Stocks rose on Thursday after a
stronger-than-expected May retail sales report and a $46
billion takeover bid for Anheuser-Busch from an overseas rival
helped the market recover from a string of deep losses.
Microsoft Corp (MSFT.O) climbed more than 4 percent and was
the top-weighted gainer in the S&P 500 after ending deal talks
acquisition as risky. Yahoo (YHOO.O) shares, however, fell
sharply and weighed on the Nasdaq.
Before the news about the collapse of the Yahoo talks, the
market fell from session highs as a sharp drop in oil prices
reversed and crude oil ended the session higher.
"Microsoft rallied because of them saying they are not
going to pursue a partnership with Yahoo, which obviously was a
negative for Yahoo, but the news helped the Dow because
Microsoft is the Dow component which staged the biggest
percentage gain," said Mark Schlarbaum, head trader at Global
Capital Management in Conshohocken, Pennsylvania.
The Dow Jones industrial average (.DJI) was up 57.81
points, or 0.48 percent, at 12,141.58. The Standard & Poor's
500 Index (.SPX) was up 4.38 points, or 0.33 percent, at
1,339.87. The Nasdaq Composite Index (.IXIC) was up 10.34
points, or 0.43 percent, at 2,404.35.
Microsoft shares rose 4.1 percent to $28.24, while Yahoo's
stock slid 10.1 percent to $23.52, both on the Nasdaq.
Shares of No. 1 retailer Wal-Mart Stores (WMT.N) rose 1
percent to $59.11 on the NYSE after data showed retail sales
growth topped economists' forecasts. Mid-priced big-box chain
Kohl's(KSS.N) rose 3 percent to $43.88 and high-end department
store owner Saks Inc (SKS.N) gained 2.4 percent to $11.99.
"When oil rallied in the afternoon, I thought that would
bite retail stocks more than it did," Schlarbaum said. "That
tells you the market is oversold after five straight downbeat
The market had started Thursday's session at its most
oversold condition since early March, according to the 14-day
relative strength index of the S&P 500 index.
Shares of Anheuser-Busch rose 5.2 percent to $61.40 after
the brewer of Budweiser said it had received an unsolicited
takeover bid from Belgium-based InBev (
Shares of Lehman Brothers (LEH.N) sank for a fifth straight
day after the U.S. investment bank replaced its chief financial
officer and its chief operating officer. Shares of Lehman fell
4.4 percent to $22.70 and are down 33 percent since Thursday.
Qualcomm Inc (QCOM.O) was a top contributor to the gains in
both the S&P 500 and the Nasdaq after the wireless chip maker
lifted its quarterly profit outlook. Qualcomm gained 5.8
percent to $48.98 on the Nasdaq.
Crude oil settled at $136.74 a barrel, up 36 cents, after
erasing an earlier drop of almost $4. Soaring crude prices had
knocked the Dow down 200 points on Wednesday amid fears that
higher energy prices would stoke inflation.
Trading volume was moderate on the New York Stock Exchange,
with about 1.33 billion shares changing hands, below last
year's estimated daily average of roughly 1.90 billion. On the
Nasdaq, about 2.27 billion shares traded, exceeding last year's
daily average of 2.17 billion.
Advancing stocks outnumbered declining ones by a ratio of
about 16 to 15 on the New York Stock Exchange, while on the
Nasdaq, about 15 stocks rose for every 13 that fell.
(Reporting by Jennifer Coogan; Editing by Jan Paschal)
Yahoo Inc (YHOO.O) said
on Thursday that talks with Microsoft Corp (MSFT.O) on a
partnership or other type of deal have concluded without an
Sources familiar with the matter said Yahoo is close to a
search deal with Google Inc (GOOG.O) instead.
Yahoo shares sank to $22.68 on news of the talks breaking
apart and the potential
Street Journal and the
at $548.18, while Microsoft rose 3 percent at $28.02.
Google's dominance in web search prompted Microsoft to
offer up to $47.5 billion to buy Yahoo.
But Yahoo said Thursday that Microsoft made it clear in a
meeting on June 8 it was no longer interested in buying the
A more recent proposal by Microsoft to only buy Yahoo's
search business did not fit into Yahoo's view of benefiting
from growth in both the search and display advertising
Microsoft declined comment.
