#PreMarket Primer: Wednesday, September 10: Dollar General Gets Aggressive
Dollar General Corp (NYSE: DG) has decided to tender to buy Family Dollar Inc. (NYSE: FDO) for $80 per share in cash. The tender offer will take place on Wednesday and comes after Family Dollar rejected Dollar General’s $9.1 billion acquisition offer in favor of an $8.5 billion agreement from Dollar Tree (NASDAQ: DLTR).
Dollar General’s aggressive move is a risky one, as the company has yet to view Family Dollar’s confidential financial information, but the tender offer will allow the company to begin to discuss antitrust issues with the Federal Trade Commission.
In other news around the markets:
- Apple Inc. (NASDAQ: AAPL) launched its highly anticipated new product line on Tuesday, but it was the software, not the hardware, that stole the show. As well as introducing two new, larger iPhones and a smartwatch, Apple unveiled new health tracking software and a mobile pay system that is designed to eventually eliminate the need for credit cards.
- On Monday, the San Francisco Fed released a report that showed that investors may be underestimating how close the U.S. Federal Reserve is to raising interest rates. With so many geopolitical factors playing into the global economy at the moment, many believed that the bank would remain cautious through the next few quarters. However, this study indicated that the Fed could implement a rate hike as early as next year.
- Microsoft Corporation (NASDAQ: MSFT) is working to acquire Mojan AB, the company behind the increasingly popular cult video game, Minecraft. Though both companies have shared no details about the negotiations, the Wall Street Journal reported that the deal will value Mojan at around $2 billion and could be signed within the next few days.
- Polls out this week showed an equal number of Scottish nationals for and against the country’s referendum. Scotland is looking to become fully independent but maintain its use of the British pound; Bank of England governor Mark Carney has said the country will not be allowed to remain a part of the U.K.’s currency union if the referendum is passed.
Asian markets were down across the board with the exception of the NIKKEI and the Shenzhen composite, which gained 0.25 percent and 0.13 percent, respectively. The Shanghai composite was down 0.35 percent, the KOSPI lost 0.33 percent and the Hang Seng index lost 1.93 percent.
European markets were mixed; the FTSE rose 0.22 percent and the CAC 40 was up 0.06 percent, but the STOXX 600 was down 0.18 percent. The DAX fell 0.07 percent and the IBEX was down 0.57 percent, but the MIB rose 0.08 percent.
Energy futures were higher; Brent futures gained 0.24 percent and WTI futures were up 0.28 percent. Gold and silver gained 0.49 percent and 0.79 percent, respectively, but industrial metals were down across the board. Copper lost 0.06 percent, aluminum was down 1.38 percent, zinc fell 3.60 percent and tin was down 1.99 percent.
The euro made modest gains on Wednesday morning and traded at $1.2945. The common currency also gained against the yen, up 0.47 percent, but lost 0.04 percent to the pound. The dollar was also lower against the pound, down 0.11 percent, but gained 0.41 percent against the yen and 0.62 percent against the Australian dollar.
Notable earnings released on Monday included:
- Leidos Holdings (NYSE: LDOS) reported second quarter EPS of $0.61 on revenue of $1.31 billion, compared to last year’s EPS of $0.19 on revenue of $2.47 billion.
- HD Supply Holdings (NASDAQ: HDS) reported second quarter EPS of $0.51 on revenue of $2.45 billion, compared to last year’s EPS of $0.23 on revenue of $2.26 billion.
- Barnes & Noble, Inc. (NYSE: BKS) reported a first quarter loss of $0.56 on revenue of $1.24 billion, compared to last year’s loss of $0.86 on revenue of $1.33 billion.
- Oxford Industries, Inc. (NYSE: OXM) reported second quarter EPS of $0.94 on revenue of $246.20 million, compared to last year’s EPS of $1.01 on revenue of $235.02 million.
Stocks moving in the Premarket included:
- Netflix (NASDAQ: NFLX) gained 0.81 percent in premarket trade after choppy trading took the stock up 0.51 percent over the past week.
- Southwest Airlines Corp (NYSE: LUV) was up 0.79 percent in premarket trade after gaining 0.89 percent over the past three days.
- AvalonBay Communities Inc (NYSE: AVB) was down 2.46 percent in premarket trade after rising 1.09 percent over the past five days.
- Perrigo Company PLC (NYSE: PRGO) was up 0.70 percent in premarket trade after falling 3.87 percent over the past five days.
Notable earnings expected on Tuesday include:
- Men’s Wearhouse, Inc. (NYSE: MW) is expected to report second quarter EPS of $1.07 on revenue of $892.47 million, compared to last year’s EPS of $1.01 on revenue of $647.26 million.
- Restoration Hardware (NYSE: RH) is expected to report second quarter EPS of $0.64 on revenue of $454.38 million, compared to last year’s EPS of $0.49 on revenue of $382.10 million.
- Vera Bradley, Inc. (NASDAQ: VRA) is expected to report second quarter EPS of $0.19 on revenue of $116.78 million, compared to last year’s EPS of $0.37 on revenue of $125.37 million.
Wednesday’s economic calendar will be relatively quiet with releases including Spanish industrial production and the Reserve Bank of New Zealand’s interest rate decision.
For a recap of Tuesday’s market action, click here.
Tune into Benzinga’s premarket info show with Fari Hamzei, Steve Ellis & Craig Erlam here.
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