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.

  • Sanofi goes hostile on Genzyme. Sanofi-Aventis (NYSE:SNY) has launched an $18.5B hostile takeover offer for Genzyme (GENZ) after Genzyme's continued refusal to accept a $69/share offer or negotiate with Sanofi. Sanofi's tender offer to acquire outstanding Genzyme shares for $69 each will expire on Dec. 10; Sanofi CEO Chris Viehbacher said he saw "no particular reason to bid more" and expects the offer to be successful. If it is, this will be the biggest hostile takeover deal in the drug industry since 2004. Premarket: GENZ -0.6% (7:00 ET).
  • Much tougher capital requirements for UBS, Credit Suisse. A Swiss government-appointed panel announced today that UBS (NYSE:UBS) and Credit Suisse (NYSE:CS) will need to hold nearly twice the capital required under Basel III rules. The banks will eventually need total capital equal to at least 19% of their assets, weighted according to risk, while Basel III requires just 10.5%. The lenders will also need to hold at least 10% of the capital in common equity by 2019, as compared to the 7% required under the Basel rules. Both banks said they expect to meet the new "Swiss finish" rules without selling additional shares. Shares are up slightly premarket, as the new requirements are less strict than some had feared: CS +0.1%, UBS +0.1% (7:00 ET).
  • AIA lowers valuation, gets Kuwaiti investment. AIG (NYSE:AIG) has lowered its valuation for the Hong Kong IPO of its AIA unit in order to secure a $1B commitment from the Kuwait Investment Authority. AIG had originally hoped to sell shares of AIA at a level that would value the company at $35B-37B, but the Kuwaiti sovereign wealth fund would only agree to invest in the IPO if AIA was valued at $30B-32B. A valuation of $32B would come as a disappointment to the Treasury, and is markedly lower than the $35.5B Prudential (NYSE:PUK) was willing to pay for the unit. AIA shares are set to start trading on Oct. 29.
  • Microsemi buys Actel. Microsemi (NASDAQ:MSCC), a maker of power management semiconductors, said it will buy integrated circuit manufacturer Actel (ACTL) for around $430M, to expand in the defense and aerospace market. Microsemi will pay $20.88/share in cash, a 30% premium to Actel's Friday close. The deal is expected to add $0.22-0.28 per share to Microsemi's 2011 earnings. Premarket: ACTL +28% to $20.50 (7:00 ET).
  • Visa, MasterCard near antitrust settlement. Visa (NYSE:V) and MasterCard (NYSE:MA) are said to be close to settling a Justice Department antitrust probe over credit-card acceptance rules. A settlement, which could be announced this week, probably won't result in a major financial hit to either of the two firms, but could potentially give merchants more flexibility to steer customers to cheaper forms of plastic. American Express (NYSE:AXP) is also under investigation by the Justice Department, but isn't expected to join in the settlement.
  • Verizon to issue millions in refunds. Verizon (NYSE:VZ) announced late yesterday that it will issue a refund to around 15M customers, in the amount of around $2-6 each, for incorrectly billing them for data services they didn't use. Sources said the refunds will cost the company around $50M, though Verizon declined to comment on whether it could narrow the potential payout range of $30M-90M. The decision comes after the FCC began looking into the issue 10 months ago, and the FCC confirmed this morning it will continue to press Verizon on the issue and may seek additional penalties over the unauthorized charges. Premarket: VZ -0.4% (7:00 ET).
  • VimpelCom nears merger deal. VimpelCom (VIP), Russia’s second-largest mobile-phone operator, and Egyptian billionaire Naguib Sawiris are said to be very close to a $7B deal to merge their phone assets. A merger would include Sawiris' 51% stake in Egypt’s Orascom Telecom Holding (OTC:ORSDF) and Italian mobile operator Wind Telecomunicazioni, and would create a company with more than 200M mobile subscribers and a valuation of more than $25B. A deal announcement could come as soon as today.
  • Isilon may sell itself. Isilon (ISLN) is reportedly seeking bidders for a sale of the company. The move is not totally unexpected, as analysts have suggested the data storage firm might be a good target for Dell (NASDAQ:DELL), which lost data storage company 3Par (NYSE:PAR) to H-P (NYSE:HPQ). Isilon has a market cap of $1.5B, and its stock has more than tripled this year on speculation it may become a takeover target.
  • Bidders line up for RBS' property loans. At least three potential bidders, including Goldman Sachs (NYSE:GS) and Blackstone (NYSE:BX), are said to be interested in a £3B ($4.8B) property loan portfolio that might be sold by RBS (NYSE:RBS). Sources expect first round bids to be submitted in the next two weeks. RBS declined to comment about whether the portfolio is up for sale.
  • GE said to be Wellstream bidder. General Electric (NYSE:GE) is said to be the mystery suitor behind an £800M-plus ($1.3B) bid for British oilfield services firm Wellstream. Wellstream said on Sept. 21 that it had received several bid approaches, but declined to name the bidders. Sources said GE was the initial bidder that put Wellstream in play, and is still the lead contender.

Today's Markets

  • In Asia, Japan -0.3% to 9381. Hong Kong +1.2% to 22619. China +1.7% to 2656. India +0.1% to 20476.
  • In Europe, at midday, London -0.4%. Paris -1.1%. Frankfurt -1.0%.
  • Futures: Dow -0.3%. S&P -0.4%. Nasdaq -0.3%. Crude -0.7% to $80.99. Gold -0.1% to $1316.90.

Monday's Economic Calendar

Seeking Alpha's Market Currents team contributed to this post.

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