Wall Street Breakfast: Must-Know News

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Includes: BP, C, EQNR, F, GFSZY, GLD, IBM, KKR, KMI, PHG, QQQ, RIO, SNE, SPY, USO, VIVHY
by: SA Editor Yigal Grayeff
SA Editor Yigal Grayeff
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.

Kinder Morgan to buy El Paso in $38B deal. Companies continue to make massive bets on the fast-growing market for natural gas, with Kinder Morgan (NYSE:KMI) announcing a blockbuster deal to buy fellow pipeline company El Paso (EP) for $21B in cash and stock, or over $38B including debt. The offer of $26.87 a share represents a 37% premium over El Paso's close on Friday. The acquisition follows multi-billion dollar transactions in the transport and production sectors, and will create a company that owns 80,000 miles of pipe stretching from coast to coast. Such coverage could allow the new entity to demand higher fees from producers, which could lead to increased energy prices for consumers.

Anadarko to pay BP $4B for Gulf oil spill. Anadarko has reached a deal to pay BP (NYSE:BP) $4B for its share of the clean-up costs of the Gulf of Mexico oil spill, with both companies agreeing to mutually release claims against each other. Anadarko may have got off relatively lightly given that it had a 25% share in the well that caused the disaster. With BP saying total expenses will be $42B, Anadarko could have faced a potential bill of around $10B if the case had proceeded in court. BP's shares were +4.3% premarket and Anadarko was +3.4%.

Statoil to acquire Brigham for $4.4B. Not wanting to miss out on the U.S. energy party, Norway's Statoil (STO) has agreed to buy the outstanding shares in oil firm Brigham Exploration (BEXP) for $4.4B in a deal that values the latter at $4.7B. The offer of $36.50 a share represents a 20% premium to Brigham's close on Friday. "We are positioning ourselves as a leading player in the fast-growing U.S. onshore oil and gas industry, in line with the strategic direction we have set out," said Statoil CEO Helge Lund.

G4S grabs Denmark's ISS for £5.2B. It's not in the U.S. oil or gas industry, but U.K. Security services firm G4S (OTCPK:GFSZY) has also announced a major acquisition, saying it is to buy Danish outsourcer ISS for £5.2B ($8.2B) in cash and shares. The deal creates a group with combined annual revenue of £15.9B as of 2010. G4S will fund the acquisition partly through a £2B rights issue.

Rio Tinto to divest $8B in aluminum assets. Rio Tinto (NYSE:RIO) plans to sell or spin off an estimated $8B worth of aluminum assets across six countries in a move seen as enabling it to increase its focus on iron ore, which accounts for nearly 80% of earnings and generates margins of 70%. The divestiture of the 13 assets comes after aluminum prices fell almost 15% in the past quarter, and just four years after Rio bought Alcan for $38B. However, the U.K. company will still be left with profitable aluminum operations in Canada.

Germany, France plan €2T "shock & awe" program. Germany and France will this week flesh out the details of a "shock and awe" plan that includes leveraging up the eurozone bailout fund to €2T ($2.8T) from €440B, The Daily Telegraph reports. The program also includes recapitalizing EU banks with €100B-€200B and increasing the losses for private-sector holders of Greek bonds to up to 50%. EU leaders have until a summit at the weekend to complete the plan, or the basic details at least, although they could well face opposition from banks on the increased Greek losses, especially as the ECB won't apparently be going to the barber's.

Philips to slash 4,500 jobs as profit plunges. Philips (NYSE:PHG) is to cut 4,500 jobs as part of a plan to save €800M ($1.1B) in costs. The move comes after Q3 2011 net profit collapsed 85% to €76M, although this did beat forecasts. Revenue slipped a less dramatic 1.2% to €5.39B and also topped expectations. Philips reiterated its 2013 targets of 4%-6% sales growth and EBITA margins of 10%-12%, but said that talks to sell its TV ops were taking longer than expected and that it would consider its options if the negotiations failed.

Citigroup may abandon EMI auction. Citigroup (NYSE:C) could halt its sale of EMI after second-round bids for all or part of the record company came in at the low end of an expected range of $3B-$4B, The Financial Times reports. Tight credit markets have made higher offers difficult to fund, especially because the music market is continuing to contract. Bidders include BMG Music (NYSE:KKR), Sony/ATV (NYSE:SNE), Vivendi's Universal Music (OTCPK:VIVHY) and Warner.

IBM Q3 profit forecast to rise 14%. IBM (NYSE:IBM) is expected to announce that Q3 EPS rose to $3.21 from $2.82 when it reports earnings after the bell today, with revenue predicted to have increased to $26.11B from $24.27B. Analysts have been concerned about IBM's ability to bring in new deals in the uncertain economy, so will be looking at signings of new service contracts, which have fluctuated this year. Still, Zacks says analysts are positive about the strength of IBM's services division, as well as corporate spending and the company's product refreshment.

UAW on track to approve Ford deal. Following setbacks at three large Ford (NYSE:F) plants last week, the automaker's tentative labor contract with the UAW now looks poised for authorization after two major union locals gave the deal their overwhelming support. With over two thirds of votes cast, around 62% of members favor the agreement so far.

Four more banks shut down. Regulators closed banks in Georgia, North Carolina, New Jersey and Illinois on Friday, bringing the total number of failures this year to 80. The combined cost to the Deposit Insurance Fund of the four latest closures is estimated at $221.7M.

Today's Markets:
In Asia, Japan +1.5% to 8879.6. Hong Kong +2.0% to 18874. China +0.4% to 2440. India -0.3% to 17025.
In Europe, at midday, London +0.5%. Paris flat. Frankfurt -0.1%.
Futures at 7:00: Dow flat. S&P flat. Nasdaq +0.1%. Crude +0.35% to $87.10. Gold +0.3% to $1688.40.

Monday's economic calendar:
8:30 Empire State Mfg Survey
9:15 Industrial Production
7:30 PM Fed's Lacker: Economic Outlook
8:00 PM Fed's Evans: 'U.S. Monetary Policy and Economic Outlook'

Earnings Results: Companies that beat EPS expectations today include Halliburton (HAL shares +0.7%), Philips (PHG +0.9%). Those that missed forecasts include First Horizon National (FHN -0.9%), Full real-time earnings coverage here.

Notable earnings before Monday's open: C, FHN, GCI, HAL, HAS, MMR, PHG, WFC

Notable earnings after Monday's close: BRO, IBM, LNCR, STLD, SWK, VMW

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