SMF Notes HGSI BUY OUT LOW OFFER THE FIRST ROUND BIDDING WARS ARE COMING AND MARIO TIME MODEL IS WORKING
HGSI Human Genome trades above $14 pre-market after co announced earlier that it has received an unsolicited proposal from GlaxoSmithKline (GSK) to acquire HGSI for $13.00/share; Board believes $13 offer does not reflect value inherent in Company (7.17 )
The HGS Board of Directors, in consultation with independent financial and legal advisors, has carefully reviewed and considered the GSK offer and has determined that the offer does not reflect the value inherent in HGS. HGS also announced today that its Board of Directors has authorized the exploration of strategic alternatives in the best interests of shareholders, including, but not limited to, a potential sale of the Company. HGS has retained Goldman, Sachs & Co. and Credit Suisse Securities to assist in this process. GSK has been invited to participate in this process and HGS has requested additional information regarding investigational products in GSK's clinical pipeline to which HGS has substantial financial rights, including darapladib, currently in Phase 3 development for the treatment of cardiovascular disease, and albiglutide, currently in Phase 3 development for the treatment of type 2 diabetes.
SMF Notes Floor Talk: Futures pare gains and pull back to lows; move lower coincides with a pullback in the euro
S&P futures are now +2, DJ futures are +18, while the euro is -0.2% at $1.3093. The move lower in the euro has accelerated after breaking technical support and as a rumor circulated. This failure to rally on the heels of decent auction from Spain and France may be seen as a broader negative for the currency. In addition, there are rumors circulating about the possibility of a France ratings cut, which comes as French CDS and yield spreads rise. However, such rumors have circulated before and may be the result of political posturing ahead of this weekend's elections (Hollande said earlier this week that the risk of a post-election downgrade would be Sarkozy's fault). This has also weighed on European equity markets have pulled back further from earlier highs -- Germany (-0.3%) and France (-0.1%) are now in the negative territory (Spain's IBEX now -1.2%).
SMF Notes Freeport-McMoRan misses by $0.05, beats on revs (38.29 )
Reports Q1 (Mar) earnings of $0.80 per share, $0.05 worse than the Capital IQ Consensus Estimate of $0.85; revenues fell 19.3% year/year to $4.61 bln vs the $4.55 bln consensus. Consolidated sales from mines for the year 2012 are expected to approximate 3.7 billion pounds of copper, 1.1 million ounces of gold and 81 million pounds of molybdenum, including 895 million pounds of copper, 235 thousand ounces of gold and 20 million pounds of molybdenum in second-quarter 2012. Sales estimates for the year 2012 have been revised from our January 2012 estimates by approximately 100 million pounds of copper and 100 thousand ounces of gold because of reduced operations at PT Freeport Indonesia. The achievement of projected 2012 sales volumes is dependent on a number of factors, including returning to normal operations at Grasberg during second-quarter 2012. Assuming average prices of $1,600 per ounce of gold and $14 per pound of molybdenum for the remainder of 2012 and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for FCX's copper mining operations are expected to average approximately $1.43 per pound of copper for the year 2012. FCX expects sales from the North America copper mines to approximate 1.3 billion pounds of copper for the year 2012, compared with 1.2 billion pounds of copper in 2011.
SMF Notes Eod Market Internals Summary For Wed. Apr. 18: SPX -0.41%, DJX -0.63%, COMPQ -0.37%, NDX -0.27%; TRIN readings settle @ neutral, market breadth ends negative as exchange trading vols. uptick accompanying modest selling pressure
EoD Volume: 720.9M vs. the 50d moving avg. @ 796.3M
Closing A/D Line: -1045 (-2:1)
Closing TRIN: Neutral Reading @ 1.07
EoD Volume: 1.544B vs. the 50d moving avg. @ 1.663B
Closing A/D Line: +1338 (-2.3:1)
Closing TRIN: Neutral Reading @ 0.99
SMF Notes European Markets at Midday: FTSE +0.3%, DAX -0.4%, CAC -0.9%, IBEX -1.6%
Most European markets are trading lower at midday. The major indices had bids early in the session following another successful Spanish auction, but gave them up after rumors circulated of the possibility of a French downgrade. A rise in initial jobless claims in the U.S. is not helping matters. Most of the peripheral eurozone markets, meanwhile, opened lower today and have extended those declines... In earnings news, Nokia (ADR: NOK) missed by 0.01 euros, ex. items, in the first quarter on slightly weaker-than-expected revenue of 7.35 bln euros (Capital IQ Consensus Estimate 7.51 bln euros). The company expects non-IFRS Devices & Services operating margin in Q2 to be similar to or below the Q1 level of -3.0%.
