Frontrunning: August 6
- Washington Post Company Chairman and CEO Donald Graham talks about the sale, what it means for the future of The Post (WaPo)
- Private-equity firms are adding debt to companies they own to fund payouts to themselves at a record pace (WSJ)
- U.S., U.K. Urge Citizens to Leave Yemen (WSJ)
- India Names Rajan Central Bank Governor as Rupee Plunges (BBG)
- Family Offices Chasing Wealthy’s $46 Trillion in Assets (BBG)
- UK 'bad bank' repays $2.9 billion to taxpayers in first half (Reuters)
- Sony rebuffs Daniel Loeb’s push for entertainment spin-off (FT)
- Public Pensions Up 12% Get Most in 2 Years as Stocks Soar (BBG)
- Hidden Billionaire Found With Food Fortune in California (BBG)
- Fonterra under fire over milk scare; more product recalls (Reuters)
- Crédit Agricole Profit Rises After Greek (WSJ)
- Four jailed for neo-Nazi killing spree that terrified Hungary's Roma (Reuters)
- Australia PM Rudd criticizes Rupert Murdoch role in election race (Reuters)
- Goldman to Axa Ride London’s Crossrail Office Boom (BBG)
Overnight Media Digest
* Jeff Bezos, Amazon.com Inc's Chief Executive, is buying the Washington Post for $250 million in an out-of-the-blue deal that captures the newspaper industry's economic decline and the shift of power from old media to Silicon Valley.
* International Business Machines Corp has enlisted Google Inc, chip maker Nvidia Corp and some other high-tech allies for a collective effort to catapult an IBM chip technology out of a shrinking niche. The alliance, which the companies plan to announce on Tuesday, would allow many companies to license IBM microprocessor designs.
* Neiman Marcus Group Inc has hired Credit Suisse Group AG , J.P. Morgan Chase & Co and Bank of America Merrill Lynch as lead underwriters for a planned public stock offering, after the luxury retailer spent the summer exploring a sale to a sovereign wealth fund.
* Sony Corp rejected hedge fund investor Daniel Loeb's proposal to sell part of its entertainment business through a public offering, saying that holding full ownership of its movies and music divisions are fundamental to the company's future.
* Carl Icahn bought four million more shares of Dell Inc last week, according to a securities filing, upping his stake slightly in an ongoing fight against the technology company's buyout. Icahn now holds 8.9 percent of the company and is the largest shareholder after founder and Chief Executive Michael Dell.
* Time Warner Cable Inc proposed an end to the three day old blackout of CBS Corp on the cable operator's TV channel lineup, suggesting that viewers could pay a la carte for the network, in other words, allowing cable subscribers the freedom to pick CBS individually. CBS called the proposal a "sham."
* The South Korean government on Monday expressed concern over the Obama administration's decision to veto an import ban on some Apple Inc products in the United States, saying the decision may negatively affect Samsung Electronics Co's patent rights.
* Private equity firm Hellman & Friedman LLC agreed to acquire insurance brokerage Hub International Ltd for more than $4 billion from a rival buyout firm, in a deal that will help the Chicago broker continue its rapid expansion, including a bigger move into Latin America.
* The Federal Bureau of Investigation has discovered vulnerabilities in the government's system for preventing market-moving economic reports from leaking to traders before public release.
HSBC on Monday said it may have to pay $1.6 billion in damages to the U.S. government over bad mortgages, higher than originally forecast.
A US regulator has accused a trading team at BP of manipulating gas prices in the aftermath of a 2008 hurricane by moving natural gas through a pipeline linking two Texas hubs.
French bank Credit Agricole - accidentally - published better than expected quarterly results on its website on Monday, ahead of its scheduled results announcement on Tuesday.
Private equity group Hellman & Friedman said it would pay $4.4 billion to buy Hub International from Apax Partners in the biggest ever takeover in the insurance broking industry.
Amazon.com founder Jeff Bezos plans to buy the Washington Post for $250 million, ending an era of family control at the newspaper that struggled in an age of online media.
* The Washington Post, the newspaper whose reporting helped topple a president and inspire a generation of journalists, is being sold for $250 million to Amazon.com Inc founder Jeffrey Bezos, in a deal that has shocked the industry.
* After gun laws were strengthened in several states in the wake of the Newtown, Connecticut, school shooting, some manufacturers are relocating to more gun-friendly states. Governors and politicians from states eager to embrace the industry have descended on places where they are not so popular - like Connecticut, Maryland, New York and Colorado - offering tax breaks and outright cash grants to persuade gun manufacturers to relocate.
