WSF Headline Roundup - 5/13/08 - HPQ acquiring EDS; WMT earnings; Lehman Q2 banking backlog down 15%; NMX seat holders balking over CME deal?; ResCap bondholders thinking war; Northern Rock overstatements?; Clear Channel deal near?; more

• HP to Acquire EDS for $13.9 Billion
• Wal-Mart Profit Increases on Discounts for     Groceries
• Investment Banking Backlog Down About 15% In 2Q: Lehman CFO
• Nymex Seat Holders Ready to Block Sale to CME, Glass Says
• ResCap Bondholders May Oppose Debt Exchange Offer
• Northern Rock overstated the quality of its mortgage book
• Clear Channel Surges on Possible Buyout Settlement
• Airbus Extends Delays on A380 Airliner     Deliveries
• Beazer Restates Results for 9 Years

HP to Acquire EDS for $13.9 Billion - Press Release

    *  EDS shareholders to receive $25.00 per share in cash for each EDS share
    * Transaction expected to more than double HP's revenue from services, furthering its standing as world's largest technology company

HP and EDS today announced that they have signed a definitive agreement under which HP will purchase EDS at a price of $25.00 per share, or an enterprise value of approximately $13.9 billion. The terms of the transaction have been unanimously approved by the HP and EDS boards of directors.

The transaction is expected to close in the second half of calendar year 2008 and to more than double HP's services revenue, which amounted to $16.6 billion in fiscal 2007. The companies' collective services businesses, as of the end of each company's 2007 fiscal year, had annual revenues of more than $38 billion and 210,000 employees, doing business in more than 80 countries.

HP intends to establish a new business group, to be branded EDS - an HP company, which will be headquartered at EDS's existing executive offices in Plano, Texas. HP plans that EDS will continue to be led after the deal closes by EDS Chairman, President and Chief Executive Officer Ronald A. Rittenmeyer, who will join HP's executive council and report to Mark Hurd, HP's chairman and chief executive officer. .....

Wal-Mart Profit Increases on Discounts for Groceries - Bloomberg 

Wal-Mart Stores Inc., the world's largest retailer, posted a higher   first-quarter profit and forecast second-quarter earnings that may trail   analysts' estimates as consumers strained by $3.70-a-gallon gasoline cut   spending. 

Wal-Mart fell $1.52, or 2.6 percent, to $56.50 at 7:12 a.m. before the   start of New York Stock Exchange composite trading. 

Net income increased 6.9 percent to $3.02 billion, or 76 cents a share,   from $2.83 billion, or 68 cents, a year earlier, the Bentonville,   Arkansas-based company said today in a statement. Profit beat estimates by 1 cent. 

Wal-Mart's sales are outpacing those of Target Corp. and Sears Holdings   Corp. as discounts as deep as 30 percent spur demand for drugs, groceries and   consumer electronics. Chief Executive Officer H. Lee Scott sparked profit   growth last year after promoting Wal-Mart's low prices while slowing U.S.   store expansion to spend more on merchandising and distribution....

Investment Banking Backlog Down About 15% In 2Q: Lehman CFO - Dow Jones via CNNMoney

Lehman Brothers Holdings Inc.(LEH), long known for its fixed-income capital markets strength, boasts more than 21% of a shrinking merger and acquisitions market, its chief financial officer said Monday.

It's "hard to get excited about taking share of a shrinking pie," CFO Erin Callan said at a conference sponsored by UBS Financial. But the firm's capture of 21.5% of the M&A market on announced deals year to date from 17.5% last year shows the loyalty of its customers and the developing strength of its worldwide capabilities, she said.

Callan said the backlog of investment banking deals from clients is down about 15% from the end of its fiscal first quarter in February. But Lehman's share of completed M&A deals has risen to 25.8% from 19.4% last year, she said.

Its underwriting share of equity has risen to 5.2% from 3.6% last year, while its high-grade debt share remained steady at 4% and high-yield debt has grown to 6.8% from 6.6%....

Nymex Seat Holders Ready to Block Sale to CME, Glass Says - Bloomberg 

Nymex Holdings Inc. chief executive officer won't get the necessary backing from the exchange's traders to sell the company to CME Group Inc. unless the sale price is raised by $2 billion, a shareholder said.
 
  CME, the world's largest futures exchange, in March agreed to buy Nymex for about $9.3 billion. The deal was valued at $11.2 billion when announced Jan. 28. The merger with CME must be approved by a majority of Nymex shareholders and 75 percent of its 816 trading-rights holders. So-called trading rights give holders the authority to trade Nymex contracts or to lease that right.
 
  ``The only way I see the CME getting the votes needed is to pay the $11.3 billion it offered,'' Gary Glass, an investor who manages his family's Nymex shares, said in an e-mail today in response to comments made May 11 by Nymex CEO James Newsome claiming he would secure the support needed for the sale. ``At last count we control over 400 votes, with a large number wanting to stay a stand alone public company,'' Glass said.
 
  CME's offer price for Nymex dropped after both companies' shares tumbled in February. The U.S. Department of Justice said in a letter to the U.S. Treasury Department the way futures exchanges process trades may be anti-competitive, sending shares of both companies down 18 percent on Feb. 6. Nymex has fallen 30 percent this year and Chicago-based CME has declined 32 percent.....

