Wall Street Breakfast: Must-Know News

by: Wall Street Breakfast
Wall Street Breakfast
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.

By Yigal Grayeff and the Market Currents team

ABB to buy Thomas & Betts for $3.9B. Swiss engineering group ABB (NYSE:ABB) has agreed to buy U.S. electrical components maker Thomas & Betts (TNB) for $3.9B in a deal that will expand ABB's North American distribution network and ramp up its presence in the market for low-voltage equipment. The $72-a-share offer represents a 24% premium to Thomas' close on Friday.

Exxon to sell Japan refining unit for $3.9B. Exxon (NYSE:XOM) has agreed to sell its Japanese refining and marketing business to TonenGeneral Sekiyu for $3.9B. Under the deal, Exxon will lose its controlling stake in TonenGeneral but will retain a 22% voting share. The divestment underscores a larger trend of oil companies shedding refining businesses and turning to exploration in the hope of boosting profits.

Large U.S. bank exposure to GIIPS $80B+. Five major banks - JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) - have over $80B of exposure to the EU GIIPS, a New York Times analysis shows, although the number falls to $50B when the banks' CDS insurance policies are included. However, some market participants are skeptical that the CDS system will work properly during massive instability.

EU to finalize rescue fund. EU leaders will sign off on a permanent eurozone rescue fund at a summit today and are expected to agree on a balanced budget rule. Greece will also dominate the talks, although the leaders will try to force the conversation to job creation and growth. Greece and its private creditors are apparently close to a debt-swap deal.

Parsons mulls quitting as Citi Chairman. Citigroup (C) Chairman Richard Parsons is reportedly considering stepping down after three years on the job. It may be a bullish sign for Citi's health, as Parsons, who helped lead the company through the financial crisis, has said in the past he would stay until the company is on solid ground. A decision is expected by early March.

Apollo-Riverstone group frontrunner for $7B El Paso unit. A consortium including P-E firms Apollo (NYSE:APO) and Riverstone reportedly leads the race for El Paso's (EP) oil-exploration unit and is in advanced negotiations to buy the ops for $7B. The business is being sold as part of El Paso's acquisition by Kinder Morgan (NYSE:KMI), which is also considering breaking the unit up.

China gives mixed messages about stability. China's debt is "generally safe and controllable," Premier Wen Jiabao said in comments released today. That's a sharp contrast to a weekend report from the National Audit Office, which warned of "unignorable" risks in some areas of the economy and said it isn't yet balanced, coordinated or sustainable.

Philips makes net loss and warns about 2012. Philips (NYSE:PHG) swung to a Q4 net loss of €162M ($214.1M) from a net profit €463M a year earlier even though sales rose 3.2% to €6.71B. The loss was greater than analysts expected and included a €272M charge related to the sale of Philips' TV unit. CEO Frans van Houten warned of a difficult first half, due to the "uncertainty in the global economy, and in Europe in particular." Shares were -2.4% premarket.

Union threatens refinery strike. The United Steelworkers union has warned of the increasing chance of a strike on Wednesday by refinery workers in one or more locations if there's no progress in contract talks for a new three-year deal. The unions have expressed concern about safety protections for workers.

SEC probes Deutsche Bank over mortgage bond. The SEC is reportedly investigating a CDO transaction in which Deutsche Bank (NYSE:DB) allowed hedge fund Paulson & Co. to select mortgage-backed securities and then bet against those securities without telling other investors. Goldman Sachs settled a similar suit with the SEC for $500M.

UBS set to face action over rogue trader. UBS (NYSE:UBS) is likely to face enforcement proceedings from a joint probe by British and Swiss regulators, The Wall Street Journal reports, due to oversight gaps that enabled employee Kweku Adoboli to make unauthorized trades last year that led to $2.3B in losses and the resignation of then-CEO Oswald Grubel. The probe should be completed in mid-February. Adoboli today pleaded not guilty to fraud and false accounting.

Hopes of recovering all of MF client cash receding. Officials are still looking for $1.2B of MF Global's (OTC:MFGLQ) missing customer money, but increasingly believe that much of it will never be recovered. Sources say a "significant amount" of the money could have "vaporized" as a result of chaotic trading during the week before the company's bankruptcy filing.

Sandberg: Facebook IPO to help create more jobs. Facebook COO Sheryl Sandberg yesterday said one of most important aspects of the social network's IPO is the jobs and social change it will bring about. The company has already helped create 450,000 jobs in Europe and the U.S., Sandberg said. Her comments came after reports on Friday said Facebook is preparing to announce an IPO on Wednesday that could value the company at $100B.

Four banks shut down. Regulators closed two banks in Tennessee and one each in Florida and Minnesota on Friday, with the total cost to the FDIC's insurance fund estimated at a combined $607M.

Today's Markets:
In Asia, Japan -0.5% to 8793. Hong Kong -1.7% to 20160. China -1.5% to 2285. India -2.1% to 16863.
In Europe, at midday, London -0.8%. Paris -0.9%. Frankfurt -0.6%.
Futures at 7:00: Dow -0.5%. S&P -0.5%. Nasdaq -0.5%. Crude -0.4% to $99.18. Gold -0.7% to $1720.20.

Monday's economic calendar:
8:30 Chicago Midwest Mfg. Index
8:30 Personal Income and Outlays
10:30 Dallas Fed Manufacturing Outlook

Earnings Results: Companies that beat EPS expectations today include Thomas & Betts (TNB), Wolverine World Wide (NYSE:WWW).

For full real-time earnings coverage, please click here.

Notable earnings before Monday's open: GCI, PHG

Notable earnings after Monday's close: BIDU, HOLX, IDTI, MCK, SLG

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