- Yara buys Terra. Norway's Yara reached a deal to buy Terra Industries (TRA) for $4.1B in cash yesterday, creating the world's leading mineral fertilizer producer. It will also allow Yara to expand its presence in the U.S., where it expects the market will "pick up in a big way." The $41.10/share offer is a 23.6% premium to Terra's Friday close, and comes one month after CF Industries (CF) withdrew its year-long hostile bid to buy Terra.
- EU leaders get stricter with Greece. European finance ministers gave Greece until March 16 to prepare deeper deficit cuts in case it fails to make sufficient progress on its budget goals by then. If Greek efforts don't satisfy the European Commission, the EU “will impose on Greece the acceptance of additional measures." The move is both a delay tactic on the part of other EU countries, and a reflection of their newfound determination to bring wayward nations back in line. EU officials are also taking a closer look at Wall Street's role in Greece's debt crisis, requesting information from Athens about currency swaps from 2001 to 2008 that may have allowed Greece to conceal billions of euros of new debt.
- JPMorgan nears RBS Sempra deal. JPMorgan (JPM) is expected to announce as soon as today that it's buying parts of RBS Sempra's (RBS, SRE) energy-trading unit for $1.7B. The deal does not cover the more valuable North American pieces of RBS Sempra Commodities; JPMorgan decided not to pursue the North American operations in part because of the proposed ban against proprietary trading.
- AstraZeneca bets on arthritis drug. AstraZeneca (AZN) agreed to buy the rights to a rheumatoid arthritis drug from Rigel Pharmaceuticals (RIGL) in a deal that could be worth up to $1.245B. AstraZeneca is betting the drug will succeed in final-stage Phase III tests, even though it failed one mid-stage Phase II study last July. The drug competes with an oral rheumatoid arthritis pill being developed by rival Pfizer (PFE).
- Barclays posts a profit. Barclays' (BCS) net profit more than doubled in 2009 to £9.4B ($14.8B), lifted by investment banking and the sale of its Barclays Global Investors unit. For the full year, bad loan provisions rose to £8.1B from £5.4B, and its Tier 1 capital ratio rose to 10%. CEO John Varley and President Robert Diamond declined bonuses for the second year in a row, as Varley said he believes "the headline is more income, more profit and less risk." Shares +12.2% premarket (7:00 ET).
- Grupo Televisa picks up Nextel stake. Mexican media giant Grupo Televisa (TV) agreed to buy a 30% stake in Nextel Mexico (NIHD) for $1.44B. The move will allow Televisa to partner with a wireless carrier ahead of a wireless spectrum auction later this year. The all-cash deal includes an option for Televisa to acquire another 7.5% of Nextel Mexico in the future.
- Outlook is bearish for some Fed holdings. The Federal Reserve is reportedly holding paper losses on the real estate portfolio it acquired when it helped JPMorgan (JPM) buy Bear Stearns. The losses are in part due to debt used to finance large buyouts, and are concentrated in commercial real estate assets. When the Fed first received the assets, they had a face value of $8.4B with an estimated worth of $7.7B; as of September, the assets had been marked down to $4B.
- Telecoms team up to take on Apple. Twenty-four telecom operators have joined forces to challenge Apple's (AAPL) wildly successful App Store. The alliance, which includes AT&T (T), Verizon (VZ) and Sprint (S), plans to build an open platform that will deliver applications to all mobile phone users. Analysts were skeptical as to whether such a large group of operators would be able to work together efficiently and whether they'd be able to compete with the Apple brand.
- Rising U.K. inflation prompts BoE letter. U.K. inflation accelerated in January to its fastest pace in 14 months, rising 3.5% in part because of an increase in the sales tax and an increase in oil prices. Since the increase substantially exceeded the 2% target set by the Bank of England, the bank was required to issue an explanatory letter outlining how it plans to return to its inflation goal. Among other points, the letter notes that short-term factors play a greater role on inflation than they have in the past and that "underlying pressures are to the downside."
- Dubai debt talk stirs markets. The price of insuring against a Dubai default rose on Monday and Dubai stocks fell following reports that Dubai World is looking to offer creditors just 60 cents on the dollar, stretched out over seven years. Sources say another option being considered is to pay creditors full payment over seven years but without the government guarantee that would come with the reduced-payment plan. Dubai World said no such proposals are on the table.
- Debate over how to count banks' losses. Jim Quigley, the global head of accounting firm Deloitte Touche Tohmatsu, has reignited the debate over how banks should account for losses. Quigley said he's an advocate of banks making loan loss provisions for "incurred losses" separately from "expected losses," and reporting them in two different lines in their accounts. The move would help banks meet the opposing demands of politicians and accountants. However, PricewaterhouseCoopers, the world's largest accounting firm, criticized a similar proposal in the past for threatening to "muddy the waters." The ongoing dispute raises doubts about a long-awaited global convergence of accounting standards.
- Lasting foreclosure fallout. Two new studies have been released on the U.S. housing market and the outlook is not good. Both studies conclude that continued waves of foreclosures in parts of the U.S. will put downward pressure on home prices over the next several years and that mortgage modification efforts will delay, but not prevent, home foreclosures. One study projects that of the 7.7M households behind on their mortgage payments, as many as 5M will see their houses put on the market through foreclosure or a related procedure.
- Google continues to backtrack on Buzz. Google (GOOG) is planning further updates to Buzz, its attempt at social networking, and may change how it tests new Buzz features as public backlash against the product continues. Google previously changed several default settings on Buzz as a concession to privacy-conscious users who felt the product's automatic settings were a violation.
Earnings: Tuesday Before Open
- Abercrombie & Fitch (ANF): Q4 EPS of $0.91 beats by $0.04. Revenue of $936M (-4.6%) vs. $953M. (PR)
- Kraft (KFT): Q4 EPS of $0.48 beats by $0.03. Revenue of $11B (+3.2%) in-line. Shares -0.9% premarket. (PR)
- Merck (MRK): Q4 EPS of $0.79 in-line. Revenue of $10B (+67.3%) vs. $9.7B. (PR)
- Qwest Communications International (Q): Q4 EPS of $0.08 in-line. Revenue of $2.9B (-9.7%) vs. $3B. (PR)
- Teva Pharmaceutical Industries (TEVA): Q4 EPS of $0.94 misses by $0.01. Revenue of $3.8B (+33.5%) in-line. (PR)
- In Asia, Nikkei +0.2% to 10034. Hang Seng -0.1% to 20269. Shanghai +1.1% to 3018. BSE +1.2% to 16227.
- In Europe at midday, London +0.9% to 5213. Paris +0.6% to 3630. Frankfurt +0.9% to 5560.
- Futures: Dow +0.32% to 10149. S&P +0.41% to 1084. Nasdaq +0.48%. Crude flat at $79.66. Gold -0.26% to $1170.90.
Tuesday's Economic Calendar
- 8:30 Empire State Mfg Survey
9:00 International Capital Flow
12:00 PM Fed's Hoenig: Knocking on the Central Bank's Door
12:45 PM Fed's Kocherlakota: Economic Outlook
1:00 PM NAHB Housing Market Index
5:00 PM ABC Consumer Confidence Index
- Notable earnings before Tuesday's open: ANF, CF, KFT, MRK, Q, TEVA
- Notable earnings after Tuesday's close: FTI, JAH, NBR, NFX, RAX, RGC, WFMI
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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