$6.5 B Bid for Knight Ridder

Elena
13 Mar, 2006
New York City

Merger activity pushed stocks moderately higher. Capital One Financial agreed to acquire North Fork Bancorp in a cash and stock deal for $14.6 B, with about $5.2 B of the amount to be paid in cash. McClatchy agreed to acquire newspaper publisher Knight-Ridder in cash and stock for $6.5 B, including the assumption of $2 B in debt. In Europe, Merck KGaA made a hostile offer of $17.4 B for the German Schering AG in a bid rejected by the drugmaker.

10:30AM U.S. Stocks slightly off intraday highs. Tech sectors advanced .
In midmorning the averages ticked slightly off their highs for the day. All of the ten economic sectors advanced. The Nasdaq rose 17 points to 0.7%, owing to a number of strong tech sectors. The disk drive rebounded, rising by about 1.9% after a week-long decline and flat performance Friday. The networking and computer hardware sectors also posted strength. The Financials sector gained 0.4% on merger-driven strength in regional banks. Energy stocks moved to the upside as well, including a 1.4% gain in the oil service sector. The Dow was steady with an advance of about 22 points. Aztar Corp. ((AZR)), casino operator, was one of the best performers in the early going, climbing 24%, after it agreed to be acquired by Pinnacle Entertainment for $38 per share. NMT Medical ((NMTI)) stood out as the morning’s biggest decliner, falling 28%, after it revealed studies of a migraine treatment that missed its primary endpoint.

Bond prices extended last week's decline, with the yield on the 10-year Treasury note edging up to 4.78% from 4.76%late Friday.


9:45AM- Stocks opened higher on deal news.
A string of merger-and-acquisition deals on both sides of the Atlantic boosted stocks early Monday. The biggest deal in value was in the banking sector as Capital One Financial ((COF)) agreed to acquire North Fork Bancorp ((NFB)) for $14.6 billion in cash and stock with about $5.2 billion of the amount to be paid in cash. Under the deal, each North Fork share is valued at $31.18, a 23% premium over North Fork''s closing price on Friday. The addition of North Fork is expected to transform the credit card issuer into a banking company with deposits of more than $84 billion. Capital One expects the deal to close in the Q4 of 2006. In another deal, Knight Ridder ((KRI)) agreed to be acquired by McClatchy for $6.5 billion, or $67.25 a share, including the assumption of $2 billion in debt. The company put itself up for sale in November on pressure from shareholders to lift its stock price. The price valued the publishing chain at only a slight premium over its Friday close of $65.00. In Europe, Merck KGaA made a hostile $17.4-billion cash offer for the German Schering AG in a bid rejected by the drugmaker. The London Stock Exchange rocketed 30% after the Nasdaq Stock Exchange bid $4.2 billion. The NYSE Group is reportedly considering an offer as well.


9:00AM – Stock futures pointed to a higher start, supported by bid activity.
U.S. stock futures were sitting above the flat level, indicating a higher start. The upbeat pre-market sentiment was largely contributed by merger-and-acquisition activity, considered a bullish sign for stocks. Standard & Poor's 500 futures were up 2.4 points, above fair value. Dow Jones industrial average futures were 25 points, and Nasdaq 100 futures were up 6.5 points. As no major economic reports are due out today and only a few earnings releases are expected, bid activity will be in the spotlight. Credit card issuer Capital One Financial Corp. ((COF)) agreed to buy North Fork Bancorp Inc. ((NFB)) for $14.6 billion in cash and stock with about $5.2 billion of the amount to be paid in cash. North Fork shares rose 21%. McClatchy Co. ((MNI)) agreed to acquire its larger rival, newspaper publisher Knight-Ridder Inc. ((KRI)) in cash and stock for $4.5 billion before debt. In Europe, the Nasdaq bid $4.1 billion for London Stock Exchange.

