Steelmaker Gerdau Ameristeel (
GNA: chart) announced after the closing bell Tuesday that it agreed to acquire Chaparral Steel Co. in a deal worth $4.22 billion, or $86 per share. The transaction is a 14% premium over Chaparral's closing price of $75.69 on Tuesday.
Gerdau sees the deal helping to further diversify its offerings. It is expected to create more than $55 million in annual operating savings by the end of next year. The company said it may issue equity securities after the transaction is complete with the support of majority shareholder Gerdau SA.
The transaction, which is subject to Chaparral shareholder approval, regulatory approvals and other customary closing conditions, is expected to close before the end of the year. Boards of the two companies unanimously approved the acquisition. Gerdau's financial advisor, J.P. Morgan Securities Inc., is providing $4.6 billion in financing commitments for the transaction.
7:30AM NY – 6:30 PM Mumbai Sensex sheds 99 points after Infosys tumbles.
The
Sensex on BSE finished 99.26 points lower, or 0.66%, at 14,910.62.
The Sensex opened 62 points lower to 14,948. The index plunged to a low of 14,830, down 180 points from the previous close in early deals. Steady performance of metal stocks lifted index into positive zone, touching an intra-day high of 15,015 in morning deals. Weak IT stocks led the index sideways.
Apart from the IT sector, auto and banking stocks also suffered profit taking and declined. However, cement, metal and offshore oil services firms advanced.
The market-breadth was strong, though. Out of 2,694 stocks traded on the market, 1,444 stocks advanced, 1,183 declined, and 67 were unchanged. Of the 30 stocks in the Sensex, 12 advanced, 17 declined and one remained unchanged. The turnover on BSE was Rs 5,473 crore, higher than Rs 5,111 crore on Tuesday. On the NSE daily turnover was reported at Rs 11,183 crore compared to Rs 10,720 crore yesterday.
Economic news
The Reserve Bank of India may intervene and sell the currency to protect exports. The rupee is the second-best performing Asian currency this year as foreign funds accelerate their purchases of local shares in view of the fast growing economy. The rupee has increased 9.5% in 2007.
Infosys
Infosys Technologies Ltd., the second-largest computer-services, reduced its profit and sales guidance after a stronger rupee affected the value of earnings from the U.S., its largest market. The company revised upwards its earnings forecasts in dollar between 28.4% and 29.7% higher than the earlier guidance of 25.7% to 27.7% growth. In rupee terms, the company revised its guidance downwards in the range of 15.6% to 16.8%, lower than the earlier guidance in the range of 20% to 22% growth. It has also cut the revenue guidance in rupee terms in the range of 16.9% to 18.3%, from the earlier guidance of a growth of 22.6% to 24.6%.
Trading highlights
Infosys was also the most active stock with a turnover of Rs 299 crore followed by DLF and Roman Tarmat.
Advancers of the Day
Grasim surged 3.4% to Rs 2,819 and Tata Steel also rallied 3.4% to Rs 655. Reportedly, steel consumption will grow 16% per year until 2012, or twice as fast as in the past five years, powered by strong demand for construction projects worth $1 trillion.
Hopes for strong earnings results drove cement stocks higher. ACC soared over 3% to Rs 1,069, UltraTech Cement Company was up 1.60% to Rs 897 and Birla Corporation gained 4.3% to Rs 286.
Reliance Energy rose 2% to Rs 626 and Hindustan Unilever rallied 2% to Rs 202.
Decliners of the Day
Infosys led the decliners, plunging 4.5% to Rs 1,930. Other IT stocks declined with four of the top five decliners were from the IT sector. Satyam and TCS lost 3.3% each to Rs 481 and Rs 1,147, respectively. Wipro dipped 2% to Rs 510.
Ambuja Cements bucked the trend with the cement stocks and lost nearly 2% to Rs 128. Tata Motors sank 1.7% to Rs 732, and Ranbaxy slipped 1.5% to Rs 357.
