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Market Update

UBS to Settle Libor Probe for $450 Million, Saputo to Buy Morningstar Foods

Author: Arthi Gupta
Last Update: 10:06 AM ET December 03 2012

10:00 AM New York – U.S. indexes opened higher and Saputo agreed to acquire Morningstar Foods for $1.45 billion. CSC agreed to sell credit services business to Equifax for $1 billion. UBS is said to near an agreement with American and British regulators to settle rate fixing charges for $450 million.

U.S. indexes extended gains after a rally in European markets lifted indexes by 1%.

UBS is said to be in settlement talks to end Libor probe and is likely to pay as much as $450 million to regulators in the U.S. and UK.

The deal is not final according to sources in the Securities and Exchange Commission and Commodity Futures Trading Commission and Financial Service Authority of UK.

If agreed, the collective penalty will be the largest linked to the London Interbank Offered Rate or so called Libor rate rigging scandal. Royal Bank of Scotland is in advanced talks to settle its Libor probe and Deutsche Bank last month reported it has set aside funds to pay for possible fines.

Investors look to the non-farm payrolls data and ADP''s private sector payroll numbers in the week to gauge the health of the U.S. economy.

The European indexes gained after a private survey showed improving manufacturing in China and Greece announced a plan to buy back €10 billion bonds to unfreeze the delayed aid.

The HSBC purchasing managers’ index for China rose to 50.5 in November from 49.5 in October. The marginal improvement in a private survey was welcome by investors as companies’ battle falling demand from the euro zone.

The downturn in the euro zone manufacturing sector eased in November, as the rates of contraction in output, new orders and employment all slowed.

Euro zone finance ministers are to meet in Brussels today to discuss details of the Greek debt buyback program. Greece confirmed that it will be buying up to €10 billion of its own debt at a price higher than the current price in the market. The buyback has to be concluded by December 13 for Greece to avail €30 billion of the bailout money.

Markets in Asia closed lower and Hong Kong led the region with a loss of 1.2% and the benchmark index in Mumbai fell 02% but in Tokyo gained 0.1%.

Saputo to Acquire Morningstar Foods

Saputo Inc. agreed to acquire Morningstar Foods, LLC, a subsidiary of Dean Foods Company for $1.45 billion on a debt-free basis, which would be financed through a newly committed bank loan. The acquisition may close by the end of this month.

For the twelve months ended September 30, Morningstar had revenues of about C$1.6 billion, and earnings before interest, taxes, depreciation, and amortization of approximately C$153 million.

CSC Agrees to Sell Credit Services Business

Computer Sciences Corp., the information technology services provider agreed to sell its credit services unit to Equifax Inc. for $1 billion in cash. The after-tax proceeds from the sale of the business will be approximately $750 to $800 million based on preliminary estimates.

CSC intends to use $300 million to $400 million to repurchase shares, contribute $300 million to $400 million to its pension plans and apply the remainder for general corporate purposes.

Earnings Review

Aryzta AG, the Swiss bakery business reported group revenue of €1.10 billion for the first quarter. Total food revenue grew 7.9% in the quarter to €747.5 million.

Conn''s, Inc. (CONN), the specialty retailer reported third quarter total revenues increased 10.6% to $206.4 million on same store sales rise of 12.6%. Net income generated in the quarter was $11.78 million or 35 cents per diluted share compared to a loss of $12.72 million or 40 cents per share the prior year.

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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