Movers: Wachovia, Wells Fargo, Citigroup, AIG
Wachovia (WB) and Wells Fargo (WFC) and Wachovia sign definitive agreement whereby WFC will acquire WB in a whole-company transaction requiring no financial assistance from the FDIC or any other government agency. Under the agreement, WFC will acquire all outstanding shares of WB common stock in a stock-for-stock transaction with a total value of about $15.1 billion. WB holders will get 0.1991 WFC share per WB share held. WFC will record WB's credit-impaired assets at fair value. The deal is expected to add to WFC's EPS in the first year of operations, excluding related-charges expected to be about $10 billion and credit reserve build
Citigroup (C) shares are seen lower as Wells Fargo agrees to a whole-company acquisition of Wachovia. Citi previously agreed to acquire parts of Wachovia.
American International Group (AIG) says it intends to refocus on its core property and casualty insurance businesses, generate sufficient liquidity to repay outstanding balance of its loan from Federal Reserve Bank of NY and address its capital structure. Says it will sell a number of businesses. Says its global coordinators for divestiture program are The Blackstone Group (BX) and J.P. Morgan (JPM).
UBS downgrades salesforce.com (CRM) to sell from buy.
ACE Ltd. (ACE) says it estimates net after-tax losses in third quarter from catastrophes, including Hurricanes Gustav and Ike, will amount to about $315 million, including reinstatement premiums.
Strategic Hotels & Resorts (BEE) expects to take a one-time third quarter charge of about $36 million due to its decision not to proceed with its previously announced contracted purchase of hotel development space at the Aqua Building, which is currently under construction and adjacent to BEE's Fairmont Chicago Hotel.
Anheuser-Busch Companies (BUD) says it has achieved good U.S. beer volume growth in third quarter, and pricing environment in U.S. beer market continues to be favorable. Says management expects revenue per barrel to increase nearly 4% in third quarter, including favorable brand mix. In addition, says its international beer operations are also performing well, volume is expected to be up in the mid-single digits in the quarter with pretax profits up over 20%.
Sprint Nextel (S) has received interest from a Latin American carrier and several private-equity firms for its Nextel unit, but a potential deal faces hurdles: WSJ.
Family Dollar Stores (FDO) posts better-than-expected $0.38, vs. $0.26, fourth quarter EPS on 5.6% same-store sales rise, 8.2% total sales rise. Street was looking for $0.34. Sees first quarter same-store sales to increase 2%-4%, EPS of $0.38-$0.42. Sees fiscal year 2009 same-store sales up 1%-3%, $1.58-$1.78 EPS.
Lawson Software (LWSN) posts $0.05, vs. $0.07, first quarter non-GAAP EPS on 2% revenue rise. Posts $0.
01 GAAP loss, primarily attributable to increase in provision for income taxes, lower interest income resulting from lower investment balances along with lower yields on those investments. Says sales of M3 solutions in Americas, Europe were weaker than forecasted. Says it's unlikely prior fiscal year 2009 guidance will be achieved.
Penn National Gaming (PENN) cuts third quarter guidance to $617 million revenue, $146.3 million EBITDA from prior view of $657.5 million, $178.6 million, respectively. Cites weak economic conditions, competition in certain markets, disruption caused by September hurricanes, and higher-than-anticipated lobbying expenses. Says its same-facility revenue in Sept. declined by about 21.4% vs. September 2007. Deutsche Bank downgrades to hold from buy.
LCA-Vision (LCAV) expects third quarter total procedure volume to be down by 52% year-over-year. Says the number of scheduled appointments at its LasikPlus vision centers during third quarter was well below prior-year numbers. As anticipated, says it will report decline in its average price per procedure, excluding impact of deferred revenue, reflecting the rollout of market-level pricing, of about $100 per procedure, compared with second quarter level.
Schering-Plough (SGP) - Merrill downgrades SGP to underperform from buy.
Global Payments (GPN) posts $0.71, vs. $0.54, first quarter EPS on 30% revenue rise. Raises fiscal year 2009 revenue guidance to $1.64-$1.68 billion. EPS guidance to $2.37-$2.45, excluding the impact of restructuring and other charges, as well as the impact of future acquisitions.
Interwoven (IWOV) expects third quarter revenue of $65-$66 million, which is higher than the $63-$65 million previously forecast for the period.
Patriot Coal (PCX) says its third quarter production volume of about 8.0 million tons was 1.4 million tons lower than expected as a result of issues that are common to Appalachian coal regions, i.e., shortage of skilled workers, difficult geologic conditions, downtime resulting from increased MSHA inspections, and delays in obtaining mining permits.