- Toronto-Dominion poised to buy Chrysler Financial. Toronto-Dominion Bank (NYSE:TD) is said to be close to buying Chrysler Financial for $6.3B, with a deal announcement possible as soon as today. Toronto-Dominion, Canada's second-largest bank, has spent C$20B ($19.9B) expanding in the U.S., and Canadian banks are looking to buy growth after emerging from the financial crisis relatively unscathed. A sale of the auto lender would come as a relief to owner Cerberus Capital Management which made a large bet on the auto industry shortly before the financial crisis hit and is looking to salvage what it can from its failed $7.4B investment in Chrysler. Update, 7:35 ET: Toronto-Dominion officially announces the acquisition, which will be a cash payment of approximately $6.3B.
- Royal DSM buys Martek. Royal DSM (OTCQX:RDSMY) agreed to buy nutrition supplier Martek Biosciences (MATK) for $31.50/share in cash, or $1.09B, marking a 35% premium to Martek's closing price yesterday. Royal DSM, the world's largest maker of vitamins, expects the deal to be immediately accretive to annual earnings per share by €0.15-0.20. Royal DSM CFO Rolf-Dieter Schwalb said the company will continue to look for acquisitions, and has earmarked as much as €2.5B to spend on takeovers. In Amsterdam, Royal DSM +4.4%.
- Alpha Natural bids for Massey. Alpha Natural Resources (ANR) has reportedly made a bid for rival Massey Energy (NYSE:MEE). Sources said ArcelorMittal (NYSE:MT) and at least one other company are also interested, but Massey's board hasn't yet decided to start a formal auction process as it considers its strategic options. Massey chairman Bobby Inman said the company's directors "are not near a decision point" as to whether to sell the company or acquire another business.
- Rio Tinto makes fresh bid for Riversdale. Rio Tinto (NYSE:RIO) has reportedly formalized a new, higher offer for Australian rival Riversdale Mining, and is now willing to pay A$16/share, or around $3.75B. Rio had previously offered A$15/share. Shares in Riversdale were halted today ahead of an announcement about a takeover, though some analysts believe Rio will ultimately end up in a join venture with Riversdale, not a merger, because of opposition from some of Riversdale's main shareholders. Premarket: RIO +2.2% (7:00 ET).
- Advantest, Verigy in merger talks. Advantest (NYSE:ATE) is said to be in merger talks with rival semiconductor test systems maker Verigy (NASDAQ:VRGY), and is trying to break up Verigy's proposed merger with LTX-Credence (LTXC). However, sources said that while Verigy is open to hearing Advantest's proposal, talks aren't going particularly well. Advantest had made a $12.15/share bid for Verigy earlier in the month, and at the time Verigy said the offer was inferior to LTX-Credence's.
- SEC probes Hurd's H-P departure. The SEC is reportedly investigating Mark Hurd's departure from Hewlett-Packard (NYSE:HPQ), including claims he relayed information about HP's 2008 acquisition of Electronic Data Systems before the deal was announced. The SEC is also investigating Hurd's use of corporate expenses in his dealings with an HP contractor who subsequently accused Hurd of sexual harassment. Hurd is now the co-president of H-P rival Oracle (NYSE:ORCL).
- FCC poised to vote for net neutrality. The FCC now has enough votes to adopt net neutrality rules when it puts the issue to a vote today. The rules aim to prevent phone and cable companies that control broadband connections from discriminating against certain kinds of web traffic, but even the FCC members voting for the new rules say they consider them too weak, a sentiment echoed by some public interest groups. Several large web companies, including Skype (NASDAQ:EBAY), Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX), have previously expressed reservations about the new rules as well.
- Wine units go up for sale. Brown-Forman (BF.A, BF.B), the maker of Jack Daniel's whiskey, has reportedly put its wine business up for sale, becoming the latest wine operation to hit the auction block as parts of the industry continue to struggle. A sale is unlikely to bring in much more than a few hundred million dollars, and it's possible only parts of the business will be sold. Separately, Constellation Brands (NYSE:STZ) is close to selling most of its non-U.S. wine portfolio to an unknown buyer for what is expected to be between $300M and $400M.
