Novartis to Buy Chiron for $5B

Elena
31 Oct, 2005
New York City

Asian-Pacific markets surged with the Nikkei in the lead, rising 2%, followed by markets in Australia, South Korea, and Hong Kong. European stocks also traded higher, boosted by merger-and-acquisition news. Novartis has agreed to acquire all the remaining public shares of Chiron for $5.1 billion. PMC-Sierra Inc. is buying Agilent Technologies for $425 million.

U.S. MARKET AVERAGES

U.S. stock futures predict higher opening, following the Friday rally on GDP growth. The market sentiment is boosted by merger-and-acquisition activity from Swiss drug maker Novartis, Saks Inc., and semiconductor maker PMC-Sierra Inc.

Novartis ((NVS)) has agreed to acquire all the remaining public shares of Chiron it does not own, offering $45 per share in cash, or a total of $5.1 billion.

Saks Inc. ((SKS)) is expected to announce the sale of its northern department-store group for $1.1 billion to Bon-Ton Stores ((BONT)).

Semiconductors maker PMC-Sierra Inc. ((PMCS)) has agreed to buy Agilent Technologies Inc.'s] ((A)) storage semiconductor business for $425 million in cash.

Companies reporting quarterly earnings on Monday include Kellogg Co ((K)), the world''s largest maker of breakfast cereal, Valero Energy ((VLO)), leading U.S. oil refiner, and bankrupt airline operator UAL Corp.

S&P 500 futures were up 2.9 points, above their fair value. Dow Jones industrial average futures were up 16 points, while Nasdaq 100 futures were up 5.5 points.

ECONOMIC NEWS

The Commerce Department is scheduled to release personal income and consumption data at 8:30 a.m. Economists in a Reuters survey expect an average rise of 0.3% in income versus a 0.1% fall and a 0.5% increase in spending versus a 0.5% decrease in the prior month.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks registered solid gains Monday on strong Friday close of U.S. equity markets, boosted by GDP growth, and ahead of an interest-rate increase from the U.S. Fed Reserve. The Nikkei surged 2% on domestic earnings and export-related issues. Other regional markets rising above 1% were Australia’s All Ordinaries, up 1.7%, followed by South Korea’s Kospi, up 1.5%, and Hong Kong’s Hang Seng, up 1.2%.

European markets posted solid gains at mid-day dealings, reflecting sharply higher U.S. markets close Friday, lower oil prices, as well as a merger-and-acquisition news from Spanish Telefonica which agreed to buy U.K.’s mobile operator Q2 for $13.5 billion. The German DAX 30 added 1.5%, the French CAC 40 climbed 1.4%, and London’s FTSE rose 1.1%.

ENERGY, METALS, CURRENCIES

Crude oil declined below $61 a barrel after OPEC declared there was enough capacity and on expectations of lower U.S. fuel demand. Light sweet crude December contract fell 77 cents to $60.45 a barrel on the Nymex. Heating oil fell 2 cents to $1.8265 a gallon. Gasoline lost over 2 cents to $1.5975. Natural gas shed 26 cents to $12.79 per 1,000 cubic feet. London Brent lost 62 cents to $58.80

Gold futures traded mixed in Europe. In London gold was fixed at $472.65 per troy ounce, up from $470.30. In Zurich it traded at $472.03, down from $473.35. In Hong Kong the precious metal lost $1.80 to close at $472.25. Silver opened at $7.75, up from $7.70.

In European trading the U.S. dollar was mixed against its major counterparts. The euro was quoted at $1.2057, down from $1.2059. The dollar changed hands at 115.94 yen, up from 115.61. The British pound was trading at $1.7776, up from $1.7740.

EARNINGS NEWS

ABN Amro ((ABN)), Dutch banking group, posted 35% increase in Q3 net profit to 1.2 billion euros, beating analyst forecasts of 781 million euros ($948 million) and said the hard-fought acquisition of an Italian bank laid the groundwork for further growth. Second-half results are expected, at least, to match the first half''s profit of 1.88 billion euros, against previous expectations of a worse performance. ABN Amro announced that profit advanced from the second quarter on due the continued growth of the consumer and commercial banking activities, an improved performance of wholesale clients division, as well as proceeds from the sale of Real Seguros and Nachenius, Tjeenk & Co.

Encore Medical Corp. ((ENMC)), orthopedic devices manufacturer, posted Q3 net income of 5 cents a share, up from 3 cents a share in the year-earlier period on 171% revenue growth, matching analyst estimate of 5 cents a share.

Humana Inc. ((HUM)), health insurer, reported Q3 net income fell 41% to 30 cents a share despite 20% revenue growth on a class-action settlement and expenses relating to Hurricane Katrina. If not for those items, it earnings would have been 60 cents a share, topping analysts’ views of 51 cents a share.

Cognizant Technology Solutions Inc. ((CTSH)), IT designer reported Q3 net income of 28 cents a share, up from 18 cents in the year-ago period on 52% revenue growth.

Valero Energy Corp. ((VLO)), refining and marketing of environmentally clean products company, announced that Q3 net income rose to $4.37 a share, up from $1.57 a share in the same period last year, topping analysts’ forecasts of $4.23 a share. Including a $621 million pretax charge related to inventory valuation, net income came in at $2.94 a share.