Yahoo faces mounting pressure from investors, including
billionaire Carl Icahn, who urged the company to seal a deal
with Microsoft but for a higher price. Icahn said a partnership
with Google should only be a second choice.
Icahn could not immediately be reached.
(Reporting by Anupreeta Das in San Francisco and Daisuke
Wakabayashi in Seattle, editing by Dave Zimmerman/Jeffrey
InBev began courting Anheuser-Busch
owners and staff on Thursday and its stock rose strongly after
it made a $46.3 billion bid to add Budweiser to its own Stella
Artois and Beck's beers and create the world's largest brewer.
InBev Chief Executive Carlos Brito said he is aiming for a
friendly deal as he sought to reassure managers and staff of
the biggest U.S. beermaker and vowed to keep the home of
Budweiser, America's "King of Beers," in St Louis.
"Our objective is to reach a friendly agreement with their
board ... We think their board will act in the best interests
of shareholders," Brito told a conference call with analysts.
He said the cash offer at $65 per Anheuser share was full
and fair and would boost InBev earnings in the second full year
after a deal, but many analysts said the Belgian brewer may
have to pay $70 a share to win over Anheuser shareholders.
Brito said InBev would look at non-core asset sales and
although he was unwilling to specify, analysts say these could
include Anheuser's SeaWorld and Busch Gardens entertainments
division and its packaging supply business, which broker Lehman
Brothers has valued together at around $3.8 billion.
InBev stock was up 6.7 percent at 50.5 euros by 1505 GMT
after it said it would finance the deal with a minimum of $40
billion of debt and thus less equity than had been expected.
A deal would bring together InBev with its big operations
in Western Europe, Brazil and Canada with Anheuser's businesses
in the U.S., Mexico and China, and fuse the second and fourth
largest brewers to overtake world leader SABMiller Plc.
Sources close to the deal said Anheuser's best defence was
to stress value and it was expected to reject the first bid.
However, with no obvious rival bidders any increase in the bid
price might be limited, they added.
Shares in Anheuser, which counts Warren Buffett's Berkshire
Hathaway as its second largest shareholder with a 5 percent
stake, were up 6 percent at $61.86. Shares in Brazil's AmBev
and Mexico's Modelo also rose.
Brito said a successful deal would lead to a cut in InBev's
dividend over the next two to three years and said it was
premature to talk about cost savings. Analysts have estimated
these at around $1.4 billion per year.
Anheuser's main business is in the United States, where it
derives over 80 percent of its sales from its 48 percent share
of the beer market, but where heightened competition is likely
as U.S. No 2 and No 3 players SABMiller and Molson Coors form a
brewing joint venture.
"The deal obviously makes sense for InBev. Apart from the
perfect geographical fit ... the new combination would (also)
have one of the best brand portfolios in the world," Degroof
analyst Marc Leemans said in a research note.
Anheuser, which also makes Bud Light and Michelob beers,
says it will consider its response in due course, but its Chief
Executive August Busch IV has said he does not want to sell the
company, although the Busch family own just 3.5 percent.
For most of the last century and a half, since Adolphus
Busch, a German immigrant, married Lilly Anheuser and went to
work at her father's brewery, the U.S. brewer has been led by
members of the Busch family.
SABMiller said a link-up between InBev and Anheuser would
not dramatically change the global brewing competitive market,
confirming analysts' assumptions that the deal is unlikely to
face legal hurdles from competition authorities.
"We do not think this changes the competitive landscape
dramatically given Anheuser-Busch's small presence outside the
United States," an SABMiller spokesman told Reuters.
The global beer industry is undergoing a wave of
consolidation, with Scottish & Newcastle split up by Carlsberg
A/S and Heineken NV, and the SABMiller and Molson Coors joint
venture in the U.S.
If the deal goes through it will be the largest takeover
this year, and the third largest foreign takeover of a U.S.
company ever. The scale of the deal was such that dealers said
news of it supported the dollar on foreign exchange markets.
InBev is being advised by Lazard and J.P. Morgan, while
sources familiar with the situation have said Anheuser has
hired Goldman Sachs and Citigroup.
InBev said the deal will be financed with at least $40
billion in debt and a combination of non-core asset sales and
equity finance. The finance will be provided by a group of
banks including Banco Santander SA, Barclays Capital, BNP
Paribas SA, Deutsche Bank AG, Fortis, J.P. Morgan and Royal
Bank of Scotland Group.