11:30AM NY – KKR is in a deal to acquire First data Corporation for $29 billion.

First Data Corp has agreed to be acquired by buy out firm KKR for $29 billion of $34 per share. The deal includes assumption of nearly $3 billion in debt. The deal values the 2007 earnings at 14 times and nearly 19 times the earnings before interest, taxes and depreciation.

The deal is priced at a premium of 26% to the March 30 closing price. The largest credit card and bank payment processing company was put on the sale by its CEO Henry Duques after spinning off its money transfer division Western Union. First Data stock jumped 20% or $5.60 to $32.48 after rising to $32.90.

Low interest rate environment has kept buyout companies busy with deals and larger deals are becoming norms in these transactions. In the last six months KKR has raised close to $100 billion to complete several buyout that it plans to finish this year. Several industry estimates suggests that more than $2 trillion deals can be completed this year if stock market remains lackluster and interest rate environment does not change. In the first quarter alone more than $175 billion of deals have been completed.

10:15 AM NY - Tribune agrees to a takeover offer of $8.2 billion from Sam Zell.

Tribune Co. agreed to be acquired by Sam Zell led offer for $8.2 billion topping the bid by Ron Burkle and Eli Broad. After a six month drawn out battle, the Tribune board agreed to sell the company to its preferred bidder Zell. Chandler family owns 20% of the company will be selling its shares in the transaction.

In a two step deal, during the fist step the company will purchase at $34 per share 50% of its outstanding shares or 126 million shares before the end of the second quarter. The company will purchase the remaining shares by the end of third quarter. The first step purchase will be funded by $260 million from Zell and rest by borrowings of $4 billion. In the second step Zell will invest additional $65 million. The Employee ownership plan will be merger with the company and Zell will have warrant worth 40% of the company.

Under the terms of agreement the company is allowed to entertain other offers with a breakup fee of $25 million.

The newspaper industry has suffered a significant decline in readership and loss of advertising revenue in the last five years. Tribune reported a decline of 5% in February advertising revenue led by a sharp drop in classified ad sales. The much anticipated synergy between print, TV broadcasting, and Internet publishing has been hard to harvest for most publishing firms. The year 2000 merger between Los Angeles Times and Chicago based Tribune generated constant management headache, employee turnover, and a failed plan to integrate two properties.

Sixty five year old Zell recently sold his real estate company for $39 billion to private equity company Blackstone Group LP.

9:20AM NY – Buyout news support a mild rise in U.S. Indexes at the opening.

U.S. market averages are expected to open higher, but only by a fraction on several buyout deals. Oil is trading higher and metals are likely to advance in the early morning trading.

First Data is in a deal to sell the company to private equity group KKR for more than $28 billion. Several bankers close to the deal confirmed that the likely price for the company is near $28 billion to $29 billion or for $34 per share. The stock in the pre-market trading jumped $6 or 23% to $33 on the news.

Tribune has agreed to be acquired by Sam Zell and Employee Stock Ownership Program for $34. Analysts had speculated that the company can be sold as high as $53 per share.

Xerox has agreed to acquire Global Imaging Systems Inc for $1.5 billion. The deal will allow Xerox to reach small and medium size businesses and home office based customers. The stock of Global Imaging rose $9 to $28.55 on pre-market trading.

AT&T and Mexico based American Movil, each has offered to buy one third of Telecom Italia SpA, largest Italian telecom company, from Pirelli & C. SpA for 2.82 euros valuing the company at near $10.5 billion.


8:30AM NY-7:30PM Mumbai Sensex down over 600 points on sell-off in banking stocks
The Sensex on BSE finished 616.73 points, or 4.72%, lower to 12,455.37. The market-breadth was very weak as there were more than two decliners for each gainer. As 1,771 stocks declined, 702 stocks advanced and only 73 remained unchanged. Of the 30 stocks in the Sensex, there were no gainers, as all 30 stocks declined. The turnover on BSE was Rs 2,910.51 crore, lower than Rs 3,011.09 on Friday. The turnover on NSE was Rs 6,866.85 crore, compared with Rs 7,517.79 crore on Friday.

Economic news

A surprise rise in the repo rate and the cash reserve ratio announced by Reserve Bank of India after trading hours on Friday surprised the market. The RBI hiked its short-term lending rate, the repo rate, by 25 basis points to 7.75%. The central bank also lifted the cash reserve ratio by half a percentage point. The CRR will rise to 6.50% in two tranches, the first on 14 April 2007 and the other on 28 April 2007, and will drain Rs 15,500 crore from the banking system.