Wall Street Breakfast: Must-Know News

by: Rachael Granby
Rachael Granby
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.

  • RockTenn buys Smurfit-Stone. RockTenn (RKT) announced yesterday evening that it would buy larger rival Smurfit-Stone Container Corp. (NYSE:SSCC) for $3.5B in cash and stock. The $35/share deal, which comes just seven months after Smurfit emerged from bankruptcy, represents a 27% premium to Smurfit-Stone's Friday closing price. The purchase will triple RockTenn's annual revenue to more than $9B and make it the second-largest containerboard producer in North America after International Paper (NYSE:IP), as the company bets that a rebounding U.S. economy will see significant demand growth for containerboards.
  • J.C. Penney plans restructuring. J.C. Penney (NYSE:JCP) unveiled a restructuring program this morning in which it will close six underperforming stores, and wind down its catalog business by shutting 19 outlet stores over the next two years. The company expects the measures to lift earnings by $0.07/share in the first full year of implementation, though they will result in an $0.08/share charge for FQ4 2010 and a $0.05/share charge in 2011. CEO Myron Ullman said the restructuring "will allow us to improve margins and drive profitable sales over the long term."
  • Sara Lee gets P-E bid. A private-equity consortium led by Apollo Global Management has reportedly made a takeover bid for Sara Lee (SLE) that values the food company close to the $20/share mark that Sara Lee's board has been seeking. Brazilian meat processor JBS missed Friday's deadline for expressions of interest, but is said to be considering a revised bid backed by Blackstone (NYSE:BX). Sara Lee’s board reportedly plans to meet this Thursday to review any bids and consider spinning off its coffee business. Premarket: SLE +2.9% (7:00 ET).
  • Sanofi extends Genzyme bid. Sanofi-Aventis (NYSE:SNY) extended its $18.5B tender offer for Genzyme (GENZ) this morning, the second such extension as the companies try to push past a months-long stalemate. There was no movement on the $69.50/share price tag, which Genzyme insists undervalues the firm's potential, but the companies are still trying to find common ground through a contingent value right. The new offer is valid through February 15. Genzyme shares closed at $71.58 on Friday. Premarket: SNY -0.4% (7:00 ET).
  • Philips falls short on earnings. Philips Electronics (NYSE:PHG) fell short of expectations with its earnings release this morning, posting a Q4 net profit of €465M ($630M) vs. consensus estimates of €532M. Quarterly sales were up 1.8% to €7.392B vs. expectations of €7.56B, with outgoing CEO Gerard Kleisterlee explaining that sales were hurt by "negative consumer sentiment in developed markets" and "continued destocking in the trade." Looking ahead, Philips expects an uptick in the construction sector which will boost its lighting division in H2, but believes consumers in mature markets will remain reluctant to spend. Premarket: PHG -6.6% (7:00 ET).
  • Treasury sees toxic asset gains. The Treasury's toxic asset funds have gained 27%, or around $1.1B, since they were created, according to data to be released later today. The eight toxic asset funds, created to support the mortgage-backed securities market and run by asset managers like BlackRock (NYSE:BLK) and Invesco, are all profitable.
  • Novartis buys Genoptix. Novartis (NYSE:NVS) agreed to pay $470M to buy Genoptix (GXDX), a lab specializing in diagnosing cancers in bone marrow, blood and lymph nodes. The $25/share deal is a 27% premium to Genoptix's closing price on Friday, and will allow Novartis to speed development of so-called companion diagnostics. Premarket: NVS +0.3% (7:00 ET).
  • Rio Tinto gets Riversdale backing. Rio Tinto (NYSE:RIO) scored some key support for its $3.9B offer for coking coal developer Riversdale Mining as Riversdale's full board recommended the bid. Top Riversdale shareholder Tata Steel (OTC:TATLY) also threw its weight behind the deal. Riversdale said it's unaware of any other offers in the works, though an Indian consortium said it planned to decide on January 27 whether to place an offer.
  • Galleon case snags Wall Street banker. The ongoing investigation into hedge fund Galleon Group has reportedly snagged a Morgan Stanley (NYSE:MS) banker. Sources said prosecutors have accused Kamal Ahmed of leaking information that was relayed to Galleon founder Raj Rajaratnam about a 2006 merger involving Advanced Micro Devices (NYSE:AMD). Ahmed, who was referred to anonymously in a Friday court filing, is the first Wall Street banker to be drawn into the Galleon investigation. Rajaratnam's trial is set for late February.
  • StanChart buys GE Money in Singapore. Standard Chartered (OTCPK:SCBFF) agreed to buy GE Money's (NYSE:GE) Singapore unit, explaining the move will "[expand] our product capabilities in auto finance [and] boost our market positioning in personal loans.” The companies declined to provide financial details of the deal, though sources said StanChart paid between S$850M ($663M) and S$900M.

Earnings: Monday Before Open

  • Halliburton (NYSE:HAL): Q4 EPS of $0.68 beats by $0.05. Revenue of $5.2B (+40% Y/Y) beats by $0.3B. (PR)

Today's Markets

  • In Asia, Japan +0.7% to 10345. Hong Kong -0.3% to 23802. China -0.7% to 2697. India flat at 19151.
  • In Europe, at midday, London +0.1%. Paris -0.3%. Frankfurt -0.7%.
  • Futures at 7:00: Dow flat. S&P -0.1%. Nasdaq -0.1%. Crude -0.7% to $88.45. Gold +0.4% to $1345.80.

Monday's Economic Calendar

The SA Currents team contributed to this post.

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