U.S. stocks were trading higher Monday with the Dow Jones Industrial Average up 24 points to 10495, the S&P 500 up 4.6 points to 1111 and the Nasdaq Composite up 10 points to 2200. Among the companies with shares actively trading in the session are XTO Energy Inc. (XOM), Citigroup Inc. (C) and California Micro Devices Corp. (CAMD).
Exxon Mobil Corp. (XOM, $70.09, -$2.74, -3.76%) announced an agreement to acquire XTO Energy ($48.11, +$6.62, +15.96%) for $31 billion in stock, boosting the oil giant's presence in the natural-gas industry at a time of low prices for the commodity. XTO holders will get 0.7098 share of Exxon for each share of XTO. That values the stock at $51.69, a 25% premium to Friday's closing price. The deal also includes the assumption of $10 billion in debt.
Meanwhile, some competitors of XTO gained as analysts said this could be the first in a round of consolidation for the natural-gas and oil industry. Tudor Pickering Hold said that the next major targets could include EOG Resources Inc. (EOG, $90.23, +$4.18, +4.86%), Southwestern Energy Co. (SWN, $43.94, +$2.49, +6.00%), PetroHawk Energy Corp. (HK, $23.50, +$1.33, +6.00%), Encana Corp. (ECA, $29.77, +$1.51, +5.33%), Devon Energy Corp. (DVN, $66.89, +$3.00, +4.70%), Chesapeake Energy Corp. (CHK, $24.41, +$1.38, +5.99%) and Anadarko Petroleum Corp. (APC, $60.00, +$2.01, +3.47%). Range Resources Corp. (RRC, $46.93, +$3.55, +8.18%) and St. Mary Land & Exploration Corp. (SM, $34.08, +$0.83, +2.50%) were among the others rising.
Citigroup ($3.75, -$0.20, -5.09%) will repay $20 billion in government assistance and exit a program under which the U.S. would cover losses on billions of dollars in loans, bringing an end to months of wrestling with its regulators and the Treasury Department. Citigroup will raise $20.5 billion mainly by issuing common stock to repay the Treasury. The bank has also decided to replace some of the cash it had agreed to pay employees with $1.7 billion in stock.
ON Semiconductor Corp. (ONNN, $8.39, +$0.28, +3.45%) will acquire California Micro Devices ($4.65, +$1.60, +52.46%) for $108 million, the latest acquisition in the tech sector as stronger players scoop up smaller companies. The deal will also give ON $45 million, costing it a net $63 million. California Micro holders will get $4.70 a share, a 34% premium to Friday's closing price close for the maker of semiconductor protection devices for the mobile handset, high brightness LED and digital electronics markets.
European Union antitrust regulators reacted positively to a proposal Monday by Oracle Corp. (ORCL, $23.26, +$0.48, +2.11%) to safeguard the MySQL database, putting Oracle's bid for Sun Microsystems Inc. (JAVA, $9.12, +$0.76, +9.09%) on a path to be cleared by the bloc. European approval is the last major hurdle for the $7.4 billion purchase.
Central Pacific Financial Corp. (CPF, $0.99, -$0.17, -14.90%) agreed to a cease-and-desist order with the Federal Deposit Insurance Corp. requiring the Hawaiian company to improve its capital position, asset quality and management oversight, among other conditions.
Luna Innovations Inc. (LUNA, $2.75, +$1.28, +87.07%) announced a settlement agreement with Hansen Medical Inc. (HNSN, $2.99, +$0.32, +11.99%) that resolves litigation between the two and clears the "largest hurdle on [Luna's] pathway to emerge" from bankruptcy protection. Under the agreement, Luna's fiber-optic shape-sensing technology will be used in Hansen's surgical robots and Hansen will receive a 9.9% stake in Luna. Luna also said it filed with the bankruptcy court plans to emerge from Chapter 11 protection as "soon as possible." The plans include how it will pay claims and allow stockholders to retain their shares.
Other Stocks In Focus:
Barron's said online retailer Amazon.com Inc. (AMZN, $130.52, -$3.63, -2.71%), Amazon is trading at such a rich value that, over the next decade, it could experience little price appreciation and could fall on any disappointment.
