Huntsman hangs on to Hexion deal; Wachovia still selling; ImClone's secret admirer stays secret

By Aaron Hochman-Zimmerman

New York, Sept. 30 - Investors were trying to smile again on Wall Street as a 485-point gain erased a good deal of Monday's record-setting losses.

Huntsman Corp. also won itself a consolation prize as judge Stephen Lamb of the Delaware Court of Chancery did not let Hexion Specialty Chemicals, Inc. and Apollo Management LP wriggle away from their deal to acquire Huntsman.

In the ever-dynamic world of finance, Wachovia Corp. will likely be joined by a host of other and smaller banks that also need to attach themselves to the coattails of those considered too big to fail, a market source said.

Even what is left of Wachovia itself is still for sale, the source said, as the market tried to determine the price of Wachovia's remaining assets.

Elsewhere, ImClone Systems Inc. still did not reveal the name of its secret high-bidder, although the company said it will reveal the name of its mystery suitor in the near future.

Meanwhile, the Dow Jones Industrial Average ended confidently up by 485.21, or 4.68%, at 10,850.66, while the Nasdaq Composite Index added 98.60, or 4.97%, to finish at 2,082.33.

The S&P 500 improved by 58.35, or 5.27%, to close at 1,164.74.

One more day for Hexion

Delaware Chancery Court ruled that Hexion Specialty Chemicals must use its reasonable best efforts to complete the $6.5 billion deal with Huntsman by Wednesday, a market source said.

Hexion, along with Apollo Management, claimed that it was misled by Huntsman about the value of the assets it was to purchase.

"We are disappointed by the court's decision," Hexion said in a statement. "We are reviewing the decision and our options.|"

Huntsman considered Hexion and Apollo's case to be an extravagant example of buyer's remorse.

"We are gratified that Apollo's allegations and tactics have failed to persuade the Chancery Court," Peter Huntsman, president and chief executive officer of Huntsman, said in a news release.

"Huntsman is a strong and dynamic company, indeed a global leader in many of its markets, and Apollo's misguided attempt to use 2008's turbulent energy and financial markets to construct a solvency issue where none existed has now been exposed," he said.

By the end of the session, as a result of a suit filed in Texas by Huntsman, a judge had ordered Credit Suisse and Deutsche Bank to refrain from withholding funding for the merger.

Shares of Huntsman (NYSE: HUN) bubbled up by $5.25, or 71.43%, to close at $12.60.

Wachovia still for sale

The stories around Wall Street say that the remainder of Wachovia will be sold, a trader said.

After Citigroup Inc. left with the big items, the buyers still browsing the shelves are Wells Fargo & Co., U.S. Bancorp. and PNC Financial Services Group Inc.

The price for the remainder "is really unclear right now," he said.

"Applying a 10-times to 14-times multiple to the earnings of Wachovia's retail brokerage and asset management operations, $1.4 billion, would yield a price of $5.00 to $7.00 [per share]," he said.

"However, that doesn't account for the $770 million in pretax annual dividends that Wachovia owes to preferred shareholders," he said.

"Those shareholders might get wiped out. If not, maybe it's worth about half that, so $2.50 to $3.50 [per share]," he said.

Shares of Wachovia (NYSE: WB) launched up by $1.66, or 90.22%, to $3.50.

Down by the banks

The trader also said the "smaller fish" will start to follow the heavy-hitters like Wachovia and Washington Mutual, Inc.

First Horizon National Corp., SunTrust Banks, Inc. and Fifth Third Bancorp were listed on the menu as smaller fish, he said.

If the above list of banks makes the menu, National City Corp. is the special, he said.

"They were proactive in getting rid of their crap to Merrill Lynch and took other write-offs, raised a ton of capital, took their dilution," he said.

"They have capital to take further hits if they are warranted," he added.

Shares of National City (NYSE: NCC) soared by $0.39, or 28.68%, to $1.75.

Meanwhile, shareholders of Sovereign Bancorp Inc. threw a going-away party for CEO Joseph Campanelli by watching their stock nearly double at its high upon his departure.

Campanelli was replaced by the chief financial officer Paul Perrault.

In Sovereign's statement announcing the hiring of Perrault, the bank also took the time to tout its balance sheet.

"Sovereign has unused committed liquidity of $12.0 billion from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve," the release said.

In addition, "Sovereign has undertaken a methodical process to reduce risk in recent months, including the liquidation of its entire CDO portfolio," the release continued.

Shares of Sovereign Bancorp (NYSE: SOV) ended better by $1.62, or 69.53%, to close at $3.95.

Who was that masked man?

ImClone shares inched up as chairman Carl Icahn reiterated that a "large pharma company" has made a serious offer of $70.00 per share for his company, a press release said.

After two months of waiting to learn the fate of Bristol-Myers Squibb Co.'s $60.00-per-share, then $62.00-per-share offer for the 84% of the company it does not own, the other bidder that swooped in with the higher offer has yet to reveal itself and ImClone is staying mum.

However, in dramatic fashion, "by 11:59 p.m. on Wednesday, October 1, 2008" the masked bidder will announce the proposal or withdraw, an ImClone release said.

Even if the bidder withdraws, the name of the firm will be spoken to the world, the release continued.

Speculation over the true identity of ImClone's superhero-like buyer has included Germany's Merck KGaA, which stated on Tuesday that it is not the mystery bidder, a market source said.

Shares of ImClone (NYSE: IMCL) added $0.44, or 0.71%, to finish at $62.40.

Shares of Bristol-Myers (NYSE: BMY) tacked on $1.00, or 5.04%, to close the day at $20.85.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.