- Charles River, Wuxi call off merger. Charles River Laboratories (CRL) and Wuxi PharmaTech (WX) called off their merger agreement following continued opposition from investors and proxy advisory firms. The $1.6B deal would have been the largest foreign takeover of a Chinese company, and would have allowed Charles River to expand in China, where revenue from drug-testing services is growing as much as 30% annually. Instead, Charles River will pay a $30M breakup fee to Wuxi and will begin a new $500M share buyback program. Premarket: CRL +6.4% (7:00 ET).
- EDF sells U.K. unit for $9.1B. A group led by Hong Kong's Cheung Kong Infrastructure Holdings (CHEUY.PK) is buying Electricite de France's (ECIFF.PK) U.K. power networks unit for £5.8B ($9.1B). EDF is selling the unit as part of its plans to reduce its debt, while Cheung Kong Infrastructure is working to increase its overseas investments because of difficulties in expanding in Hong Kong's mature market.
- Disney offloads Miramax. At long last, Disney (DIS) announced it's selling its Miramax film studio. Filmyard Holdings, whose partners include construction tycoon Ron Tutor and investment firm Colony Capital, will buy the studio for $660M, ending months of talks with various bidders. Disney agreed to the plan after Tutor and his investment partners paid a nonrefundable $40M deposit and presented a financing plan.
- Life insurers face fraud probe. New York Attorney General Andrew Cuomo has subpoenaed Prudential (PRU) and MetLife (MET) as part of a "major fraud" investigation into life insurers. The probe is focused on whether the firms misled military families into placing benefits in insurer-controlled, low-yield, potentially risky accounts which "reaped millions of secret profits for the insurers." Six other firms, including Genworth Financial (GNW) and Unum Group (UNM), have reportedly been subpoenaed as well.
- DoJ sues Oracle. The Justice Department has joined an existing whistle-blower lawsuit against Oracle (ORCL), alleging the firm defrauded the federal government on a software contract in effect from 1998 to 2006 that involved hundreds of millions of dollars in sales. According to the suit, Oracle misrepresented its commercial sales practices, causing government customers to receive deals that were inferior to those Oracle gave its commercial customers. Oracle closed down 2.4% yesterday.
- Google calls China blackout a miscalculation. Google (GOOG) said yesterday that its search and advertising services were being blocked in China for the first time since the company reached a compromise with Chinese regulators earlier in the month. However, Google later said the blockage was because of its own miscalculation: "Because of the way we measure accessibility in China, it’s possible that our machines could overestimate the level of blockage. That seems to be what happened last night when there was a relatively small blockage. It appears now that users in China are accessing our properties normally.”
- Visa may face antitrust suit. Visa (V) disclosed it may face an antitrust suit from the Justice Department over its policy of prohibiting merchants from charging customers extra for credit card transactions. CEO Joseph Saunders said the company is "currently engaged in constructive negotiations with the department to resolve its concerns as it relates to Visa without litigation or payment of monetary damages.” Merchants already have a pending antitrust suit against both Visa and MasterCard (MA). In yesterday's trading, Visa closed down 4.3%.
- Fed sees paper profit on Bear, AIG. The Federal Reserve now has a paper profit on the toxic assets it's holding from Bear Stearns and AIG (AIG). The assets are presently worth $69.1B, around $2B more than last quarter, with the unrealized gains on the Maiden Lane portfolios standing at $10.8B.
- Vale buys Brazilian copper firm. Vale (VALE), the world’s largest iron-ore producer, said it plans to buy Brazilian copper producer Paranapanema for about 2B reais ($1.14B) as it seeks to diversify its metals output. The company will pay 6.30 reais per share to buy all of Paranapanema’s voting stock in a Sept. 1 auction. Vale aims to become one of the world’s largest copper producers in the medium term, rivaling companies like Xstrata (XSRAF.PK) and Anglo American Plc (AAUKY.PK).
- Citigroup settles subprime charge. Citigroup (C) agreed to pay $75M to settle regulatory charges that it failed to disclose $40B in subprime exposure to investors during 2007. Gary Crittenden, Citigroup's former CFO, agreed to pay $100,000 as part of the settlement. Arthur Tildesley, a former head of investor relations, agreed to pay $80,000.
- Reliance, Universal discuss theme park in India. India's Reliance ADA Group is reportedly in early stage talks with Universal Studios, a unit of GE's (GE) NBC Universal, to build a $1.5B theme park and resort in India, a move that would capitalize on rising demand for entertainment in one of the world's fastest-growing markets. A deal would help Reliance in its efforts to become a global media giant, while allowing Universal to extend its brand to a new market. (Comcast (CMCSA) is in the midst of seeking regulatory approval to buy control of NBC Universal.)
- IMF: U.S. financial system at risk. Though the U.S. financial system is "slowly recovering," the IMF said it remains vulnerable to crisis, partly because lawmakers have failed to streamline the regulatory system or take bolder action. The IMF also conducted stress tests on the 53 largest banks in the U.S. and found that 12 banks, nearly all of them small or regional, would need to raise more capital.
