Russia may impose restrictions or a ban on European airlines using trans-Siberian routes in retaliation for the new EU sanctions over Ukraine, reports Reuters quoting the Vedomosti. If imposed, the restrictions would weaken European airlines' competitive advantage over Asian rivals due to longer flights and higher fuel costs. The constraints would greatly affect Lufthansa (OTCQX:DLAKY), British Airways and Air France (OTCPK:AFLYY), and could lead to potential losses of $1.3B for three months of restrictions.
Israel has withdrawn its ground forces from the Gaza Strip following its elimination of cross-border infiltration tunnels. An Egyptian-mediated 72-hour ceasefire kicked in at 5:00 a.m. GMT, and over the course of the truce, delegates are expected to join talks in Cairo to cement a longer-term deal. Egypt has positioned itself as a mediator in prior Gaza conflicts but, like Israel, its current administration views Hamas as a security threat.
AIG has agreed to settle a shareholder lawsuit for $960M which was filed in 2008. The lawsuit surfaced shortly after the insurance group’s value collapsed due to the tremendous losses it sustained on the mortgage securities it insured. The settlement was disclosed as AIG (NYSE:AIG) reported Q2 net income of $3.1B, compared with $2.7B in the same period a year earlier.
Telefonica says it is offering $9B in cash and shares for GVT, Vivendi's (OTCPK:VIVHY) Brazilian operator. Telefonica (NYSE:TEF) is looking to combine GVT with Vivo (its Brazilian unit) if the bid is successful. "A combination of both companies would create the largest telecom operator in the largest market in Latin America, providing a unique platform for the generation of synergies and value creation," says the telecom giant.
U.S. authorities are investigating General Motors' (NYSE:GM) auto financing arm over subprime auto loans it made and securitized since 2007. Financial services firms have paid billions of dollars to settle investigations under FIRREA (Financial Institutions Reform, Recovery and Enforcement Act) which probed mortgages pooled into securities in the run-up to the financial crisis, however, this new subpoena suggests that investigators are also looking at the securitization of subprime auto loans.
Gannett has agreed to take full ownership of Cars.com for $1.8B. Gannett (NYSE:GCI) currently owns 27% of Cars.com parent Classified Ventures, so the deal values the whole business at about $2.5B. Classified Ventures is backed by four media companies in addition to Gannett, including McClatchy (NYSE:MNI), Tribune (TRBAA), AH Belo (NYSE:AHC), and Graham Holdings (NYSE:GHC).
LinkedIn will pay almost $6M to more than 350 current and former employees following a Department of Labor investigation which found that the online career-networking company violated U.S. wage law. The Labor Department uncovered LinkedIn's (NYSE:LNKD) failure to record and compensate workers for all hours worked, violating provisions of the Fair Labor Standards Act which requires non-exempt workers to be paid the federal minimum hourly wage plus overtime.
Banco Espirito Santo may have received a $6.6B rescue yesterday, however, it did not prevent one of its main shareholders from logging a record loss. Credit Agricole (OTCPK:CRARY) has reported that it took a €708M ($950M) hit due to the 14.6% stake it owns in Banco Espirito Santo, nearly wiping out the bank's Q2 net profit.
Credit Agricole's morale continued to slide following the continuing U.S. investigation into its potential sanctions violations. The bank says it's now beginning to discuss terms with U.S. authorities, and has sent the latter the results of its internal review. Credit Agricole (OTCPK:CRARY) gave no details about its litigation provisions, but says it considers them adequate.
Lexmark has again increased its offer for Swedish software firm Readsoft (OTC:RDSFF), pushing the high-stakes bidding war between it and Hyland Software even farther. Lexmark (NYSE:LXK) lifted its offer to SEK55.50/share, above Hyland's latest offer of SEK55/share made on Monday. Readsoft Chairman Goran Larsson said yesterday that both firms would make good owners of Readsoft, and that the outcome of the battle was now a matter of price.
The Federal Trade Commission has given U.S. antitrust approval to Akorn's (NASDAQ:AKRX) acquisition of prescription drug-maker VersaPharm on condition that Akorn sell its rights to a generic version of the tuberculosis drug rifampin. Akorn entered into a definitive agreement in May to purchase VersaPharm for $440M. Watson Laboratories, a subsidiary of Actavis (NYSE:ACT), has agreed to buy Akorn's rights to rifampin.
