- Community Health to convert $3.3B Tenet bid to all cash. Community Health Systems (CYH) plans to convert its $3.3B bid for Tenet Healthcare (THC) into an all-cash $6/share offer in an effort to sidestep potential complications of a lawsuit filed by Tenet. Since Tenet's shareholders would receive only cash, they would not suffer the consequences that would hit Community Health if it wins the takeover battle and then gets penalized for alleged overbilling of Medicare, an accusation Tenet made in a lawsuit as part of an attempt to prevent the takeover. Community Health has called the lawsuit baseless, although it said on Friday that it has been subpoenaed by the Health & Human Services Department about the allegations. Community Health initially offered $5 in cash and $1 in stock for Tenet.
- Synthes confirms J&J talks. Shares in Synthes jumped 7% in early Zurich trading after it confirmed it's in talks with Johnson & Johnson (JNJ) 'about a potential business combination transaction.' This followed reports at the end of last week that J&J is looking to buy the Swiss-U.S. medical device maker for $20B. In what would be J&J's biggest ever acquisition, Synthes would give J&J immediate presence in the $5.5B trauma category, which grew 8% last year. "It's the gaping hole in [J&J's] orthopedic portfolio, so Synthes really is a good match for them," said a person familiar with the industry. Synthes "pretty much built the trauma market."
- Eli Lilly beats Q1 2011 forecasts. Eli Lilly (LLY) has reported better-than-expected Q1 2011 sales and earnings, fueled by overseas sales of its prescription medicines. Excluding special items, Lilly earned $1.24 a share, well above the analysts' forecasts of $1.17. However, net EPS fell to $0.95 from $1.13 a share a year earlier, while revenue grew 6% to $5.8B.
- NYSE wants massive fee from Nasdaq before talks. NYSE Euronext (NYX) would probably demand an antitrust 'reverse break-up fee' of up to $2B from Nasdaq (NDAQ) and IntercontinentalExchange (ICE) before it is willing to start talks about their $11.3B takeover offer, two sources said. However, two other sources said Nasdaq and ICE are considering a far lower fee that would be close to the €250M ($361M) agreed in NYSE's friendly $10.2B bid from Deutsche Boerse (OTC:DBOEY). NYSE is taking inspiration from AT&T's (T) $39B bid for T-Mobile USA, which is another deal that faces tough antitrust scrutiny. Among other things, AT&T has promised to pay T-Mobile owner Deutsche Telekom (OTC:DTEGY) $3B in cash if the deal doesn't get clearance. Premarket: NYX +0.6% (7:00 ET).
- Finnish election results threaten EU bailouts. Finnish voters have ousted their government and handed major gains to the True Finns anti-bailout party, placing a major doubt on Europe's rescue funds for debt-ridden countries. Although the pro-Europe National Coalition narrowly won with 20.4%, the True Finns received 19% - up from 4.1% in 2007 - while the Social Democrats, who have called for changes in how Europe's crisis countries are funded, gained 19.1%. The National Coalition will therefore have to invite at least one of the parties to coalition talks, raising questions about Finland's support for the rescue packages, which need unanimous approval in the eurozone. The election is likely to put a shadow over talks in Lisbon today between Portugal, the EU, the ECB and the IMF over Portugal's bailout.
- Philips Q1 profit tumbles; to spin off TV ops. Philips' (PHG) Q1 2011 net profit plunged 31% year-on-year to €138M ($198.3M) and came in below analyst forecasts even though revenues rose to €5.26B from €4.98B. Net income reflects an after-tax loss of €87M from the results of Philips' television business, which it now plans to spin-off into a joint venture with Hong Kong based TPV Technology (OTC:TPVTF). The latter will own 70% and Philips 30%. The TV unit was once the Dutch company's flagship business but it can no longer compete with lower-cost rivals. For the rest of 2011, Philips expects 'headwinds', due to the Japan earthquake affecting its revenue and supply chain.
- France Telekom, Deutsche Telekom form JV to cut costs. France Telecom (FTE) and Deutsche Telekom (OTC:DTEGY) plan to form a 50-50 joint venture to buy network equipment, mobile phones and other information technology in a move that could save about €1.3B ($1.9B) annually after three years. The French carrier would save almost €900M and the German operator around €400M. The JV is the latest step in an initiative the two groups unveiled in February in which they identified five areas of cooperation. Analysts said that the relationship enables the carriers to achieve savings and benefit from each others' expertise without the risks of a mega-merger.
- G-20 names ‘too big to ignore’ economies. A gathering of G-20 finance ministers and meetings of the IMF and World Bank, all in Washington at the weekend, spawned a plethora of pronouncements. The G-20 named seven economies that are 'too big to ignore', these being the U.S., Japan, Germany, France, the U.K., India and China. The idea is that they will be more closely scrutinized and then given advice about what measures to take to correct polices that are aggravating any imbalances. World Bank President Robert Zoellick warned that rising food prices could push many more millions into poverty, saying that the world is "one shock away from a full-blown crisis." Brazilian Finance Minister Guido Mantega said the increased food prices were because of the developed nations' money printing and low interest rates, while Tim Geithner called on emerging economies to let their currencies float.
- Gold and silver surge continues. The price of gold broke records for a third day and that of silver reached its highest in 31 years as concerns about inflation around the world and Europe's debt crisis prompted investors to seek safe havens. Gold for June delivery in New York climbed to $1,489.70 an ounce while cash silver gained as much as 0.9% to reach $43.37 an ounce. The threat of a gold shortage has prompted the University of Texas Investment Management Company to take the uncommon step of taking delivery of 6,643 gold bars, worth $987M.
- Texas Instruments first up among major chipmakers. Texas Instruments (TXN), Intel (INTC) and AMD (AMD) are all due to report earnings this week, when investors and analysts are expected to focus on the impact of Japan's earthquake and tsunami on the semiconductor industry. They will also look for the effect of growing tablet sales on the providers of components to PCs, whose sales have slowed as a result of the tablet success. First up is TI after the market closes later today. Its EPS is forecast to rise to $0.58 from $0.51 a year ago on a 6% increase in revenue to $3.4B.
- Six banks shut on Friday. Regulators shut six banks on Friday, bringing the total failures in 2011 to 34 so far. The banks that were closed included Alabama's Superior Bank, and the cost of the six closures to the FDIC's insurance fund is expected to be $588.1M.
Earnings: Monday Before Open
- Eli Lilly (LLY): Q1 EPS of $1.24 beats by $0.08. Revenue of $5.84B (+6.4% Y/Y) beats by $0.2B. (PR)
- Halliburton (HAL): Q1 EPS of $0.61 beats by $0.03. Revenue of $5.28B (+40% Y/Y) beats by $0.3B. (PR)
- KeyCorp (KEY): Q1 EPS of $0.21 vs. consensus of $0.16. "We expect to continue to see decreasing levels of net charge-offs and nonperforming assets during 2011." (PR)
- In Asia, Japan -0.4% to 9557. Hong Kong -0.7% to 23830. China +0.2% to 3057. India -1.5% to 19091.
- In Europe, at midday, London -1.0%. Paris -1.5%. Frankfurt -1.1%.
- Futures at 7:00: Dow -0.6%. S&P -0.7%. Nasdaq -0.6%. Crude -1.1% to $108.45. Gold -0.1% to $1484.50.
Monday's Economic Calendar
- 10:00 NAHB Housing Market Index
- Notable earnings before Monday's open: AMLN, AMTD, C, GCI, HAL, KEY, LLY, MMR
- Notable earnings after Monday's close: TXN, ZION
The SA Currents team contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.