In Spain, the IBEX is currently -1.6%. The country sold 2.5 bln euros in 2- and 10-year bonds today. The yield on the 2-year was actually in-line with the prior auction while the 10-year increased about 34 bps. In the secondary market, though, the yield on the Spanish 10-year bond is flat today. Among stocks, Repsol continues to sell off, dropping more than 1% following the recent re-nationalization of YPF (ADR: YPF).
In France, the CAC is currently -0.9%. Ahead of the French election this weekend, rumors are circulating about the possibility of a downgrade. This comes as French CDS and yields rise. We would note, however, that the comments regarding a French downgrade initially came from President Sarkozy's challenger, Mr. Hollande. It moved markets, but may just be political posturing. Moody's has since come out and said its negative outlook does not signal an imminent change in France's rating... Among stocks, Publicis Groupe fell 4% after the advertising group forecast slower growth in the second quarter, including disappointing gross margin guidance. The country conducted its own batch of bond auctions today, selling 8 bln euros in various bonds.
Other markets: U.K. (FTSE +0.3%), Germany (DAX -0.4%), Portugal (PSI -0.1%), Ireland (ISEQ +0.4%), Italy (MIB -0.7%) -- the yield on Italy's 10-year is up 15 bps today to 5.55% -- Greece (ASE -1.7%)
50 shares at 601.76 on aapl
ADD 50 shares at 600.66 on aapl
SMF Notes Gilead Sciences: Color on GS-7977 data release - very strong results when combined with Bristol-Myers (BMY) daclatasvir
Gilead Sciences has seen gains of ~17% in premarket trading following the presentation of data at European Association for the Study of the Liver (EASL) 47th annual International Liver Conference. Gilead's GS-7977 is widely viewed as the hepatitis C treatment with the greatest potential, so data regarding its efficacy was hotly anticipated. The key metric being used to evaluate the drug's effectiveness is sustained virologic response four our twelve weeks after the completion of treatment (SVR4 or SVR12). A sustained virologic response is defined as HCV RNA being undetectable in the patient.
The Phase 2 ELECTRON study examining once-daily oral GS-7977 plus ribavirin in genotype (GT) 1 treatment-naive patients for 12 weeks showed SVR4 of 88% (22 of 25 patients)
The Phase 2 QUANTUM study also examining GS-7977 plus ribavirin saw SVR4 of 59% (10 of 17) for GT1 patients
The Phase 2 ATOMIC trial examining a 12-week course of treatment with GS-7977 plus pegylated interferon and ribavirin in treatment-naive GT1 patients showed an SVR12 of 90% (47 of 52)
A Phase 2 study combining Bristol-Myers daclatasvir (an NS5A inhibitor) and GS-7977 for 24 weeks saw SVR4 of 100% among GT 1 patients and SVR4 of 91% among GT 2 and 3 patients (40 of 44)
SMF Notes Leading Indicators Forecast Accelerating Recovery
The Conference Board's Leading Economic Index increased 0.3% in March, down from a 0.7% increase in February. The consensus expected the Leading Indicators to increase 0.2%. Since eight of the 10 components of the index are known prior to the release, the difference between the consensus and the actual data is typically minor and generally comes from the two estimated components: manufacturer orders of nondefense capital goods excluding aircraft and manufacturer orders of consumer goods. In this case, however, the data for building permits -- which were released after economists made their estimates -- were much stronger than expected. That caused a minor upside surprise in the leading indicators data.
SMF Notes Lack of Distressed Properties Cause Home Sales to Fall in March
Existing home sales tumbled in March, falling from 4.60 mln in February to 4.48 mln. The consensus expected sales to increase to 4.62 mln. The drop in sales was in direct contrast to the Mortgage Bankers Association's Mortgage Purchasing Applications Index. That index showed that the demand for new homes increased 10.2% in March. That was the first increase since November 2011 and the largest monthly gain since May 2003. The National Association of Realtors blamed the March decline on low inventory levels of homes that are currently in the most demand. Without directly spelling it out, the realtors believe that the number of available distressed properties in high investor locations, such as Florida, has declined. That caused investors who do not want to pay nondistressed prices to pull out of the market in March. Distressed properties, which made up 34% of the sales in February and 40% of the sales in March 2011, accounted for only 29% of the sales in March 2012. The lack of investor demand was not offset by first-time or existing homeowner sales, causing overall home sales to slide. While the drop in distressed inventories was bad for sales in March, it is actually a sign that the housing market is normalizing. Prices increased 2.5% y/y in March to $163,800 as existing homes did not have as much competition from low-priced distressed properties. As inventories of distressed homes continue to decline in the coming months, housing prices should trend higher and induce more potential homebuyers, and sellers, back into the market.