* Government authorities are homing in on a lucrative loophole that allows online lenders to offer short-term loans at interest rates that often exceed 500 percent annually, the latest front in a crackdown on the payday lending industry.
* Sony Corp said late on Monday that it planned to keep all of its vast entertainment arm, rejecting a proposal to spin off the unit by one of its biggest investors, activist hedge fund manager Daniel Loeb. The decision, announced in a publicly disclosed letter to Loeb, raises questions about whether he will now stage a public fight with Sony.
* The reinsurance arm of Third Point, the hedge fund run by Daniel Loeb, disclosed on Monday that it is seeking to raise up to $370.6 million from its forthcoming initial public offering. Third Point Reinsurance said that it planned to sell 22.2 million shares at $12.50 to $14.50 a share.
* New Zealand dairy producer Fonterra apologized on Monday for the contamination of an infant milk formula ingredient with a potentially toxic strain of bacteria. The contamination could hurt sales of dairy products, the leading export of New Zealand, to its most crucial market, China.
* European Aeronautic Defense and Space Co (EADS), the parent company of Airbus, confirmed on Monday that it had received a letter from hedge fund TCI, urging it to sell its 46 percent stake in Dassault Aviation, the French maker of the Rafale fighter and the popular Falcon business jet
THE GLOBE AND MAIL
* The federal Conservative government consulted with both environmental organizations and industry associations before making controversial changes to the Fisheries Act last year, but listened primarily to industry. Documents released recently to The Globe and Mail under federal access to information laws suggest that the wording of a significant change was offered by industry associations.
Reports in the business section.
* Barrick Gold Corp is facing yet another class action lawsuit from a group of investors in the Canadian mining giant as it struggles to adjust to faltering metal prices. The suit alleges Barrick violated federal securities laws by making false and misleading statements, and by concealing information related to the cost and development schedule for its Pascua-Lama project, one of Barrick's South American mines.
* Bombardier Inc says it can still maintain its position by year end as the world's largest business aircraft manufacturer despite falling behind U.S. rival Gulfstream Aerospace Corp in terms of the value of planes shipped in the second quarter. U.S.-based Gulfstream shipped 36 aircraft worth $1.83 billion in the quarter, compared with 45 planes valued at $1.59 billion for Bombardier.
* Days after a deadly Toronto shooting sparked debate, Alberta's police watchdog is looking into three incidents that saw Royal Canadian Mounted Police officers use their firearms or a Taser, resulting in two dead and two wounded.
* An intercepted secret message between al-Qaeda chief Ayman al-Zawahri and his deputy in Yemen about plans for a major terror attack was the trigger that set off the current shutdown of many U.S. embassies, two officials told The Associated Press on Monday.
* Canada's high commission in Dhaka, Bangladesh, reopened its doors on Monday after a "security precaution" resulted in one-day closure of the embassy on Sunday, according to the Foreign Affairs Department.
* Even if Canadian home sales continues to slide, it could take some time before home ownership rates are actually impacted. However, the risk to the Canadian economy is the buyers entering the market today are on the fringe, much the way they were in the United States before the housing market crashed there.
* At least three governments and two energy industry groups are leading what they hope will be a "pan-Canadian" approach to find ways to improve the country's pipelines. Alberta, British Columbia and Natural Resources Canada, as well as the Canadian Association of Petroleum Producers and the pipeline association are setting up the collaborative, which is expected to be operational by late fall.
* TransCanada Corp's planned 2,700 mile pipeline, which will bring crude from Alberta to refineries and ports on the East Coast, has the potential to upturn the dynamics of the North Atlantic oil trade squeezing out some imported crude to North America and revitalizing once ailing refineries.
* From recent initiatives targeting offshore tax havens and multi-millionaire tax cheats, the Canada Revenue Agency (CRA) has now been cracking its disciplinary whip on middle-income operators, including waitresses, used car salesmen, and even maple syrup producers. Dozens of cross country pilot projects were ordered by the CRA to help develop techniques for eradicating the underground economy, and indicates a change in agency priority to spotlight middle-income tax avoiders, according to a Canadian tax expert.
CHINA SECURITIES JOURNAL
- China should persevere with policies to regulate and control the property market amid the complex domestic economic environment, said Xu Shaoshi, director of the National Development and Reform Commission (NDRC) at a conference held on Monday.
