The FDIC reports that Wachovia's (WB) banking operations will be purchased by Citigroup (C. FDIC says WB did not fail; rather, it is to be acquired by Citigroup on an open bank basis with assistance from the FDIC. Under the agreement, Citigroup will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citi has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk. S&P maintains buy.
Financial stocks such as Morgan Stanley (MS) are in focus today after the White House and congressional leaders agreed on a $700 billion deal to authorize the biggest banking rescue in U.S. history. Deal must be approved by both the House of Representatives and the Senate. In Europe, British government nationalize Bradford & Bingley, and Belgian, Dutch and Luxembourg governments agreed to inject €11.2 billion (US$16.4 billion) into Fortis (FOR.BR).
Aegon N.V. (AEG) says it does not hold common equity in Washington Mutual (WM). It notes that during 2008, it actively lowered its exposure to WM by about 47%. As of Sept. 26, AEG had total general account fixed income gross exposure of €125 million, which includes Credit Default Swaps-related exposure to WM.
Apple (AAPL) - Morgan Stanley reportedly downgrades to equal weight from overweight. RBC reportedly downgrades to sector perform from outperform.
Circuit City Stores (CC) posts $1.45 second quarter loss per share, vs. $0.38 loss from continuing operations on 9.5% sales drop.
Pilgrim's Pride (PPC) says it successfully completed a definitive written agreement with lenders to temporarily waive fixed-charge coverage ratio covenant under its credit facilities thru Oct. 28. Lenders also agreed to provide liquidity under these facilities during this same 30-day period in accordance with terms of deal. Separately, PPC said it has retained Bain Corporate Renewal Group to work on a range of strategic issues and operating improvement; has also engaged Lazard as its investment banker.
Littlefuse (LFUS) cuts $145-$150 million third quarter sales guidance to $140 million, now sees $0.30-$0.35 EPS before special charges ($0.09-$0.14 after special charges). Notes automotive sales dropped off sharply in the third quarter.
Cardinal Health (CAH) announces plans for tax-free spin-off of its clinical and medical products businesses as a separate public company, which is expected to be completed by middle of calendar year 2009. It says fiscal year 2009 pro forma revenue for these businesses as a stand-alone entity is expected to be more than $4 billion. Says Chairman and CEO R. Kerry Clark will lead the company through the spin-off, then will retire from CAH. Also reiterates fiscal year 2009 guidance of 6%-7% rev. growth, non-GAAP diluted EPS from continuing operations of $3.80-$3.95.
Cal-Maine Foods (CALM) posts $0.47, vs. $0.76 a year ago, first quarter EPS as higher feed costs offset 16% revenue rise.
Eli Lilly (LLY) and Daiichi Sankyo Co. confirm that FDA did not complete its review for the prasugrel new drug application (NDA) by the Prescription Drug User Fee Act goal date of 9/26/08. Proposed indication for prasugrel is for the treatment of patients with acute coronary syndromes (ACS) being managed with an artery-opening procedure known as percutaneous coronary intervention (PCI).