Allianz Stake in Hartford, ArcelorMittal Plunges

123jump.com Staff
07 Oct, 2008
New York City

Hartford Financial receives capital infusion from Allianz SE. MetLife, Prduential and Principal Financial Group dive. Metals and mining companies fall sharply. American Express, Visa and MasterCard drop. eBay cuts 1,600 staff and takes a charge. Gannett Drops to a new low.

[R]2:05 PM New York – Miners, financials and ocean freight carriers plunge. Hartford Financial rallies after Allianz takes a stake and companies release a third quarter loss.[/R]

ArcelorMittal ((MT)) plunged 17.5% or $8.37 to $36.28. The largest steelmaker in the world with operations in 20 countries on four continents was lowered by Deutsche Bank lowered to ‘hold’ from ‘buy.’ Deutsche also lowered steel price for this and next year. Brazil based Vale ((RIO)) plunged 20% or $3.20 to $12.55.

Mining and metals related stocks fell sharply in trading.

BHP Billiton ((BHP)) dropped $4.96 to $42.13, Freeport McMoran ((FCX)) plunged $3.06 to $41.78 and Peabody Energy ((BTU)) dived $3.43 to $32.69. U.S. Steel ((X)) sank $6.63 to $56.94.

Citigroup Inc ((C)) dropped 8.50% or $1.55 to $16.80. On Sunday the company said it won a court order blocking Wells Fargo from buying Wachovia. Wells Fargo bank revised its offer for the bank after the completion of auction conducted by the Federal Depository Insurance and offered $15.1 billion for its banking, brokerage and asset management.

eBay Inc ((EBAY)) fell 5.60% or $1.06 to $17.87, the online marketplace provider agreed to pay $820 million in cash and $125 million in options for Bill Me Later. The company also paid $390 million for dba.dk and bilbasen.dk, a leading classifieds operator in Denmark. The eBay also cut its work force by 10% or 1,600 jobs. The company will take a restructuring charge between $70 million and $80 million in the fourth quarter and save $150 million annually.

DryShips ((DRYS)) dropped 24% $7.50 to $24.10 and Excel Marine ((EXM)) plunged 25% or $3.50 to $10.40. DryShips said in a presentation that it plans to acquire nine ships with deadweight tonnage of 1.6 million controlled by founder George Economou. The company will pay $689.6 million and assume $216.3 million in debt and $262 million in shipyard payments.

El Paso Corporation ((EP)) lost 11.59% or $1.27 to $9.70. Operator of the natural gas transmission and explorer in the Gulf of Mexico said its operations are ``heavily damaged'''' by recent hurricanes and that much of its production in the region remains shut.

Gannett Co., Inc dropped 4.7% or 72 cents to $14.46 after it borrowed $1.2 billion from its unsecured credit line. The company has relied on the past for its short term capital in the commercial paper market and has a total of $3.9 billion credit line. The company debt was out on negative watch by S&P according to the company on October 1.

Gold, zinc and copper miners dropped sharply after analysts lowered metals price forecast for the rest of the year and next year. Goldcorp Inc ((GG)) fell 4.53% or $1.23 to $25.56. Randgold Resources Limited ((GOLD)) dropped 3.77% or $1.31 to $33.43. On Sept 25, the company said that BlackRock Global Funds is interested in 4.75 million shares of the company representing 6% voting rights.

The Hartford Financial Services Group, Inc ((HIG)) surged 13.25% or $3.66 to $31.08 after the company said it will receive a $2.5 billion investment from Germany based Allianz SE.

Allianz will purchase Hartford stock at $31 a share or $750 million in preferred and convertible stock and $1.75 billion of 10% junior subordinate debentures. The debentures are callable at par after ten years. Allianz will also warrants that expire in seven years to purchase up to $1.75 billion in common stock at a price of $25.32 a share. The company also lowered its dividend 40% to 32 cents a share.

The company estimates in the third quarter a loss of between $8.50 and $8.80 a share including net realized loss of between $2.1 billion and $2.2 billion or $7.05 and $7.25 a share. About 75% of the losses are linked to financial services sector securities. The company appointed Greg McGreevey as chief investment officer and executive vice president.

MetLife ((MET)) dropped 2.7% or $1.12 to $41.01 and Prudential Financial ((PRU)) fell 6.8% or $3.71 to $52.16.

Vimpel Communications ((VIP)) in New York trading dropped 27% or $4.62 to $12.78 after Russian market index plunged 19%. Templeton Russia Fund ((TRF)) fell 15% or $4.33 to $24.96.