- KNOC makes hostile bid for Dana Petroleum. South Korea's state-run Korean National Oil Corp. made a hostile bid for Dana Petroleum (OTC:DNPXF), saying it will take its £1.87B ($2.9B) offer directly to shareholders after Dana rejected the bid earlier this month. It is the largest takeover ever attempted by KNOC or by a South Korean state firm, and underscores South Korea's growing sense of urgency to secure oil reserves as it jostles with countries like China for scarce resources. Dana is said to be in talks to acquire Suncor's (SU) U.K. North Sea fields, and had hoped the acquisition would compel KNOC to raise its bid, but KNOC said it already has letters of support from investors holding 49% of Dana's stock. Dana +5.7% in London trading (7:00 ET).
- BofA, Visa to test mobile payment system. Bank of America (BAC) and Visa (V) said they plan to begin a test program next month that lets customers use their smartphones to make purchases in stores. The trial will run from September until the end of the year, and Visa has plans to conduct a similar test with U.S. Bancorp (USB) as well. Earlier in the month, reports had circulated that AT&T (T), Verizon (VZ) and T-Mobile USA (OTCQX:DTEGY) were working on a mobile payment system that relies on smartphones; Discover Financial (DFS) and Barclays (BCS) were said to be part of that venture as well. Premarket: BAC -0.15%, V -0.1% (7:00 ET).
- AWB favors Agrium bid. Agrium (AGU) said this morning that Australia's AWB favors its $1.1B cash bid over a rival stock-based offer from GrainCorp (OTC:GRCLF). Under AWB's existing agreement with GrainCorp, AWB has to provide three days' notice before withdrawing its earlier recommendation of GrainCorp's bid. When this waiting period expires on Monday, Agrium expects AWB will recommend the Agrium transaction.
- Cuomo broadens insurance probe. New York Attorney General Andrew Cuomo has subpoenaed AIG (AIG), Lincoln National (LNC), Aetna (AET), CNO Financial (CNO) and Principal Financial (PFG) as part of a fraud investigation focusing on life insurers’ retention of death benefits. Cuomo is widening an existing probe and had previously issued subpoenas for MetLife (MET) and Prudential (PRU).
- FAA set to fine American Airlines. The FAA is reportedly set to fine American Airlines (AMR) a record $25M or more for maintenance lapses that prompted widespread flight cancellations in the spring of 2008. The penalty would come after months of internal debate among government officials and after American made extensive efforts to improve its maintenance record in order to avoid the fine. However, sources said the FAA is determined to make an example out of American, and will seek a civil penalty nearly three times larger than any fine ever levied against a U.S. airline.
- First Niagara picks up NewAlliance as M&A shows signs of life. NewAlliance Bancshares (NAL) closed up 12.5% yesterday after First Niagara Financial (FNFG) said it would acquire the bank for around $1.5B, creating a top-25 U.S. bank with more than $29B in assets and 340 branches. Shares of First Niagara closed down 6.5%. It's the largest bank merger since the peak of the financial crisis, and part of a recent surge in M&A activity which suggests U.S. executives are growing restless as they wait for the broader economy to pick up.
- CBO sees $1.3T budget deficit. In its latest update on the budget and the economy, the Congressional Budget Office said it expects the U.S. deficit to reach $1.34T this year, down slightly from an earlier projection but still the second-largest shortfall in the last 65 years. The 2011 deficit is expected to come in at $1.07T, an increase from the CBO's previous estimate of $980B. The economic recovery will continue at a "modest pace" over the next few years.
- Rio Tinto still set on BHP JV. Rio Tinto (RTP) CEO Tom Albanese said the company would keep working to get regulatory approval for a planned $116B joint venture with BHP Billiton (BHP). His comments followed earlier reports that suggested the deal wouldn't receive regulatory approval and that the JV had in fact "died months ago." As for whether Rio would consider competing with BHP by launching its own bid for Potash Corp. (POT), Albanese refused to comment (see more below). Premarket: RTP -2%, BHP -1.3% (7:00 ET).
- Potash looks for white knight, allies. Trying to fend off a hostile takeover bid from BHP Billiton (BHP), Potash Corp. (POT) is exploring alliances and looking for a competing offer. Rio Tinto (RTP), which is seen as a possible, but unlikely, white knight, declined to comment on whether it would consider a competing bid, while Vale (VALE) is also seen as a logical buyer but could have a difficult time arranging deal financing. In the meantime, Potash is said to be exploring potential alliances with global chemical and agricultural companies, as well as Chinese sovereign banks.
