Aetna to buy Coventry Health Care in $7.3B deal. Aetna (AET) has agreed to acquire Coventry Health Care (CVH) in a cash and stock deal worth $7.3B, including the assumption of the latter's debt. The $42.08 a share offer represents a 20% premium to Coventry's closing price on Friday, sending its shares surging 18.1% premarket. The acquisition provides Aetna with 5M more members and makes it one of the biggest providers of government-funded healthcare.
Germany dampens ECB bond-buying speculation. Germany's Bundesbank has warned that moves to share "solvency risks" in the eurozone should be decided by governments and not the ECB. The comments follow a weekend report that the ECB is considering intervention to cap the spreads between peripheral and German bond yields by buying unlimited amounts of government debt. The speculation has sent Spanish yields plummeting, but it's a plan that Germany's finance ministry says would be "very problematic."
Best Buy hires new CEO. Best Buy (BBY) has appointed turn-around specialist Hubert Joly as its new CEO to replace interim chief Mike Mikan. Joly - until now the boss at restaurant and hotel company Carlson - will need to manage the dealings with Best Buy founder Richard Schulze, who has rejected an offer from the company to conduct due diligence and make a buyout offer within 60 days.
Top Stock News
Diageo closes in on $3B tequila deal. Diageo (DEO) is reportedly in advanced negotiations to acquire Jose Cuervo, the world's top tequila brand, from Mexico's Beckmann family for $3B in cash and shares. Diageo had been in talks to buy a 20%-30% stake, but it seems as if discussions have moved on. Separately, Diageo has held negotiations to acquire a stake in United Spirits, which owns Whyte & Mackay whiskey.
Lowe's net profit falls. The sluggishness continued at Lowe's (LOW) in Q2 as net profit fell to $747M from $830M, and while EPS of $0.65 beat consensus, revenue slipped 2% to $14.25B and missed Street forecasts. Comparable-store sales fell 0.4% and the level of U.S. business was off 0.2%. For FY12, the home-improvement giant sees comparable-store sales rising 0.5% and EPS of $1.64, while it also expects to add 10 stores.
AMR's flight attendants approve new contract. AMR's (OTC:AAMRQ) flight attendants yesterday voted to accept the bankrupt airline's final contract offer, increasing the pressure on the pilots' union to agree to a settlement as well. With the ground workers accepting a new deal earlier this month, the pilots are the last major holdout as AMR seeks to cut costs and emerge from bankruptcy.
GM close to German deal over working hours. As it looks to cut costs in Europe, GM (GM) could seal an agreement within a week with the German government and the IG Metall Union to implement a "short-time program" at Opel's Russelsheim and Kaiserslautern plants. The scheme would allow GM to reduce or expand the workday or workweek according to demand, and would be more flexible than laying off employees.
JPMorgan hires ex-Exxon CEO to lead probe of "whaling" loss. JPMorgan (JPM) has appointed former Exxon (XOM) CEO Lee Raymond as the chairman of a board committee that's investigating the bank's multi-billion dollar "London-whale" trading blunder, the WSJ reports. "He won't whitewash anything," said former JPM director John Biggs of Raymond, who, said a source, was as "tough as nails" when at Exxon.
Groupon insiders sell out. At least four of Groupon's (GRPN) early investors have sold many or all of their shares since the company's post-IPO lockup period ended in June, the WSJ reports, including venture-capital firm Andreessen Horowitz. While the WSJ portrays the moves as the abandoning of a sinking ship, it's worth noting that some VC firms, as a matter of policy, sell holdings as soon as possible after an IPO.
U.K. legislators slam Barclays et al over Libor scandal. Not many of those involved in the Barclays (BCS) Libor scandal came out well in a U.K. parliamentary report that was released over the weekend. Barclays is slammed for its "deeply flawed" culture, Bob Diamond for his unforthcoming and selective testimony to a parliamentary panel, BOE Governor Mervyn King for forcing Diamond to quit, and the FSA regulator for being behind the curve.
CME to create London derivatives exchange. With over 20% of its volume originating in Europe, CME Group (CME) is applying to the U.K.'s Financial Services Authority to create a London-based derivatives exchange. Pending approval as a Recognized Investment Exchange, CME will initially begin trading forex futures and is expected to launch in mid-2013.
Motorola counter-sues Apple - again. Motorola Mobility is counter-suing Apple (AAPL) again, with the Google (GOOG) unit claiming that iOS devices infringe on seven of its patents and requesting ITC import bans. This time, Motorola - like Apple in its many suits - isn't suing over standards-essential IP, but over software patents covering features such as e-mail notifications and Siri.
Lawyers go after "Big Food". Lawyers who earned hundreds of millions suing Big Tobacco are now going after major food companies such as PepsiCo (PEP), Heinz (HNZ) and General Mills (GIS) for wrongly labeling products and ingredients. One gem is calling sugar "evaporated cane juice," while rather more scarily, a ConAgra (CAG) "propellant" in Pam cooking spray includes petroleum gas, propane and butane.
Top Economic & Other News
Ranchers unable to make hay because of the drought. In addition to damaging the corn and soybean harvests, the drought is wreaking havoc with hay, sending prices surging and prompting ranchers to look for alternative food for their cattle. Farmers are also sending their animals to market earlier, causing prices to fall not just because of the increased supply but because the cattle is underweight.
Gap between bank deposits and loans surges. The gap between bank deposits and loans is rising at the quickest pace in two years, coming in at $1.75T on August 8, when deposits stood at $8.87T and lending at $7.12T. The gap is well above the $100B average in the 10 years before credit markets started breaking down. Banks are using the money to snap up U.S. debt, buying $136.4B worth this year, more than twice the $62.6B for all of 2011. It's unsustainable, says an analyst.
In Asia, Japan +0.1%. Hong Kong -0.1%. China -0.4%. India closed.
In Europe, at midday, London -0.2%. Paris flat. Frankfurt +0.4%.
Futures at 7:00: Dow flat. S&P +0.1%. Nasdaq flat. Crude flat at $96.00. Gold -0.1% to $1617.80.
Today's economic calendar:
8:30 Chicago Fed National Activity Index
Notable earnings before today's open: LOW
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