- AIG, Pru deal in danger. Prudential (NYSE:PRU) failed to persuade AIG (NYSE:AIG) to lower the price of their AIA deal to $30.4B from $35.5B, imperiling the future of the deal. Pru had spent the last few days trying to convince AIG to renegotiate the sale of its Asian unit after several of Pru's largest shareholders called the takeover too expensive. Following AIG's rejection, Pru said it's considering its position and will make a further announcement "when appropriate." Many analysts believe Pru's best move now is to abandon the bid rather than push through with the original terms, while sources said AIG is moving forward with plans for an IPO of the unit in October. News of the failed negotiations sent Pru's shares +4% in London, AIG -3.2% premarket (7:00 ET).
- Covidien buys ev3. Covidien (COV) agreed to acquire ev3 (EVVV) for $2.6B, or $22.50 per share. The acquisition will enable Covidien to significantly expand its presence in the vascular market, Covidien said. The deal will dilute Covidien's 2010 earnings per share by 5 to 8 cents, but the underlying strength of Covidien's existing businesses is expected to offset some of the dilution.
- BP: Everybody scared as 'top kill' fails. After three days of pumping heavy drilling mud into the Gulf of Mexico oil leak, BP (NYSE:BP) said Saturday that its 'top kill' efforts had failed. The company is now preparing to use remotely operated vehicles to cut the leaking pipe and cap it, but the move could end up making the spill worse and the only guaranteed solution is still more than two months away, prompting BP CEO Tony Hayward to comment that "this scares everybody, the fact that we can't make this well stop flowing." Meanwhile, Rep. Bob Markey said he's not sure if BP was "lying or incompetent" in its initial estimate that 1,000 barrels/day of oil were escaping into the sea. Given BP's tainted track record, said Markey, he has "no confidence" coming measures will be successful: "I think they do not know what they were doing." Premarket: BP -14.7% (7:00 ET).
- Eurozone faces 'hazardous contagion.' The eurozone is facing “hazardous contagion” effects from the region’s debt crisis, said the ECB in its latest report, as growing government deficits could raise borrowing costs and clip economic growth. The ECB forecasts another €195B in bank writedowns this year and next, while the U.S. plans to urge Europe to publicly disclose the results of bank stress tests. Euro -1.4% against the dollar (7:00 ET).
- iPad sales break two million. Sales of Apple's (NASDAQ:AAPL) iPad have topped two million in less than sixty days, exceeding the sales rate for the company's Mac laptops and desktops and for the original iPhone, though falling short of the sales rate for the iPhone 3G. The news could prompt analysts to upwardly revise their sales projections, giving an already buoyant stock a further lift. Competitors are racing to join Apple in the newly-created tablet computer market, with Asustek unveiling a new tablet called the Eee Pad that will run on Microsoft (NASDAQ:MSFT) software. Premarket: AAPL +0.1% (7:00 ET).
- Healthscope heats up with second bid. Australian hospital operator Healthscope has become the subject of a private equity bidding war, after KKR and an unnamed firm made separate offers yesterday, each valuing Healthscope at A$1.84B ($1.54B). Sources said the unnamed firm is U.S-based Tenet Healthcare (NYSE:THC), while private equity firm CVC Asia-Pacific is reportedly in talks to join KKR's bid. Monday's offers top an earlier A$1.74B bid from a consortium including Blackstone Group (NYSE:BX), TPG and Carlyle.
- EU takes closer look at Unilever, Sara Lee deal. The European Commission has opened an investigation into the $1.3B bid by Unilever (NYSE:UN) to buy Sara Lee's (SLE) personal care brands. "This merger creates significant overlaps in a number of products used by consumers on an everyday basis," said EU Competition Commissioner Joaquin Almunia. "We need to make sure that if there are competition concerns these are duly addressed." Premarket: UN -1.35%, SLE -0.7% (7:00 ET).
- Deutsche error sends Nikkei down. Deutsche Bank (NYSE:DB) said it accidentally sent out erroneous sell orders for Nikkei futures contracts because of a system malfunction, causing the Nikkei to plunge briefly just seconds after the market opened. Deutsche discovered the error within minutes and canceled the trades, but not before the Nikkei average sank 1.1%. The Nikkei rebounded slightly over the rest of the day, closing -0.6%.
- France fights to keep credit rating. France admitted that it faces a challenge in maintaining its triple-A credit rating, and announced some controversial cost-cutting measures in an effort to soothe market anxieties. France's actions follow a Friday downgrade of Spain to AA+ from AAA.
- Canada's growth picks up. Canada's GDP grew a better-than-expected 6.1% (annualized) in the first quarter, beating forecasts of 5.8% growth and more than double what the U.S. economy reported for the same period. The data sets the stage for what is likely to be the first post-crisis interest-rate increase among the G-7 nations.
- Friday's failures. Three affiliated Florida banks were closed on Friday, bringing the year's total failures to date to 76 and costing the FDIC's insurance fund an estimated $203M. The banks' owner, Bank of Florida (BOFL), isn't part of the transaction, but its shares closed -60.9% in after hours trading on Friday.
- In Asia, Japan -0.6% to 9712. Hong Kong -1.4% to 19497. China -0.9% to 2568. India -2.2% to 16572.
- In Europe, at midday, London -2.1%. Paris -2.3%. Frankfurt -1.7%.
- Futures: Dow -1.1%. S&P -1.4%. Nasdaq -1.1%. Crude -2.6% to $72.06. Gold +0.8% to $1224.20.
Tuesday's Economic Calendar
May Auto sales
10:00 ISM Manufacturing Index
10:00 Construction Spending
5:00 PM ABC Consumer Confidence Index
- Notable earnings before Tuesday's open: GAME, PSS
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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