SHANGHAI SECURITIES JOURNAL
The ministry of environment will toughen environmental protection standards for six base metals industries as part of the government's anti-pollution efforts, the paper said, citing unidentified sources. The ministry will set emission standards for industrial pollutants and the plan will help accelerate the consolidation of the industry.
- China is drafting detailed measures to promote growth in cross border e-commerce that will likely take effect later this year, as outbound shipments through the internet are increasingly important for Chinese exporters and manufacturers, said a source from the ministry of commerce.
- China will continue to introduce policies and take measures to encourage private investment to spur economic development and create jobs, said the National Development and Reform Commission. Private investment accounted for 64 percent of the total fixed-asset investment in China, compared to 61.4 percent by the end of last year, the NDRC said.
- There has been a sharp decrease in Chinese household confidence in the economy, amid slower growth in business activity and income, according to a survey released by the China Wealth Index on Monday.
Fly On The Wall 7:00 AM Market Snapshot
Audience (ADNC) upgraded to Buy from Hold at Benchmark Co.
Fiserv (FISV) pgraded to Overweight from Equal Weight at First Analysis
Meadowbrook (MIG) upgraded to Sector Perform from Underperform at RBC Capital
Old Dominion (ODFL) upgraded to Outperform from Sector Perform at RBC Capital
FreightCar America (RAIL) upgraded to Neutral from Underperform at Longbow
Responsys (MKTG) upgraded to Outperform from Neutral at Credit Suisse
SurModics (SRDX) upgraded to Outperform at Barrington citing market share
Vocera (VCRA) upgraded to Outperform from Market Perform at Wells Fargo
Volcano (VOLC) upgraded to Buy from Hold at Canaccord
American Eagle (AEO) downgraded to Hold from Buy at Brean Capital
American Eagle (AEO) downgraded to Neutral from Buy at Janney Capital
Cardtronics (CATM) downgraded to Neutral from Buy at Compass Point
Chico's FAS (CHS) downgraded to Neutral from Buy at Janney Capital
DSW (DSW) downgraded to Hold from Buy at BB&T
Deere (DE) downgraded to Underperform from Market Perform at William Blair
First Financial (FFIN) downgraded to Underperform from Neutral at Sterne Agee
Fresenius Medical (FMS) downgraded to Hold from Buy at Societe Generale
GlaxoSmithKline (GSK) downgraded to Neutral from Buy at Citigroup
IBM (IBM) downgraded to Underperform from Neutral at Credit Suisse
Kosmos (KOS) downgraded to Neutral from Buy at Citigroup
McDermott (MDR) downgraded to Hold from Buy at BB&T
NIC Inc. (EGOV) downgraded to Market Perform from Outperform at Barrington
Strategic Hotels (BEE) downgraded to Neutral from Overweight at JPMorgan
Titan Machinery (TITN) downgraded to Underperform from Market Perform at William Blair
Unilever (UN) downgraded to Neutral from Overweight at JPMorgan
Web.com (WWWW) downgraded to Neutral from Buy at Roth Capital
Acuity Brands (AYI) initiated with a Neutral at Goldman
CDW Corporation (CDW) initiated with a Buy at Deutsche Bank
CDW Corporation (CDW) initiated with a Buy at Goldman
CDW Corporation (CDW) initiated with a Neutral at RW Baird
CDW Corporation (CDW) initiated with an Overweight at JPMorgan
Fifth Street Senior (FSFR) initiated with a Buy at Deutsche Bank
HD Supply (HDS) initiated with a Buy at UBS
HD Supply (HDS) initiated with a Neutral at Goldman
HD Supply (HDS) initiated with an Outperform at Credit Suisse
HD Supply (HDS) initiated with an Outperform at RW Baird
HD Supply (HDS) initiated with an Outperform at Wells Fargo
TTM Technologies (TTMI) initiated with a Buy at Canaccord
Carl Icahn bought 4M shares of Dell (DELL) on August 1
Chesapeake Lodging (CHSP) raises quarterly dividend by 8.3% to 26c per share
Chevron (CVX) to pay $2M for Richmond refinery fire