SMF Notes FCX Freeport-McMoRan on conf call summary (38.32 +0.30) -Update-
Co on conf call noted a few highlights in Q1 included continuing progress to restore normal operations at Grasberg and completed highly attractive debt refinancing. China continues to spend money on projects related to FCX. Co said 2012 appears to be another year with a deficit in the copper market in inventory... China remains the important demand driver. Co says it expects full operations in Grasberg mine to be restored in Q2 of 2012, dependent on maintaining security and productivity in the workplace. Co notes that China remains an important demand driver... on urbanization and infrastructure; slowing growth on a larger base, which equals significant consumption.
SMF Notes Stocks/ETFs making 52 week highs/lows - New highs (115) outpacing new lows (77)
Stocks making 52 week highs: AAP, ACGL, ADS, ALLT, ANDE, ANSS, ASML, AUBN, AVB, BIRT, BRT, CB, CHD, CHKP, CHRS, CHSI, CL, COO, CPWM, CRBC, CRI, CRM, CVI, CXW, DEO, DKS, DLTR, DOX, DSW, DWCH, EBAY, EDAC, ERJ, EZCH, FDO, FIRE, FLXS, FUN, GCA, GGG, GPS, GRZ, GSK, HBNC, HIBB, HMST, HSTM, HSY, IBCA, IHG, IHS, INPH, INXN, JBSS, JFBC, KLIC, LHO, LNG, LQDT, MACK, MAR, MCRS, MDS, MLNX, MNRK, MNTG, MO, MSG, MYE, NCR, NTES, NTK, NVO, PBM, PENN, PFBI, PGC, PMT, POOL, PPG, PSMT, PVFC, RAX, RDEN, RDWR, REGN, RHT, RRR, RVSN, SAIA, SANW, SBH, SEMG, SNAK, STX, SXCI, SYNT, TFM, TNGO, TPGI, TRMB, TSCO, TSS, TTM, TWC, ULTA, VAL, VCLK, VMW, VRSK, VRSN, WAB, WNI, WRB, WYN
Stocks making 52 week lows: ABH, AMRS, ANO, APOL, ARCO, BBVA, BFED, BNVI, CBLI, CELL, CHT, CIIC, CLW, CNTF, CNYD, CPRX, CRMB, CWCO, DIGA, DVOX, EDMC, EDN, EGOV, ENG, ERF, ESEA, FFI, FIZZ, FTE, FUEL, FUQI, GBR, GFA, GFIG, GNI, GNTX, GRPN, HGT, HIL, HL, HUSA, IDCC, KT, KWK, MCHX, MERU, MNKD, MOD, MTR, NAUH, NCIT, NOK, NTL, OESX, PAM, PLCM, PMFG, PRIS, PULS, QBC, RIMG, SJT, SKYW, STD, STRI, TEF, TRMD, TSTC, UNTD, UNTK, UPL, WACLY, WAVX, WWE, XRA, YPF, ZLTQ
SMF Notes Today's biggest point gainers/losers
Biggest point gainers: MLNX (62.00 +18.67), FFIV (136.22 +12.01), SYNT (60.86 +7.02), HGSI (14.17 +7.00), SXCI (94.90 +5.54), GILD (51.99 +5.38), EBAY (40.98 +5.11), WPO (375.50 +4.99), VMW (115.65 +4.36), SSYS (47.71 +4.05), BMI (37.95 +4.04), CHSI (89.07 +3.84), UFPI (35.52 +3.19), CRM (161.71 +3.07), MSTR (147.90 +2.95), ARLP (61.08 +2.87), UTEK (32.41 +2.77), TRV (62.02 +2.55), HBNC (21.50 +2.41), AHGP (42.83 +2.41), CLR (85.33 +2.40)
Biggest point losers: GNI (66.50 -8.30), TNH (252.25 -6.00), LTM (44.53 -4.75), SWK (73.78 -4.71), BLK (191.32 -4.69), PNRA (152.32 -4.46), GNTX (21.51 -3.91), QCOM (63.40 -3.59), TPX (84.10 -3.16), UNP (106.94 -2.71), SWU (122.00 -2.70), ALB (62.63 -2.62), GWW (214.21 -2.54), NEU (188.94 -2.37), HNI (24.64 -2.37), NUE (39.92 -2.28), FOSL (130.42 -2.23), COL (56.48 -2.18), WPRT (32.64 -2.00), CLB (131.85 -1.96),
SMF Notes CMG Chipotle Mexican Grill Q1 Earnings Preview (431.38 -6.73)
Mexican food QSR name Chipotle Mexican Grill (CMG) is scheduled to report Q1 earnings today after the close followed by conference call at 4:30pm ET. Current consensus is Q1 EPS growth of 32% y/y to $1.93 on revs growth of 24% y/y to $630 mln; FY12 EPS of $8.75 on revs of $2.76 bln. CMG will only provide full year expectations for comparable restaurant sales and store openings.
