Wall Street News
Bain, Golden Gate close in on $6.5B BMC deal. Private-equity firms Bain and Golden Gate could reportedly announce a deal today to acquire BMC Software (BMC) for over $6.5B, with the $46-share-offer above the latter's close of $45.42 on Friday. The proposed deal would follow pressure from activist investor Paul Singer for BMC to sell itself. Singer, who holds 9.7% in BMC, has criticized the company for failing to realize the opportunity in Internet-based business software.
P-E firms mull $8B Neiman Marcus exit. Neiman Marcus owners TPG Capital and Warburg Pincus are reportedly considering a sale or an IPO of the luxury retailer, with the private-equity firms believing that they can pull in $8B for the department-store chain after buying it for $5.1B in 2005. If a deal is struck, the valuation could be of interest to investors of mall rivals Saks (SKS) and Nordstrom (JWN).
GM to invest $16B in U.S. over next three years. GM (GM) has fired back at a WSJ op-ed calling the carmaker "General Tso Motors," saying that it plans to invest $16B in the U.S. through 2016. That would add to the $8.5B spent since 2009 and would be well above the $11B that GM and its joint-venture partners plan to invest in China over the next three years. In April, Chinese sales of vehicles from GM and its JVs climbed 15.3% on year to 261,870, accelerating from a rise of 12.6% in March.
Top Stock News
Apple among financially strongest companies... Apple (AAPL) and Visa (V) are among Barron's list of the 500 financially strongest companies as ranked after a rigorous cash and sales analysis. A quick filter shows that a good chunk of the names trade with a single-digit price-to-earnings ratio, including Goodyear Tire & Rubber (GT). Despite the buzz about booming auto sales in the U.S. and China, concerns about growth in other regions have lowered expectations.
...but it's missing out on 2.8B potential customers. Apple's (AAPL) stringent policies with telecom carriers - including minimum sales requirements - and the iPhone's high price and its technical needs, are preventing the company from addressing a market of 2.8B customers, research firm Asymco.com estimates. Tellingly, Apple has signed fewer than a dozen new carriers since September 2011, helping to explain the device's slowing growth and Samsung's (SSNLF.PK) increasing dominance.
"Iron Man 3" rakes in the cash. Disney's (DIS) "Iron Man 3" has generated $680.1M in worldwide sales in the 12 days since its release, including $175.3M over its debut weekend in the U.S. and Canada. Only last year's "The Avengers" - which also includes the Iron Man character - has generated more money on its opening weekend, highlighting the success of Disney's "branded tent-pole" film strategy.
Santander puts asset management ops on the block. Banco Santander's (SAN) asset management unit is reportedly on the block again, with the bank in talks to sell a stake in the business to two P-E firms. Santander has tried to unload the €161B AUM unit several times, but has failed because of price; it also doesn't help that a third of the assets are located in troubled Spain.
Toyota FY operating profit seen topping ¥1T for first time in five years. Toyota (TM) is reportedly expected to post a fiscal-year operating profit of ¥1.3T ($13.1B), the first time that the figure would have exceeded ¥1T since the financial crisis of 2008. The number would also be 3.7 times more than last year and ¥150B above a forecast that Toyota gave in February.
Top Economic & Other News
Obama indicates support for boosting LNG exports. President Obama has signaled his backing for increasing the U.S.'s exports of natural gas, saying that the country will probably be a net seller of LNG by 2020. The Department of Energy is assessing applications for 20 projects to export gas to nations with which the U.S. doesn't have a free trade agreement. Companies that could benefit include Cheniere Energy (LNG), while Dow Chemical (DOW) is among those opposed.
Israeli air strike on Syria sends crude higher. Crude prices have received a boost from their favorite catalyst: geopolitical tension. Brent futures hit their highest levels in a month, while Nymex jumped as well, after Israel carried out air strikes on Syrian targets over the weekend. Expect the risk premium that investors attach to oil to rise further in the coming weeks should rhetoric surrounding possible U.S. intervention heat up. At the time of writing, Brent was +0.5% and Nymex was +0.35%.
Chinese services PMI falls to 21-month low. Chinese HSBC services PMI has declined to its lowest level since August 2011, falling to 51.1 in April from 54.3 in March. The growth in new orders dropped to the slowest rate in 20 months, while staffing declined for the first time in over four years. The stumble in the services sector, which accounts for almost half of GDP, has added to a deceleration in manufacturing, and has increased concerns about China's economic recovery.
Eurozone business activity stuck in reverse. Eurozone composite PMI edged up to 46.9 in April from 46.5 in March, while the services reading increased to 47 from 46.4. The eurozone PMI reading is "broadly consistent with GDP falling at a quarterly rate of 0.4-0.5%," says Markit, which is skeptical that the ECB's "mere 25 bps cut from an already low level will have a material impact on an economy that is contracting so sharply."
Senate set to pass Internet sales tax measure. The Senate looks poised to approve a bill today that would force online merchants to collect sales tax on Internet transactions. However, the measure will probably hit greater opposition in the House, where the leadership appears to be undecided, with Speaker John Boehner taking no public position. Companies in favor include Wal-Mart (WMT) and Amazon (AMZN), while those against include News Corp (NWS) and eBay (EBAY).
The Oracle holds court. Warren Buffett has complete faith in Ben Bernanke's ability to unwind the Fed's QE policy, the Oracle of Omaha told Berkshire Hathaway's (BRK.A) annual meeting over the weekend, although he noted that when rates rise "it's likely to be the shot heard round the world." In the meantime, Buffett is entertained: "This is like watching a good movie...I don't know how it will end."