Softbank Sprints into the U.S. with $20.1B acquisition. Softbank (OTCPK:SFTBF) has confirmed that it has agreed to buy 70% of Sprint (NYSE:S) for $20.1B in Japan's biggest overseas acquisition since at least 2000. Softbank will purchase $8B in newly issued stock and $12.1B in existing shares. However, the transaction doesn't obligate Sprint to increase its 49% stake in Clearwire (CLWR), whose stock price soared last week on speculation that it would be part of a deal. Sprint shares were +6.5% premarket and those of Clearwire were +9.9%.
Chinese data gives cause for cheer. Chinese export and inflation data for September came in better than expected, with exports jumping 9.9% on year to a record $186.4B vs. consensus of +5% and +2.7% in August. Imports of +2.4% also beat forecasts. CPI fell to +1.9%, the slowest pace in two years, from 2% in August, with a government statistics official saying that the easing will probably continue into Q4.
Top Stock News
Amazon eyes TI's mobile-chips ops. Amazon (NASDAQ:AMZN) is in negotiations to acquire Texas Instrument's (NASDAQ:TXN) cellular-chip operations in a deal that would be worth billions of dollars, the Calcalist Israeli newspaper reports. TI, whose chips are used in Kindle devices and Barnes & Nobles' (NYSE:BKS) Nooks, has already said it won't invest in supporting its customers' plans for smartphones and tablets to the same extent as previously.
ING looks to pay off bailout. ING (NYSE:ING) is in negotiations with Holland's government and the European Commission to repay €4.5B of state aid the bank received after the 2008 financial crisis. ING, which has returned the bulk of the €10B it obtained, has been offloading assets around the world to raise the cash needed to pay back the bailout and comply with EU conditions for accepting it.
RBS branches attract interest from Virgin, JC Flowers. RBS (NYSE:RBS) shares were -1.2% midday in London following the collapse of a deal to sell 318 branches to Santander (NYSE:SAN) to meet EU directives. Richard Branson's Virgin Money and P-E firm JC Flowers have reportedly emerged as front-runners to buy the outlets, although RBS may also try to persuade the EU to allow it to keep them. The bank described today how well it has progressed in meeting its EU obligations.
UBS to slash IT expenses. UBS (UBS) intends to cut IT costs from 3.6B francs ($3.8B) a year to 2.4B francs by 2015 in a move that could hit thousands of jobs globally, the TagesAnzeiger newspaper reported over the weekend. UBS employs 8,200 IT workers, 3,200 of whom are in Switzerland.
Major corporations get together to help vets find work. To help former soldiers fill advanced manufacturing positions, major companies, community colleges and veterans organizations are forming a coalition called "Get Skills to Work" that will train the vets and assist them in translating their existing skills. The corporations include GE (NYSE:GE), Alcoa (NYSE:AA), Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT). GE CEO Jeff Imelt says it's not just patriotism that spurs the firms: "veterans are a perfect fit."
Hulu left with no Providence after $200M deal. Providence Equity Partners has reportedly sold its 10% holding in Hulu back to the online video service for $200M in a transaction that values the company at $2B. Hulu is taking a loan to fund the acquisition, which leaves News Corp. (NASDAQ:NWS), Comcast (NASDAQ:CMCSA) and Disney (NYSE:DIS) as the remaining owners. Separately, Hulu's CEO is poised to receive $40M.
P-E firms must decide what to do with cash. Five years after record fundraising for P-E firms, the shops still sit on much of that cash and are coming up against the time when they must "use-it-or-lose-it." Barron's screens for attractive targets - market cap of $1B-$10B, an Enterprise Value/EBITDA ratio below 10, and annual cash flow of at least 5% of stock market value. The winners: Guess (NYSE:GES), Terex (NYSE:TEX), Charles River Labs (NYSE:CRL) and Big Lots (NYSE:BIG).
Top Economic & Other News
Iran mulls causing oil spill to break embargo. Iran has formulated a plan to block oil traffic in the Strait of Hormuz by causing a massive oil spill, Spiegel reports. Iran's co-operation would be needed for a cleanup that would probably involve Western nations, thereby possibly leading to a temporary lifting of the embargo on the country. The speculation comes as the EU considers tougher sanctions on Iran, which has reiterated an offer to suspend domestic production of medium-enriched uranium.
Chinese iron ore surges, suggesting steel recovery. The Chinese steel sector seems to be rebounding, with prices for 63.5% iron ore fines to Qingdao hitting $117 a metric ton, up 29% from a multi-year low on September 7. In the middle of the month, 29 vessels were chartered to transport iron ore to China, the largest weekly volume since late March. The trends come after the government approved major infrastructure projects. Stocks that could benefit include BHP, RIO, VALE and CLF.
Indian inflation exacerbates central bank dilemma. While China could be getting its economy back on track, Indian inflation rose to +7.81% on year in September from +7.55% in August and vs. consensus of +7.75%. The increase was fueled by the government raising diesel prices by 14% to help get control of its ballooning deficit. The figures exacerbate the dilemma facing the Reserve Bank of India: how to rein in inflation against the background of slowing growth.
Spain bailout request could come next month. Spain could ask for a rescue in November, Reuters reports, adding that any request would be dealt with at the same time as a new debt program for Greece and a bailout for Cyprus. The report follows the ECB's Benoit Coeure saying on Friday that the bank could buy Spanish bonds even without the involvement of the ESM if Spain signs an MOU on the conditions for aid.
In Asia, Japan +0.5% to 8578. Hong Kong +0.1% to 21148. China -0.3% to 2099. India +0.2% to 18714.
In Europe, at midday, London +0.6%. Paris +1.3%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.3%. S&P +0.45%. Nasdaq +0.6%. Crude -0.3% to $91.62. Gold -0.7% to $1748.10.
Today's economic calendar:
8:30 Retail Sales
8:30 Empire State Mfg Survey
10:00 Business Inventories
12:45 PM Fed's Lacker: U.S. Economic Outlook
1:10 PM Fed's Bullard: U.S. Economic and Monetary Policy
Notable earnings after today's close: PKG
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