Codexis (CDXS) receives notice alleging breach of Dyadic license agreement
Cutera (CUTR) authorizes $10M repurchase plan in addition to 10b5-1 plan
Emerson (EMR) to sell 51% stake in embedded computing and power business
Guggenheim reports 15% stake in Diamond Resorts (DRII), to nominate directors
JA Solar (JASO) to supply solar modules to Phoenix Solar for Simon Solar Farm
Jeff Bezos to purchase Washington Post (WPO) newspaper publishing business for $250M
Kindred Healthcare (KND) initiates quarterly cash dividend of 12c per share
MFP Investors reports 8.1% stake in ALCO Stores (ALCS), says $14 offer 'inadequate'
Monarch reports 18.63% stake in Star Bulk Carriers (SBLK), seeks board seat
National Healthcare (NHC) authorizes $25M share repurchase program
Quidel (QDEL) gets FDA clearance for Sofia hCG fluorescent immunoassay
Regeneron (REGN), Bayer report positive results from two Phase 3 trials of Eylea
SAC Capital reports 5.1% passive stake in Children's Place (PLCE)
Siemens (SI) announces $966.8M order from Saudi Aramco
Sony (SNE) says spinning off entertainment assets not consistent with strategy
Spectra Energy Partners (SEP) to acquire Spectra (SE) assets for partner units, $2.2B cash
Spectrum Brands (SPB) board approves new $200M common stock repurchase program
The Medicines Co. (MDCO) reports positive results from Phase III trial
Companies that beat consensus earnings expectations last night and today include:
Pacira Pharmaceuticals (PCRX), Dawson Geophysical (DWSN), Cognizant (CTSH), Global Geophysical (GGS), Bristow Group (BRS), Endurance Specialty (ENH), Legacy Reserves (LGCY), Hillenbrand (HI), DealerTrack (TRAK), GT Advanced (GTAT), PAA Natural Gas Storage (PNG), Alleghany (Y), Fidelity National (FNF), Vocera (VCRA), QCR Holdings (QCRH), Ducommun (DCO), Stone Energy (SGY), Entercom Comm (ETM), PDI, Inc. (PDII), American Science & Engineering (ASEI), Hologic (HOLX), BroadSoft (BSFT), Black Diamond (BDE), Sykes Enterprises (SYKE), Emergent BioSolutions (EBS), RigNet (RNET), Unum Group (UNM), Qualys (QLYS)
Companies that missed consensus earnings expectations include:
Spectra Energy (SE), Cinemark (CNK), Spectrum Brands (SPB), EchoStar (SATS), PetroQuest Energy (PQ), Commtouch (CTCH), Zebra Technologies (ZBRA), Allot Communications (ALLT), Endeavour (END), Skilled Healthcare (SKH), Otter Tail (OTTR), Alon USA Partners (ALDW), Kindred Healthcare (KND), Preferred Apartment (APTS), Ellington Financial (EFC), Atlas Pipeline Partners (APL), Midstates Petroleum (MPO), Anaren (ANEN), McDermott (MDR), Morgans Hotel (MHGC), EXCO Resources (XCO), Capital Senior Living (CSU), Rosetta Resources (ROSE), Black Hill (BKH), FairPoint (FRP), ProAssurance (PRA), BMC Software (BMC), Synageva (GEVA), Plains All American (PAA), American Vanguard (AVD), Hill International (HIL), Jamba (JMBA), Cutera (CUTR), ArthroCare (ARTC), SIGA Technologies (SIGA), Wright Medical (WMGI), Nautilus (NLS)
Companies that matched consensus earnings expectations include:
Vitamin Shoppe (VSI), RDA Microelectronics (RDA), Tesoro Logistics (TLLP)
Alliant Techsystems (ATK) in talks on Bushnell buy, Reuters says
GM (GM) slashes Chevy Volt price by $5,000 to boost sales, Bloomberg says
IBM (IBM) furloughs hardware staff to cut costs, Bloomberg says
Morgan Stanley (MS) exploring options for commodities unit, Reuters reports
NAND flash prices to return to growth in September, October, DigiTimes says
Advent Software (ADVS) files to sell 7.26M shares for SPO Advisory
Allison Transmission (ALSN) files to sell 16.6M shares of common stock for holders
Capital Product (CPLP) files to sell 11.9M common units representing limited partners
Einstein Noah (BAGL) files to sell 1.5M shares of common stock for holders
Northstar Realty (NRF) files to sell 35M shares of common stock
PDC Energy (PDCE) raises stock offering to 4.5M shares from 3.75M shares
TRW Automotive (TRW) files to sell 10.9M shares of common stock for holders