Celldex Therapuetics Inc. (CLDX, $4.84, +$0.35, +7.80%) said a Phase 2 study on its treatment from patients with heavily pre-treated, locally advanced or metastatic breast cancers had positive results and met the primary goal of "significant antitumor activity."
Citigroup reshuffled its ratings on real estate investment trusts Monday, saying the sector enters 2010 with a backdrop that could support current elevated valuations, but that there remain long-term risks to the recovery. Among other moves, the broker upgraded Codgell Spencer Inc. (CSA, $5.76, +$0.32, +5.88%) and Kite Realty Group Trust (KRG, $3.84, +$0.31, +8.78%) to buy from hold and PS Business Parks Inc. (PSB, $47.38, +$0.47, +1.00%) to hold from sell. It also downgraded Highwoods Properties Inc. (HIW, $32.03, -$0.87, -2.64%), Kimco Realty Corp. (KIM, $12.30, -$0.20, -1.60%) and Corporate Office Properties Trust (OFC, $35.74, -$0.73, -2.00%) to sell from hold.
CoinStar Inc. (CSTR, $26.09, +$1.39, +5.63%) subsidiary Redbox Automated Retail, a DVD-rental kiosk operator, extended its deal with Hollywood giant Paramount Home Entertainment Inc. through at least June, giving Paramount more time to possible extend it ultimately through 2014.
Dynegy Inc. (DYN, $1.89, -$0.08, -4.06%) said it will repurchase $830 million of debt that matures in 2011 and 2012 from an unnamed investor, or 83% of the amount of that debt outstanding. The independent power producer said it will fund the buyback with asset sales, including the recent $970 million it raised from selling power plants.
Barron's said this week that Atlanta-based Invesco Ltd. (IVZ, $21.88, +$0.41, +1.91%) Chief Executive Martin Flanagan has moved to boost Invesco's profile by expanding its investment offerings and improving its performance, which could leave its shares set to outperform in the next year
Jefferies raised its rating on Pharmaceutical Product Development Inc. (PPDI, $21.98, +$1.04, +4.97%) to buy from hold, saying the new leadership is righting the ship and has the analysts predicting improving business wins and growth.
RadioShack Corp. (RSH, $20.03, +$0.55, +2.82%) shares should see outsized gains next year as it accrues benefits of recent steps, Barclays Capital said in upgrading the stock to overweight from equal-weight. The addition of T-Mobile as a third wireless carrier, the nationwide rollout of the iPhone, a new branding campaign and other business extensions, such as managing wireless kiosks in Target Corp. (TGT, $47.24, +$0.31, +0.65%) stores are among positive factors, Barclays said. "We would be accumulating a position at the current level and view the stock as a solid investment for 2010."
Charles Schwab Corp. (SCHW, $17.77, -$0.66, -3.58%) received $6 billion in net new assets last month from customers, while average client trades tumbled 27% from a year earlier, when the market downturn was roiling investors. But Chief Financial Officer Joe Martinetto also said the company expects fourth-quarter earnings lower than the third quarter's, while analysts had been expecting them to be flat.
Teradyne Inc. (TER, $10.27, +$0.65, +6.76%) was boosted to overweight from neutral by PiperJaffray which said it "is one of the best positioned mid cap semiconductor companies for the current upturn" as it significantly expanded its market opportunity during the downturn.
Goldman Sachs economists said they are expecting a consumer recovery in Russia and Turkey in the 2010 and 2011 periods to be the fastest among the emerging markets, which led Goldman analysts to boost the ratings on telecommunications stocks from the countries. Russia's Vimpel Communications (VIP, $18.96, +$0.91, +5.04%) and Turkey's Turkcell Iletisim Hizmetleri AS (TKC, $16.31, +$0.51, +3.23%) were both raised to buy from hold.
Visa Inc. (V, $84.97, +$3.63, +4.46%) and Mead Johnson Nutrition Co. (MJN, $43.15, +$0.70, +1.65%) will be added the Standard & Poor's 500 index with credit-card payment processor Visa replacing networking-equipment provider Ciena Corp. (CIEN, $11.12, -$0.38, -3.30%) and pediatric-nutrition company Mead Johnson replacing bond insurer MBIA Corp. (MBI, $3.38, -$0.29, -7.90%).
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