Key Areas of Interest:
Comparable restaurant sales (click here for table detailing historical comps, margins and restaurant count): CMG comps have been growing in double digits for past six quarters, but are expected to slow in 2012. Co previously guided for FY12 comparable restaurant sales growth in low single digits.
Margins: The Q4 restaurant level operating margin increased 20 basis points to 26.1%--despite 120 bps increase in food costs (as % sales)... Co has been offsetting food cost increases by managing labor, occupancy and other costs (also increased prices last summer). Co believes over the long-term, it can sustain the same level of restaurant margin it has seen over the last few years, possibly expanding with strong comps (mid single digit comps would sustain current margin levels). Co said last qtr that it is planning for FY12 food inflation in mid single digit range from Q4 food cost level (32.2% of sales).
Restaurant expansion: This metric has been the key to the co's top-line growth over the past year. Chipotle still has room to expand not only in the US, but also abroad. Co previously guided for FY12 openings in 155-165 range vs 150 opening in FY11 (1230 total as of last qtr).
Transactions (typically discusses the peak lunch hour avg transactions during the conference call): This metric had been under pressure for nearly two years but has seen some improvement over the past two quarters. Peak-hour transactions are typically in ~100 range (has reached as high as 110-115 in the past) and total transactions are ~500. Co previously said that based on FY12 comps guidance of low single digits, transactions could be ~1-2% more.
Briefing note: Based on CMG options, the current implied volatility is ~81% higher than its historical volatility (over the past 30 days). The current implied one-day change in the underlying stock is ~2.1%. This week is options expirations, April 20 is the last day to trade April equity options.
CMG results will precede earnings reports from most restaurant/QSRs peers: McDonald's (MCD) reports this Friday April 20 before the open, Brinker (EAT) April 23 before the open, Panera Bread (PNRA) and Buffalo Wild Wings (BWLD) April 24 after the close, Cheesecake Factory (CAKE) April 25 after the close, PF Chang's (PFCB) May 1, Wendy's (WEN) May 8... YUM! Brands (YUM) repored yesterday after the close.
SMF Notes CMG Chipotle Mexican Grill prelim $1.97 vs $1.93 Capital IQ Consensus Estimate; revs $640.6 mln vs $629.53 mln Capital IQ Consensus Estimate
CMG Chipotle Mexican Grill beats by $0.04, beats on revs (430.78 -7.33)
Reports Q1 (Mar) earnings of $1.97 per share, $0.04 better than the Capital IQ Consensus Estimate of $1.93; revenues rose 25.8% year/year to $640.6 mln vs the $629.53 mln consensus. For the full year 2012, management expects the following: 155-165 new restaurant openings; Mid-single digit comparable restaurant sales growth; and Food inflation of mid-single digits.
SMF Notes XLF Fed issues clarification on Volcker Rule Conformance Period -Update-
The Federal Reserve Board on Thursday announced its approval of a statement clarifying that an entity covered by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the so-called Volcker Rule, has the full two-year period provided by the statute to fully conform its activities and investments, unless the Board extends the conformance period. Section 619 generally requires banking entities to conform their activities and investments to the prohibitions and restrictions included in the statute on proprietary trading activities and on hedge fund and private equity fund activities and investments. Section 619 required the Board to adopt rules governing the conformance periods for activities and investments restricted by that section, which the Board did on February 9, 2011. Subsequently, the Board received a number of requests for clarification of the manner in which this conformance period would apply and how the prohibitions will be enforced. The Board is issuing this statement to address this question. The Board's conformance rule provides entities covered by section 619 of the Dodd-Frank Act a period of two years after the statutory effective date, which would be until July 21, 2014, to fully conform their activities and investments to the requirements of section 619 of the Dodd-Frank Act and any implementing rules adopted in final under that section, unless that period is extended by the Board. The Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (the agencies) plan to administer their oversight of banking entities under their respective jurisdictions in accordance with the Board's conformance rule and the attached statement. The agencies have invited public comment on a proposal to implement the Volcker rule, but have not adopted a final rule.
