Mega-Deal:Two Brokerage Titans Merge

In a press-release,it was announced today that Charles Schwab Corporation is acquiring TD Ameritrade Holding Corporation.Through the definitive agreement, Schwab will acquire TD Ameritrade in a stock transaction worth about 26 billion dollars.*
According to Schwab CEO Walt Betting:
With this transaction, we will capitalize on the unique opportunity to build a firm with the soul of a challenger and the resources of a large financial institution that will be uniquely positioned to serve the investment, trading and wealth management needs of investors across every phase of their financial journeys​.*
Charles Schwab Corp (SCHW)

Pfizer will access Array's approved cancer drugs in $11 billion deal

Kate Rogers Interviews Dunkin' Brands CEO Nigel Travis On Cold Brew And Competition | CNBC

Merger of Middle East Banking Powerhouses

The National Bank of Abu Dhabi is set on merging with FGB (First Gulf Bank) to create a 175 billion dollar institution.It will be the biggest bank in the Middle East and North Africa.The combined bank will be larger than Germany's Deutsche Bank.*
Both banks are substantial holdings of the royal families of the UAE.The deal is the first big merger since Abu Dhabi made an effort to diversify away from oil and its declining value.The merger,involving a share swap,could result in a cost savings of about 30%.The mammoth transaction,resulting in the most sizeable lender in the Middle East,could spur more financial mergers and acquisitions in the region.*
Wisdom Tree Middle East Dividend Fund (GULF)

Visa Inc. Acquiring Long Lost Visa Europe

Visa Inc. announced in a press release today that it is acquiring privately held Visa Europe Ltd. for up to 23.4 billion dollars,depending on how many benchmarks are achieved.The deal will add to Visa Inc. about 3,000 European issuers and more than 500 million accounts that pay more than 1.5 trillion euros.The transaction reunites the two companies that had been one until 2004.Subject to regulatory approval,the cash and stock deal is expected to close in Visa's fiscal third quarter of 2016.
The move will result in a more seamless experience for Visa's global customers,with those in Europe getting access to the innovative technology,products and services of Visa Inc.European transactions are still 37% cash or check,so Visa Inc. will be able to grow substantially there.*
Visa Inc. is a global payments technology company connecting consumers,businesses,financial institutions and governments in more than 200 countries and territories to fast,secure and reliable electronic payments,Visa Inc. said.Visa Europe is also a payments technology company,but is owned and operated by member banks and other payment services in 38 countries,rather than shareholders.It services the more than 500 million cardholders in Europe.Benefits from revenue synergies,cost savings and increased repurchases of Class A common stock will begin to accrue in fiscal full-year 2017,Visa Inc. projected.*
Visa Inc (V)

Lockheed Buys Sikorsky,May Divest Some Businesses

Lockheed Martin,the world's largest defence contractor,announced today,20 July,that it has entered into a definitive agreement to acquire Sikorsky Aircraft from United Technologies for 9 billion dollars.After a tax break,Lockheed said the final cost would be 7.1 billion.*
Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defence technologies,said CEO Marilyn Hewson.I'm confident this acquisition will help us extend our core business into the growing areas of helicopter production and sustainment.Together,we'll offer a strong portfolio of helicopter solutions to our global customers and accelerate the pace of innovation and new technology development.*
Pending regulatory approval,the deal is expected to close by late Q4 2015 or early Q1 2016.Despite the acquisition,Lockheed will continue on course to pay dividends and buy back shares.*
Sikorsky will become part of Lockheed's Mission Systems and Training segment.Through MST,Lockheed and Sikorsky are already partners on the VH-92 Presidential Helicopter,Combat Rescue Helicopter and Naval MH-60 Helicopter.*
Lockheed is also exploring the option of spinning off or selling its government IT and technology services businesses,which comprise about 6 billion of its estimated 2015 annual sales.As global security market dynamics shift,this review will strengthen our competitive posture,enabling sustained,profitable growth and positioning Lockheed Martin to deliver value for customers,shareholders and employees,Ms.Hewson added.*
Certain defence and intelligence programmes in the Information Systems&Global Solutions segment will not be included in the review.*
Lockheed Martin (LMT),United Technologies (UTX)

