- SAP acquires Sybase. SAP AG (NYSE:SAP) announced late yesterday that it will acquire Sybase (SY) for $65 per share, or about $5.8B. The price is a 56% premium to Sybase's shares before news of the negotiations became public. SAP is trying to beat out Oracle (NYSE:ORCL) on software for wireless internet transactions, and is hoping to reverse a sales slump via acquisitions. Though many analysts see the deal as a win-win, there are still some risks, as "SAP does not have the most stellar history of buying companies and then maximizing its investments in the technologies it has acquired." Sybase climbed 35% during regular trading yesterday on rumors of the deal. Premarket: SY +14.7%, SAP -1.3% (7:00 ET).
- Banks targeted in criminal probe. New York Attorney General Andrew Cuomo has reportedly opened a criminal investigation into whether eight major banks provided misleading information to ratings agencies in order to get higher ratings on certain mortgage-related products. The SEC is said to be participating in the investigation as well and has issued civil subpoenas. The targets of Cuomo's probe are: Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), UBS (NYSE:UBS), Citigroup (NYSE:C), Credit Suisse (NYSE:CS), Deutsche Bank (NYSE:DB), Credit Agricole (OTCPK:CRARY) and Merrill Lynch (NYSE:BAC). Alternate reports also place JPMorgan Chase (NYSE:JPM) on the list. Premarket: GS +0.7%, MS +1.1%, UBS -0.5%, C -1.7%, DB -1.05%, BAC -0.1% (7:00 ET).
- Pru's AIA deal back on track. Prudential (NYSE:PUK) will likely launch its delayed $21B rights issue next week after it reportedly received preliminary approval from regulators for its deal to buy AIG's (NYSE:AIG) Asian unit. The initial approval follows negotiations with AIG to change the deal structure, with AIG now prepared to accept $2B of junior debt instruments instead of cash as part of the $35.5B sale.
- BP on the hook for rising spill costs. BP (NYSE:BP) said the Gulf of Mexico oil spill has cost it $450M so far, a $100M increase from the figure reported earlier this week. Analysts' estimates of the total spill-related costs have varied widely, from a few hundred million dollars to more than $12B. Complicating any estimates is the legislation being sent by the White House to Congress which would raise oil companies' liabilities from the current $75M cap and which would apply retroactively to BP. White House officials said they don't yet have a figure in mind for what the new cap will be, but proposals already in Congress would raise the ceiling to $10B.
- Financial reform touches on mortgage finance. The Senate continues to work its way through amendments to the financial reform bill. Yesterday, lawmakers voted to ban mortgage-steering payments and to prohibit lenders from making loans without verifying a borrower's ability to pay from income and other assets. Senators also handed a partial victory to the Federal Reserve by removing a provision that would have forced Fed-regulated state-chartered banks to register with the FDIC. Banks will now be able to choose whether to be overseen by the Fed or the FDIC.
- Macarthur abandons Gloucester merger. Australia's Macarthur Coal terminated its planned merger with Gloucester Coal as it considers the newly-reduced takeover offer from Peabody Energy (NYSE:BTU). The merger termination was hardly a surprise, as Noble Group (OTCPK:NOBGF), Gloucester's majority shareholder, rejected plans last month to sell a stake to Macarthur.
- NYSE fines Goldman, others. The New York Stock Exchange fined Goldman Sachs (GS), UBS (UBS) and Cantor Fitzgerald for various violations. Goldman was fined $450,000 for several rule violations, though the firm will pay less than that because of a separate settlement with the SEC. UBS was fined $350,000 for 21 violations, including trading along with or ahead of a customer's order without consent to do so. Cantor Fitzgerald was fined $250,000 for failing to reasonably supervise the accounts of the then-CEO of one of its business units.
- Lions Gate investors back poison pill. A Canadian court ruled that Lions Gate Entertainment's (NYSE:LGF) poison pill plan was illegal, but a majority of shareholders backed the plan yesterday at the company's delayed shareholder meeting. Around 56% of investors voted in favor of the plan as Lions Gate tries to fight off a $7/share hostile takeover bid by Carl Icahn. Icahn responded that the high number of investors who voted against the plan indicates shareholders are unhappy with management, including CEO Jon Feltheimer.
