U.S. Market Opens Lower as Oil Tops $72

Elena
05 Jul, 2007
New York City

U.S. stock markets reopened lower on Thursday after the Independence Day holiday, hurt by surging crude oil prices and rising bond yields. Oil prices hovered near $72 a barrel ahead of weekly petroleum report. Stocks failed to sustain the positive pre-market mood, despite 27% rise in the shares of Hilton Hotels after Blackstone Group''s $26 billion acquisition offer. Investors also digested the interest rate hike by The Bank of England to 5.75%, which exerted pressure on the dollar.

[R]9:45AM Market opened lower, as oil topped $72 a barrel and bond yields rose.[/R]

U.S. stock markets reopened lower on Thursday after the Independence Day holiday, hurt by surging crude oil prices and rising bond yields. Oil prices hovered near $72 a barrel ahead of weekly petroleum report. Investors also digested the interest rate hike by The Bank of England to 5.75%, which exerted pressure on the dollar. Stocks failed to sustain the positive pre-market mood, despite 27% rise in the shares of Hilton Hotels ((HLT)) after Blackstone Group's ((BX)) $26 billion acquisition offer.

After market close on Tuesday, Blackstone said it will buy the hotel chain for $47.50 a share, which represents a 40% premium over Monday's closing price. The news suggested there will be more merger deals in the sector. Marriott International Inc. ((MAR)) gained 6% and Starwood Hotels & Resorts Worldwide Inc. ((HOT)) rose 8% amid speculations that they are possible takeover candidates.

In other deal news, chemicals group Huntsman ((HUN)) advanced 12% after it received a $6 billion offer from a private-equity firm that trumps last week's bid from Dutch group Basell. Coca-Cola Co.((KO)) is reportedly looking into buying Cadbury Schweppes PLC's Snapple iced tea brand or building its own tea brand.

On the economic news front, two reports suggested a healthy labor market. The ADP employment report, a measure of jobs creation in the private sector, said 150,000 new non-government jobs were created in June, while the Labor Department said that initial claims rose by 2,000 in the latest week to 318,000.

In early trading, the Dow fell 45.20, or 0.33%, to 13,532.10. General Motors ((GM)) pushed the blue average down, as its shares slipped 4.5%. The stock was downgraded by a Bear Stearns after the automaker posted a 21.3% drop in June sales compared to last year. The Standard & Poor's 500 index was off 1.28, or 0.08%, at 1,523.59, and the Nasdaq composite index fell 0.85, or 0.03%, to 2,644.10.


[R]8:00AM Huntsman Corp. received a $6.1 billion offer from Apollo Management.[/R]

Huntsman Corp. ((HUN)), U.S. chemicals group, announced that it received an acquisition bid worth $6.1 billion from private-equity firm Apollo Management. The offer exceeds a previously agreed deal with Dutch group Basell. Apollo division Hexion Specialty Chemicals offered $27.25 a share in cash for Huntsman, representing an 8% premium to an offer of $25.25 a share, or $5.6 billion, from Basell.

In June, Huntsman agreed to the deal with privately owned Dutch group Basell. Including assumed debt, the Basell offer was worth around $9.6 billion. The deal can be terminated provided a better offer is received. If the deal with Basell is terminated, the Dutch group will be entitled to a $200 million break-up fee.

Under the terms of the agreement, Huntsman would receive a $325 million fee if Hexion failed to get regulatory approval or secure financing for the deal. Similarly, Huntsman would have to pay a $225 million fee to Hexion if it terminated the deal.