Bank of America Bags Countrywide

(Businessweek) - The $4 billion acquisition of Countrywide Financial rescues the U.S.'s largest mortgage lender. BofA chief Ken Lewis calls it a "rare opportunity"

 

Every go-go period on Wall Street has a spectacular flame-out that comes to symbolize the excesses of the day, from Sam Insull's Middle West Utilities during the Great Depression to Pets.com in the dot-com era. Now it's Countrywide Financial's (CFC) turn.

Bank of America (BAC) announced Jan. 11 that it is buying Countrywide in a deal that values the nation's largest mortgage broker at just $4 billion, or roughly $6.90 per share. Even that was a bit of a gift for Countrywide investors, who had seen their stock slip to just $5 a share in the past week as the company denied rumors it would seek bankruptcy protection. As recently as January, 2007, Countrywide's shares were selling for $42.

Bank of America Chairman and Chief Executive Kenneth Lewis said he did not plan on having Countrywide Chairman and Chief Executive Angelo Mozilo head the combined operations. "I would want him to stay until the deal gets done and then probably I would guess that he would want to go have some fun," Lewis said in a conference call announcing the deal.

Read more at Businessweek

Movers: IBM, Harman, Sovereign Bancorp, Sears

(Businessweek) - International Business Machines (IBM) announces preliminary fourth quarter EPS from continuing operations of $2.80, vs. $2.26 a year ago, on 10% higher revenues, including 6 points of currency benefit.

Harman International Industries (HAR) now sees non-GAAP 2008 EPS of $3.00-$3.10, before after-tax merger-related costs of $0.13 per share but including impact of the company's ongoing accelerated share repurchase. It says the change in guidance caused by major shift in market for Portable Navigation Devices (PNDs), which experienced significant pricing pressure.

Sovereign Bancorp (SOV) expects to take a combination of charges due to the continued volatility in the financial markets and deterioration in the credit environment; charges are expected to adversely impact its fourth quarter financial results.

Sears Holdings (SHLD) says Sears Domestic's same-store sales declined by 2.8% during the nine-week period ended Jan. 5, while Kmart's same-store sales declined by 4.2%; total domestic same-store sales declined 3.5%. Due to lower sales, gross margin rates, it sees fourth quarter EPS of $2.59-$3.48, vs. $5.33 last year. It sees $5.13-$5.96 fiscal year 2008 EPS. Goldman reportedly downgrades to sell from neutral.

The Financial Times reports that as Merrill Lynch (MER) is seeking about $4 billion in a second capital raising, Kuwait Investment Authority is expected to be a significant investor in this new deal, which could be announced as soon as mid-week, according to people familiar with the matter. Other investors could come from Europe. Separately, WSJ reports the SEC is probing whether several current and former Merrill employees improperly placed trades for the firm's own account ahead of client orders.

Weyerhaeuser (WY) agrees to sell its iLevel European engineered wood products operations to Finnforest of Finland, part of the Metsaliitto Group. Terms of the sale were not disclosed.

Blue Nile (NILE) posts 24% rise in fourth quarter revenue. Anticipates reporting strong profitability for fourth quarter earnings.

Western Alliance Bancorporation (WAL) sees fourth quarter EPS of $0.09. It says decline from third quarter's $0.35 EPS primarily results from increase in loan loss provision expense to $13.9 million.

FTD Group (FTD) sees $0.30 second quarter EPS on $155 million consolidated revenue, vs. year ago's $0.21 EPS on $152 million consolidated revenue.

PeopleSupport (PSPT) receives unsolicited revised proposal from IPVG Corp. and AO Capital Partners Ltd.

Compuware (CPWR) sees lower-than-expected $0.14 third quarter adjusted EPS. It says there was a high ratio of ratable versus up-front recognition for new software licenses in the quarter, and this resulted in lower-than-expected revenue and EPS.

Terex (TEX) agrees to acquire A.S.V. ( ASVI) for about $488 million. Terms: $18 for each ASVI share. Expects transaction to close by end of the first quarter 2008.

Kirby (KEX) expects fourth quarter EPS to exceed $0.62, above the top end of $0.57- $0.62 guidance, substantially above fourth quarter 2006 EPS of $0.44. It cites strength in core businesses.

 

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Malawi tobacco output higher

(Fin24) - Tobacco production in Malawi is expected to rise to 150 million kilograms this season, encouraged by higher prices and good rains, says the Tobacco Association of Malawi (Tama).

Tama president Charles Mwamsambo told Reuters more farmers had signed up to grow tobacco this season because of a number of factors, key among them an anticipated spike in prices that is likely to encourage tobacco growers to lift production.

