Huntsman up 28% on $5.6 B Acquisition Bid

Elena
26 Jun, 2007
New York City

Wall Street opened above the flat line, reflecting bargain hunting after recent weakness and merger-and-acquisition news ahead of a key report on the housing market. BlackRock added 1.6% after it agreed to buy the fund-of-funds business of Quellos Group for up to $1.7 billion. In earnings news, homebuilder Lennar lost 1.2% after posting a quarterly loss and warning of further weakness. Oracle and Nike are scheduled to report after the closing bell.

[R]9:45AM Wall Street opened above the flat line amid bargain hunting and merger deals.[/R]

Wall Street opened above the flat line, reflecting bargain hunting after recent weakness and merger-and-acquisition news ahead of a key report on the housing market.

Chemical company Huntsman ((HUN)) surged 28% after division of billionaire investor Leonard Blavatnik's Access Industries agreed to buy it for $5.6 billion. Under the terms of the agreement, Basell will acquire Huntsman's outstanding common stock for $25.25 per share in cash, with the price representing a 34% premium over the company's Monday closing stock price of $18.90. Again in M&A action, BlackRock ((BLK)) added 1.6% after it agreed to buy the fund-of-funds business of Quellos Group for up to $1.7 billion.

In earnings news, homebuilder Lennar ((LEN)) lost 1.2% after posting a quarterly loss and warning of further weakness. Kroger ((KR)) fell 4.2%. after it reported better-than-expected quarterly earnings and a gain in revenue. There were few premarket quotes for the supermarket operator's stock, but it should be active after the opening. Oracle ((ORCL)) and Nike ((NKE)) are scheduled to report after the closing bell.

In morning trading, the Dow Jones industrial average rose 13.08, or 0.10%, to 13,365.13. The Standard & Poor's 500 index rose 2.49, or 0.17%, to 1,500.23, and the Nasdaq composite index gained 6.75, or 0.26%, to 2,583.83. Bonds fell slightly after the new home sales data, with the yield on the benchmark 10-year Treasury note rising to 5.09% from 5.08% late Monday.


[R]9:30AM Asian markets mostly decline with China bucking the trend and gaining.[/R]

Asian markets ended mostly lower. The Nikkei 225 Average in Tokyo settled lower on weakness in brokerage house Mitsubishi, lower 2.4%, and on a decline in export-oriented stocks, which were hurt by the subprime mortgage rate concerns in the world biggest import market. Elpida Memory shed 3.3% and Fujitsu declined 1.5%. Sony, the biggest maker of game consoles in the world, lost 0.9%.

HK also ended lower as deals ahead of futures settlement this week weighed on stocks. The Hang Seng Index lost 0.3% and settled at 21,803. PICC tumbled 8% after Citigroup reduced its recommendation on the stock to sell from hold. Lenovo declined 6% after Deutsche Bank cut its rating to sell from buy and HSBC shed 0.1% on subprime mortgage rate concern.

Problems for small-cap stocks drove South Korean market lower. Small-caps suffered as country''s financial watchdog took steps to limit stock trading on credit by retail investors. Construction companies were also hit. Hyundai Engineering & Construction lost 2.3% and Daelim Industrial shed 1.4%. Seoul’s Kospi Index lost 0.5% to 1,749.

Other major markets around the region also declined. Australian S&P/ASX 200 lost 0.3% to 6,308 and Taiwan ended 0.5% lower at 8,865. In Australia, the biggest mining company in the world, BHP Billiton edged 0.4% lower, while Woodside Petroleum lost l.1% after Credit Suisse cut its rating to underperform.

China bucked the downtrend. The Shanghai Composite Index gained after declining for two sessions in a row. The index advanced 0.9% to finish at 3,973. Shipping company China Cosco Holdings rallied 93.2% in its Shanghai trading debut as traders were upbeat about its possible expansion. Huangshi Dongbei Electrical Appliance soared by the daily 10% limit.


