U.S. indices were mixed during midday trading Tuesday following the long holiday weekend. The Nasdaq was up about 0.1%, while the Dow Jones Industrials and the S&P 500 were down approximately 0.5% and 0.2%, respectively. Energy and oil companies appear to be making the biggest moves in the market. This comes ahead of the OPEC meeting in Austria on Thursday. Crude oil was up more than 1% by midday, nearing $50 a barrel.
Allergan (AGN) shares were up slightly, about 0.6%, during midday trading following news that billionaire activist investor Carl Ichan recently acquired a "large position" in the pharmaceutical company. In a statement, Ichan said he is very supportive of CEO Brent Saunders, adding that he has every confidence in his ability to enhance value for all shareholders. No further details about the Ichan's stake has been disclosed.
The Botox maker, which is a core holding of Jim Cramer's chartiable trust Action Alerts PLUS, has healthy balance sheet with approximately $1.2 billion in cash, but an upcoming deal with another pharmaceutical will increase the bottom line. Allergan is set to sell its generics unit to Teva Pharmaceutical (TEVA) in a $40 billion deal expected to close by the end of June. Nearly $34 billion will make up the cash component of the deal. So far this year, Allergan shares have tumbled more than 23%.
Shares of the Westar Energy (WR) skyrocketed more than 7% during midday trading Tuesday after Great Plains Energy (GXP) announced plans to acquire the Kansas-based electric utility company for approximately $8.6 billion in a combined cash and stock deal. The transaction enterprise value is expected to be $12.2 billion, which includes the cash and stock consideration as well as the assumption of $3.6 billion of debt. Westar shareholders will receive a premium price of $60 per share. Great Plains CEO Terry Bassham will become chairman and CEO of the combined company. The energy companies anticipate the deal closing in the spring of 2017, in which case Westar will become a wholly owned subsidiary of Great Plains.
Cliffs Natural Resources (CLF) soared by more than 38% during midday trading Tuesday, following news that J.P. Morgan Securities upgraded the iron ore producer's shares to Overweight from Neutral. Analysts also reinstated a price target of $7 on the stock. The firm noted that Cliffs has significant near-term earnings growth as rising steel prices should result in higher pellet prices for the remainder of 2016. Additionally, Cliffs entered into a new long-term iron ore supply agreement with ArcelorMittal (MT) through 2026.
Coca-Cola Enterprises' (CCE) shares tumbled nearly 25% by midday Tuesday after three Coca-Cola (KO) bottlers merged. Coca-Cola European Partners merged with Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke GmbH and is now trading under the ticker for Coca-Cola Enterprises. The companies agreed to merge in October with Enterprise shareholders receiving a one-time payment of $14.50 per share. The company is now the largest independent bottler for Coca-Cola, based on pro forma 2015 net sales of about 11 billion euros.
News that Vista Equity Partners will acquire Marketo (MKTO) sent shares upward by more than 9% on high-volume trading Tuesday. The private equity firm will pay $35.25 per share in cash for the marketing software maker; a deal valued at about $1.8 billion. Marketo CEO Phil Fernandez said the acquisition will enable the company "to deliver its mission to give tomorrow's marketers and the C-suite an ultra-high-scale enterprise platform for customer engagement." The transaction is expected to close in the third quarter and still must be approved by Marketo shareholders. Takeover speculation had prompted RBC Capital Markets to downgrade Marketo stock to Sector Perform, but that was prior to Vista Equity's announcement. Shares for the software company have soared about 23% so far this year.
-- Written by Anders Keitz
