To all Wall Street Breakfast readers:
Thanks for all the warm wishes while I was away on maternity leave. I'm back and am looking forward to a great 2010 here at Seeking Alpha. As always, I'd love to hear your feedback about Wall Street Breakfast or general comments. You can contact me via the new direct messaging system on the site (check out your dashboards).
Wishing you all a happy and healthy new year!
- All eyes on Novartis. Novartis (NVS) has exercised a call option agreed to in 2008 and will buy the rest of eye-care giant Alcon (ACL) from Nestle (NSRGY.PK) and minority shareholders for around $39.3B. Nestle will sell its 52% stake for an average of $180 per share (vs. Alcon's Thursday close of $164.35), bringing Novartis' holdings up to 77%, and Novartis is offering 2.8 of its own shares for each Alcon share held by the public (valuing Alcon at approximately $153 per share). Novartis, which expects $300M of synergies within three years of the deal completion, plans to fund the deal with cash and external debt financing. Premarket: NVS -0.4% (7:00 ET).
- Krafting a sweeter bid for Cadbury. Kraft (KFT) is reportedly planning to improve its hostile £10B offer for Cadbury (CBY) in the next two weeks, as it approaches a Jan. 19 deadline to lock in its offer and tries to win over Cadbury shareholders. After the deadline, Kraft will only be allowed to raise its bid if there's a rival offer. Potential suitors include Italian confectioner Ferrero and Hershey (HSY), with reports that the two firms met to discuss a joint bid.
- Bernanke deflects blame, calls for stronger regulation. Lax regulatory oversight, rather than low interest rates, helped inflate the housing bubble, said Fed's Bernanke yesterday, although he admitted that Federal Reserve efforts to rein in the bubble were "too late or were insufficient," and future regulatory actions "must be better and smarter." Speaking at the annual meeting of the American Economic Association, Bernanke concluded that low interest rates were responsible for around 5% of the change in housing prices, while increased global capital flows were responsible for 30%. Speaking at the same meeting, Fed's Donald Kohn said raising interest rates now to prevent a commodity price bubble would be both ineffective and potentially dangerous.
- Total, Chesapeake ink shale pact. Total (TOT) signed a $2.25B shale-gas pact with Chesapeake Energy (CHK) which will give Total a 25% stake in Chesapeake's upstream Barnett Shale assets. Total will pay $800M in cash and $1.45B by funding 60% of Chesapeake's drilling and completion expenditures. Premarket: TOT +2.9%, CHK +3.9% (7:00 ET).
- JAL soars on beefed up credit line. Japan Airlines president Haruka Nishimatsu said he's opposed to a state-backed bankruptcy, has no plans to withdraw JAL from overseas flights, and prefers Delta (DAL) to American (AMR) as an overseas partner. Nishimatsu's comments come after government officials on Sunday asked the state-owned Development Bank of Japan to double JAL's credit line to $2.2B. JAL's shares, which hit record lows last week on bankruptcy fears, rebounded sharply today, closing up 31% in Tokyo trading.
- Merz to buy BioForm Medical. Privately-held Merz Pharma Group will acquire all the outstanding shares of BioForm Medical (BFRM) for $5.45 per share, a 60% premium over BioForm's Thursday close of $3.40. The deal, valued at approximately $253M, is part of Merz's strategy to become a leading player in the fast-growing field of aesthetic medicine.
- U.K. banking shake-up continues. National Australia Bank, which already owns Clydesdale and Yorkshire banks in the U.K., is reportedly meeting with advisors over a potential deal for nationalized lender Northern Rock, which has formally been split into a good bank and a bad bank. National Australia Bank may also bid for hundreds of branches being sold by Royal Bank of Scotland (RBS) and Lloyds (LYG), and Itau Unibanco, Brazil's largest bank, is considering buying stakes as well. Meanwhile, Virgin Money, which expects to receive a banking license in the next three months, has hired an advisory firm to help it buy a bank as early as this month, and is also expected to make a bid for Northern Rock.
- Business loan defaults keep rising. Businesses may be hoping for a fresh start in 2010, but bad news from 2009 continues to trickle in. Severe delinquencies on business loans rose to 0.91% in November from 0.87% in October, reported PayNet Inc. today, marking the 22nd consecutive monthly increase in loans unlikely to be paid. Moderate delinquencies rose to 4.33% from 4.19%. In a small sign of improvement, the Small Business Lending Index fell just 11% Y/Y, the smallest decline in the index since the recession began.
- Rusal plans IPO. Rusal, one of the world's top aluminum producers, is planning to raise nearly $2.6B in an initial public offering in Hong Kong, with a secondary listing planned for the Euronext in Paris. In its filing, Rusal, which reported an $868M loss for H1 2009, detailed its exposure to fluctuations in the price of aluminum, noting that a price drop of over 20% would 'adversely' impact its ability to meet financial covenants. Rivals include Rio Tinto (RTP) and Alcoa (AA).
- Towers Watson makes its debut. Human resources consulting firm Watson Wyatt completed its $4B merger with Towers Perrin Forster & Crosby, and will begin trading today as Towers Watson & Co. under the new symbol TW. Major competitors include Hewitt (HEW) and Marsh & McLennan (MMC).
Financial markets open 2010 on an upbeat note.
- In Asia, Nikkei +1% to 10,655 (a 15-month closing high). Hang Seng -0.2% to 21,823. BSE +0.5% to 17,559. Shanghai closed.
- In Europe at midday, London +0.7%. Paris +1.1%. Frankfurt +0.7%.
- Futures: Dow +0.5%. S&P +0.7%. Nasdaq +1.1%. Crude +1.8% to $80.82. Gold +2.1% to $1118.50.
Monday's Economic Calendar
Seeking Alpha editor Eli Hoffmann contributed to this post.
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