- ECB mulls exit timing. The ECB will likely consider in Q1 2011 the timing for withdrawing its emergency lending measures, said Axel Weber, president of the German Bundesbank and a member of the ECB's policy-setting Governing Council, adding "it's clear that we need to re-embark on a normalization procedure." As of 7:00 ET, the euro was down 1% against the dollar and the yield on Germany’s 30-year bond had fallen to a record low, as Weber's comments seemed to suggest the ECB will support the region’s banks for longer than many investors expected.
- Apple shutters Quattro Wireless ad network. Apple (AAPL) will shut down the Quattro Wireless ad network that it paid $275M for last year, and focus efforts on its iAd network. The closure of the Quattro ad network could send publishers uninterested in iAds to rivals like Google's (GOOG) AdMob or Millennial Media (which sources said is in talks to possibly be acquired by Research In Motion (RIMM)).
- RIM, U.A.E. make progress on BlackBerry talks. Research In Motion (RIMM) is making "good progress" with officials from the United Arab Emirates to head off a BlackBerry ban set to take effect on October 11, according to Yousef al-Otaiba, the U.A.E. ambassador to the U.S. The U.A.E. will likely be given access to encrypted messages, while creating judicial oversight to address concerns about privacy violations; RIM is expected to avoid commenting on any eventual solution in order to maintain its reputation for security and privacy. Premarket: RIMM -2.3% (7:00 ET).
- Tyco comes back to S&P 500. Tyco (TYC) is returning to the S&P 500 after the index reconsidered its policy of removing companies that incorporate outside the U.S.; S&P had removed Tyco in March 2009 after the company reincorporated in Switzerland. Tyco will replace Smith International (SII) in the S&P 500 after the close of trading on Aug. 26, around the same time that Smith will be acquired by rival Schlumberger (SLB). Shares of Tyco rose 5% in after-hours trading.
Earnings: Thursday After Close
- Aeropostale (ARO): Q2 EPS of $0.46 in-line. Revenue of $495M (+9.2%) vs. $503M. Shares +1.1% AH. (PR)
- Dell (DELL): Q2 EPS of $0.32 beats by $0.02. Revenue of $15.5B (+21.7%) vs. $15.2B. Shares -2.8% AH. (PR, earnings call transcript)
- Foot Locker (FL): Q2 EPS of $0.04 beats by $0.01. Revenue of $1.1B (-0.3%) in-line. Shares -1.5% AH. (PR)
- Gap (GPS): Q2 EPS of $0.36 beats by $0.01. Revenue of $3.3B (+2.3%) in-line. Shares +2.9% AH. (PR, earnings call transcript)
- Hewlett-Packard (HPQ): FQ3 EPS of $1.08 in-line. Revenue of $30.7B (-0.4%) vs. $30.4B. Shares -1% AH. (PR, earnings call transcript)
- Intuit (INTU): FQ4 EPS of -$0.05 beats by $0.05. Revenue of $537M (+17.5%) vs. $501M. (PR, earnings call transcript)
- Marvell Technology Group (MRVL): Q2 EPS of $0.40 in-line. Revenue of $896M (+4.8%) vs. $912M. Shares +9.2% AH. (PR, earnings call transcript)
- Salesforce.com (CRM): Q2 EPS of $0.29 beats by $0.02. Revenue of $394M (+24.8%) vs. $385M. Shares +7.8% AH. (PR, earnings call transcript)
- In Asia, Japan -2.0% to 9179. Hong Kong -0.4% to 20982. China -1.7% to 2642. India -0.3% to 18402.
- In Europe, at midday, London -0.7%. Paris -1.4%. Frankfurt -1.0%.
- Futures: Dow -0.5%. S&P -0.5%. Nasdaq -0.4%. Crude -1.3% to $73.46. Gold -0.3% to $1231.50.
Friday's Economic Calendar
- 10:00 Mass Layoffs
10:00 Regional and State Employment
10:30 ECRI Leading Index
- Notable earnings before Friday's open: ANN
Seeking Alpha's Market Currents team contributed to this post.
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