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Market Update

U.S. Stocks Rebound, Dell Goes Private in $24.4 Billion Deal

Author: Nichole Harper
Last Update: 10:46 AM ET February 05 2013

10:45 AM New York – Stocks, sectors and market indexes shot up in the early trading. Dell Inc agreed to go private in a deal that valued the company at $24.4 billion. Service sector expanded in January according to a private survey. European markets advanced. Becton Dickinson, Cardinal Health, MasterCard and Virgin Media gained.

Stocks in New York shot in all key sectors and indexes retraced gains after 1% drop in yesterday’s session and tracked higher European markets.

Investors were reacting to latest read on the service sector and the index tracked by Institute for Supply Management increased to 55.2 in January, down from 55.7 in December.

However, the read above 50 still indicated that the sector is expanding.

Dell Goes Private

Dell agreed to go private in a $24.4 billion deal after trading as a public company for 25-years.

Consortium of investors led by Michael Dell included and his investment firm MSD Capital, $2 billion loan from Microsoft and loans from Barclays, Bank of America, Merrill Lynch and Credit Suisse.

The deal values the company stock at $13.65 a share, representing 25% premium over closing price of $10.88 on Jan 11 before media reports suggested that the company is negotiating to exit public markets.

Michael Dell will contribute his 14% to the new company and will continue to lead the company as chairman and chief executive.

Dell share peaked above $56 on March 24, 2000, valuing the company at $100 billion.

Stocks in Review

Becton Dickinson (BDX) gained 3% after the medical devices maker lifted its outlook.

The company lifted its previously communicated revenue guidance for the year of 3.5% to 4.5% to 4% to 4.5% and diluted earnings per share from continuing operations between $5.69 and $5.72.

Cardinal Health (CAH) increased 3% after it narrowed its earnings outlook.

The healthcare services provider tightened fiscal outlook for non-GAAP diluted earnings per share from continuing operations to $3.42 to $3.50

Dell Inc (DELL) shares were halted after the company announced to go private in a deal that valued the computer maker at $24.4 billion of $13.65 a share.

J.C. Penney (JCP) gained 0.9% after retreating at the opening after media reports that the company received creditor notices that the retailer violated terms of bonds.

MasterCard (MA) increased 1% after the board approved $2 billion in share buyback and doubled its quarterly dividend.

NYSE Euronext (NYX) was nearly flat after the exchange operator reported lower revenues and earnings in the fourth quarter and said its debt to earnings ratio and operating expenses are likely to fall. The exchange has agreed to merge with Atlanta based IntercontinetalExchange Inc. (ICE).

Virgin Media (VMED) soared 17% after the media speculation that the UK cable company is in talks with Liberty Media (LBTYA) to merge businesses in Europe.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc