Wednesday, April 8, 2015

Higher markets on acquisition news

Dow rose 48, advancers over decliners 3-2 & NAZ added 24.  The MLP index slid pennies in the 434s & the REIT index was up a fraction to the 338s.  Junk bond funds did little & Treasuries drifted lower.  Oil pulled back after Saudi Arabia reported increased oil production & gold was weak.

AMJ (Alerian MLP Index tracking fund)

CLK15.NYM...Crude Oil May 15...52.54 Down ...1.44 (2.7%)

GCJ15.CMX....Gold Apr 15......1,208.50 Down .....2.10  (0.2%)

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Royal Dutch Shell (RDS.A) agreed to buy smaller rival BG Group for €47B ($70B) in the first major energy industry merger in more than a decade, closing the gap on market leader ExxonMobil (XOM), a Dow stock & Dividend Aristocrat, after a plunge in prices.  Anglo-Dutch Shell will pay a mix of cash & shares that values each BG share at around 1.35 pence, a hefty premium of about 52% to the 90-day trading average for BG.  The 3rd-biggest oil & gas deal ever by enterprise value will bring Shell assets in Brazil, East Africa, Australia, Kazakhstan & Egypt, including some of the world's most ambitious liquefied natural gas (LNG) projects.  Shell is already the world's leading LNG company & would get BG's capacity in LNG logistics, complex infrastructure that includes terminals, pipelines, specialized tankers, rigs, super coolers, regasification facilities and storage points.  Shell said the deal would boost its proven oil & gas reserves by 25%.  "We have been scanning quite a few opportunities, with BG always being at the top of the list of the prospects to combine with," Shell's Van Beurden said.  "We have two very strong portfolios combining globally in deep water and integrated gas."  RDS.A fell 1.41.  If you would like to learn more about Shell, click on this link:

Shell to Buy Rival BG Group for $70B

Bigger burgers will be back on the menu at McDonald's, a Dow stock & Dividend Aristocrat, at least for a while.  The company will introduce a trio of "Sirloin Third Pound" burgers for a limited time starting later this month, the latest sign the chain is pushing to improve perceptions about the quality of its food.  The sirloin burgers would have the biggest beef patties on the chain's menu & come after MCD dropped its Angus Third Pounders in 2013.  At the time, some said the Angus burgers were too pricey.  The sirloin burgers will cost around $4.99, although franchisees can set their own prices.  MCDonald's is pushing to turn around its US business, which has seen sales slip for 2 years in a row at established locations amid intensifying competition. The stock rose 81¢.  If you would like to learn more about MCD, click on this link:

McDonald's to roll out third-pound burgers after cutting Angus burgers

McDonald's (MCD)

Family Dollar Stores, a Dividend Aristocrat, Q2 profit fell 15.6% in what is likely to be its last quarterly report as a public company.  The company's same-store sales rose just 0.5% in Q2, due to an unusually cold Feb & a fall in average spend per customer. The forecast was for comparable sales to grow 1.8%.  Its shareholders approved an $8.5B cash & stock offer from Dollar Tree (DLTR).  Antitrust regulators are still reviewing the deal, but the Federal Trade Commission has identified about 340 stores for DLTR to divest so it can gain approval for the merger.  The deal is expected to close in May.  FDO EPS fell to 67¢ in Q2 from 80¢ a year earlier.  Excluding fees related to the merger, EPS was 74¢, a penny above the 73¢ estimate.  Revenue rose to $2.80B from $2.72B, largely in line with the estimates.  FDO stock rose 41¢.  If you would like to learn more about FDO, click on this link:

Family Dollar Quarterly Sales Rise 3%

Family Dollar Stores (FDO)

The acquisition in energy brought optimism to the stock market.  Oil has been depressed for months & buyers liked to see that oil assets still have a lot of value.  In the PM, notes from the last FOMC meeting will be released giving hints about future interest rate increases.  Tonight, earnings season begins when Alcoa (AA) reports.

Dow Jones Industrials

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