It was an M&A Monday, with a number of new corporate marriages announced. In fact deals overshadowed earnings and stalled talk of this week's major events like the two-day FOMC meeting, which starts tomorrow, and the July jobs report on Friday. All three major indexes closed in the red by less than half-a-percent.
Perrigo (PRGO) tanked but Dublin-based Elan (ELN) rose on an announcement that the former pharmaceutical company is buying the latter. The agreement is for $8.6 billion in both cash and stock. It follows three hostile takeover bids for Elan from Royalty Pharma. The new company will be based in Ireland where the corporate tax rate is 12.5%. Perrigo shares closed down nearly 7% while Elan rose over 3.5%.
Omnicom (OMC) gave back initial gains and closed down 0.5% after the announced merger with France-based Publicis to form a $35 billion advertising powerhouse. The deal is designed to restore the balance of power between ad agencies and Silicon Valley behemoths like Google (GOOG) and Facebook (FB). But it could face regulatory scrutiny.
Saks (SKS) climbed 4% on news the company is being bought by Canada's Hudson's Bay which also owns Lord & Taylor. The deal is for roughly $2.4 billion and has Hudson's paying $16 in cash for each share of Saks stock. That's a 5% premium on the stock's closing price last Friday.
Hertz (HTZ) fell 2% after posting a loss related to its acquisition of smaller competitor Dollar Thrifty. The company says it lost $36.4 million or 9-cents a share for the quarter. Excluding items, Hertz actually beat estimates posting profits of 33-cents a share when estimates were for 31-cents. Revenue was $2.3 billion compared with expectations for $2.27 billion. Moving forward, the company is reaffirming its guidance for the year citing higher pricing. Hertz is up 60% year-to-date and has climbed 134% over the past year.
Shanda Games (GAME) tanked 20% after the Chinese gaming company announced it entered into new deals designed to establish a mobile platform and improve the company's structure. Under the agreement, Shanda Games will acquire affiliates from its parent company Shanda Interactive.