Words of the Day:Cybersecurity,Antitrust and Alibaba

I'm paranoid enough that I get a new credit card every three months,said Ken Westin,Tripwire security researcher.I'm guessing at least one or two retailers a week are going to be coming out with an announcement.I'm expecting to see more shoes drop.
I think the Home Depot hackers are a much more sophisticated group than those that hacked Apple's iCloud accounts of celebrities.Odds are,they're operating outside the US.Once those credit cards get exfiltrated out of the US to Russia or Eastern Europe,it's almost impossible to follow up on the investigation.*
Microsoft has an antitrust law problem in China.Their office was raided by Chinese authorities in July.This is pretty serious for Microsoft,said David Evans,Vice President and Chairman of Global Economics.It's not clear what exactly the allegations are.The full array of claims I don't think we know at this point in time.I think the point is,it's a law that was passed in 2008.This is a baby antitrust law.It's really a very new thing in China.This is actually very quick for China to be taking the law so seriously and acting so aggressively.*
Alibaba,the Chinese Internet titan,has valued itself at 162.7 billion dollars prior to its initial public offering on the New York Stock Exchange later this month.Alibaba will announce share pricing on September 18 and go public the following day.Its publicity roadshow begins at the Waldorf Astoria in New York today,followed by two weeks of meetings with prospective investors.
Alibaba has spent 4.6 billion dollars on 2014 deals.There will be questions about this M&A strategy,as profit margins are crimped when a business expands too rapidly.The company also has an ownership structure that is not investor-friendly.Investors have less of a say in big company decisions than they would like.
It does concern me,says Jeff Sica,founder and president of SICA Wealth Management,because transparency is clearly one of the clouds on their horizon.The top question is,is Alibaba going to be able to operate under the standards of the NYSE?*
Microsoft(MSFT,Home Depot(HD),Apple Computer(AAPL)

Pharma Flash:AbbVie Continues To Court Shire PLC

AbbVie,the Chicago-based biopharma concern,is continuing its courtship of Ireland's Shire PLC,despite repeated rejections on the grounds that AbbVie made an inadequate offer.It has made a third offer of 46 billion dollars,also promising a plan to buy back shares and offer shares as well as cash to Shire shareholders.*
Shire has several ADHD drugs in its portfolio,such as Adderall.The deal would also be an inversion for AbbVie,i.e.,by being Ireland-based,it would lower AbbVie's tax rate to 13% and free up overseas cash.That's significantly less taxes than US competitors pay.*
AbbVie was formerly part of Abbott Laboratories.It was spun off on 1 January 2013 as a global biopharma firm.With 25,000 workers,AbbVie has launched a Phase III study of Veliparib for Advanced Breast Cancer.
AbbVie claims the proposed combination is strategically compelling to AbbVie and Shire and would create a larger and more diversified biopharmaceutical company with multiple leading franchises and significant financial capacity for future acquisitions,investment and enhanced shareholder distribution and value creation.It offers attractive free cash flow and an enhanced return of capital policy.The new company would be listed in both London and on the NYSE.*
AbbVie(ABBV),Shire PLC(SHPG)

Drug Companies Swap Units,Join Forces

Two pharma titans,GlaxoSmithKline and Novartis,are entering into a complex 25 billion dollar transaction.Novartis,based in Geneva,Switzerland,is buying GSK's oncology unit for 14.5 billion dollars;at the same time,Britain's GSK is buying Novartis' vaccine unit.Finally,the two firms are forming a joint venture that combines their over the counter drug businesses.
Today we announced we are focusing on our pharmaceutical,eye care,and generics businesses,said Novartis CEO Joseph Jimenez.We're gonna add probably one billion people on earth,and 50% of them will be over 50.It's gonna take innovation to deal with it.We've got these powerhouses that fit exactly with the demographic changes for the next 20 years-for example,GSK's two drugs for metastatic melanoma.
I believe increased technology is gonna allow new targets in cancer that we've never seen before.We're at the beginning of having new tools to combat this disease like never before.This deal with GSK changes the financial profile of Novartis,increasing our operating margin significantly.The whole portfolio review was to allow us to have great strength in that new world.I'll be able to feed these big engines a lot more.We're generating better leverage than we have in the past,explained Mr.Jiminez,who is an American.*
In addition,Novartis is selling its animal health business to Eli Lilly.Even when the deal with GSK is completed,Novartis will still be open to more bolt-on acquisitions that benefit its three lines of business.*
Novartis(NVS),Eli Lilly&Co(LLY),GlaxoSmithKline(GSK)

Facebook Absorbs Oculus VR

After buying messaging service WhatsApp and expressing interest in solar drone maker Titan Aerospace,Facebook has announced its intention to acquire virtual reality startup firm Oculus VR,Inc.Facebook has one eye on Internet rivals such as Google,which is well known for its appetite for scooping up startups.
Oculus makes the Oculus Rift virtual reality goggles,which are not currently available commercially.Oculus is soliciting application ideas for the big,bulky headset from software developers in fields such as gaming,film,marketing,architecture,education,design and automotive.An early problem with the goggles has been motion sickness.They are part of the wearable tech trend,which has also spawned Google glass and wristwatch smartphones.
We're making a long-term bet that immersive,virtual and augmented reality will become a part of people's daily life,Facebook CEO Mark Zuckerberg explained in a conference call.Imagine enjoying a courtside seat at a game,studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face just by putting on goggles in your home,Zuckerberg enthused.
The two billion dollar deal is mostly in Facebook stock,with only 400 million in cash being forked over by the social media titan.*
Facebook(FB),Google(GOOG)

