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Stocks Rise Amid Acquisition Rumors and Economic Indicators

Strategic Insights

— 1 min read

Bloomberg News reported that Northwest Airlines Corp. shares surged 9 percent after rumors of a potential acquisition by American Airlines parent AMR Corp. surfaced. The Fort Worth Star-Telegram suggested that AMR values Northwest at around $56 per share, but Northwest chairman Gary Wilson is seeking at least $65 per share. Meanwhile, interest rates on short-term Treasury securities rose in a Monday auction, with the three-month bill discount rate reaching 5.830 percent, its highest level since May 15. Additionally, struggling apparel designer Mossimo Inc. secured a $4.5 million loan, allowing it to stay afloat until a licensing deal with Target Stores takes effect next year.

Key Takeaways:

  • Northwest Airlines Corp. shares climbed 9 percent following rumors of a potential acquisition by American Airlines parent AMR Corp.
  • AMR values Northwest at approximately $56 per share, but Northwest chairman Gary Wilson wants at least $65 per share.
  • The Fort Worth Star-Telegram reported the potential acquisition, citing unnamed sources.
  • Interest rates on short-term Treasury securities rose in Monday's auction, with the three-month bill discount rate reaching 5.830 percent, its highest level since May 15.
  • The six-month bill discount rate also rose, reaching 5.975 percent.
  • AMR shares have declined 20 percent since May 23, the day before UAL made public its offer for US Airways.
  • United Airlines agreed to buy US Airways Group Inc. for $11.6 billion in May.
  • Mossimo Inc. secured a $4.5 million loan to stay afloat until a licensing deal with Target Stores takes effect next year.
  • The loan will allow Mossimo to pay off a trio of Los Angeles-area creditors that had sought to force the company into bankruptcy liquidation.

Statistics:

  • Northwest Airlines Corp. shares rose 9%
  • Three-month bill discount rate: 5.830 percent ( highest since May 15)
  • Six-month bill discount rate: 5.975 percent (highest since June 12)
  • AMR shares declined 20% since May 23
  • UAL agreed to buy US Airways Group Inc. for $11.6 billion in May
  • Mossimo Inc. secured a $4.5 million loan
  • Three-month bill selling price: $9,852.60 (with a $10,000 bill)
  • Six-month bill selling price: $9,697.90 (with a $10,000 bill)

Sources:

  • Bloomberg News
  • The Associated Press
  • Los Angeles Times

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