets were mostly higher Tuesday. The U.K. FTSE 100 index advanced 0.2% at 6,581.20 while the German DAX Xetra 30 index increased 0.1% at 7,745.68 as British and German investors returned from a long holiday weekend. The French CAC-40 index inched down 0.1% at 6,063.66. National benchmarks rose in 10 of the 17 western European markets that were open.

Advancers

Mobile phone company Vodafone Group posted strong share gains in early trading as investors welcomed the company announcement that its fiscal-year loss narrowed to 5.3 billion pounds, from 21.8 billion pounds a year ago, in part on much lower impairment losses. Vodafone climbed 4%.

France Telecom gained 0.2%, adding to recent strong gains made amid growing speculation that it is on the verge of selling its Orange Netherlands division, most likely to Deutsche Telekom, which shares rose 0.8%.

Philips gained 1.2% as it was added to Lehman Brothers European Recommended Portfolio.

Decliners

Bid target ABN Amro declined 0.6% after a consortium led by Royal Bank of Scotland officially launched its offer for the bank, bidding 71.1 billion euros, or $95.5 billion for the firm.

Shares in Royal Bank of Scotland fell 1.2% while its consortium partners put in a mixed performance, with Fortis shares down 1%.

Commodities

Crude oil for March delivery was at $64.35 a barrel in after- hours electronic trading on the New York Mercantile Exchange, down 85 cents from the closing price on May 25. Brent crude oil traded little changed in London on expectations of higher gasoline demand in the U.S.

Gold advanced in London as a decline in the dollar against the euro revived demand for the metal as an alternative investment. Gold for immediate delivery rose $2.25, or 0.3%, to $657.80 an ounce, after falling 45 cents yesterday. Silver gained 7 cents to $13.01 an ounce.

Currencies

The U.S. dollar was mostly down against most major currencies in European trading Tuesday. The euro traded at $1.3483, up from $1.3451 late Monday in New York. The British pound traded at $1.9874, up from $1.9834. The dollar bought 121.41 Japanese yen, down from 121.68.