- Wells Fargo agrees to mortgage mods in CA. California Attorney General Jerry Brown announced a settlement with Wells Fargo (NYSE:WFC), in which the bank will provide loan modifications worth around $2.4B to California homeowners with "pick-a-payment" adjustable-rate mortgages. Wells Fargo will also pay an additional $32M to borrowers who lost their homes through foreclosure. Franklin Codel, CFO of Wells' mortgage unit, said he hopes the bank can ultimately reach an agreement with all fifty states.
- Mortgage lenders may face NJ foreclosure freeze. Six leading mortgage lenders may face a possible freeze on foreclosures in New Jersey after the state's Supreme Court set a January 19 hearing to address problems related to the handling of mortgage documents. The hearing will be attended by representatives from Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM), Citigroup (NYSE:C), Ally Financial's GMAC mortgage unit, Wells Fargo (WFC) and OneWest Bank. New Jersey is the first state to take action against improper foreclosures at the level of the state supreme court, and other states may ultimately follow suit.
- Hedge funds may escape Fed oversight. The Federal Reserve doesn't believe any single hedge fund can topple the financial system, said an industry source familiar with the Fed's thinking, and therefore the industry may escape direct supervision by the Fed. The Fed is part of the newly created Financial Stability Oversight Council, which is in the early stages of determining which non-bank firms are 'systemically important' and need more rigorous oversight. The Fed's view on the issue will carry significant weight with the council, and the suggestion that hedge funds may avoid the 'systemically important' designation is welcome news to the industry which has thus far managed to avoid the stricter controls imposed on mutual funds.
- SEC probes U.S.-listed Chinese firms. The SEC has reportedly begun to investigate Chinese companies listed on U.S. stock exchanges through reverse takeovers, after hundreds of Chinese companies gained a U.S. listing by merging with dormant shell companies. As part of the investigation, the SEC is targeting individual Chinese companies for accounting violations and lax auditing practices, and is also looking into how U.S. accountants, bankers and lawyers may have facilitated the process.
- AstraZeneca halts motavizumab development. AstraZeneca (NYSE:AZN) has halted the development of motavizumab, a drug for the prevention of a respiratory infection. As a result, the company will take a $445M impairment charge in the fourth quarter, but the full-year earnings forecast will remain unchanged. The discontinuation isn't totally surprising, as the drug hit several regulatory obstacles earlier in the year. Premarket: AZN -0.3% (7:00 ET).
Earnings: Monday After Close
- Adobe (NASDAQ:ADBE): FQ4 EPS of $0.56 beats by $0.04. Revenue of $1B (+33%) in-line. Shares +7% AH. (PR, earnings call transcript)
- Darden Restaurants (NYSE:DRI): FQ2 EPS of $0.54 in-line. Revenue of $1.7B (+5.2%) in-line. Shares -2.6% AH. (PR)
- Jabil Circuit (NYSE:JBL): FQ1 EPS of $0.61 beats by $0.07. Revenue of $4.1B (+32%) vs. $4B. Shares +4.6% AH. (PR, earnings call transcript)
- Paychex (NASDAQ:PAYX): FQ2 EPS of $0.37 beats by $0.02. Revenue of $512M (+3.1%) vs. $511M. Shares +0.7% AH. (PR)
- In Asia, Japan +1.5% to 10371. Hong Kong +1.6% to 22994. China +1.8% to 2904. India +0.9% to 20060.
- In Europe, at midday, London +0.7%. Paris +0.5%. Frankfurt +0.6%.
- Futures at 7:00: Dow +0.3%. S&P +0.3%. Nasdaq +0.2%. Crude +0.1% to $89.44. Gold +0.05% to $1386.80.
Tuesday's Economic Calendar
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
- Notable earnings before Tuesday's open: CAG, CCL, CMC, KMX
- Notable earnings after Tuesday's close: CTAS, NKE, RHT, TIBX
The SA Currents team contributed to this post.
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