While you were sleeping: BusinessWire overnight wrap

Tuesday 27th January 2009

Pfizer Inc will cement its position as the world's biggest drugmaker after announcing a US$68 billion takeover bid for Wyeth, giving it access to new drugs as patents expire for its biggest selling Lipitor cholesterol pill.

Pfizer fell 11% to US$15.50 and was the biggest decliner on the Dow Jones Industrial Average after saying it will halve its quarterly dividends, close five factories and cut 19,000 jobs across the combined group to effect the merger. Its US$50.19 per share cash and stock bid is about 30% more than Wyeth's stock price before the transaction was reported on January 22.

The drugmaker has secured loans of US$22.5 billion from five banks to help fund the bid. Wyeth, with drugs including Effexor, which treats depression, and Prevnar, a vaccine for pneumonia, and an animal health unit, fell 0.9% to US$43.31.

The Dow gained 0.9% to 8151.24 and the Standard & Poor's 500 Index rose 1.1% to 841.27. The Nasdaq Composite advanced 1.2% to 1495.46.

Helping lift stocks were National Association of Realtors figures showing sales of existing homes expectedly rose 6.5% to 4.74 million in December while the Conference Board's index of leading economic indicators gained 0.3% as money supply rose.

The reports come amid deepening job cuts which have added to the 2.6 million lost in the US last year, giving President Barack Obama a tougher job in creating some 3 million new jobs through his US$850 billion fiscal and economic stimulus package.

Including Pfizer's plans, some 72,000 job cuts were announced overnight in the US

Leading the Dow higher, Home Depot climbed 4.5% to US$22.69 and AT&T rose 2.5% to US$26.77. General Electric rose 2.6% to US$12.34. Earthmoving equipment maker Caterpillar fell 9% to US$32.42 after Japanese rival Komatsu cut its annual profit forecast because of the global economic downturn.

Caterpillar is also among US manufacturers lobbying to prevent Obama's spending plans requiring a buy-US-made rule to materials such as steel, which could drive up costs. General Motors fell 2.9% to US$3.39.

Caterpillar, Sprint Nextel and Home Depot were among companies announcing jobs cuts.

Obama plans to direct more of the second half of the Troubled Asset Relief Program toward freeing up credit for consumers and companies, White House press secretary Robert Gibbs told reporters in Washington.

Obama also began efforts to reverse the Bush administration's policies on climate change, including the first steps toward forcing automakers to produce more fuel-efficient cars with lower emissions. He is also considering a request from the state of California to impose its own emission standards.

Stocks rallied in Europe after Barclays Plc said it wouldn't need to raise more capital and was preparing to post a 2008 pretax profit in excess of 5.3 billion pounds. Writedowns would amount to some 8 billion pounds.

Barclays stock soared 73%, leading the Dow Jones Stoxx 600 Index up 3.1% to 188.06 and helping fuel a rally in financials including Bank of Ireland, which gained 38%, Allied Irish Banks, up 33% and Lloyds Banking Group, which gained 32%.

ING Groep jumped 28% and BNP Paribas rose 17%.

Barclays and Lloyds also led the FTSE 100 Index higher in London, where it jumped 3.9% to 4209.01. Germany's DAX 30 climbed 3.5% to 4326.87, led by an 8.4% gain for Volkswagen, and an 8% rally for Postbank. Allianz climbed 7.5% and Deutsche Bank rose 7%.

France's CAC 40 rose 3.7%, led by BNP Paribas. Credit Agricole jumped 16% and Societe Generale rose 11%.

The Barclays announcement lifted optimism about a revival in growth in Europe and drove the yen and the US dollar lower against the euro.

The yen weakened to 89.01 per dollar from 88.75 and fell to 117.42 per euro from 115.12. The euro advanced to $1.3186 from $1.2975.

Crude oil fell amid speculation waning economies worldwide will sap demand for fuel even as OPEC cuts output. Futures for March delivery fell 1.5% to US$45.76 a barrel on the New York Mercantile Exchange.

Copper rose to the highest level in seven weeks after the US data on home sales and leading indictors, which lifted optimism the world's biggest economy will dig itself out of recession.

Copper futures for March delivery jumped 7.8% to US$1.5865 a pound on the New York Mercantile Exchange. Gold futures for April delivery rose 1.4% to US$910.70 an ounce in New York.

By Jonathan Underhill

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