Pisani: Simon Property's $10 Billion Bid on General Growth
While the Greek stock market is down 2.4 percent this morning, most of the rest of Europe is up fractionally. China, Hong Kong, Taiwan and Malaysia markets are closed due to the Chinese New Year, while Brazil is in the middle of Carnival.
Barclays rose 11 percent pre-open, as it reported profits nearly double that of 2008.
1) Now we know what Simon Property Group had in mind when they raised all that money at the end of last year. SPG made a $10 billion offer to buy all of General Growth Properties . GGP, of course, is in bankruptcy, and they are offering 100 percent recovery to the unsecured creditors and other holders of debt and securities. That alone is worth about $7 billion. They will also offer $6 per share for the company, which is worth another $1.9 billion, plus other assets valued at about $3 per share, or another $900 million.
That's nearly $10 billion, most of which would be paid in cash.
The sticking point: GGP does not seem receptive, or at least at this price. In an open letter to GGP shareholders, SPG CEO David Simon said that "We have not received a substantitve response to this offer from GGP or its advisors..."
SPG is the largest mall operator in the world. GGP is the second largest in the U.S., so this is a large deal.
2) Terra Industries soars 22 percent pre-open (also the most actively traded stock at the NYSE) after agreeing to be acquired by Norwegian fertilizer giant Yara for $4.1 billion in cash. The deal values Terra shares at $40.10.
With the acquisition creating the world's largest fertilizer producer, the combined company will have an estimated 8 percent global market share and a 30 percent market share in the U.S.
The entire industry is in the throes of global consolidation. CF Industries (CF) had been seeking to buy Terra for nearly a year, while CF itself is under a hostile offer from Agrium (AGU).
3) Kraft Foods falls 1 percent pre-open. Earnings beat estimates ($0.48 vs. $0.45 consensus) as margins improved significantly improved. However, sales fell slightly short of expectations largely due to lower cheese prices. Helping offset a 1.2 percent decline in overall prices were higher volumes (up 1.6 percent).
The U.S. food maker expects earnings will grow at "the high end of its 7 to 9 percent" long-term growth goal.
4) Abercrombie & Fitch rises 1 percent after Q4 earnings topped estimates ($0.91 vs. $0.87 consensus). Declines in total U.S. sales (down 12 percent) continued to offset strength overseas (total international sales up 86 percent). Company-wide same-store sales fell 13 percent.
Leading the weakness, poor comps at its largest chain, Hollister (down 19 percent).
Despite the drop in Hollister sales, stronger performance from that brand may be key to Abercrombie this year. In 2010, the retailer plans to open 30 mall-based stores and 1 New York flagship store for its Hollister brand.
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