- ABB bows out of Chloride bid. ABB (ABB) abandoned its pursuit of U.K.-based Chloride Group, saying it won't raise its bid for the company to match an improved £997M ($1.5B) offer by Emerson Electric (EMR). The move comes as a surprise to some investors who had expected ABB to match the bid; ABB CEO Joe Hogan explained that "while we still see considerable value in the combination of ABB and Chloride and have a high regard for the Chloride management team, we must take a disciplined approach when assessing potential acquisitions."
- Portugal blocks Telefonica’s Vivo bid. In an unexpected and controversial move, Portugal's government blocked Telefonica's (TEF) bid for Portugal Telecom's (PT) stake in their Vivo (VIV) joint venture. Around 74% of Portugal Telecom's shareholders had voted in favor of the €7.15B ($8.7B) bid, and the government's intervention using its "golden shares" is expected to be challenged by both Telefonica and the European Commission, and will likely lead to drawn-out legal wrangling.
- Arena strikes deal for obesity drug. Arena Pharmaceuticals (ARNA) announced an agreement with Japan's Eisai Inc. in a deal worth potentially more than $1.3B to fund commercialization of an obesity drug that could become Arena's first product. Eisai will pay $50M upfront for the right to sell Arena's lorcaserin in the U.S., and will pay as much as $160M in payments for reaching certain development targets and getting the drug approved by regulators, plus a $1.16B one-time payment in the future based on the level of annual sales. Premarket: ARNA +30% (7:00 ET).
- Singing the Q2 blues. The second quarter was one investors will want to forget. In a late-day selloff yesterday, the Dow closed down 1% to 9773.95, marking a 10.4% loss for the quarter and its worst quarterly performance since the beginning of 2009. Nasdaq and S&P were down 12% and 11.9% for the quarter, respectively. The outlook for Q3 is shaky, as investors continue to worry about a global trifecta of economic, fiscal and regulatory issues. "Fresh in everybody's mind is the carnage of late 2008 and early 2009," said one strategist. "Therefore, their mentality is to sell first, ask questions later and be content with earning 3% on 10-year Treasurys."
- Financial reform still waiting for the fat lady to sing. The House of Representatives approved the financial reform bill yesterday (in a 237-192 vote), but the Senate postponed its vote until after the week-long July 4 recess, leaving open the possibility that the bill may undergo further compromises. The delay could also sap the bill's momentum, giving opponents time to convince on-the-fence lawmakers to vote against the measure.
- AIG CEO wants to oust chairman. AIG (AIG) CEO Robert Benmosche reportedly said last week that he would quit unless Chairman Harvey Golub leaves the company. Benmosche told the insurer's board that he wanted more control over the divestment of AIG's Asian life insurance unit, including making management changes. The board didn't make a decision during the meeting.
- ConocoPhillips drives away with $626M. ConocoPhillips (COP) completed the sale of its 50% stake in a truck stop joint venture, bringing in $626M in the process. The divestiture is the latest step in Conoco's $10B asset sale plan.
- Toyota prepares for more recalls. Toyota (TM) is preparing to recall 270,000 luxury cars worldwide to repair a defect that could cause the engine to stall. A spokeswoman said the recalls will be carried out "as soon as we decide on the measure to minimize inconvenience for our customers."
- BP hearings could become public trial. The U.S. presidential commission investigating the Gulf of Mexico spill has decided to hold hearings in affected Gulf states, and will be calling upon top BP (BP) executives, including CEO Tony Hayward. While acknowledging concerns that the hearings, set to begin July 12 in a 500-seat venue, could turn into a public trial, commission members stressed the need for local residents to be heard. Meanwhile, BP is turning to banks for additional short-term loans to help cover its spill costs. BP raised $20B in cash and credit by the end of last week, but could raise another $5B now. Premarket: BP +0.45% (7:00 ET).
- Yahoo's stock buyback. Yahoo (YHOO) announced a plan to buy back $3B of stock over the next three years, sending its shares up 1.1% in after hours trading. The new buyback "is consistent with the company's commitment to returning value to shareholders," said a spokeswoman.
- Moody's may downgrade Spain. Moody's warned it may downgrade Spain's triple-A sovereign rating by one or two notches because of deteriorating economic conditions: "In the short term, the government's accelerated fiscal consolidation combined with the higher borrowing costs currently facing the government, consumers, and businesses will likely depress growth." Moody's is the last major ratings firm to rate Spain as Aaa. But in a reassuring sign for markets, Spain successfully raised €3.5B ($4.3B) in an oversubscribed bond sale today.
- Amedisys subject of SEC probe. Amedisys (AMED) received notification from the SEC that it is the subject of a formal investigation, and received a subpoena for documents. The company noted that "the SEC is also investigating others in the home health industry regarding matters being examined by the Senate Finance Committee."
- URS wins bidding war for Scott Wilson. Engineering firm URS (URS) beat out privately-held CH2M Hill in their bidding war for U.K.-based Scott Wilson Group. CH2M Hill withdrew its offer for Scott Wilson, saying the acquisition no longer added value to the company, after URS raised its bid to £223M ($337M) yesterday.
- Icahn increases stake in Mentor Graphics. Activist investor Carl Icahn raised his stake in Mentor Graphics (MENT) to 10.84%, steadily increasing his holdings from 8% as of June 11 and 9.5% as of June 22. A shareholder rights plan will be triggered when an investor acquires at least 15% of Mentor's common stock. Icahn said he had met with Mentor's management and "looks forward to further conversations and to working constructively with current management to maximize shareholder value."
- Future unclear for Carlyle's Taiwan deal. Carlyle Group's plan to sell a pay-TV operator to Taiwan Mobile for $1B has been put in jeopardy by its failure to obtain regulatory approval ahead of the deal's deadline. Taiwan Mobile said both companies agreed to let the original sales agreement lapse following yesterday's missed deadline, but still wanted to complete the sale and were looking for ways to address regulatory concerns. This is the second time in two months that foreign companies have faced difficulties with Taiwanese regulators, as AIG (AIG) had to extend a $2.2B sale deadline last month after regulators raised concerns.
- Hitachi offloads JV stake. Hitachi (HIT) will transfer most of its stake in an LCD joint venture to Panasonic (PC) for $717M. The move will shrink Hitachi's JV holdings to 5%, and raise Panasonic's stake to 92%.
- Amazon picks up Woot. Amazon (AMZN) signed an agreement to buy Woot.com, the irreverent online store which sells discounted products and operates an online community, for an undisclosed sum. The deal is expected to close in Q3, and "more details forthcoming after we pick our eyeballs up off of the floor," Woot said in its statement.
Earnings: Wednesday After Close
- Apollo Group (APOL): FQ3 EPS of $1.74 beats by $0.19. Revenue of $1.3B (+27.7%) in-line. Shares -2.1% AH. (PR, earnings call transcript)
- In Asia, Japan -2.0% to 9191.6. Hong Kong -0.6% to 20129. China -1.0% to 2374. India -1.1% to 17509.
- In Europe, at midday, London -1.0%. Paris -1.4%. Frankfurt -0.7%.
- Futures: Dow -0.1%. S&P -0.1%. Nasdaq -0.3%. Crude -1.1% to $74.83. Gold -0.2% to $1243.
Thursday's Economic Calendar
- Motor Vehicle Sales
6:00 Monster Employment Index
7:30 Challenger Job-Cut Report
8:30 Jobless Claims
9:00 Hearing: The Role of Derivatives in the Financial Crisis
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
- Notable earnings before Thursday's open: STZ
Seeking Alpha's Market Currents team contributed to this post.
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