From Buybacks To Growth;JC Penney Improves

We're forecasting about a 10% upside for the year-closer to an average return than the past few years,said Savita Subramanian,head of US equity and quantitative strategy at Bank of America/Merrill Lynch.Once we get a better sense of the economy as improving,there's no better place to be than the stock market.The market is actually rewarding the companies that spend on growth,whether through acquisition or capex.Investors want growth,not necessarily buybacks to return cash.
We really want to look at company spoecifics.It's less about picking the right asset class,and more about picking the right stocks.
It just doesn't make sense anymore to buy back stock,when prices have returned to more normal levels.Companies have not been spending on economic growth,but I think that's what we're gonna see this year,Ms.Subramanian projected.
She likes the technology,industrial and energy sectors.*
In the retail sector,it's been a big improvement for JC Penney,according to Chad Green of Sterne Agee.It looks a lot better for them than it did 12 months ago.Their store looks a lot better.It looks like the old JC Penney.
The big question for them is getting their traffic back,clearing through former CEO Don Johnson's mistakes,Mr.Green noted.*
JC Penney(JCP)

Facebook and Titan Aerospace:Shepherding the Drones

Facebook is reportedly in discussions to purchase the startup firm Titan Aerospace,pioneer of the atmosat(TM)drone concept,for 60 million dollars-possibly for the sole purpose of furthering Facebook's Internet.org project.Both companies declined to comment on the talks.*
The Titan drones have potential for multiple other highly beneficial applications,such as asset tracking;maritime traffic monitoring;cosmic radiation and magnetosphere studies;meteorology;oilspill mapping;power line monitoring;crop monitoring;global positioning;search and rescue;fire and floodplain monitoring.Under the reported scenario,Titan's production line would be totally consumed by Facebook's Internet access project,which aims to provide affordable Internet access to five billion people in developing countries.*
Two of the Titan Aerospace models,the Solara 50 and 60,can ascend to a height of over 65,000 feet and stay continuously aloft for five years on solar power,which is provided by panels on their wings and tails.This is zero emission,near-orbital flight at a fraction of the cost of a rocket-launched satellite,and is above the 60,000 foot height of FAA-regulated commercial airspace.
In sum,instead of diversifying its business with the range of drone applications Titan is capable of,Facebook may be focusing the entire acquisition on one communications application.True,it's only 60 million dollars,but the potential return on the atmosat technology would be whittled down for the forseeable future.Perhaps other firms will be making higher bids for the versatile atmosat.

Inside the Deal:Should Yahoo Buy Tumblr

Yahoo is purchasing blog site Tumblr for 1.1 billion dollars.Should it be spending so much on a site that has made so little money?Tumblr is a platform that has revenue of only 13 million dollars.Is Yahoo crazy or something?
CNBC's Jim Cramer says Yahoo is buying relevance.Tumblr has the demographic 18-34,which Yahoo lacks now.Yahoo could use anything that shows it has a pulse.It's TV of the future.Budweiser,McDonalds and Procter and Gamble will advertise on Tumblr.
This is about mobile.They're getting an immediate plug-in into mobile,as 50% of Tumblr connections are on mobile.It gives Yahoo a massive footprint.It's a very smart move.
This is a new generation of leaders at Yahoo.You can't look at the past;this makes a lot of sense,according to Chris Cunningham,CEO of Appsavvy.We're talking about Yahoo.I predict a richer,more appropriate,user-centric vision.
Tumblr is not a tradtitional tech company,but a user compant that has a huge adult audience.Tumblr is cool,it's edgy.It makes sense.They're gonna work on the inappropriate content.Tumblr is a phenomenal company.Their road map,their vision stays on tap.
Yahoo CEO Marissa Mayer said we have a global audience of more than a billion people with the addition of Tumblr.They get 24 billion user minutes a month.As we promised,we are not gonna screw this up.
Yahoo is increasing its New York presence,leasing four floors of the former New York Times headquarters building.
Yahoo,Inc(YHOO)

