Movers: GE, ImClone Systems, Ford, AIG, Boston Scientific
General Electric (GE) shares were down 7% after after Deutsche Bank cut GE EPS estimates and target. Deutsche Bank says adjustments largely reflect deterioration at GE Capital - driven by tighter credit markets, asset shrinkage and debt pay-down. But the stock recovered a little on news that GE plans to sell $3 billion of perpetual preferred stock in a private offering to Warren Buffett's Berkshire Hathaway (BRKA).The perpetual preferred stock has a dividend of 10% and is callable after three years at a 10% premium. In conjunction with this offering, Berkshire Hathaway will also receive warrants to purchase $3 billion of common stock with a strike price of $22.25 per share, which is exercisable at any time for a five-year term. GE also announces plans to offer at least $12 billion of common stock to the public.
ImClone Systems (IMCL) rises 2.95 to 65.35 after the Wall Stree Journal reports that Eli Lilly (LLY) is in advanced talks to acquire IMCL for $70 a share. The offer values IMCL, maker of Erbitux, at $6.1 billion.
Ford Motor (F) shares fall 0.66 to 4.54 after Ford, Lincoln and Mercury dealers report total sales of 116,734 in September, down 34% from a year ago. Ford says September was the lowest sales month for the company and the industry this year.
Boston Scientific (BSX) shares fell after Johnson & Johnson's (JNJ) Cordis Corp. says U.S. district court in Delaware entered final judgment of $1.2 billion to Cordis on patents infringed by Medtronic (MDT) and Boston Scientific. Cordis says cases involve the original palmaz balloon expandable stent patent. MDT was ordered to pay about $521 million and BSX about $703 million. Merrill reportedly downgrades BSX to underperform.
American International Group (AIG) rises 0.32 to 3.65 after the Wall Street Journal reports that Maurice R. "Hank" Greenberg, the former chief executive officer of AIG, has asked the company's CEO for the chance to bid on any assets the insurer plans to sell.
Reliant Energy (RRI) falls 0.69 to 6.66 after Fitch announces that it has revised RRI's Rating Outlook to Negative from Stable, following RRI's announcement that it is revising its 2008 outlook downward due to financial impact of Hurricane Ike on the company's retail business and lower prices at its wholesale power business. In addition, RRI announced that it would be ending its credit-enhanced retail structure with Merrill Lynch and raising $1 billion in new capital.
Tenet Healthcare (THC) falls 0.30 to 5.25. UBS Financial takes a more cautious view on hospitals - it downgrades THC to sell from neutral, lowers Community Health (CYH) and Universal Health Services (UHS) to neutral from buy.
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