Business Blog Posts

The German exchanges operator is also waiting to see how credit rating agencies score Nasdaq's move, two people familiar with Deutsche Boerse's (DB1Gn.DE) strategy said on Monday.

"Rating agencies as well as the NYSE Euronext board have not yet reacted to the offer, so it's far too early to say what Boerse's next move will be," said one of the two sources.

Deutsche Boerse unveiled its $10.2 billion takeover of NYSE Euronext (NYX.N) in February -- aiming to form the world's largest exchange operator as part of a wave of tie-ups in the increasingly competitive and global exchange world.

Nasdaq (NDAQ.O) and ICE (ICE.N) on Friday bid $11.3 billion for NYSE Euronext in an effort to trump the German exchange operator's deal, and pushed their case with an appeal to U.S. patriotism.

Their counterbid, which was unveiled to some skepticism it can succeed, would redraw the world's capital markets so that Americans have a stronger hand than Europeans as exchange operators globally maneuver to come out on top.

A spokesman for Deutsche Boerse declined to comment. Earlier, in response to a report in German newspaper Die Welt that the exchanges operator would not raise its bid, the spokesman said the company strongly believed a merger of Deutsche Boerse and NYSE Euronext was the best possible combination.

Shares in Deutsche Boerse (DB1Gn.DE) dropped 1.5 percent to 52 euros by 0858 GMT on Monday morning.

Analysts said the counterbid left it looking vulnerable -- either it retaliates with an expensive counterbid or risks losing an opportunity to grab market share and economies of scale as the global exchanges M&A heats up.

"If Deutsche Borse intends to be back in the merger they have to raise the price substantially including a potential cash component which would be negative in our view," said DZ Bank analyst Matthias Duerr.

LBBW analyst Martin Peter downgraded Deutsche Boerse to "hold" from "buy" on the grounds of uncertainty over whether it would raise its bid.

At the same time, he said, the Nasdaq/ICE offer was still seen as shaky.

"It will be hard for Nasdaq to eliminate the existing doubts regarding synergies, leverage, and valuation as well as regulatory and political issues," Peter said.

WestLB and Commerzbank also cut their ratings on Deutsche Boerse.

DEAL OVERHAUL?

* Shares on Wall Street started the second quarter on a solid footing on Friday, ending the session higher on optimism over the recovery in the labor market after data showed the unemployment rate fell to a two-year low.

* The Dow Jones industrial average .DJI hit 12,419.71, its highest intraday level since June 2008, before closing on Friday at 12,376.72.

* The robust jobs data has prompted some caution in equity markets as expectations grow that the Federal Reserve could scale back ultra loose monetary policy in the second half of the year as the economy shows signs of recovery and inflation expectations pick up.

* Monetary tightening expectations have been fueled by hawkish talk from some Fed officials in the past weeks, though influential member William Dudley said recently that there was no need for the central bank to reverse course.

* The European Central Bank (ECB) is expected to lead the way among Western central banks to shift rates higher at a meeting later this week.

* Some nervousness over the political unrest in the Middle East and North Africa continued to linger in financial markets, with Brent crude rising to a 2-1/2 year high above $119 on the worries.

* In company news, Nasdaq OMX Group Inc (NDAQ.O) and IntercontinentalExchange Inc (ICE.N) are expected to face serious hurdles to their bid for NYSE Euronext (NYX.N).

* Separately, Deutsche Boerse (DB1Gn.DE) is holding off on making any decision as to whether to raise its rival offer for NYSE Euronext, two sources familiar with Deutsche Boerse's thinking said on Monday.

* The Bureau of Ocean Energy Management said on Sunday it had not struck a deal with BP (BP.N) to allow the oil company to resume deepwater drilling in the Gulf of Mexico, refuting a press report.

* Abbott Laboratories Inc's (ABT.N) experimental Absorb heart stent, designed to dissolve and thereby restore the blood vessel's natural flexibility, has proven safe and effective a year after being implanted in patients, researchers said.

* In Europe, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was higher in early trade, with the chemicals sector boosted by a pickup in merger and acquisitions (M&A) activity.

(Reporting by Harpreet Bhal; Editing by Greg Mahlich)

In what could be one of the biggest such breaches in U.S. history, a diverse swath of companies that did business with Epsilon stepped forward over the weekend to warn customers some of their electronic information could have been exposed.

Drugstore Walgreen, Video recorder TiVo Inc, credit card lender Capital One Financial Corp and teleshopping company HSN Inc all added their names to a list of targets that also includes some of the nation's largest banks.

The names and electronic contacts of some students affiliated with the U.S.-based College Board -- which represents some 5,900 colleges, universities and schools -- were also potentially compromised.

No personal financial information such as credit cards or social security numbers appeared to be exposed, according to the company statements and e-mails to customers.

Epsilon, an online marketing unit of Alliance Data Systems Corp, said on Friday that a person outside the company hacked into some of its clients' customer files. The vendor sends more than 40 billion e-mail ads and offers annually, usually to people who register for a company's website or who give their e-mail addresses while shopping.

"We learned from our e-mail provider, Epsilon, that limited information about you was accessed by an unauthorized individual or individuals," HSN, also an e-commerce operator, said in an e-mail to customers on Sunday.

