- Seagate jumps on talks to go private. Seagate (STX) disclosed late yesterday that it had received a preliminary indication of interest to be taken private, and had hired Morgan Stanley (MS) and Perella Weinberg as advisers. TPG Capital and KKR (KKR) are said to be the firms in talks with Seagate, and are reportedly considering an offer of around $16/share, which would value the company at $7.55B. A deal would mark Seagate's second leveraged buyout in a decade, and though there's "no assurance" a formal offer will be made, shares jumped 20.7% in after-hours trading to $15.32.
- HSBC gives up on Nedbank deal. HSBC (HBC) has abandoned talks of a £5B ($8B) plan to buy South Africa's Nedbank. Sources said HSBC found due diligence on the lender to be more complex than expected, and therefore wouldn't have been in a position to make an offer for Nedbank before a two-month period of exclusive talks with majority owner Old Mutual (OTCPK:ODMTY) ended this weekend. HSBC's decision to pull out could pave the way for Standard Chartered (OTCPK:SCBFF) to move forward with a bid, though StanChart could find itself in an awkward position after stressing its recently announced £3.3B rights issue "is not a war chest for acquisitions." Premarket: HBC +0.8% (7:00 ET).
- Regulators to block Rio-BHP venture. German regulators are planning to prohibit a planned $116B iron ore joint venture between Rio Tinto (RTP) and BHP Billiton (BHP). The deal has been on the rocks for some time because of shareholder and industry backlash, persistent rumors that one or both of the firms was going to pull out, and expected resistance from regulators. Though Germany's competition authority didn't issue a formal ruling, its stated “intention to prohibit” the venture is the first formal or indicative ruling of any kind on the deal and likely foreshadows a rejection of the JV by the European Commission.
- Positive results for Sanofi's MS drug. Sanofi-Aventis (SNY) announced this morning that a two-year phase III study of its multiple-sclerosis drug teriflunomide reduced the relapse rate of patients by 31%. The drug also reduced disability progression by as much as 30%. The findings are good news for Sanofi, which is working to offset the loss of business from key drugs that face patent expiries. Premarket: SNY +1% (7:00 ET).
- Foreclosure crisis catches up to bank stocks. All the renewed talk about the foreclosure crisis has finally taken a toll on banks' shares, with U.S. financial stocks posting notable losses yesterday while the broader market was essentially flat. Bank bonds fell and banks' credit-default swaps widened. The fear is that problems related to foreclosures aren't easily resolved technical glitches but rather widespread flaws which, in conjunction with political pressure, could stop the entire foreclosure process for an undetermined period of time. In yesterday's trading, C -4.5%, GS -2%, BAC -5.2%, WFC -4.2%, MS -1.9%, JPM -2.8%.
- SEC, Countrywide execs works towards settlement. The SEC appears to be making progress on a settlement of its high-profile civil fraud case against former Countrywide Financial CEO Angelo Mozilo and two other former executives. Sources said the two sides have been in deal discussions in an effort to reach a settlement before the case goes to trial on Tuesday. Though the SEC and the defendants have put an enormous amount of effort into preparing for the trial, the defendants are keen on a settlement to avoid the possibility of criminal charges while the SEC is nervous its already-battered reputation would take a punishing blow if it loses one of the biggest government enforcement actions to come out of the financial crisis.
- Bribery settlement could set precedent. Panalpina Group, a major Swiss shipping and logistics company, and Shell (RDS.A), one of its customers, are said to be close to settling foreign-bribery charges stemming from a three-year investigation by the SEC and Justice Department. The case could set a new standard for global companies that rely on contractors to operate in parts of the world where the rule of law is shaky, and a settlement could be the first of several by major multinational firms. The inquiry has expanded to include Nabors Industries (NBR), Schlumberger (SLB), Transocean (RIG) and Noble (NE), several of which may reach settlements of their own in the coming weeks and months.
- Treasury's conflict of interest in GM's IPO. General Motors said yesterday that the Treasury's 12.4% stake in Citigroup (C), in conjunction with the Treasury's 61% stake in GM, poses a conflict of interest in GM's upcoming IPO according to Finra rules. As a result, Citigroup Global Markets won't be allowed to sell shares to discretionary accounts without prior consent from clients. The IPO is expected to take place in November; no formal price range has been specified yet, though GM Chairman Ed Whitacre has said he expects a share price "somewhere in the $20 range... $20, $25, something like that would be my guess," based on a 4-to-1 split.
- China warns U.S. on yuan ahead of currency report. The Treasury is scheduled to issue today its twice-yearly report on the currency practices of the major U.S. trading partners, and China is not sitting by quietly. Yao Jian, from China's commerce ministry, warned the U.S. not to make the yuan a scapegoat for its own domestic problems and said it's unfair to criticize the yuan's exchange rate simply by pointing at China's trade surplus. Though the Treasury is unlikely to label China a currency manipulator in this report, the Treasury's language will be closely watched, as will the movement of the dollar as its continuing weakness could potentially destabilize the global economy. (Also: Japan continues to talk intervention)
- Google bags earnings beat. Google (GOOG) handily beat earnings expectations yesterday (see details below), posting a 32% jump in profit and 23% increase in revenue as online ad spending experienced a broad recovery. The company said that its "core business grew very well, and our newer businesses - particularly display and mobile - continued to show significant momentum." Shares of Google rose 9.1% in after-hours trading.
Earnings: Friday Before Open
- GE (GE): Q3 EPS of $0.29 beats by $0.02. Revenue of $35.89B (-5.1%) vs. $37.54B. Shares -0.1% premarket. (PR)
- Infosys Technologies (INFY): FQ2 EPS of $0.65 beats by $0.04. Revenue of $1.50B (+29.6%) vs. $1.43B. Fy'11 revenue guidance of $5.95 - $6.00B and EPADS guidance of $2.54-$2.58. (PR)
- Mattel (MAT): Q3 EPS of $0.77 beats by $0.01. Revenue of $1.83B (+2.3%) vs. $1.94B. (PR)
Earnings: Thursday After Close
- Advanced Micro Devices (AMD): Q3 EPS of $0.15 beats by $0.09. Revenue of $1.6B (+15.7%) in-line. Shares +4.5% AH. (PR, earnings call transcript)
- Google (GOOG): Q3 EPS of $7.64 beats by $0.96. Revenue of $5.5B (+25%) vs. $5.3B. Shares +6.1% AH. (PR, earnings call transcript)
- J.B. Hunt Transport Services (JBHT): Q3 EPS of $0.43 misses by $0.01. Revenue of $986M (+18.2%) vs. $986M. Shares -0.5% AH. (PR)
- In Asia, Japan -0.9% to 9500. Hong Kong -0.4% to 23758. China +3.2% to 2971. India -1.8% to 20125.
- In Europe, at midday, London -0.3%. Paris +0.1%. Frankfurt +0.2%.
- Futures: Dow -0.1%. S&P -0.2%. Nasdaq +0.1%. Crude flat at $82.69. Gold +0.1% to $1379.30.
Friday's Economic Calendar
- 8:00 Fed's Lockhart: Economy and Business
8:15 Bernanke: Monetary Policy in a Low-Inflation Environment
8:30 Consumer Price Index
8:30 Retail Sales
8:30 Empire State Mfg Survey
8:30 Real Earnings
9:55 Reuters/UofM Consumer Sentiment
10:00 Business Inventories
2:00 PM Treasury Budget
- Notable earnings before Friday's open: FHN, GCI, GE, INFY, MAT
Seeking Alpha's Market Currents team contributed to this post.
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