Why It’s Merger Monday

October 27, 2003
Brice Wightman

Stocks
were higher Monday. Mega-mergers from Bank of
America and Fleet Boston, Anthem and Wellpoint, UnitedHealth Group and
Mid-Atlantic Medical Services among others are giving investors confidence of
higher prices ahead.

Economic releases today
included Existing Home Sales figures of $6.69 million up from an expected $6.30
million and $1,145,000 in new home sales.

10-year Bonds are -140
at 112 170.

The dollar
is +0.35 at 91.63.

Gold is +.40 at 388.10.

Crude Oil is -0.28 at
29.92.

Volume was 1.3 billion on
the NYSE, and 1.5 billion on the Nasdaq.

Market breadth was positive,
with NYSE advancing issues over declining issues by 2.06 and up over down volume
by 1.78; Nasdaq declining issues over advancing issues at 1.90, and up
volume over down volume at 2.79.

Stocks in the news:

FleetBoston Financial
(
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has agreed to be acquired by Bank of America
(
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stock. FBF is up 24% after the announcement. Existing Fleetboston
stockholders will be offered a 42% premium to last Friday’s closing price of
$45, each shareholder will receive 0.5553 share of Bank of America Commons
stock. Bank of America expects a $1.1 billion of after-tax expense savings from
this acquisition.

Nam Tai Electronics
(
NTE |
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PowerRating)
shares are up 10% after it reported third-quarter earnings from continuing
operations of $9.9 million up $6.6 million from the previous sale (a 198%
increase). They also increased quarterly sales to $93.2 million from $56.9
million a year ago. They will introduce a one-time special cash dividend of 80
cents and a stock dividend of one share for every 10 shares held.

Standard Pacific
(
SPF |
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raised its full-year 2003 earnings forecast to $5.65 to $5.75 a share vs.
analysts’ forecasts of $5.50 on revenue of $2.3 billion. Its quarterly income
more than doubled on much higher demand for new housing from $22.6 million a
year ago, to $57.9 million or $1.72 a share. Continued demand can be seen from
continued low mortgage interest rates of about 6.05%.

Procter & Gamble
(
PG |
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experienced a 13% increase in revenue to $12.2 billion. It posted earnings of
$1.76 billion up from $1.46 billion in the year-ago period, with shares at a new
high of 97.41. The company also expects its sales of Prilosec OTC to reach at
least $200 million in its first year, as can be seen from the 23% surge in
volume in their health-care unit and a 23% increase in sales, to $1.73
billion. Fabric and home-care sales also reached record volume, from products
such as Dawn Complete, Swiffer Wetjet and Duster. Sales rose 8% to $3.39
billion.

On the downside,
UnitedHealth Group
(
UNHI |
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PowerRating) shares took a 5% hit after announcing a deal
to purchase Mid Atlantic Medical Services
(
MME |
Quote |
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PowerRating) in a cash and stock
deal valued at $2.95 billion. Mid Atlantic is up more than 10% on the news.
Under the agreement, UnitedHealth will exchange $18 in cash and 0.82 of its
common stock for each share of Mid Atlantic share outstanding, a 16% premium
over Friday’s closing price.