Intraday Market Update
A slew of M&A news over the weekend helped lift equities higher in early trading but stocks quickly rolled over just after the bell and are now struggling to hold onto gains. Potash formerly rejected BHP's offer and encouraged other buyers to make counter bids for the company. 3PAR, Inc. (PAR) has received another buyout offer from Dow member Hewlett-Packard at a price that is much higher than the bid from Dell's offer last week. Elsewhere, Campbell Soup Co. is reportedly considering a bid for United Biscuits of Britain. The NASDAQ gapped +1% higher at the open but that was quickly sold into as the index has now lost -0.50% on the day. The DJIA and S&P 500 are near breakeven, while the Russell 2000 has lost -0.60%. Crude oil is down more than -1% and has hit a 6-week low, while gold is near the flat line. Overseas, Asia-Pacific markets were slightly lower while European markets posted solid gains. News is light with no economic data on the calendar and volume is anemic again as we head into the final weeks of summer.
New developments are making headlines in two big M&A deals that were announced last week. Potash formally rejected the $38.6 billion ($130 per share) unsolicited buyout offer from BHP Billiton saying it "substantially undervalues" the company, adding that it has been approached by third parties with bids. The Wall Street Journal reported a group led by Chinese private equity fund Hopu Investment Management Co. is studying the feasibility of a bid for Potash. The group consists of investors from the US, Canada, and Asia, and includes at least two sovereign wealth funds. Potash is up +1.50%.
Meanwhile, Dell has found some competition in its bid for 3PAR, Inc. 3PAR builds high end systems to help companies store and manage data using virtualization technology. Last week DELL offered to buy 3PAR for $18 per share which was a +86% premium to their stock price. This morning Hewlett-Packard announced a competing offer at $24 per share which is +33% above Dell's bid. Shares of PAR have surged another +42% today on the news and have gained +167% since their August 13th close.
In other M&A news, 3M's (MMM) CEO vowed to spend nearly $2 billion in 2010 acquisitions. Campbell Soup Co. (CPB) said they were considering a $2.3 billion bid for privately held United Biscuits of Britain, while HSBC (HBC) is considering a $6.4 billion purchase for a 70% stake in Nedbank Group based in South Africa.
Core Sector List:
Overall reading: 9 sectors advancing, 11 sectors declining
Strongest Sectors: Utilities, Healthcare, Pharmaceuticals
Weakest Sectors: Home Construction, Gold Miners, Semiconductors
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