Wall Street Breakfast: Must-Know News

by: SA Editor Yigal Grayeff
SA Editor Yigal Grayeff
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.

  • VF to buy Timberland in $2B deal. Timberland (NYSE:TBL) shares are surging 41% to $42.25 premarket on news that VF Corp. (NYSE:VFC) has agreed to buy the footwear and apparel company for $43 a share. The price represents a hefty premium on Timberland's close of $29.99 on Friday, and a total enterprise value of approximately $2B net of cash acquired.
  • Large amounts of data accessed in IMF hacker attack. The intrusion into the IMF's computer systems led to the exposure of a 'large quantity' of data, including documents and e-mails, a security expert familiar with the incident said. The person added that the intrusion was linked to a foreign government but didn't say which country is suspected of responsibility. Tom Kellermann, a former cybersecurity specialist at the World Bank who has been tracking the incident, said concern exists that the hackers designed their break-in to obtain market-moving insider information. The attackers appeared to have gained broad access to IMF plans, particularly those relating to the bailout of countries in economic distress.
  • ENRC rises on £12B bid report. Shares of Eurasian Natural Resources (OTC:EURNF) increased 7.2% in U.K. trading after a newspaper reported that Glencore is considering a £12B ($19.5B) bid for the mining company. Glencore CEO Ivan Glasenberg has held talks in recent weeks with three investors who control 45% of ENRC, and with the government of Kazakhstan, which owns 12%. The timing of any potential deal is unclear, as Glencore can't issue new shares until six months after its recent IPO.
  • Allied World to buy Transatlantic for $3.2B. Allied World Assurance (NYSE:AWH) has agreed to acquire Transatlantic Holdings (NYSE:TRH) for $3.2B in stock, creating a reinsurer with a market worth of over $5B and operations in 18 countries. The deal values Transatlantic at $51.10 a share, or a 16.1% premium over the company's close of $44.01 on Friday. The merged entity, to be called TransAllied Group, will have primary insurance operations, a Lloyd’s of London presence, and a bigger capital base outside the U.S. The deal adds to the trend of the past couple of years of mid-sized reinsurers combining to gain scale and return capital to investors.
  • Ford to appeal $2B award to truck dealers. Ford (NYSE:F) will appeal a $2B judgment awarded to commercial truck dealers who say the company overcharged them for 11 years. On Friday, a judge upheld a $4.5M jury verdict in favor of an Ohio dealer in February, and said Ford had to pay similar damages and interest to a class of about 3,000 other dealers. James Lowe, a lawyer for the dealers, said Ford’s prospects of a reversal may be limited. “The court of appeals has already upheld this judge when he certified this as a class action,” Lowe said. The $2B sum is five times higher than the largest-ever jury award against Ford in a lawsuit.
  • Regions Financial investigates executives. The audit committee of Regions Financial (NYSE:RF) is looking at whether bank executives delayed the disclosure of loans that were going sour during the financial crisis, according to court documents and sources. The probe began after the Fed expressed concerns about past practices, and with Regions facing a lawsuit from two pension funds over the issue. The inquiry also comes as regulators increase their scrutiny of methods banks use to classify loans. Separately, Regions is likely to soon agree to pay $200M to settle SEC charges it defrauded investors by inflating the value of subprime securities.
  • AGs probe banks over mortgage documentation. New York Attorney General Eric Schneiderman and Delaware counterpart Joseph Biden have requested information from Bank of New York Mellon (NYSE:BK) and Deutsche Bank (NYSE:DB) as part of a new inquiry into whether the repackaging of mortgages into securities was properly documented and valid, sources said. The banks are the two largest firms acting as trustees that oversee and administer securities for investors. If they and other trustees didn't follow the rules, they may be liable for breaching their duties to investors who bought the securities and could be exposed to costly litigation.
  • HSBC to wind down U.S. card ops if buyer not found. HSBC (HBC) will wind down its $33B U.S. credit card business if it can't find a buyer for the division. The move would be part of the bank's strategy of slashing $3.5B in costs and cutting back on retail banking as it looks to lift its return on equity. CEO Stuart Gulliver said the business doesn't make strategic sense. The relationship of customers is often with a store rather than HSBC, meaning that the bank can't cross-sell as it can in other markets.
  • FDA gives limited approval to GSK, Valeant drug. The FDA has provided limited authorization for Potiga, an epilepsy treatment from GlaxoSmithKline (NYSE:GSK) and Valeant Pharmaceuticals (NYSE:VRX). The companies expects the drug to be available in the U.S. at the end of the year, after the FDA has decided on a final classification. Analysts have forecast peak annual sales for Potiga of $200M-$800M.
  • Best Buy to put Europe expansion on hold. Best Buy (NYSE:BBY) is likely to decide against further expansion in Europe due to difficult market conditions, sources said. The electronics retailer initially planned to open 100 'big box' stores in the U.K. by 2013 and 200 across Europe, but later cut the target for Britain to 80. Best Buy Europe, which has opened ten stores in the U.K., has been hit by a downturn in demand for electrical goods and competition from an improving Dixons Retail (OTCPK:DSITY).
  • U.S. banks to cut Treasurys use. Major banks are preparing to lower their use of U.S. Treasurys in August to protect them against the consequences of Congress not raising the $14.3T debt ceiling and the government defaulting, a senor bank chief said. One strategy may be to offer cash on hand as a collateral against derivatives and other transactions rather than Treasurys. Investors use the high rating and liquidity of the bonds to back transactions relatively cheaply, with JPMorgan (NYSE:JPM) estimating that around $4T in Treasurys is used in this way in the repurchase, futures and swaps markets. JPMorgan has warned that a default "could lead to deleveraging and a sharp drop in lending."
  • Deadline to close for Nortel patents bids. Apple (NASDAQ:AAPL), Research in Motion (RIMM) and Microsoft (NASDAQ:MSFT) are among the companies thought likely to make initial bids for thousands of Nortel patents and patent applications before the deadline for offers closes today at 4 pm ET. Any proposal would join a $900M bid from Google (NASDAQ:GOOG), with Ericsson (NASDAQ:ERIC), ZTE (OTCPK:ZTCOF) and Intel (NASDAQ:INTC) also thought to be interested. The auction is due to take place next Monday. Nortel's patents cover every major area of technology, including communications, Internet advertising, voice-activated control and networking. They could be used for defensive and offense purposes, and to generate revenues through licensing.
  • Jobs panel proposes ways to spur hiring. President Obama is due to meet the high-level Jobs & Competitiveness Council today, when it will detail its proposals for boosting employment. These include cutting red tape for construction projects, encouraging training for manufacturing through partnerships between the private sector and community colleges, and making it easier for tourists to visit the U.S. The council is headed by GE (NYSE:GE) CEO Jeff Immelt and comprises 26 'private-sector leaders,' including American Express (NYSE:AXP) CEO Ken Chenault.

Today's Markets

  • In Asia, Japan -0.7% to 9448. Hong Kong +0.4% to 22508. China -0.2% to 2701. India -0.0% to 18266.
  • In Europe, at midday, London -1.2%. Paris +0.3%. Frankfurt +0.1%.
  • Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq +0.1%. Crude -1.4% to $97.90. Gold -0.15% to $1526.90.

Monday's Economic Calendar

The SA Currents team contributed to this post.

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