Wall Street Breakfast: Must-Know News

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Actavis nears acquisition of Forest Labs for up to $25B – WSJ. Actavis (ACT) is in advanced negotiations to buy fellow pharmaceuticals provider Forest Laboratories (FRX) for up to $25B, the WSJ reports, adding that the deal could be announced today. The figure is above Forest’s market cap of $19.3B. One reason for the tie-up is to allow the companies to better negotiate with customers amid consolidation between hospitals, insurers and doctors. Forest’s shares were +2.3% premarket.

Nikkei surges after BOJ boosts loan facilities. The Bank of Japan has surprised markets by expanding lending facilities that are designed to spur corporate investment by offering low-interest loans to commercial banks in the hope that they will lend the money to businesses. At a policy meeting, the BOJ also maintained its program of increasing the monetary base by ¥60-70T a year. The boosting of the lending facilities comes after data yesterday showed that Q4 GDP growth slowed to a less-than-expected 0.3% on quarter from 0.5% in Q3. The move helped weaken the yen and cause the Nikkei to surge 3.3%.

H-P knew of Autonomy methods long before writedown – FT. Hewlett-Packard’s (HPQ) senior management was aware of Autonomy’s controversial hardware sales practices months prior to a whistleblower flagging them, the FT reports. If true, the report could undermine HP’s claims that Autonomy officials hid the information. The whistleblower’s actions helped prompt H-P to sharply write down the $11.1B acquisition.

Top Stock News
BHP earnings surge 31%. BHP Billiton’s (BHP) underlying FH1 profit jumped 31% to $7.76B and exceeded consensus of $6.9B, helped by a rise in the company’s earnings from its iron-ore operations, cost cuts and the improving global economy. Revenue increased 5.9% to $33.9B. BHP declared a dividend of $0.59 for the period and said that its strong cash flow could enable it to consider a substantial dividend increase in the future. Shares were +2.25% premarket.

Airline misery continues as snow storms pound on. Airlines have cancelled over 500 flights for today as the freezing weather continues relentlessly. The latest storm has dumped snow on the Midwest and is expected to be similarly beneficent to the Northeast and mid-Atlantic states. The latest cancellations add to 1,379 flights that were scrubbed for the President’s Day holiday yesterday and over 4,440 that were delayed. More than 7,500 flights were scrapped on February 13.

Healthcare services firm MultiPlan sold for reported $4.4B. Private-equity firms BC Partners and Silver Lake have agreed to sell MultiPlan, a provider of services that help big health insurers manage the claims process, to a consortium comprising Starr Investment and Swiss firm Partners Group. The financial terms of the deal weren’t disclosed, although reports said the price was $4.4B. Starr is an affiliate of C.V. Starr, which is part of an insurance and investment group led by former AIG (AIG) chief Maurice “Hank” Greenberg.

News Corp wins $800M back from Australian tax man. News Corp (NWSA) has received a rebate of A$882M ($796.62M) from Australia’s tax authorities after it won a legal battle over A$2B in forex losses that it suffered during a restructuring in 1989. The Australian Tax Office had refused to allow the deduction but was defeated in the country’s Federal Court in July. The payment has only just come to light, although News Corp received the money at the end of last year.

AngloGold Ashanti replaces chairman. AngloGold Ashanti (AU) Chairman Tito Mboweni has stepped down, due to his “increasing portfolio of professional commitments,” and is being replaced by nonexecutive director Sipho Pityana. Mboweni, who is a member of the African National Congress’ National Executive Committee, will leave AngloGold Ashanti as nonexecutive director at the company’s annual shareholders meeting in May.

Top Economic & Other News
German investor confidence falls sharply. The German ZEW survey of investor confidence has dropped to 55.7 in February from 61.7 in January and missed consensus that was also 61.7. However, the current situation print has surged to 50 from 41.2. The decline in the headline figure was probably caused by recent uncertainties, such as weak U.S. labor and other economic data, and the volatility in emerging markets, ZEW says, adding that the fall “must not be overstated.”

U.K. CPI falls below BOE goal. U.K. inflation has fallen below the Bank of England’s target of 2% for the first time since November 2009, dropping to 1.9% on year in January from 2% in December and undershooting consensus that was also 2%. The data comes after BOE Governor Mark Carney said last week that with spare capacity in the economy high and inflation benign, the bank has scope to maintain interest rates at a record-low of 0.5% for a while yet.

PBOC drains $7.9B from financial system. The People’s Bank of China has drained $7.9B from the country’s financial system by selling 48B yuan in repurchase contracts, the first such transaction since June. The PBOC made the tightening move after weekend data showed that aggregate financing soared to a record 2.58T yuan ($425B) in January from 1.23T yuan in December despite the bank’s attempts to rein in lending.

Italian President asks Matteo Renzi to become PM. Florence Mayor Matteo Renzi, the head of Italy’s center-left Democratic Party (PD), was due to start talks with the leaders of other parliamentary groups today after he was yesterday asked by President Giorgio Napolitano to try to form a government. Renzi’s nomination comes after the PD ousted incumbent PM Enrico Letta last week following Renzi’s machinations.

Top Ideas: Movers and Great Calls
1) On December 16, Stephen Simpson, CFA, argued that copper miner First Quantum Minerals (OTCPK:FQVLF) was trading at an “appealing price,” as growing production and declining costs underpinned the bull case. Shares are +19.3% since. Read article » 
2) In April, fund manager Thomas Finser predicted a sharp turnaround for laser-vision correction specialist LCA-Vision (LCAV). After a buyout offer on Thursday, the stock may have more room to run, as it trades above the offer price and is +61.9% since Finser’s call. Read article »

Top Ideas To Watch
1) High-end mattress retailer Select Comfort (SCSS) has 70% upside ahead, as a new product and marketing campaign should drive a rebound, writes Shaun Currie, CFA. Read article »
2) Helix Investment Research says investors should look to SoftBank (OTCPK:SFTBY), not Yahoo, for exposure to Chinese e-commerce giant Alibaba, and in the process receive a company undervalued based on its other equity stakes and core earnings.Read article »

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