TD Bank Grinds Higher

Although TD Bank has posted profits that are up 23%,CEO Ed Clark feels that the environment has soured.For instance,there is the Durbin amendment that we have to absorb.
The Durbin amendment restricts the fees that big banks operating in the U.S. can charge merchants for processing transactions made with their debit cards.The fees would be reduced from about 44 cents per swipe to 21 cents per swipe,resulting in a revenue loss to the banks of more than 16.1 billion dollars.The amendment is slated to go into force in October.
Tough environments actually widen the difference between excellent franchises and not so excellent franchises.We run this very simple model with longer hours;seven days a week;and spectacular service:you just relentlessly take market share that way.Our mortgage book is up 39% in the U.S.
On the other hand,there are a whole lot of political changes that,over time,will grind the banking system down;that,over time,will prevent banks from giving strong support to the economy.If you impose a form of tax-we're quite committed to the U.S.,but we shouldn't underestimate the grind that we're feeling right now.
TD Bank isn't focused on mergers and acquisitions.Taking market share has to be the core of your business strategy,but you add little parts you need by acquisition,Mr.Clark explained.
Toronto-Dominion Bank(TD)

Advantage View:Evaluating This Bull Market

We are seeing bullish sentiment extremes,and this shows that the bull market is unsustainable,according to Walter Zimmerman,Chief Technical Analyst at United ICAP.We are likley to see the highs for the year this month.Be wary of any sudden moves to the downside.
Everyone is long,waiting for the next rally.Everyone is already in the market.All the mergers are also a sign.It's not just individuals that are bullish.Historically,market tops have been marked by big financial mergers such as the recently announced Deutsche Boerse-NYSE/Euronext or the CME-NYMEX tie-ups.
United ICAP is a technical advisory service and inter-dealer energy broker.It provides analysis to the energy industry,as well as the average trader and investor.

Inside the Deal,Weighing the Investment:Danaher and Beckman Coulter

Danaher,the Washington,D.C. diversified technology company,is acquiring biomedical testing firm Beckman Coulter for 83.50 a share.Beckman Coulter develops,manufactures and markets products that simplify,automate and innovate complex diagnostic systems and research instruments.These products are used by hospitals and clinics to diagnose,make treatment decisions and monitor patients;and by research establishments to study the causes of diseases and possible therapies for them.
Danaher CEO H.Lawrence Culp,Jr. described Beckman as an iconic company with a great brand,broad reach and technology leadership;well-positioned in the markets it serves.It will be an excellent complement to Danaher's Life Sciences and Diagnostics platform,Mr.Culp believes.
An industrial conglomerate,Danaher's portfolio of products-in four segments and seven platforms-test,measure,identify,control,manipulate and detect for a number of industrial and professional applications,from dentistry and inventory to auto repair.Most notably,Danaher owns the Craftsman hand tools brand.
Danaher(DHR),Beckman Coulter(BEC)

Canadian Banks Go Shopping

Canadian banks,which are considered the strongest in the world by the International Monetary Fund,are looking southward to expand their businesses.Last week,Toronto Dominion Bank purchased Chrysler Financial from private equity firm Cerberus Capital for 6.3 billion dollars U.S.,and the Bank of Montreal bought Marshall&Ilsley for 4.1 billion.
Chrysler Financial's loan book is 90% U.S. loans and 10% Canadian.Both the acquired firms are regarded as being relatively weak.
The Royal Bank of Canada thinks SunTrust Banks is a likely takeover target as well.
In response to the news,shares of Toronto Dominion rose 10.83%.Ed Clark is CEO of Toronto Dominion,while William Downe is CEO of Bank of Montreal.
Toronto Dominion Bank(TD),Bank of Montreal(BMO),SunTrust Banks(STI),Marshall&Ilsley(MI),Royal Bank of Canada(RBC)

BlackRock Viewpoint

Consumers spent a little more money last month,feeling a little better about the jobs they hold,notes Bob Doll,Vice-President and Chief Equity Strategist at BlackRock.We're seeing an improvement in business conditions,improving revenue and will add some jobs soon,but we've got to get past the tightening concerns,the Greek problem.There are more bad debts out there,and that means a sub par recovery.It will be slower than normal:two steps forward,and one step back.
The economy and markets can handle small rate increases.There are political worries,but manufacturing is doing pretty well and inflation is contained.We need to see some job growth.That would be the next step in a normal recovery.The rising price of oil is a sign of global economic recovery.
I've been impressed by the recent mergers and acquisitions,and I think there are a bunch more to come.It will spread lots of different places.I think we'll see continued mixed data,but leaning to the positive.My view is that European growth will be slow.They've got some punching to do to get out of the mess,Mr.Doll believes.
BlackRock,which acquired Barclays' iShares funds,has more than a trillion dollars under management.