Wall Street Breakfast: Must-Know News

by: Rachael Granby
Rachael Granby
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.

  • Geely buys Volvo. China's Geely Holding Group agreed to buy Ford's (NYSE:F) Volvo unit yesterday for $1.8B, completing 18 months of negotiations and marking the largest overseas acquisition by a Chinese automaker. It's also the first time a Chinese company is in charge of a major global car brand, a reflection of China's rise in the post-crisis world. The companies expect to complete the deal in the third quarter. F +1.3% premarket (7:00 ET).
  • Rio employees sentenced to up to 14 years. The four Rio Tinto (RTP) employees that were on trial in China have been sentenced to seven to 14 years in jail for accepting bribes and stealing commercial secrets. The case has garnered broad international attention, reflecting foreign investors' concerns over China's legal system. The employees are considering an appeal of what Australia has called a "very tough sentence," while Rio Tinto has terminated the employment of the employees because of "deplorable" conduct that was "at odds" with Rio's ethical culture. RTP +2.7% premarket (7:00 ET).
  • CIT Group may sell Aussie unit. CIT Group (NYSE:CIT) may sell its Australia and New Zealand vendor-finance unit to Bank of Queensland as part of the lender's reorganization. Bank of Queensland, an Australian regional bank, will begin conducting exclusive due diligence for a potential takeover of the unit.
  • FDIC, JPMorgan face off on tax benefit. The FDIC has reversed its earlier support for a $1.4B tax break benefiting JPMorgan (NYSE:JPM). The tax benefit is a result of JPMorgan's acquisition of Washington Mutual; the failed bank's parent company filed a bankruptcy plan on Friday that would allow JPMorgan to claim the sum from an FDIC receivership, and the FDIC's support for the plan was notable missing. It appears the FDIC first became concerned over the potential windfall after meeting with WaMu bondholders who oppose the deal, and after media reports appeared last week with details of JPMorgan's plan. Moreover, TARP specifically excludes companies such as JPMorgan that received government aid from being eligible to receive the tax benefit.
  • Sinopec taps into upstream assets. Sinopec's (NYSE:SNP) Hong Kong unit is buying a 55% stake in upstream assets in Angola from parent company China Petrochemical Corp. Sinopec said the $2.46B deal is meant to be the first of many, as more such deals could protect the company from the high oil prices that hurt margins in the fourth quarter. In addition to purchases of more upstream assets from China Petrochemical, analysts said Sinopec could also look for assets in North Africa, the Caspian Sea and Latin America. The transaction will raise Sinopec's proven reserves of crude oil by 3.6%, and will increase its daily crude oil production by 8.8%.
  • Morgan Stanley to underwrite Citi sale. Morgan Stanley (NYSE:MS) has reportedly been chosen from a strong competitive field to be the underwriter and adviser in the government's sale of its Citigroup (NYSE:C) stake. The bank will oversee the "dribble out" sale of the government's 27% stake, a process that could take the rest of the year. Sales are likely to begin after Citigroup's quarterly earnings report on April 19.
  • Taiwan Semi wants SMI stake. Taiwan Semiconductor (NYSE:TSM) formally submitted an application to Taiwan authorities to take a stake in Semiconductor Manufacturing International (NYSE:SMI). Taiwan Semiconductor, the world’s largest custom-chip maker, is looking for up to a 10% stake.
  • Bank tax efforts pick up steam. The U.S. and European governments are working to build consensus over plans to tax large banks in order to cover the costs of any future bailouts. Germany and Sweden want to use the money to create a "resolution authority," France wants to collect the fees after a crisis has already passed, and the U.S. is split, with Congress favoring a resolution authority and the White House leaning towards a post-crisis option. Despite the differing approaches, the concept of a bank tax has picked up so much momentum that officials expect it to be on the agenda at the G-20 meeting in June.
  • Toyota supplies hybrid tech to Mazda. Toyota (NYSE:TM) reached a deal to supply Mazda (OTCPK:MZDAF) with hybrid technology. Mazda plans to launch a car using the hybrid system in Japan by 2013. Separately, Toyota said today that its global production jumped 83% in February from the year before. However, it will be virtually impossible to sustain this pace as the comparison was against a particularly weak February 2009 and Toyota is still reeling from the fallout of its recent recalls.
  • Friday's failures. Four more bank failures on Friday brought this year's total to 41. The closures in Florida, Arizona and Georgia (I, II) will cost the FDIC's insurance fund an estimated $320.3M. However, the FDIC said it would cut the amount of losses it shares with buyers of failed banks, moving away from taking a 95% share of potential losses. An 80-20 split is expected to become the new norm for the entire loan portfolio.

Today's Markets

  • In Asia, Nikkei -0.1% to 10986. Hang Seng +0.9% to 21237. Shanghai +2.1% to 3124. BSE +0.4% to 17711.
  • In Europe at midday, London -0.3% to 5710. Paris +0.4% to 4004. Frankfurt +0.7% to 6162.
  • Futures: Dow +0.4%. S&P +0.6%. Nasdaq +0.5%. Crude +0.9% to $80.69. Gold +0.6% to $1111.30.

Monday's Economic Calendar

Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.

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