Monti's plan to quit sends markets into turmoil. Italian shares have sunk 3.3% and 10-year bond yields soared 36 bps to 4.88% after Prime Minister Mario Monti said he plans to resign once the 2013 budget is authorized. Monti's announcement followed Silvio Berlusconi's PDL party pulling its support for the technocrat government and the former PM saying he would run for office again in elections that are now likely to be brought forward from April.
AIG to sell aircraft-leasing unit in $4.23B deal. AIG (NYSE:AIG) has agreed to sell an 80.1% stake in its plane-leasing unit, ILFC, for $4.23B in a deal that values the entire business at $5.28B. The good news: AIG's continued refocus on core operations and the raising of cash to buy back shares. The bad news: the sale price is about two-thirds of ILFC's book value and less than what AIG hoped it might raise in an IPO.
Japan slips back into recession. Japan's Q3 GDP fell an annualized 3.5%, worse than a forecast of -3.3%. With the government revising Q2 from growth to slight contraction, the country technically slipped into a recession in the last quarter. The current account surplus dropped to ¥376.9B in October, a bit better than the expected ¥218B, but off 25% from a year ago.
Top Stock News
Ingersoll-Rand in compromise with Peltz. Ingersoll-Rand (NYSE:IR) has reportedly reached a compromise with activist investor Nelson Peltz and agreed to spin off its security-technology business rather than break up into three companies, as Peltz had originally advocated. Ingersoll-Rand will also repurchase $2B in shares and increase its dividend. The industrial conglomerate could announce the plan today.
Arris, Pace lead race for Motorola set-top box unit. Cable infrastructure vendor Arris (NASDAQ:ARRS) and U.K. set-top box maker Pace have reportedly "made the most compelling bids" for Motorola's set-top/cable infra unit. A complex financing structure in which Google (NASDAQ:GOOG) would maintain equity and patents might prevent a deal from closing this year. P-E firms are uninterested in the unit, which has to contend with a shift towards cloud-based apps and litigation with TiVo (NASDAQ:TIVO).
Bids for Hostess' brands due in today. Today marks the deadline for interested parties to submit bids for Hostess Brands' products, with estimates for the lot pegged at $1-1.5B. A major focus is on Flowers Foods (NYSE:FLO) after the snack-foods company expanded its credit facility last month in preparation for jumping into the fray. Supermarket chains could also be in the mix.
Panasonic, Sony, Sharp holding $3B "garage sale." Panasonic (PC), Sony (NYSE:SNE) and Sharp (OTCPK:SHCAF) are selling real estate, business units, their shares in other companies, and other assets in a "garage sale" that could bring in a combined $3B. Panasonic intends to raise $1.34B by the end of March and could continue the sell-off after that. The struggling Japanese companies own fixed assets of $42B while having a combined market cap of $24B.
STMicro to quit Ericsson JV. STMicroelectronics (NYSE:STM) is in negotiations to exit ST-Ericsson, its loss-making mobile chip joint venture with Ericsson (NASDAQ:ERIC), by Q3 2013. STMicro's move is part of a strategy to refocus on products such as motion sensors and chips for cars as the semiconductor company looks to return to profitability and achieve an operating margin of 10%. STMicro will continue to supply ST-Ericsson with parts and IP.
Diageo eyes $10B+ joint bid for Beam. Diageo (NYSE:DEO) reportedly held talks earlier this year with Japanese peer Suntory about joining up to buy bourbon whiskey producer Beam (NYSE:BEAM) for over $10B. With talks stalling, both companies have held discussions with other potential partners. A bid for Beam, whose market cap is $9.5B, would mark a departure by Diageo from its strategy of acquiring spirits brands in fast-growing emerging markets.
Bloomberg mulls buying the FT. New York Mayor Michael Bloomberg is reportedly running his eye over the Financial Times, which analysts reckon is loss-making but could be worth $1.2B. Another potential bidder, should Pearson (NYSE:PSO) decide to sell - and the drumbeat of speculation is starting to get louder - is Bloomberg rival Thomson Reuters (NYSE:TRI). Bloomberg apparently deeply admires the newspaper industry as a reader but sneers at it as a businessman.
BOE, FDIC launch plan to deal with TBTF banks. The Bank of England and FDIC have unveiled the first cross-border plan to deal with too-big-to-fail banks that start...failing. Senior management would be sacked, shareholders would be wiped out, and unsecured bondholders "can expect that their claims would be written down to reflect any losses that shareholders cannot cover," which didn't happen in the financial-crisis bailouts.
EU to come down on banks for rigging Euribor. While the Libor scandal has grabbed much of the attention, the EU is reportedly poised to accuse multiple banks of trying to rig Euribor, a sin that Barclays (NYSE:BCS) has already admitted to. A dozen banks or more are being scrutinized, with at least four of them under investigation for colluding with Barclays. UBS (UBS) is nearing a deal to settle accusations that it tried to rig rates, including Euribor.
Top Economic & Other News
China's export growth slows sharply. China had a bit of a long-weekend data dump that provided a mixed picture, with the most notable figure a big fall in export growth in November to 2.9% on year from 11.6% in October. Consensus was for a 9.6% rise. Inflation rose to 2% from a 33-month low of 1.7%, while industrial production grew 10.1% from 9.6% and topped forecasts.
Greece extends deadline for bond buyback. Greece has extended its offer to repurchase debt from private creditors to midday tomorrow from Friday as it reportedly looks to get bondholders to tender another €3-4B. This is despite speculation that creditors had already offered €26-30B worth of debt, or almost half the amount that Greece owes to the private sector. The government is spending up to €10B on the plan, so its debt burden would fall €20B.
German exports surprisingly rise. German exports grew 0.3% in October on month to a seasonally adjusted €92.8B, beating a 2.4% fall in September and consensus of -0.3%. Imports rose 2.5% and the trade surplus narrowed to €15.2B. Meanwhile, French industrial production slipped 0.7%, missing consensus for a rise of 0.2% but improving on a drop of 2.7% in September.
In Asia, Japan +0.1% to 9534. Hong Kong +0.4% to 22277. China +1.1% to 2084. India -0.1% to 19410.
In Europe, at midday, London -0.2%. Paris -0.6%. Frankfurt -0.6%.
Futures at 7:00: Dow -0.15%. S&P -0.2%. Nasdaq -0.2%. Crude +0.55% to $86.40. Gold +0.5% to $1713.70.
Today's economic calendar:
10:00 Employment Trends Index
Notable earnings before today's open: FGP
Notable earnings after today's close: PPHM
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