SMF Notes Market Internals
The Dow decreased 68.65 (or -0.53%) closing at 12964.10, the Nasdaq was down 23.89 points (or -0.79%) to finish at 3007.56 and the S&P 500 was down 8.22 (or -0.59) to finish at 1376.92.
Today's movement came from lower than avg. volume (NYSE 823 mln, vs. 790 mln avg; Nasdaq 1930 mln, vs. 1667 mln avg), with decliners outpacing advancers (NYSE 1205/1783 Nasdaq 927/1549), and with new highs outpacing new lows (NYSE new highs/new lows 72/41 and NASDAQ new highs/new lows 71/56).
ETF relative strength: Biotech-XBI +4.0%, Grains- JJG +1.9%, Biotechnology-IBB +1.5%, Airlines- FAA +1.4%, Health Care Providers-IHF +1.0%.
ETF relative weakness: Solar- FAN -2.2%, Natural gas- UNG -2.1%, Steel- SLX -1.8%, Transports-IYT -1.4%, Home Builders-XHB -1.3%.
SMF Notes End of Day Summary: Stocks Slip Again
A general lack of leadership left stocks to slide into negative territory for the second straight session, but a late bounce helped the major averages trim their losses... Stocks struggled to establish a clear direction in morning trade. An absence of leadership left the major averages to roll into the red to trade with losses of about 1%. A rebound began to take shape in the final hour, when the S&P 500 found support at the 1370 line, which marks the weekly closing low that was set on Monday. Although stocks settled comfortably above session lows, broad losses were still booked.
Tech stocks were hit the hardest today. The sector suffered a 1.3% loss. Qualcomm (QCOM 62.56, -4.42) was one of its poorest performers as market participants responded in a decidedly negative manner to the firm's underwhelming forecast, which overshadowed an upside earnings surprise for the latest quarter... Ostensibly lackluster earnings results from both Morgan Stanley (MS 18.07, +0.41) and Bank of America (BAC 8.77, -0.15) were initially forgiven, enabling their shares to gap higher at the open, but support for the pair waned. Fellow financial outfit American Express (AXP 57.57, -0.47) was even backed down despite a better-than-expected quarterly report, but Travelers (TRV 61.70, +2.23) was able to score a strong gain on the heels of its latest numbers. Financials closed with a collective loss of 0.5%, which is less than half of the loss that the sector had wrestled with at its session low... Stronger-than-expected quarterly results from Verizon (VZ 38.15, +0.49) helped the integrated Telecom play prop up the rest of Telecom. That helped the sector score a 0.2% gain, although it had been up more sharply at midday... Health Care stocks also scored a 0.2% gain. Human Genome Sciences (HGSI 14.17, +7.00) nearly doubled its share price and brought attention to biopharmaceutical plays after the company announced it rejected an unsolicited bid from GlaxoSmithKline (GSK 46.69, +0.32) for $13.00 per share in order to explore alternatives... Online retailer eBay (EBAY 40.62, +4.75) garnered strong buying interest on the back of its quarterly report. The stock surged to a multi-year high as a result. Still, the Consumer Discretionary sector suffered a 0.9% loss today. It was the only major sector to book a gain in the prior session.
The dollar was flat at day's end, but that was only after it surrendered an early gain that came in response to a retreat by the euro. The euro's downturn came after it had violated a key technical support line following news of satisfactory demand at a debt auction held by both Spain and France, tacitly pointing to underlying concerns about fiscal and financial conditions in the eurozone core and periphery.
Data today didn't do anything to bolster confidence in stocks... The latest initial jobless claims tally totaled 386,000, which is little changed from the prior week, but greater than the 375,000 claims that had been generally expected... Additionally, the Philadelphia Fed Survey for to 8.5 in April from 12.5 in the prior month. Economists polled by Briefing.com had expected, on average, a more modest decline to 10.3... Existing home sales also proved disappointing. The pace of sales eased down to an annualized rate of 4.48 million units in March from a pace of 4.60 million units in the prior month. An annualized clip closer to 4.62 million units had been broadly anticipated... Leading Indicators for March were somewhat of a bright spot, but not terribly so. They increased by 0.3%, which isn't much better than the 0.2% increase that had been generally forecasted.
