Monday, June 29, 2009

Wall Street Breakfast: Must-Know News

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Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby

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  • Novartis, Elan in talks. Novartis (NVS) is reportedly in talks to buy parts of Elan (ELN), including its key multiple sclerosis drug Tysabri and Alzheimer's disease drug pipeline, but a final deal is still 'some way off.' Earlier this year, Elan said it was open to a merger or sale, and on June 10 said it expects to complete a strategic transaction 'in the near term.' Premarket: NVS -1.4%, ELN +1.9% (7:00 ET).
  • Anglo seeks merger defenses. Sources say Anglo American (AAUK) is building its defenses against a merger offer from Xstrata (XSRAF.PK) by engaging in early stage negotiations with Chinalco (ACH) and at least one unidentified Middle Eastern investor to inject hundreds of millions of dollars into Anglo's Brazilian iron ore business. Anglo is also reportedly renewing its efforts to bring Sir John Parker in as its new chairman.
  • UBS nearing tax settlement? According to Swiss newspaper reports, UBS (UBS) will pay 3-5B Swiss francs ($2.77-4.62B) in the next two weeks to settle a U.S. tax probe, and is under pressure by the Swiss central bank to sign the deal in order to bring stability back to the Swiss banking sector. However, some following the case are skeptical the U.S. government would drop its probe without major concessions from Switzerland. Shares -2.8% premarket (7:00 ET).
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  • Vodafone mulls T-Mobile bid. Vodafone (VOD) is reportedly considering a bid to buy T-Mobile UK (DT) in a move that would shake up the U.K. mobile phone market and potentially face resistance from regulators. The deal would create a company with around 35M subscribers, or about half of the U.K. mobile market. T-Mobile UK has underperformed for several years, and JPMorgan has been appointed to advise parent company Deutsche Telekom on strategic options for the business.
  • DoJ extends Oracle-Sun review. The Department of Justice extended its review of Oracle's (ORCL) proposed acquisition of Sun Microsystems (JAVA). The government's 30-day period to review the deal expired Friday, but the Justice Department requested both companies provide more information before it gives any sort of acquisition approval. Though the extension is unusual, an Oracle representative said the investigation is expected to end soon and that discussions with the Justice Department had been positive.
  • GM accepts product liability. Under pressure from more than a dozen state attorneys general and several consumer-advocacy groups, General Motors agreed to assume legal responsibility for injuries caused by vehicle defects after GM emerges from bankruptcy. Under GM's original bankruptcy plan, future car-accident victims seeking to sue GM would have been treated as unsecured creditors and forced to fight over GM's old bankruptcy estate. Car-accident victims with pending lawsuits and those who won damages against GM before it filed for bankruptcy will still be unable to bring claims against the new GM.
  • GM holds back-up talks on Opel. Belgian and Chinese bidders may sign non-binding agreements to buy General Motor's Opel unit as a fallback to the carmaker's proposed deal with Magna International (MGA). RHJ International and Beijing Automotive Industry Holding Co. have gotten involved as the Magna talks slow down.
  • Watson Wyatt/Towers Perrin merger. Consulting firms Towers Perrin Forster & Crosby and Watson Wyatt Worldwide (WW) plan to merge in an all-stock deal valued at around $3.5B, seeking to cut costs as clients pare back discretionary spending. Watson Wyatt shareholders will get 50% of the shares in the combined company, to be named Towers Watson & Co. Watson CEO John Haley will be chairman and CEO of the combined company, while Tower CEO Mark Mactas will serve as president and COO.
  • Porsche claims VW blackmail. Porsche's chairman Wolfgang Porsche accused Volkswagen (VLKAY.PK) of attempting to blackmail the debt-ridden company into accepting a reworked merger plan, reigniting an ongoing dispute between the two firms. Porsche rejected the Monday deadline he claimed Volkswagen had imposed, saying "ultimatums do not belong in the 21st century. We won’t be blackmailed." Volkswagen denied it had issued an ultimatum.
  • Madoff faces the music. Madoff goes to court today to be sentenced, and is expected to receive an effective life term. On Friday, the judge in Madoff's criminal case ruled Madoff's multiple houses and apartments will be sold to raise money to pay back victims of his $65B Ponzi scheme, along with Madoff's Mercedes Benz and VW cars, boats and trailers. Ruth Madoff will retain $2.5M and give up her claims to more than $80M in assets.
  • Five more failed banks. Five more banks were seized by regulators, bringing this year's total failures to 45. All told, the five banks held assets worth around $1.04B.

Today's Markets

  • In Asia, Nikkei -1% to 9,783. Hang Seng -0.4% to 18,529. Shanghai +1.6% to 2,975. BSE +0.1% to 14,786.
  • In Europe at midday, London +0.6%. Paris +1.3%. Frankfurt +1.2%.
  • U.S. futures: Dow +0.3%. S&P +0.4%. Nasdaq +0.4%. Crude +1% to $69.82. Gold +0.2% to $942.30.

Monday's Economic Calendar

Seeking Alpha editor Eli Hoffmann contributed to this post.

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