- Carlyle Group takes its vitamins. Carlyle Group agreed to buy vitamin and nutritional supplements maker NBTY Inc. (NTY) for $3.8B in cash, marking one of the largest leveraged buyouts since the credit crisis began. The $55/share offer is approximately a 57% premium to NBTY's 30-day average closing price.
- Nippon Telegraph enters a new dimension. Nippon Telegraph & Telephone (NTT) agreed to buy South Africa's Dimension Data for £2.1B ($3.2B) in cash, an 18% premium to the stock's closing price yesterday. Dimension Data provides and manages specialist IT infrastructure solutions, and the deal comes as clients show a renewed willingness to spend money on IT and IT services.
- AIG chairman quits because of CEO friction. AIG (AIG) Chairman Harvey Golub stepped down yesterday, after losing a power struggle with CEO Robert Benmosche. In his strongly-worded resignation letter, Golub wrote that Benmosche had told the board their relationship was “ineffective and unsustainable," adding: "At this point, I view asking the board to choose between us [as] an abdication of my responsibility to lead. Consequently, I am resigning for the simple reason I believe it is easier to replace a chairman than a CEO." The move, which came as a surprise to many insiders, could pave the way for further turmoil as the insurer tries to turn its fortunes around.
- Goldman, SEC in settlement talks. Goldman Sachs (GS) and the SEC have reportedly held talks about a catch-all settlement that would resolve both the fraud case against the bank and some of the SEC's lower-profile probes into Goldman's mortgage department. A combined settlement was Goldman's idea and it may end up agreeing to a fine of $1B or more, as long as the case doesn't end with a civil fraud charge. Premarket: GS +1.2% (7:00 ET).
- FDA panel backs Avandia, GSK takes $2.4B charge. An FDA panel of outside experts said GlaxoSmithKline's (GSK) diabetes drug Avandia should be allowed to stay on the market in some form, easing the threat of further litigation that could have followed a ban. Only 12 of 33 members recommended that the FDA withdraw the drug. Separately, Glaxo said this morning that it will record a £1.57B ($2.4B) charge in Q2 to cover the cost of settling lawsuits involving Avandia and antidepressant Paxil. Premarket: GSK +1.8% (7:00 ET).
- BP faces possible ban. The House Natural Resources Committee voted to ban BP (BP -2.1%) and other oil companies from obtaining new offshore leases or drilling permits for as many as seven years unless they can certify they have paid damage and cleanup costs for any oil spill. The bill's future beyond the panel is uncertain. Separately, the company was dealt a setback in its attempts to test a new, better-fitting cap after discovering a leak on the line attached to one of the valves. The leak will have to be repaired before tests can proceed, but some scientists are worried the well bore under the sea floor has been damaged, so shutting in the well as part of the integrity tests could cause the back side of the relief well to blow out. Premarket: BP +1.8% (7:00 ET).
- FOMC minutes: Slower growth, more division. The FOMC minutes, released yesterday, showed a sanguine reaction to a slowdown, as officials saw no immediate need for more easing. The minutes hinted at a little more division, with some pushing for earlier asset sales, though hawkish Hoenig remained the only dissenting voice on the zero-interest policy statement. None of the participants see another dip into recession, though they moderated growth forecasts. Overall, the panel reduced its inflation forecast some, but it hasn't gone all in for deflation: Inflation expectations were seen as well anchored. Slightly higher unemployment is seen coming in 2011.
- Siemens lines up Russian deals worth billions. Siemens (SI) announced it had signed memorandums of understanding in Russia to supply wind power and railway technologies with a total value of several billion euros. In order to manufacture most of the products in Russia, Siemens is planning three joint ventures with Russian partners. Further financial details weren't disclosed.
- ON Semi buys Sanyo's chip unit. Japan's Sanyo Electric (SANYY.PK) will sell its money-losing chip unit to ON Semiconductor (ONNN) for around ¥33B ($373M) in order to focus on strengths such as environmentally friendly technology. Sanyo, which is majority owned by Panasonic (PC), plans to spend $1.8B over the next three years on its rechargeable battery and solar cell businesses. Less clear is ON Semi's angle, or how it plans to make the chip unit profitable.
- Mylan to buy Bioniche Pharma. Mylan (MYL) agreed to acquire Bioniche Pharma Holdings, a privately-held, global injectable pharmaceutical company, for $550M in cash. Mylan President Heather Bresch said the acquisition "satisfies one of our long-standing objectives of filling product and therapeutic gaps in our U.S. portfolio."
- FDIC sues former IndyMac execs. The FDIC has sued four former executives of failed IndyMac for negligence in making loans to homebuilders, and is seeking $300M in damages. This is the FDIC's first legal case related to bank failures during the financial crisis, and an FDIC spokesman said more such actions can be expected in the future.
- China's growth slows. China's economy is growing at a slower clip, with a 10.3% expansion in Q2 raising the possibility of an H2 slowdown. The previous quarter had seen 11.9% growth. The below-estimate expansion gives Chinese policymakers room to scale back some of their restrictions on bank lending and property purchases.
- BOJ raises growth outlook. The Bank of Japan held its key rate steady at 0.1%, as expected, and raised its economic outlook for the country. For the fiscal year that began in April, Japan is expected to see 2.6% growth, up from a previous estimate of +1.8%, "mainly due to acceleration of growth in emerging economies," the bank said in its statement. Next year's growth will slow to +1.9% from a previously expected 2% rise.
Earnings: Thursday Before Open
- JPMorgan (JPM): Q2 EPS of $1.09 beats by $0.39. Revenue of $25.6B (-7.6%) vs. $25.6B. Shares +1.6% premarket. (PR)
- Nexen (NXY): Q2 EPS of $0.49 beats by $0.15. Revenue of $1.5B (+21.2%) in-line. (PR)
- Novartis (NVS): Q2 EPS of $1.06 beats by $0.01. Revenue of $11.7B (+11.1%) vs. $11.4B. Shares +1.5% premarket. (PR)
Earnings: Wednesday After Close
- Marriott (MAR): Q2 EPS of $0.31 beats by $0.03. Revenue of $2.77B (+8.1%) vs. $2.75B. Shares +0.3% AH. (PR)
- In Asia, Japan -1.1% to 9686. Hong Kong -1.5% to 20256. China -1.9% to 2424. India -0.2% to 17909.
- In Europe, at midday, London -0.1%. Paris +0.4%. Frankfurt +0.2%.
- Futures: Dow +0.2%. S&P +0.3%. Nasdaq +0.3%. Crude +0.4% to $77.33. Gold +0.6% to $1214.10.
Thursday's Economic Calendar
- 7:30 Regulatory Reform Summit
8:30 Producer Price Index
8:30 Empire State Mfg Survey
8:30 Initial Jobless Claims
8:30 Atlanta Fed Hearing: Home Mortgage Disclosure Act
9:00 Nomination Hearing: Fed's Yellen, Diamond, Raskin
9:15 Industrial Production
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:15 PM Fed's Lacker: Economic Outlook
- Notable earnings before Thursday's open: FCS, JPM, NVS, NXY, PPG, TCB
- Notable earnings after Thursday's close: AMD, GOOG, PBCT, PLCM
Seeking Alpha's Market Currents team contributed to this post.
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