"This information included your name and e-mail address and did not include any financial or other sensitive information. We felt it was important to notify you of this incident as soon as possible."

Citigroup customer names and some credit card customers' e-mail addresses -- but no account information -- were part of the data breach, the third-largest U.S. bank said on Saturday.

The College Board, which administers the SAT admissions tests, on Saturday warned students about the breach and asked them to be cautious about receiving "links or attachments from unknown third parties," according to two e-mails reviewed by Reuters.

The not-for-profit organization is in contact with more than 7 million students, according to its website. It did not immediately return calls for comment.

PROBING FOR ANSWERS

Law enforcement authorities are investigating the breach, though it was unclear on Sunday how many customers or students had been exposed. Epsilon is also looking into what went wrong.

"While we are cooperating with authorities and doing a thorough investigation, we cannot say anything else," said Epsilon spokeswoman Jessica Simon. "We can't confirm any impacted or non-impacted clients, or provide a list (of companies) at this point in time."

Capital One, which also runs a bank, and Walgreens, the largest U.S. drugstore, said the Epsilon hacker accessed its customer e-mail addresses, but no personally identifiable information.

Many investors are coming to the view that the U.S. employment situation has turned a corner, but the risks that sent stocks cascading between mid-February and mid-March are as real as ever.

In addition, the surprisingly robust recovery shown in recent economic data has some investors nervous that the Federal Reserve may end its easy money policies before schedule and increase interest rates in the second half of the year.

That could be spell trouble for risk assets such as stocks and commodities that have benefited from the added liquidity provided by the Fed's $600 billion Treasury bond buying. The program, known as quantitative easing, or QE2, is slated to end in June.

"The Fed is now going to much more seriously consider early withdrawal of QE2 because these numbers are getting stronger," said Kenneth Polcari, managing director at Icap Corporates, a floor broker at the NYSE.

One Fed official poured cold water on that idea on Friday, saying he saw no reason to reverse course even as the economy adds jobs. The comments helped cement optimism over the jobs data.

RECOVERING LOSSES

Polcari said the data would provide the fuel to send the S&P 500 to 1,350 this week.

The Dow Jones industrial average hit 12,419.71 -- its highest intraday level going back to June 2008 -- before closing up 56.99 points, or 0.46 percent, at 12,376.72 on Friday. The S&P rose 6.58 points, or 0.50 percent, to 1,332.41. The Nasdaq Composite gained 8.53 points, or 0.31 percent, to 2,789.60.

For the week, the Dow gained 1.3 percent, the S&P added 1.4 percent and the Nasdaq rose 1.7 percent.

The Dow has recovered most of its losses since February as U.S. employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low.

The jobs report chimed with the view that the U.S. recovery is becoming self-sustaining.

"The numbers are looking pretty powerful," said Jim Awad, managing director at Zephyr Management New York.

"You have got strong and perhaps accelerating economic growth, you have good profit growth, you have fair valuations, you have momentum, and you have high merger and acquisitions activity."

But uncertainty arising from world trouble spots shows scant sign of abating and is likely to contain stock prices.

Two sources familiar with the matter said that Glencore, expected to list in both London and Hong Kong, was planning to issue a so-called Intention to Float document in London around mid-April, though this timeline could still change.

If the company makes a final decision to go ahead with the listing, it would likely be completed by around mid-May.

The Swiss-based firm has already received approval to list from the Hong Kong stock exchange, other sources told Reuters on Friday, clearing a hurdle it needed to overcome before the launch of the London leg of its Initial Public Offering (IPO).

The commodities giant has kept its plans under wraps since briefing analysts more than a month ago. Those analysts were expected to produce research notes with valuations for the company by April 1.

Glencore has consistently declined to comment on the timeline of any IPO.

In a sign trust in the company is already improving, the cost of buying protection against default of its debt has fallen steadily over the last few months, Markit data shows, as talk about the IPO intensifies.

"The IPO will allow the company to raise equity capital and help the business (cut debt), but what is just as important is that it will also improve disclosure," said one credit analyst, asking not to be named.

Glencore also refinanced a $9-billion loan last week to extend the maturity of two one-year loans put in place last year. The company was able to lock in lower rates due to favorable loan market conditions and banks' willingness to lend to commodities companies.

The loan refinancing is a positive move for potential investors in Glencore, as it extends the maturity of its debt while cutting borrowing costs on the loan, which is used to fund the company's trading book.

ALL ABOUT TIMING

The listing will require Glencore, founded by Marc Rich in 1974, to shed its once-fabled secrecy and become more transparent, opening up its huge and successful oil, coal and metals trading operations to scrutiny.

Rich, a former U.S. fugitive who was pardoned by U.S. President Bill Clinton in 2001 after years in Switzerland to flee charges of financial crimes, sold Glencore to management.

The group, valued by one analyst at about $60 billion, is now looking to ditch its long-standing partnership structure in favor of life as a public company, which will make it easier to reward partners and make acquisitions.

It will aim to launch the retail portion of a Hong Kong IPO in the third or fourth week of April, with a listing scheduled for early to mid May, sources have said.