Citi shares off after equity infusion; Tesoro shares fall as Tracinda drops merger plan; Garmin stock climbs

By Sheri Kasprzak

New York, Nov. 27 - Even though shares of Citigroup Inc. slipped as the Abu Dhabi Investment Authority agreed to invest $7.5 billion in the struggling investment bank, the news boosted the broader stock market.

On Tuesday, Abu Dhabi Investment Authority said it will infuse $7.5 billion in Citi, which said on Monday that it may be making massive layoffs as a result of the nation's recent credit woes. Shares of Citi were off by 3.15%, or $1.00, on Monday after news of the potential layoffs.

For its investment, Abu Dhabi Investment will receive equity units that pay an 11% annual yield, which will be converted into Citigroup shares at up to $37.24 each. The move would give Abu Dhabi a majority interest in Citi.

The broader stock market responded well with the Dow Jones Industrial Average ending the day up 200.54 points at 12,958.44. The Nasdaq composite index gained 39.81 to close at 2,580.80, and the Standard & Poor's 500 composite index climbed by 21.01 to end at 1,428.23.

One analyst said Tuesday in a phone interview that it seems like a temporary fix.

"This is a serious, serious problem," he said. "Yes, it's great that they managed to get some cash. That's certainly important. But I don't think it's going to fix this, at least not solely. I do, however, feel like they're moving in the right direction. I think they're looking at the damage and they're making strides to fix it. They're obviously going through some cuts. They're making cuts where they need to make cuts. It's going to take a long time to fix this."

On Tuesday, shares of Citi closed down 38 cents, or 1.24%, to settle at $30.32, losing another 8 cents after the market closed (NYSE: C).

Another company that has been hit by the mortgage crisis actually saw its stock climb on Tuesday. Shares of Countrywide Financial Corp. improved on Tuesday as the mortgage lender continued to tout itself as financially sound.

At a conference in New York, David Bigelow, a managing director at Countrywide, told attendees that the mortgage company has sufficient liquidity.

That news sent shares of Countrywide up 33 cents, or 3.82%, to end at $8.97 (NYSE: CFC). Countrywide's stock has plummeted by 80% over the course of the year after the recent subprime mortgage fallout.

Countrywide has recently been criticized for borrowing too much money.

Tracinda pulls Tesoro buyout plan

Elsewhere Tuesday, shares of Tesoro Corp. fell after Tracinda Corp. backed out of its plan to buy all of Tesoro's stock. The news comes just a day after Tracinda said it was concerned over Tesoro's planned rights offer.

Tracinda said Monday that Tesoro's board of directors adopted a rights plan that would negatively impact its shareholders, preventing them from being able to vote or sell their Tesoro shares.

Shares of Tesoro fell for the second-straight session on Tuesday, losing 5.88%, or $3.04, to end at $48.65 (NYSE: TSO). Tesoro's stock dropped by $4.23 on Monday to end at $51.69.

Tracinda had previously planned to tender for Tesoro's stock at $64 per share for up to 21.875 million Tesoro shares, or 16% of Tesoro's outstanding stock. The tender offer, before Tracinda cancelled the deal, had been set to expire on Dec. 6.

Garmin buys Synergy

In other news Tuesday, Garmin settled its acquisition of Italian distributor Synergy SpA, pushing shares of Garmin higher.

Garmin's shares ended the day up $6.29, or 6.5%, to close at $103 (Nasdaq: GRMN).

The terms of the acquisition were not released Tuesday.

Synergy will be renamed Garmin Italia SpA and will retain its management, sales, marketing and support staff. The distributor will remain at its headquarters in Milan.

"The acquisition of Synergy is expected to further strengthen Garmin's presence in the Italian market," said Min Kao, chief executive officer of Garmin, in a statement.

"We are pleased to welcome Synergy's employees into the Garmin family and look forward to the full integration of Synergy into our European operations."

Based in the Cayman Islands, Garmin designs and markets navigation, communication and information devices, most of which are enabled by GPS technology.

U.S. Energy buys Crested

Finally, U.S. Energy Corp. sealed its merger with Crested Corp.

In the transaction, U.S. Energy issued 2,876,188 of its shares to former Crested shareholders.

U.S. Energy's shares responded positively, gaining 6 cents, or 1.29%, to close at $4.72 (Nasdaq: USEG).

"The merger of Crested Corp. into U.S. Energy Corp. presents a significant milestone in the company's history," said U.S. Energy CEO Keith Larsen in a news release.

"Management's goal is to streamline, simplify and make the company more transparent while building shareholder value. With the approval of the merger, U.S. Energy Corp. now owns 100% of all assets previously jointly held ... with Crested Corp. This includes the world-class Lucky Jack molybdenum deposit located in west central Colorado that is being developed through our venture with Kobex Resources Ltd."

Riverton, Wyo.-based U.S. Energy is a mineral exploration and acquisition company.

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