#PreMarket Primer: Tuesday, June 3: Bidding On Hillshire Ramps Up

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The bidding war over Chicago-based meats and desserts company Hillshire Brands Co. heated up after Pilgrim’s Pride Corp increased its acquisition offer by $1 billion.

The new offer values Hillshire at $55 per share, a step up from Tyson Foods $50 a share offer on Thursday.

If Hillshire strikes a deal with either company, last month’s $4.3 billion acquisition deal with Pinnacle Foods would be off the table.  Hillshire shares rose 2.7 percent to $55 a share in after-hours trading following reports of Pilgrim’s new bid.

Top News

In other news around the markets:

  • China’s services and manufacturing Purchasing Managers’ Index for May showed a marked improvement from April’s 48.1 reading and rose to a four month high of 49.4. The figure, although still below the 50 point mark that separates expansion and contraction, indicated that the Chinese economy was improving, albeit slowly.
  • The US government investigation into whether or not BNP Paribas violated US sanctions took a sour turn on Tuesday when France’s Foreign Minister said that the French government would defend BNP if the bank is subjected to what he believes are “unreasonable” fines. BNP could face penalties of up to $10 billion from the United States; something Laurent Fabius has said is disproportionate to the infraction.
  • Eurozone PMI figures confirmed speculation that the nation’s recovery was beginning to wane. The region’s PMI slid to a six month low of 52.2 in May, with most of the bloc’s members posting disappointing figures. Spain and the Netherlands were the only nations to show increased momentum, while Germany suffered yet another decrease in factory activity and France posted a score below 50, indicating a contraction.
  • During the first day of the World Wide Developers Conference, Apple revealed its plans to break into the fitness tracking market with a new “HealthKit” suite of mobile applications. The applications will use health and home data to work together with companies like Nike and the Mayo Clinic to offer users a more complete health tracking package.

Asian Markets

Asian markets were mixed; the NIKKEI rose 0.66 percent, the KOSPI was up 0.33 percent and the Hang Seng Index gained 0.83 percent. However, the Shanghai composite lost 0.04 percent and the Shenzhen composite was down 0.19 percent.

European Markets

Europe’s markets were down across the board with the exception of the Spanish IBEX, which rose 0.32 percent. The UK’s FTSE was down 0.17 percent, the eurozone’s STOXX 600 lost 0.10 percent, the German DAX fell 0.04 percent and the CAC 40 was down 0.02 percent.

Commodities

Energy futures were moderately lower with Brent futures down 0.14 percent and WTI futures down 0.01 percent. Gold and silver gained 0.14 percent and 0.70 percent respectively, and industrial metals were also higher. Aluminum gained 0.65 percent, zinc was up 1.41 percent and tin gained 0.67 percent.

Currencies

Currency markets were quiet on Tuesday; the euro was steady at $1.3604 but lost 0.02 percent against the pound. The dollar was down 0.02 percent against the yen and 0.31 percent against the Australian dollar.

Earnings

Notable earnings released on Monday included:

  • Krispy Kreme Doughnuts (NYSE: KKD) reported first quarter EPS of $0.23 on revenue of $121.60 million, compared to last year’s EPS of $0.20 on revenue of $120.62 million.
  • Quiksilver (NYSE: ZQK) reported a second quarter loss of $0.15 on revenue of $408.00 million, compared to last year’s loss of $0.12 on revenue of $458.75 million.

Pre-Market Movers

Stocks moving in the Premarket included:

  • MeadWestvaco (NYSE: MWV) was up 0.49 percent in premarket trade after gaining 5.86 percent on Monday.
  • Ford Motor (NYSE: F) was down 0.30 percent in premarket trade after rising 2.62 percent over the past five days.

Earnings

Notable earnings releases expected on Tuesday include:

  • Dollar General (NYSE: DG) is expected to report first quarter EPS of $0.73 on revenue of $4.56 billion, compared to last year’s EPS of $0.71 on revenue of $4.23 billion.
  • ABM Industries (NYSE: ABM) is expected report second quarter EPS of $0.40 on revenue of $1.23 billion, compared to last year’s EPS of $0.36 on revenue of $1.17 billion.
  • Mattress Firm Holding (NASDAQ: MFRM) is expected report first quarter EPS of $0.36 on revenue of $337.55 million, compared to last year’s EPS of $0.38 on revenue of $275.96 million.

Economics

After a busy day of PMI releases on Monday, Tuesday’s economic calendar will be relatively quiet. Investors will be watching for Australian GDP, British construction PMI, US car sales, Italy’s unemployment rate and Hong Kong’s retail sales.

For a recap of Monday’s market action, click here.

Tune into Benzinga’s #PreMarket Prep to hear Doug Kass and Reggie Middleton on the today by clicking here!

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