- Senate investigates home health-care firms. The Senate Finance Committee has launched an investigation into four home health-care companies to determine whether the firms deliberately increased the number of home therapy visits to trigger higher Medicare reimbursements. The targets of the probe are Amedisys (NASDAQ:AMED), the country's largest home health-care company, LHC Group (NASDAQ:LHCG), Gentiva Health Services (NASDAQ:GTIV) and Almost Family (NASDAQ:AFAM).
- HTC sues Apple. Taiwan's HTC, maker of Google's (NASDAQ:GOOG) Nexus One phone, filed a complaint with the International Trade Commission to stop the importation and sale of Apple's (NASDAQ:AAPL) iPhones and iPads in the U.S. The move further escalates the showdown between the two firms, as Apple had filed a patent infringement suit against HTC in March.
- Foreclosures start to ebb. The number of households facing foreclosure fell 2% in April from the year before, marking the first annual decline in five years, reported RealtyTrac Inc. However, despite initial signs that the foreclosure crisis is starting to subside, banks still seized a record 92,000 homes last month, and nearly 12% of all households with a mortgage were at least one month behind on payments or were in foreclosure as of March.
- Wal-Mart in talks with Russian retailer. Wal-Mart (NYSE:WMT) is said to be in preliminary talks to acquire Russian retailer Lenta as part of its search for new growth markets. Lenta has become a major hypermarket chain in Russia, and had $1.86B of sales in 2009. Though talks have been ongoing since the beginning of the year, sources said, "there is genuine interest but nothing imminent."
- Ford, Mazda want to end China JV. Ford (NYSE:F), Mazda (OTCPK:MZDAF) and Chongqing Changan Automobile Co. are reportedly seeking approval from Chinese authorities to end their three-way joint venture. If the break-up is approved, Ford and Mazda both plan to set up their own individual joint ventures with Chongqing Changan Automobile, giving both companies more leeway in crafting their own China strategies.
Earnings: Thursday Before Open
- Kohl's (NYSE:KSS): Q1 EPS of $0.64 beats by $0.02. Revenue of $4B (+10.9%) in-line. (PR)
- Urban Outfitters (NASDAQ:URBN): Q1 EPS of $0.31 beats by $0.01. Revenue of $480M (+24.7%) vs. $477M. (PR)
Earnings: Wednesday After Close
- Cisco Systems (NASDAQ:CSCO): Q1 EPS of $0.42 beats by $0.03. Revenue of $10.4B (+27%) vs. $10.2B. Shares -1.8% premarket (5:23 AM EDT). (PR)
- DryShips (NASDAQ:DRYS): Q1 EPS of $0.27 beats by $0.05. Revenue of $194M (+0.3%) vs. $203M. Shares -2% AH. (PR)
- Silver Wheaton (NYSE:SLW): Q1 EPS of $0.13 misses by $0.03. Revenue of $86M (+128.5%) vs. $91M. Shares -2.2% AH.(PR)
- URS (NYSE:URS): Q1 EPS of $1.17 may not be comparable to consensus of $0.77. Revenue of $2.2B (-12.4%) vs. $2.3B. Shares +5% AH. (PR)
- Whole Foods Market (WFMI): Q2 EPS of $0.38 beats by $0.05. Revenue of $2.1M (+13.4%) vs. $2B. Shares +3.7% AH. (PR)
- In Asia, Japan +2.2% to 10621. Hong Kong +1.0% to 20422. China +2.1% to 2711. India +0.4% to 17266.
- In Europe, at midday, London +0.5%. Paris +0.2%. Frankfurt +0.8%.
- Futures: Dow -0.1%. S&P -0.1%. Nasdaq -0.4%. Crude -1% to $74.93. Gold -0.8% to $1233.20.
Thursday's Economic Calendar
8:30 Jobless Claims
8:30 Import/Export Prices
9:00 Fed's Kohn: Monetary Policy
10:30 EIA Natural Gas Inventory
12:00 PM Fed's Kocherlakota speaks to local business leaders
12:30 PM Bernanke: Community Development
1:00 PM 30-Year Bond Auction
1:15 PM Fed's Fisher: Economic Update
4:30 PM Fed Balance Sheet
4:30 PM Money Supply
- Notable earnings before Thursday's open: AMSC, KSS, SNE, URBN, WEN
- Notable earnings after Thursday's close: ALKS, BBI, CA, JWN, NVDA
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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