Earnings: Friday Before Open
- Aon Corporation (AON): Q2 EPS of $0.81 beats by $0.06. Revenue of $1.89B (+0.9%) vs. $1.87B. (PR)
- CapitalSource Inc. (CSE): Q2 EPS of $0.06 beats by $0.07. (PR)
- Newell Rubbermaid (NWL): Q2 EPS of $0.51 beats by $0.07. (PR)
Earnings: Thursday After Close
- Acme Packet (APKT): Q2 EPS of $0.18 beats by $0.01. Revenue of $53.3M (+62%) vs. $52.5M. Shares -13.7% AH. (PR)
- Amgen (AMGN): Q2 EPS of $1.38 beats by $0.08. Revenue of $3.8B (+2.5%) vs. $3.7B. Shares -0.2% AH. (PR, earnings call transcript)
- Coinstar (CSTR): Q2 EPS of $0.39 beats by $0.06. Revenue of $342M (+34.8%) vs. $381M. Shares -7.5% AH. (PR)
- DTE Energy Company (DTE): Q2 EPS of $0.51 misses by $0.09. Revenue of $1.8B (+6.2%) vs. $1.7B. Shares -0.3% AH. (PR)
- Eastman Chemical Company (EMN): Q2 EPS of $2.05 beats by $0.40. Revenue of $1.7M (+37.6%) vs. $1.6M. Shares +6.3% AH. (PR)
- Expedia (EXPE): Q2 EPS of $0.44 beats by $0.02. Revenue of $834M (+8.3%) vs. $846M. Shares +2.9% AH. (PR, earnings call transcript)
- First Solar (FSLR): Q2 EPS of $1.84 beats by $0.23. Revenue of $588M (+11.8%) vs. $543M. Shares -3.9% AH. (PR, earnings call transcript)
- Genworth Financial (GNW): Q2 EPS of $0.24 may not be comparable to consensus of $0.28. Shares -4.8% AH. (PR)
- Ingram Micro (IM): Q2 EPS of $.41 beats by $0.04. Revenue of $8.2B (+24%) vs. $7.9B. Shares -0.7% AH. (PR, earnings call transcript)
- KLA-Tencor (KLAC): FQ4 EPS of $0.70 beats by $0.10. Revenue of $559M (+98.2%) vs. $558M. Shares -0.4% AH. (PR, earnings call transcript)
- Maxim Integrated Products (MXIM): FQ4 EPS of $0.33 beats by $0.02. Revenue of $566M (+43.5%) vs. $562M. Shares +3.3% AH. (PR)
- McAfee (MFE): Q2 EPS of $0.63 beats by $0.03. Revenue of $495M (+5.7%) vs. $507M. Shares +0.6% AH. (PR, earnings call transcript)
- MEMC Electronic Materials (WFR): Q2 EPS of $0.06 misses by $0.03. Revenue of $448M (+58.5%) vs. $466M. Shares -7.1% AH. (PR, earnings call transcript)
- MetLife (MET): Q2 EPS of $1.23 beats by $0.23. Revenue of $12.8B (+4.8%) vs. $13B. Shares +3.2% AH. (PR)
- Monster Worldwide, Inc. (MWW): Q2 EPS of $0.00 beats by $0.04. Revenue of $215M (-4%) vs. $216M. Shares +0.2% AH. (PR, earnings call transcript)
- Pactiv (PTV): Q2 EPS of $0.56 beats by $0.01. Revenue of $973M (+8%) vs. $1010M. Shares -0.9% AH. (PR)
- Regal Entertainment Group (RGC): Q2 EPS of $0.03 may not be comparable to consensus of $0.17. Revenue of $731M (-7.4%) vs. $757M. Shares -0.5% AH. (PR)
- Republic Services (RSG): Q2 EPS of $0.43 beats by $0.01. Revenue of $2.1B in-line. Shares +0.8% AH. (PR, earnings call transcript)
- Rovi Corporation (ROVI): Q2 EPS of $0.55 beats by $0.09. Revenue of $135M (+12.8%) vs. $129M. Shares +3.4% AH. (PR)
- Sunoco (SUN): Q2 EPS of $1.31 beats by $0.54. Revenue of $9.6B (+31.4%) vs. $8.3B. Shares +3.2% AH. (PR, earnings call transcript)
- In Asia, Japan -1.6% to 9537.3. Hong Kong -0.3% to 21030. "China Shanghai Co" -0.4% to 2638. India -0.7% to 17868.
- In Europe, at midday, London -0.6%. Paris -0.5%. Frankfurt -0.8%.
- Futures: Dow -0.2%. S&P -0.3%. Nasdaq -0.4%. Crude -0.6% to $77.90. Gold +0.1% to $1172.80.
Friday's Economic Calendar
- 8:30 GDP Q2
8:30 Employment Cost Index
8:30 ISM New York Business Index
9:45 Chicago PMI
9:55 Reuters/UofM Consumer Sentiment
3:00 PM USDA Ag. Prices
- Notable earnings before Friday's open: ACI, AEP, AIV, AON, BPO, BWA, CSE, CVH, CVX, ENDP, FO, ITT, LPX, MCK, MRK, NWL, PEG, SPG, UFS, UPL, WY
Seeking Alpha's Market Currents team contributed to this post.
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