ResCap Bondholders May Oppose Debt Exchange Offer - Bloomberg 

Residential Capital LLC bondholders may form a group to oppose the distressed mortgage-finance company's $12.8 billion debt exchange offer, according to a lawyer approached by investors.
 
  Bondholders are unhappy with ResCap's offer because it would push back maturities and require some to exchange the debt at a discount, said Evan Flaschen, partner and chair of the financial restructuring group at Bracewell & Giuliani LLP in New York. Flaschen said he's been approached by about a dozen investors who may seek his representation.
 
  ``It's pretty preliminary,'' Flaschen said in a telephone interview. ``The kinds of calls I've been getting are: `I've heard there might be a group, let us know, we'd like to be included.'''
 
  ResCap, the mortgage-finance company owned by GMAC LLC, is seeking to stave off bankruptcy. The company is offering to exchange notes maturing in 2008 and 2009 for as much as 100 cents on the dollar of new 2010 debt. Securities due in 2010 through 2015 will be swapped for no more than 80 cents on the dollar's worth of debentures maturing in 2015.....

Northern Rock overstated the quality of its mortgage book - Daily Telegraph 

Northern Rock's former directors overstated the quality of the nationalised lender's £100bn mortgage book by using "inadequate" controls that have left the taxpayer more exposed to a housing downturn than previously thought.
 
  Ron Sandler, the state-owned bank's new chairman, revealed that he has had to "strengthen [Northern Rock's] procedures regarding mortgage arrears capitalisation" after deciding the previous policy was unsatisfactory.
 
  The change means the value of Northern Rock mortgages on which three or more monthly payments have been missed will roughly double.

At the end of December, 0.57pc of the mortgage book qualified as "in arrears". Mr Sandler said the figure at the end of April was 0.95pc and that it would "move much closer to the industry average... in the coming months".....

Clear Channel Surges on Possible Buyout Settlement - Bloomberg

Clear Channel Communications Inc. jumped 9.6 percent in New York Stock Exchange trading as buyout firms and banks negotiated a settlement of lawsuits related to funding the radio broadcaster's acquisition.

There is no assurance an agreement will be reached, Clear Channel said today in a statement. Citigroup Inc. and five other banks may finance the buyout for a reduced price of $36 a share, ending cases pending in New York and Texas state courts, the Wall Street Journal reported, citing people familiar with the matter. The stock advanced $2.87 to $32.87 at 4 p.m.

Judges delayed proceedings in both cases today. The banks were to face a non-jury trial today in New York state court over whether they must fund the $19.5 billion acquisition by Boston- based Bain Capital LLC and Thomas H. Lee Partners LP. The two firms alleged the banks wrongly backed out of an agreement to finance the deal. The banks rejected the claim and countersued.

``The way the case was developing it was likely the banks would face a Texas jury,'' said Jake Newman, an analyst at CreditSights, a fixed-income research firm in New York. ``They may decide it could cost more to fight in court than fund the deal.''....

Airbus Extends Delays on A380 Airliner Deliveries - Bloomberg 

Airbus SAS, two years behind schedule on the double-decker A380 plane, cut   the model's delivery targets for three years, saying it can't automate   production as quickly as planned after wiring difficulties forced it to   assemble part of the cabin by hand. 

Airbus, the world's largest maker of commercial aircraft, lost money the   past two years as delays on the 525-seat A380 and the A400M military transport   helped wipe 3.87 billion euros ($6 billion) from profit at parent company   European Aeronautic, Defence & Space Co. EADS shares have lost 28 percent   this year. Toulouse, France-based Airbus said it doesn't know the cost of the   latest delay. 

The planemaker will deliver 12 A380s this year instead of the 13 planned,   21 airliners in 2009 rather than 25, and 30 to 40 planes two years from now   instead of 42, Chief Executive Officer Tom Enders said on a conference call   today. 

``This is disappointing,'' said Zafar Khan, an analyst at SG Securities in   London with a ``hold'' recommendation on EADS stock. Kahn estimates the new   delays' costs will total 50 million euros to 75 million euros, though as   Airbus already has provisions for further postponements, ``it's not quite so   much monetary as a sentiment issue.''.....

Beazer Restates Results for 9 Years - Wall Street Journal

Beazer Homes USA Inc. restated financial results over nine years, removing one of several clouds hanging over the home builder.

After a nearly yearlong internal review that delayed the company's quarterly filings and resulted in a showdown with bondholders, Beazer late Monday restated its earnings for fiscal years 1998 to 2006. The Atlanta company said its audit committee determined it had improperly recorded certain liabilities associated with land development and other costs, according to its filings with the Securities and Exchange Commission. Based partly on the probe's findings, management concluded there were "material weaknesses" in Beazer's internal controls over financial reporting, according to the filings.

But the restatement resulted in a $27.6 million gain for Beazer partly because the costs the company recorded as "accrued" liabilities turned out to be less than expected.

Beazer has seen its stock price get hammered by the housing crisis and a range of investigations, including the internal accounting review, which was launched after problems surfaced relating to its lending practices. During the review, Beazer fired its chief accounting officer last summer for allegedly attempting to destroy company documents....