U.S. Stocks Surge on Merger Monday

123jump.com Staff
28 Sep, 2009
New York City

Stocks in early trading surged after two merger deals. Xerox agreed to pay $6.4 billion for government services outsourcing company Affiliated Computer Services. Abbott agreed to pay $6.6 billion to acquire pharmaceutical business of Belgium based Solvay SA. German election returns ruling coalition.

[R]10:45 AM New York – Stocks in early trading surged after two merger deals. Xerox agreed to pay $6.4 billion for government services outsourcing company Affiliated Computer Services. Abbott agreed to pay $6.6 billion to acquire pharmaceutical business of Belgium based Solvay SA.[/R]

Stocks in early trading jumped after the announcement of two deals totaling $13 billion and three smaller deals totaling $500 million.

European markets edged higher after Germany’s ruling coalition gained enough seats to form a new government. The left leaning parties gained in election as the ruling party coalition partner loses seats.

Merger Monday

Xerox Corporation agreed to acquire Affiliated Computer Services, Inc in cash and stock for $6.4 billion. Xerox has offered $18.60 in cash and 4.935 share of Xerox in exchange of each ACS share or valuing the company at $63.11 a share.

Xerox will also assume $2 billion of ACS debt and issue $300 million of convertible debt to class B stockholders. The offer is 34% premium to Friday’s closing price of ACS.

In the early morning trading Xerox fell 17% to $7.48 billion and ACS surged 13.65% or $6.38 billion to $53.65.

Abbott today announced to acquire pharmaceutical business of Solvay SA for 4.5 billion euros or $6.6 billion. The acquisition will add $3 billion revenues and $500 million in R&D investment that will accelerate new products development.

Earnings Review

Cal-Maine Foods, Inc, an egg producer reported first quarter sales fell 9% to $187.7 million from $206.9 million a year ago. Net loss in the quarter was $3.8 million or 16 cents per diluted share compared to net income of $11.1 million or 47 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 256.46 or 2.50% to 10,009.52, Hang Seng index in Hong Kong decreased 435.99 or 2.07% to 20,588.41 and CSI 300 index in China lower 85.88 or 2.81% to 2,972.64. ASX 200 index in Australia decreased 35.90 or 0.76% to 4,677.40. The FTSE Bursa KL Composite index in Malaysia closed lower 11.44 or 0.94% to 1,205.95.

The Kospi Index in South Korea decreased 15.93 or 0.94% to close at 1,675.55. SET index in Thailand closed lower 12.69 or 1.76% to 708.88 and JSE Index in Indonesia decreased 46.76 or 1.91% to 2,397.83. The Indian market was closed today.

Europe Markets Review

In London FTSE 100 Index traded higher 1.29 or 0.03% to 5,083.49, in Paris CAC 40 Index decreased 0.69 or 0.02% to 3,738.45 and in Frankfurt DAX index traded higher 50.59 or 0.91% to 5,632.00. In Zurich trading SMI decreased 42.42 or 0.68% to 6,194.49.