Crude oil prices eased back on expectations of sufficient oil supplies. Light sweet crude April delivery lost 13 cents to $59.83 a barrel. London Brent for April delivery added 6 cents to $60.89 a barrel. European gold prices gained advanced Monday morning. In London gold rose to $545.25 bid per troy ounce, up from $535 late Friday. In Zurich the precious metal advanced to $544.80 from $539.30. In Hong Kong gold fell $2.60 to $543.50. Silver opened at $10, up from $9.92. The U.S. dollar traded lower against other major currencies. The euro traded at $1.1925, up from $1.1911. The dollar bought 118.88 yen, down from 118.99. The British pound was quoted at $1.7264, up from $1.7263.


8:30 AM A couple of companies reported decline in profit on charges.
Stewart Enterprises Inc, ((STEIE)), funeral services and cemetery operator, reported Q1 earnings of 8 cents a share, swinging from a loss of $1.33 a share a year-ago. Adjusted income for Q1 in 2006 and 2005 would have been 9 cents a share and 8 cents a share, respectively. In Q1 the company announced sales increased 3% to $126.6 million.

Vail Resorts ((MTN)) reported Q2 earnings of $1.12 a share, up from 89 cents a share in the year-earlier period. If not for certain one-time items, earnings would have increased to $1.15 a share from last year''s 90 cents a share, beating analysts’ expectations for earnings of 94 cents a share. Revenue advanced 8.8%, as a 15% increase in mountain revenue and 23% growth in real estate revenue helped offset a 25% decline in lodging revenue. The company added it set a stock repurchase program of up to 3 million shares of common stock.

AM Castle & Co, ((CAS)), specialty metals and plastics distributor, reported that Q4 profit more than tripled to 39 cents a share, from 12 cents in the year-ago period. Sales for Q4 advanced to $227.3 million from $197.8 million in the same quarter last year.

Westar Energy Inc., ((WR)), electric utility, reported that Q4 profit totaled 8 cents per share, down 92% from $1.03 per basic share, a year ago, as the company recorded a large charge against year-ago results that benefited from a gain. Q4 incorporated a 49 cent per share charge to reverse gains connected with fuel supply contracts for its generating units. Q4 last year was lifted by a gain of 84 cents per share from discontinued operations. If not for some items, the company earned 3 cents per basic share. Sales rose 15%, helped by cooler weather and higher wholesale power prices.

Computer Horizons Corp, ((CHRZ)), computer services company, reported that Q4 net loss grew to $39.5 million, or $1.24 a share, from $24.3 million due to a 2.7% decline in. Q4 loss incorporated special charges of $36.6 million connected with restructuring and losses on the sale of investments. The company added that it is set to report modest profitability in Q1 of 2006 in the wake of its restructure.


8:00AM Asian markets gained across the region. New Zealand reached a record high.
Asian-Pacific benchmarks ended higher Monday, boosted by a strong Friday rally on Wall Street and stronger dollar with technology and industrial shares in focus. The Nikkei led gainers, rising 1.5% to 16,361.51 on improved confidence in the economic recovery, despite GDP data showing slightly disappointing figures. Nissan Motor, Toyota Motor and Nomura Holdings stood out among advancers. South Korean Kospi surged to 1.4%, supported by strong automobile and bank stocks. Shanghai Composite rose 1.1% on property stocks and gains in cement companies. Australian All Ordinaries soared 1.3%, lifted by corporate data and strength in overseas markets. Hong Kong’s Hang Seng rose 0.6%, although concerns over interest-rate hikes weighed. Stocks in New Zealand hit a record high of 0.8% to 3516.99.

European markets advanced at mid-day dealings as merger-and-acquisition news and speculations sent stocks higher. The German DAX 30 climbed 0.7%, boosted by drug maker Schering which rocketed 23% on a takeover bid by a rival company Merck. The French CAC 40 gained 0.4%, while London’s FTSE 100 rose 0.5%, supported by 22% gain in London Stock Exchange on speculations that U.S. exchanges may start a bidding war for it.