Movers: AIG, Merrill Lynch, Bank of America, Lehman
American International Group (AIG) shares plunged 7.38 to 4.76 after the US government reportedly says it won't bail out AIG, but that it has asked Goldman Sachs ticker symbol="GS"/>) and JP Morgan (JPM) to lead a $70-$75 billion lending facility. NY Governor Patterson reportedly says AIG has been given permission to access $20 billion of capital to free up liquidity. Earlier, WSJ reported AIG is pulling together survival plan. S&P Ratings Services placed AIG ratings on CreditWatch with negative implications. S&P Equity Research, Merrill, Citigroup downgraded AIG.
Merrill Lynch (MER) agrees to be acquired by Bank of America (BAC) in a $50 billion all-stock transaction. Under terms of the transaction, BAC would exchange 0.8595 BAC share per MER share. The price is 1.8 times stated tangible book value.
Lehman Brothers Holdings (LEH) shares fell 3.44 to 0.21. Lehman says it intends to file a petition under Chapter 11 of U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York. None of the broker-dealer subsidiaries or other subsidiaries of LEH will be included in the Chapter 11 filing and all of the broker-dealers will continue to operate. LEH is exploring the sale of its broker-dealer ops and, as previously announced, is in advanced talks with a number of potential purchasers to sell its Investment Management unit.
Electronic Arts (ERTS) says it has decided not to make a proposal to buy Take-Two Interactive Software (TTWO) and has terminated its talks with the company. TTWO says it remains actively engaged in talks with other parties to consider alternatives.
A group of global commercial and investment banks, including Bank of America, Barclays (BCS), Citigroup (C), Credit Suisse Group (CS), Deutsche Bank (DB), Goldman Sachs (GS), JP Morgan (JPM), Morgan Stanley (MS), Merrill, and UBS Financial (UBS), today initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets. Banks have committed to fund $7 billion each ($70 billion in total) to lend to troubled financial companies.
Longs Drug Stores (LDG) confirms it has received a buyout offer of $75.00 per share from Walgreens (WAG). LDG Board continues to recommend to its stockholders that they accept the tender offer by CVS Caremark (CVS) and tender their shares of LDG in that tender offer.
WebMD Health (WBMD) agrees to buy QualityHealth.com and its owner, Marketing Technology Solutions Inc. (MTS). The purchase price is $50 million in cash, payable at closing, and WBMD has agreed to pay up to an additional $25 million in cash if certain performance thresholds are achieved relating to calendar year 2009.