Liberty Global to buy Virgin Media for $16B. As expected, Liberty Global (LBTYA) has agreed to acquire U.K. cable-TV operator Virgin Media (VMED) for $16B in cash and shares. The deal rekindles John Malone’s rivalry with old sparring partner Rupert Murdoch via News Corp’s (NWS) large stake in BSkyB (BSYBY.PK), Britain’s leading pay-TV broadcaster. Liberty is offering $47.87 a share, representing a premium of 24% to Virgin’s closing price on Monday, prior to the news of the acquisition becoming public.
Biogen to buy full MS-drug ownership for at least $3.25B. Biogen Idec (BIIB) has agreed to acquire full ownership of multiple-sclerosis drug Tysabri from Elan (ELN) for $3.25B plus future royalty payments. Biogen has co-marketed the injectable treatment, which generated revenue of $1.6B in 2012, with Elan for twelve years, with both firms splitting the profit until now. The deal comes as Biogen awaits approval for its BG-12 pill to treat MS.
RBS to be fined $627M – report. RBS’s (RBS) Libor fine will be £400M ($627M), Reuters reports, while Sky says that the bank has signed a two-year deferred prosecution agreement with the U.S. All RBS has said today is that it will pay "significant penalties." The full details are expected to be revealed very soon. Meanwhile, U.K. Business Secretary Vince Cable is reviving a proposal to privatize the government’s 82% stake in RBS by giving its shares away free to the public.
Top Stock News
Japanese shares end at four-year high. The prospect of more powerful easing in an earlier timeframe due to the hastened departure of Bank of Japan Governor Masaaki Shirakawa has helped weaken the yen even further and send Tokyo shares to their highest closing level in over four years. Given that Shirakawa is leaving only three weeks early, the excitement all seems a bit overdone. Tokyo surged 3.8% to 11464.
Time Warner net profit soars 55%. Time Warner’s (TWX) net profit jumped 55% to $1.2B in Q4 as EPS of $1.17 beat consensus but sales of $8.2B were flat and undershot forecasts. A 4.7% increase in Networks revenue wasn’t enough to offset lower sales at the Publishing and Film and TV businesses, although ad income benefited from the U.S. presidential election. Time Warner has authorized a new $4B stock buyback program and bumped up its quarterly dividend to $0.2875 per share.
Disney shares rise as earnings top forecasts. Disney (DIS) shares climbed 3.2% premarket after the company’s FQ1 earnings beat expectations and it forecast improved income over the next few quarters. Net profit slipped 6% to $1.38B, EPS came in at $0.79 and revenue rose 5% to $11.34B. CEO Bob Iger said Disney plans to develop stand-alone films using Star Wars characters, with a slate of movies tentatively scheduled for release between 2015 and 2021.
Fed was worried about ratings agencies’ credibility in 2007. Ben Bernanke and other senior Fed officials had major concerns about ratings agencies in mid-2007, which marks part of the period that the Justice Department is focusing on in its $5B lawsuit against S&P (MHP) for inflated ratings. Bernanke spoke of "a loss of investor confidence" in the firms, while William Dudley warned that flawed ratings could be masking "significant market risk."
GM interested in buying Chinese car makers. GM (GM) and partner SAIC Motors are reportedly interested in acquiring ailing car makers in China, as if the U.S. company has done such a grand job of turning around loss-making operations in Europe. Still, GM wants to boost sales in China by 75% to 5M by 2015, and an acquisition could be one way to achieve this. The government might be supportive, as it wants to consolidate a car industry that suffers from over-capacity.
Dell to pin revival on avoiding battling the big guns in IT. Dell (DELL) doesn’t reportedly plan to carry out huge job cuts or asset sales after it completes its $24.4B deal to go private. Instead, the company is pinning its turnaround hopes on enterprise R&D investments and providing soup-to-nuts solutions, including PCs, to small- and medium-sized businesses. The idea is to avoid battling the likes of IBM (IBM), H-P (HPQ), Oracle (ORCL) and co. over the IT budgets of major corporations.
Softbank to sell $3.2B in debt to pay for Sprint. Softbank (SFTBF.PK) reportedly intends to issue $3.2B worth of four-year bonds to help finance its acquisition of a 70% stake in Sprint (S) for $20.1B. "Softbank is well-known and popular among individuals," says analyst Mana Nakazora. "There isn’t concern about the bonds remaining unsold."
Investors hope that Green Mountain can keep climbing. Green Mountain’s (GMCR) FQ1 earnings are due out after the bell today, with analysts forecasting that EPS will rise to $0.65 from $0.60 last year and that revenue will climb 15% to $1.3B, although Zacks reckons the company will beat these forecasts. Green Mountain has had a tough time over the past year, although it turned things around in FQ4 and investors will look for indications that the company has kept this momentum going.
Top Economic & Other News
Deficit to drop to below $1T this year – CBO. The deficit will fall to below $1T in 2013 for the first time since 2008, the CBO forecasts. Assuming that automatic cuts take effect in March, the deficit will drop to $845B in this year and then $616B in 2014. However, debt will continue to accumulate, taking the overall burden to $20T by 2023 and annual interest payments to above $850B. The CBO also predicts that GDP growth will slow to 1.4% in 2013 before accelerating to 3.4% next year.
Fed hit by cyber-attack. The Fed has become the latest government organization to be hit by a cyber-attack. While admitting that some information was obtained, the Richmond Fed said last night that the breach was plugged soon after it was discovered. "This incident did not affect critical operations," the Fed said. On Sunday, Anonymous said it had accessed data belonging to 4,000 bankers in the Fed’s system.
In Asia, Japan +3.8% to 11464. Hong Kong +0.5% to 23257. China +0.1% to 2434. India -0.1% to 19640.
In Europe, at midday, London +0.2%. Paris -0.5%. Frankfurt -0.3%.
Futures at 7:00: Dow +0.1%. S&P +0.1%. Nasdaq -0.1%. Crude -0.65% to $96.01. Gold -0.2% to $1670.90.
Today’s economic calendar:
7:00 MBA Mortgage Applications
9:00 Treasury Refunding Quarterly Announcement
10:30 EIA Petroleum Inventories
Notable earnings after today’s close: AKAM, ALL, ARAY, ARRS, ATML, ATO, BDN, CBG, CINF, CVA, CYS, DV, ENS, FMC, GHDX, GMCR, HIMX, IACI, IRBT, LF, NTES, NWSA, ORLY, OSUR, PAA, PDH, PNG, PRU, QUIK, SGMO, SRCL, TQNT, TRLA, TRLG, TSO, TWO, V, XIDE, YELP
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