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  • Foster's turns down $10B SABMiller offer. SABMiller (OTCPK:SBMRY) will continue to attempt to buy Foster's (OTC:FBRWF) after the Australian beer maker rebuffed a A$9.5B ($10B) bid from its U.K. rival. Foster's said the A$4.90 offer, which represented an 8.2% premium to its closing price on Monday, undervalued the company; in trading today, Foster's shares jumped 13.5% to A$5.14. A Citigroup analyst said that while he expects SABMiller to increase its proposal, he placed doubt on the potential benefits, due to "limited synergies, low post-deal returns, and added risk given current Australian dollar strength." Other analysts said rival bidders will probably emerge such as Japan's Asahi Breweries.
  • Plane orders worth $20B announced in just one day. Plane makers disclosed bookings for over 200 aircraft with a total value of more than $20B on the first day of the Paris Air Show. Airbus (OTCPK:EADSY) led the charge, announcing several orders for its fuel-efficient A320neo jet, a competitor to Boeing's (BA) 737. Today, JetBlue Airways (JBLU) ordered 40 A320neo aircraft in a deal worth $3.4B at list prices, adding to a booking yesterday from GE (GE) leasing unit GECAS for 60 of the jets. GE said it expects to win over $10B in orders this week, including for its new engines and expanding services business. Boeing received orders for 17 of its new elongated 747-8 aircraft from two customers in deals worth $5.4B, and it is selling 33 jets to Air Lease (AL) in a transaction comprising 737, 777 and 787 planes.
  • Greek PM in confidence vote. Greek Prime Minister George Papandreou faces a confidence vote tonight that could lead to his country defaulting if he loses. Papandreou's Pasok socialist Party has 155 seats in Greece's 300-seat parliament but suffered defections last week, which is why the result is in doubt. Should he survive, Papandreou will next week attempt to push through an unpopular €78B ($112B) austerity package so that the EU will transfer a €12B tranche of last year's bailout and finalize a second rescue package. Yesterday, the IMF warned that a failure to take decisive action on Greece's debt crisis risks triggering “large global spillovers.”
  • AstraZeneca selling Swedish division. AstraZeneca (AZN) is in exclusive final talks to sell its Swedish healthcare and dental unit Astra Tech to Pennsylvania-based Dentsply (XRAY) in a transaction that could value the subsidiary at about $1.8B, sources said. Dentsply, a provider of dental equipment, has outbid private equity group EQT Partners, medical company Biomet and others. A deal could be announced as early as this week and would continue the re-emergence of strategic buyers, who are making acquisitions and outbidding P-E firms as they spend cash accumulated during the economic recovery.
  • EMI considering its options. EMI has started to explore a sale, recapitalization or IPO four months after Citigroup (C) seized control of the music label from P-E group Terra Firma for failing to pay its debts. An analyst said she expects "a lot of bidders for EMI, including the guys who won Warner (WMG)," which was sold to billionaire Len Blavatnik in May for over $3B. Any interest in EMI would come despite the company and the wider music industry struggling because of people downloading songs for free on the Internet.
  • Paulson makes massive loss on Sino-Forest. John Paulson's $37B hedge fund has made a loss estimated at hundreds of millions of dollars (I, II) after selling its entire stake in Sino-Forest, the Chinese tree-plantation owner accused of overstating its timber holdings by investment firm Muddy Waters. Sino-Forest's shares have slumped 85% since June 1, the day before the allegations were made. The losses mark a difficult year so far for Paulson, whose largest fund has fallen about 20% due to the Sino-Forest accusations and a souring of U.S. bank stocks. However, he recovered from similar losses last year, when his Advantage Plus fund gained as much as 18% after falling 11% in the first eight months.
  • FTC probes oil trading. The FTC is investigating whether oil companies, refiners and traders have engaged in anticompetitive practices or manipulated crude oil prices. The inquiry follows soaring refining margins and reports that refiners were using less of their capacity than they did last year, as well as other developments. The commission is also looking at whether oil companies provided misleading information to a federal agency related to the wholesale price of oil or petroleum products. The probe comes after legislators called on the FTC to investigate, as well as following President Obama's creation of a task force earlier this year to identify illegal conduct in oil and gasoline markets.
  • Wal-Mart women to continue bias fight in lower courts. Women who are suing Wal-Mart (WMT) for sex discrimination will continue to press their claims after the Supreme Court yesterday prevented them from representing 1.5M colleagues in a massive class-action suit. The court said the women failed to prove that Wal-Mart had a nationwide policy that led to gender discrimination. However, Wal-Mart could now face thousands of claims nationwide as the women said they would file smaller lawsuits in lower courts and with the U.S. Equal Employment Opportunity Commission. With other major firms such as Cigna (CI) and Goldman Sachs (GS) attempting to block similar class-action suits, the ruling was closely watched.
  • HUD launches $1B program to aid borrowers. The Department of Housing & Urban Development has finally commenced a $1B scheme to help save delinquent homeowners from foreclosure. However, borrowers only have a month to apply for zero-interest loans of up to $50,000, while the government only has until September 30 to approve them, as its authority to make new loans then runs out. The program is expected to aid 30,000 homeowners, although as one person involved in managing the scheme said, "It will be challenging to enroll borrowers," given the short time frame. The government had hoped to launch the program last year but was delayed due to a series of complications in forging agreements with the bodies helping to run it.
  • Facebook surpasses Yahoo for ad display revs. Facebook will increase its U.S. ad display revenues this year by 81% to $2.19B, online research company eMarketer estimates. Such growth would push Facebook past Yahoo (YHOO) to become the number one company in the country for display income, although it would represent a slowdown for the social network after sales grew in triple digits in 2009 and 2010. Google is also enjoying good growth this year after more than doubling revenues in 2010. eMarketer predicts that Microsoft (MSFT), Yahoo and AOL (AOL) will make double-digit gains as the total display market rises 24.5%.

Today's Markets

  • In Asia, Japan +1.1% to 9460. Hong Kong +1.2% to 21851. China +1.0% to 2648. India +0.3% to 17560.
  • In Europe, at midday, London +0.7%. Paris +1.1%. Frankfurt +0.8%.
  • Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude +1.1% to $94.26. Gold +0.2% to $1545.10.

Tuesday's Economic Calendar

  • Notable earnings before Tuesday's open: BKS, CCL, CMC, JEF, WAG
  • Notable earnings after Tuesday's close: ADBE, JBL

The SA Currents team contributed to this post.


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Source: Wall Street Breakfast: Must-Know News