Advancing Sectors: Health Care +0.2%, Telecom +0.2%
Declining Sectors: Utilities -0.3%, Energy -0.3%, Consumer Staples -0.3%, Materials -0.3%, Financials -0.5%, Consumer Discretionary -0.9%, Industrials -1.0%, Tech -1.0%
Dow -0.5%, S&P 500 -0.6%, Nasdaq -0.8%, Nasdaq 100 -1.1%, S&P 400 -0.4%, Russell 2000 -0.6%
SMF Notes SNDK SanDisk prelim $0.63 vs $0.71 Capital IQ Consensus Estimate; revs $1.21 bln vs $1.21 bln Capital IQ Consensus Estimate
SMF Notes Ted Nugent stood by his controversial comments about President Barack Obama and Democrats made over the weekend, telling conservative radio host Dana Loesch on Tuesday that he had been unfairly targeted for saying he would "either be dead or in jail" by next year if Obama is reelected.
"I'm a black Jew at a Nazi-Klan rally," the rock star complained to Loesch. "And there are some power-abusing, corrupt monsters in our federal government that despise me because I have the audacity to speak the truth."
Nugent continued: "I spoke at the NRA and will stand by my speech. It's 100 percent positive. It's about we the people taking back our American dream from the corrupt monsters in the federal government under this administration, the communist czars he has appointed."
The Secret Service is reportedly investigating Nugent in the wake of his Saturday tirade at the NRA convention in St. Louis. Nugent's hits include the 1977 classic "Cat Scratch Fever." He has endorsed Mitt Romney for president.
Later in the radio interview, Nugent went after Democratic National Committee chairwoman Debbie Wasserman Schultz, who condemned Nugent's remarks on Tuesday as she called on Romney to answer for the rocker's rhetoric with a DNC petition and web video.
"Wasserman Schultz is such a brain-dead, soulless idiot," Nugent told Loesch. "I could not be more proud that this soulless, heartless idiot feebly attempts to find fault with Ted Nugent, because I am on the right track and she just encourages me to stand stronger."
SMF Notes CMG Chipotle Mexican Grill on Conference Call; stock trading at $433 in after hours -Update-
beef dairy and avocados; says that all sour cream come from cows beginning in Q2; not seeing anything disturbing on underlying trends... no plans for further menu price increases... hard to say how weather impacted comp sales; says it may have added 100-200 bps to the quarter; says April is a continuing of the underlying sales trend... has not set out a target for growth in U.K.... sees food prices up low single digits y/y; expect higher costs in Q2 and Q3 (beef, avocados, sour cream) and will recede in Q4...
SMF Notes VMI Valmont beats by $0.43, beats on revs; raises FY12 EPS above consensus (118.34 -1.96)
Reports Q1 (Mar) earnings of $1.96 per share, $0.43 better than the Capital IQ Consensus Estimate of $1.53; revenues rose 26.3% year/year to $717.4 mln vs the $669.6 mln consensus. Co raises guidance for FY12, expects EPS to exceed $8.00 vs. $7.53 Capital IQ Consensus Estimate, up from $7.30-7.60.
SMF Notes Human Genome Said to Reject Bid on Concern of Investor Loss
Human Genome Sciences Inc. (HGSI) rejected GlaxoSmithKline Plc (GSK)’s $13-a-share takeover offer partly because most of its biggest investors bought the stock at a higher average price, said two people with knowledge of the matter.
Of the 25 largest shareholders, about 22 of them acquired stakes with an average basis price that’s higher than the offer, said the people, who asked not to be identified because the discussions are private. Starting in late 2009, Human Genome shares traded between $20 and $30 until about August of 2011.
Glaxo first learned of Human Genome’s rejection of the $2.59 billion offer through a phone call earlier today, another person familiar with the situation said. Human Genome Chief Executive Officer Thomas Watkins called Glaxo CEO Andrew Witty at about 5 a.m. New York time, saying that the offer didn’t reflect Human Genome’s value and that the company would be making a public statement shortly, the person said. The statement was released at 5:12 a.m.
Human Genome first learned of Glaxo’s interest in an April 11 letter, two people said. The Rockville, Maryland-based company told Glaxo it was willing to discuss a sale at a higher price, said two people. Late last week, Human Genome decided to go public with the offer and put itself up for sale, anticipating interest from larger pharmaceutical companies, the people said.
A spokeswoman for London-based Glaxo and a spokesman for Human Genome declined to comment beyond the company’s statement.