The expected increase in prices follows a slump in production last year, when growers only managed production of only 140 million kilograms, down from 158 million the previous season.

"There are several factors like the motivation that farmers have from last year's good prices: more buyers on the market and good rains that will result in high production of about 150 million kilograms this growing season," he said.

More farmers

Mwamsambo said Tama had registered 27 000 new farmers this season compared to only 10 000 new growers signed up last year.

Tobacco accounts for over 70% of Malawi's exports and 15% of its gross domestic product, but for the last two years low prices have led to cuts in production.

About 2 million of the country's 13 million people depend on tobacco and related industries for their livelihood.

The biggest auction floors last year saw farmers sell their crop between $1.70 and $1.60 per kg for the first time in several years, after President Bingu wa Mutharika ordered buyers to offer better prices or leave the country.

 

Read more at Fin24

AnGold buys Golden Cycle

(Fin24) - AngloGold Ashanti (ANG), the world's second-largest gold producer, announced on Monday that it had  acquired 100% of Golden Cycle Gold Corporation (GCGC), a US precious metals exploration and development company, for $149m, about R1bn.

The company said in a statement to the JSE that the transaction would be effected through a merger transaction in which GCGC's shareholders will receive consideration consisting of AngloGold Ashanti ADSs.
 

Read more at Fin24

Big yes for diamond merger

(Fin24) - Diamond Core Resources (Diamond Core) shareholders today overwhelmingly approved the proposed merger with Toronto-listed BRC Diamonds to create BRC Diamond Core.

There was no sign of opposition from estranged black economic empowerment (BEE) partner Sefalana and the fact that the meeting went so smoothly indicates settlement negotiations between Sefalana and Diamond Core management seem to be progressing well.

The proposed merger had to be passed by at least 75% of the votes cast at the meeting.

In all 206.8 million shares - equivalent to 69.8% of Diamond Core's total issued share capital - were cast. Some 205.8 million of those - equivalent to 99.5% - were voted in favour of the merger.

'SA, DRC projects to be prioritised'

The merger must now be formally sanctioned by the High Court before coming into effect. Diamond Core shares are due to be suspended from trading on the JSE from February 4 at which point BRC shares will begin trading on the bourse. The effective implementation date of the scheme is February 11.

Diamond Core CEO Theo Botoulas said: "What management must do now ahead of February 11 is prioritise the projects in South Africa and the Democratic Republic of Congo (DRC) and come up with a revised strategy and plan to be presented to the new board."

Diamond Core already has two bulk sampling operations running in South Africa. One of these is on an alluvial deposit at Silverstreams on the Middle Orange River and the second is on the Paardeberg kimberlite pipe near Kimberley.

Main justification for the merger is the potential rapid growth for the company should it make a major diamond discovery in the DRC on the prospecting rights held by BRC Diamonds.

Interviewed after the meeting, Botoulas told Fin24 that bulk sampling had been completed at Paardeberg and the results were being analysed by consultants with a view to drawing up a mine plan.
 

 

Read more at Fin24

Reuters, Thomson expect deal to close in Q2

(Reuters) - News and information groups Reuters Group Plc (RTR.L: Quote, Profile, Research) and Thomson Corp (TOC.TO: Quote, Profile, Research) said they expect Thomson's proposed acquisition of the British group to close early in the second quarter of 2008.

The pair said the U.S. Department of Justice, which had been expected to give its decision on the 8.2 billion pound ($16.1 billion) deal by Tuesday, would now give its ruling around the same time as the European Commission's.

The Commission is set to give its ruling by March 10, and it could then take four to six weeks to secure shareholder approval.

"Thomson and Reuters have had productive discussions with the (United States) Department of Justice and the European Commission," the companies said, adding that they "have a high degree of confidence that the acquisition will receive clearance on an expedited timetable".

 

Read more at Reuters

M&T Bank Q4 profit sinks

(Reuters) - M&T Bank Corp (MTB.N: Quote, Profile, Research), the first large U.S. bank to report fourth-quarter results, said on Monday that profit tumbled 70 percent, hurt by debt write-downs and turmoil in residential real estate markets.

The bank, which counts Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote, Profile , Research) (BRKb.N: Quote, Profile, Research) among its largest investors, said net income fell to $64.9 million, or 60 cents per share, from $213.3 million, or $1.88, a year earlier. Operating profit totaled 77 cents per share, the bank said.

Analysts on average expected profit of $1.85 per share, according to Reuters Estimates. Buffalo, New York-based M&T was one of the few large U.S. banks that had not in the last two months specifically cautioned investors how credit and mortgage market turmoil would hurt fourth-quarter results.