[R]9:00AM Market to open slightly higher ahead of housing data.[/R]

U.S. stock market looked poised for a higher opening Tuesday, with investors awaiting a report on new home sales, expected to show a decline in May from the previous month. In another report, the Conference Board is due to release its June consumer confidence index.

Among pre-market highlights, homebuilder Lennar ((LEN)) said it swung to a Q2 loss of 244.2 million, or $1.55 per share, vs. a profit of $324.7 million, or $2 per share a year ago, blaming weaker housing market. Analysts had been expecting Q2 profit of 5 cents a share. Quarterly revenue dropped 37% to $2.88 billion from $4.58 billion in the prior-year period, beating analyst estimate of $2.58 billion. The company warned it would report a Q3 loss as well.

Investment management company BlackRock Inc. ((BLK)) said it agreed to buy the fund of funds division of Quellos Group LLC for up to $1.7 billion. The deal, which is expected to complete around Oct. 1, will create a fund of funds operation with more than $25.4 billion in managed assets. S&P 500 futures rose 3 points at 1,516.60 and Nasdaq 100 futures rose 4 points at 1,945.00. Dow industrial futures rose 14 points.


[R]8:00AM NY-7:00PM Mumbai Sensex ends virtually flat in a subdued trading.[/R]

The Sensex on BSE finished 13.36 points higher, or 0.09%, at 14,501.08.

The market-breadth was strong with almost three gainers for every two decliners. As 1,492 stocks advanced, 1,117 declined and 84 remained unchanged. Of the 30 stocks in the Sensex, 15 advanced, 14 declined and one was unchanged. The turnover on BSE was Rs 4,677 crore, higher than Rs 4,316 crore on Monday. On NSE, the turnover was Rs 9,557 crore and was also much higher than Rs 8,308 on Monday.

Economic news

After the State Bank of India announced that it may have to raise $12 billion in the next three years to meet growing loan demands and meet capital requirements, the risk of holding debt of the lender advanced to a three-month high. SBI will use the money to expand its operation in the domestic and international markets. Credit-default swaps based on $10 million of the company''s debt advanced 4% to $50,000 from $48,000 yesterday. Any rise in the price of debt indicates the investors’ increased skepticism of the capacity of the bank to repay its debt. The bank said that plans to raise $1.2 billion by the end of this year.

The risk for holding debt in another Indian bank ICICI bank also increased to a six-month high as the bank failed to secure an important government approval to sell a stake of its unit. Credit-default swaps based on $10 million of the company''s debt advanced 3% to $70,000 today after surging 4.5% yesterday to almost $68,000.

Trading highlights

Time Technoplast was the most active stock with a turnover of Rs 201 crore followed by Indiabulls Financials and Indiabulls Real Estate.

Advancers

ONGC and Bharti Airtel surged 2% each to Rs 936 and Rs 850, respectively. ONGC reported a 13% decline in net profit to Rs 2,681.64 crore in the fourth-quarter of fiscal 2007 compared to a net profit of Rs 3,085.89 crore in the same period a year ago. Total income advanced nearly 10% to Rs 15,400 crore in fiscal 2007, compared to Rs 14,200 crore in the year ago period.

Bharti Airtel advance was on sustained buying after HSBC raised the price target of Bharti Airtel by 9%, and added that the company will continue to expand market share.

State run engineering large-cap BHEL gained 1.4% to Rs 1,471 as the company secured an order worth Rs 106 crore from Rashtriya Ispat Nigam. Grasim gained 1.4% each to Rs 2,496 and Tata Motors advanced over 1% to Rs 684. Satyam Computers was the only It large-cap which advanced rose 0.4% to Rs 456.

Decliners

Ranbaxy dropped 2.4% to Rs 348 as it was allegedly involved in a cartel of fixing drug prices. Profit taking weighed on cement stocks. Gujarat Ambuja Cements lost 1% to Rs 116 and ACC dipped 1.2% to Rs 846. IT stocks advanced on a weaker rupee until the last hour of trading when they declined. TCS was down 0.3% to Rs 1,122, Infosys Technologies sank 0.7% to Rs 1922, and Wipro lost 1.3% to Rs 509.