Petrobras will not likely meet its oil and gas production target for 2014 because of continued delays in the startup of new offshore oil platforms, a government source with direct knowledge of the situation tells Reuters. Petrobras (NYSE:PBR) set a 2014 goal of increasing output by 7.5%, +/- one percentage point, hoping to break a string of missed targets caused by declining output from its largest existing fields and delays in new areas.
Indonesia’s government has approved the BP-led Tangguh LNG expansion project, a key step toward the project's ultimate approval. The expansion project, expected to cost $12B, would add a third train, boosting total project production capacity to 11.4M metric tons/year from current capacity of 7.6M. BP (NYSE:BP) and its partners have pledged to supply 40% of the LNG output from Train 3 (1.5M metric tons/year) to Indonesia’s state electricity company for the domestic market.
Sycamore Partners, a private equity firm which recently bought Jones Group (NYSE:JNY), Talbots and Hot Topic, is considering a bid for Sears Canada (SEARF), reports the New York Post. Eddie Lampert, the hedge-fund billionaire who controls Sears (NASDAQ:SHLD) and its Canadian counterpart, expects up to $2B for the 176-store chain. Sears Canada has recently fallen on hard times, with increased competition from U.S. rivals Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) which have been aggressively expanding in Canada.
VeriFone (NYSE:PAY) -8.8% since Jun. 23 David Granik article »
Web.com (NASDAQ:WWWW) -39% since Oct. 7 Renzo Dancourt article »
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In Asia, Japan -1% to 15320. Hong Kong +0.2% to 24648. China -0.2% to 2220. India +0.7% to 25908.
In Europe, at midday, London +0.4%. Paris +0.6%. Frankfurt +0.6%.
Futures at 6:20: Dow -0.1%. S&P -0.2%. Nasdaq -0.1%. Crude +0.2% to $98.46. Gold +0.3% to $1293.30.
Ten-year Treasury Yield flat at 2.49%
Today's economic calendar:
7:45 ICSC Retail Store Sales
8:30 Gallup US ECI
8:55 Redbook Chain Store Sales
9:00 PMI Services Index
10:00 Factory Orders
10:00 ISM Non-Manufacturing Index
11:00 Global Composite PMI
11:00 Global Services PMI
Notable earnings before today's open: ACM, ACT, ADM, AEE, AKRX, ALLT, AME, AMSC, ANSS, ARCC, ARCO, ARQL, BCRX, BLMN, CIE, CLDT, CNK, COH, CRZO, CVC, CVS, DWRE, EMR, END, ENZY, EXH, EXLP, EXPD, FE, FUN, GLDD, GTIV, GTXI, HCLP, HCP, HEP, IART, IFF, IIVI, INFI, IT, KWK, LIN, LPX, MDU, MGM, MMP, MSI, MWW, MZOR, NILE, NNN, [[NTi]], NVDQ, NWN, ODP, OXF, OZM, PMC, RBA, REGN, RHP, RIGL, RTI, SCMP, SCOR, SMG, SNSS, SPAR, STE, TDG, VMC, VSI, VTG, WLK, WNR, ZBRA, ZTS
Notable earnings after today's close: AMTG, APEI, ARC, ATSG, ATVI, AVNR, AWR, AXLL, BIO, BKH, BMR, CHUY, CLR, CRTO, CSU, DAVE, DIS, DPM, DRYS, ENPH, EOG, FANG, FEYE, FRGI, FSLR, FTR, FUEL, GMED, GRPN, HCI, HGR, HT, ITRI, JAZZ, JCOM, KAR, LBTYA, MCHX, MITT, MODN, MPO, MRCY, NSTG, NYMT, OAS, OKE, OKS, ORA, ORIG, PBPB, PEGA, PNNT, PRAA, PZZA, QUAD, REXX, RLD, RST, RSYS, SGMS, SGY, SKT, SMCI, TDW, TMHC, TPC, TRMB, TTWO, UNTD, WBMD, WES, WGP, WMGI, WTR, XEC, Z, ZAGG, ZGNX
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