M&T shares fell $3.24, or 4.4 percent, to $70.51 in pre-market electronic trading.

The company reduced profit by $78 million, or 71 cents per share, to write down collateralized debt obligations, and by $29 million, or 27 cents per share, for credit losses.

Earnings were also reduced 13 cents per share for M&T's share of antitrust litigation involving credit card network Visa Inc, and 8 cents per share for acquisitions.

M&T Bank said it has $64.9 billion in assets and more than 650 branches in seven mid-Atlantic states and Washington, D.C.

Its results may foreshadow those at other large U.S. banks, most of which are to report by the middle of next week. Nearly all are expected to report lower profits, or losses.

 

Read more at Reuters

Investors brace for bank losses in pivotal week

(Reuters) - Major American banks are expected to unveil substantial losses and secure more cash from abroad in what is shaping up to be a pivotal week for the global credit crisis, with central banks also poised to weigh in again.

Citigroup Inc. (C.N: Quote, Profile, Research) could write off as much as $24 billion and lay off 20,000 workers in a drive to cut costs and boost capital, CNBC said on its Web site in a report dated Sunday.

CNBC said the plans will be unveiled on Tuesday when Citi, the largest U.S. bank by assets, reports fourth quarter results.

Investment bank Merrill Lynch (MER.N: Quote, Profile, Research) is just as troubled.

The Financial Times said on Monday that Merrill was seeking about $4 billion in a second capital raising, and the Kuwait Investment Authority was expected to be a significant investor.

A deal could be announced as soon as midweek, the paper said, citing people familiar with the matter.

The New York Times on Friday reported Merrill was expected to suffer $15 billion in losses stemming from bad mortgage investments, when it releases its results later this week.

 

Read more at Reuters

Apple, China Mobile call off iPhone launch talks

(Reuters) - Apple Inc (AAPL.O: Quote, Profile, Research) and China Mobile have called off talks to launch the U.S. firm's popular iPhones in China, dashing investor speculation that the device will hit store shelves soon and sending China Mobile shares down.

Investors had cheered Apple possibly winning access to China Mobile's 350 million subscribers -- more than the population of the United States -- and news of talks over the device's potential launch in the world's largest telecoms market helped Apple's stock climb more than 10 percent on November 13.

Shares in China Mobile (0941.HK: Quote, Profile, Research), the world's largest mobile phone operator, slid nearly 3 percent after Monday's announcement to HK$130.

Analysts had expected talks to fail at least initially, predicting that both parties would eventually lock horns over revenue sharing and a plethora of technical difficulties.

"It's not a surprise. China Mobile doesn't want to share its non-voice revenue," said Duncan Clark, chairman of BDA China, a Beijing-based telecoms research consultancy. "The two have very strong egos and, as in any relationship, that often doesn't work."

The iPhone, a cellphone that allows Internet access and plays music, sells for about $500 in the United States -- about double the average monthly salary in China.

Experts said last year the iPhone would have to navigate a spate of technical, content and fee issues unique to China, including a standard revenue-sharing agreement that China Mobile would be sure to dislike, before any launch could proceed.

 

Read more at Reuters

Money-Market Rates in Dollars Drop Before Fed

(Bloomberg) -- The cost of borrowing dollars fell the most in four months before a $30 billion cash auction by the Federal Reserve to break the logjam in short-term lending.

The three-month London interbank offered rate, or Libor, for dollars fell 20 basis points to 4.06 percent, the British Bankers' Association said today. That's the biggest decline since Sept. 19, the day after the Fed lowered its benchmark interest rate a half point. The equivalent euro and pound rates also dropped.

The Fed is offering cash in the first of two $30 billion emergency-cash injections. The European Central Bank plans two $10 billion auctions this month and the Bank of England will offer 10 billion pounds ($19.6 billion) tomorrow. Policy makers are responding to about $100 billion of losses at financial institutions after the collapse of the U.S. subprime-mortgage market.

``Central banks are committed to providing banks with as much cash as is necessary to prevent pressures escalating,'' said Lena Komileva, an economist in London at Tullett Prebon Plc, part of the world's second-biggest inter-dealer broker. ``There's a consensus view among policy officials that further coordinated action will be required to achieve this.''

The three-month euro interbank offered rate, or Euribor, dropped 2 basis points to 4.56 percent, the European Banking Federation said. It was at a seven-year high of 4.95 percent on Dec. 12, when policy makers said they would combine forces to counter a short-term credit shortage. The comparable pound rate fell 1 basis point to 5.67 percent.

 

Read more at Bloomberg