Weekend Report: McKesson to Buy HBO & Co.; Japan Climbs at Open - TheStreet

Weekend Report: McKesson to Buy HBO & Co.; Japan Climbs at Open

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The market's reborn optimism, evident last

Thursday and

Friday, may enjoy another lift tomorrow, as "Merger Monday" got off to an early start this week. Late Sunday,

McKesson

(MCK) - Get Report

announced it has agreed to acquire

HBO & Co.

(HBOC)

in a stock swap.

Terms of the merger call for each shareholder of HBO to receive 0.37 shares of McKesson common stock for each share of HBO stock in a tax-free exchange. (Please see the

release for more details.) McKesson is a health-care supply-management company, and HBO is a health-care information company.

Plus, overseas, the

Nikkei 225

rose 1.72% at the open, climbing 228.26 to 13508.80. Australia's

All Ordinaries

index was down 0.19%, and the New Zealand

NZSE 40

was down 0.47%.

Still, the

Federal Reserve

-inspired euphoria may be short-lived, judging by the weekend press reports (of the dead-tree variety).

Headlines such as "A Week for Wishful Thinkers" and "Despite Fed's Rate Cuts, Dangers Remain" sum up the thinking at

The New York Times

. Perhaps the most illuminating business piece in the paper, however, is a page-one story detailing Wall Street firms' eagerness to lend to Russian institutions and how -- of course -- that proved a disastrous strategy.

Shockingly (not),

Barron's

columnists also took a cynical outlook on the Federal Reserve's intermeeting rate hike. A notable dissenter from this view is

Jay Palmer

, substitute scribe (that explains it) of "The Trader" column, normally penned by

Andrew Bary

. Palmer

reviews the newfound optimism of

Morgan Stanley Dean Witter

chief U.S. investment strategist

Byron Wien

and ongoing bullishness of

Elizabeth Mackay

,

Bear Stearns'

chief investment strategist. The column describes the notion that the Fed eased to pre-empt something wicked from coming this way as "downright paranoid."

IPO Market Attempts Revival

Paranioa has struck deep in the IPO market lately, as offerings from corporate heavyweights such as

Goldman Sachs

have been labeled with the ignominious "postponed indefinitely" moniker. The new-issue market gets a chance at redemption this week with its biggest calendar in two months, headed by

Conoco's

offer, expected Thursday. This spinoff of

DuPont's

(DD) - Get Report

oil business is predicted to raise between $3 billion and $3.6 billion -- what would be the largest ever in the U.S. The success or failure of this and other IPOs, as well as reactions to the continued rush of earnings, will reveal rather quickly the sustainability of last week's rally.

Set to Move?

Back to the print pubs. Keeping with recent form, they limited the attention lavished on individual stock-picking. Given the market's erratic and dramatic performance of late, who can blame them? But a few "picks and pans" did emerge.

The Times

offers a salivating view of

Campbell Soup's

(CMB)

Pepperidge Farm

division, but a less-glowing outlook on prospects for

Intel

(INTC) - Get Report

the stock (vs. Intel, the company).

The paper's "Investing With" column focuses on

Gary M. Lewis

, manager of the

(ACEGX)

Van Kampen Emerging Growth fund, where big holdings include

Dell

(DELL) - Get Report

,

Yahoo!

(YHOO)

and

Best Buy

(BBY) - Get Report

. The column offers little insight into whether Lewis is currently adding to any of these positions or what he likes now.

Citing both its traditional defensive characteristics and prospects for uncharacteristic growth,

Barron's

serves up a plate of supermarket stocks it says are ripe for the picking. Favorites include

Safeway

(SWY)

,

Kroger

(KR) - Get Report

and

Fred Meyer

(FMY) - Get Report

. (Meanwhile,

Bloomberg

reported on Friday that Kroger was in talks to buy Fred Meyer, and that while there's no guarantee of an agreement, a transaction could be announced this week.)

Barron's

also pointed to smaller names such as

Hannaford

(HRD)

as acquisition fodder.

The weekly's special section on travel suggests vacationing investors look to such "bargains" as

Hilton

(HLT) - Get Report

,

Royal Caribbean Cruises

(RCL) - Get Report

and

Marriott International

(MAR) - Get Report

.

At the Helm

The weekend's international news was decidedly lacking in market-moving potential. Given recent history, that's good news. Policymakers were also quiet, although

International Monetary Fund

Managing Director

Michel Camdessus

and

U.S. Treasury

Secretary

Robert Rubin

issued public pronouncements.

Camdessus said Sunday there are "more advantages than disadvantages" to an interest-rate cut by either France or Germany, or both, but he understands their reticence. "In particular, they are waiting to see what the effect of the downward move of the U.S. dollar will be on the exchange rates of European currencies,'' Camdessus said, according to

Reuters

.

Rubin, the great defender of the greenback, said in a speech Saturday at

Yale Law School

that policymakers have a "good understanding" of the crises, but one of the main challenges is balancing ''the sovereignty of nations on the one hand and the demands of the transnational global economy on the other.'' Acknowledging there are "no magic wands," Rubin added: "A crisis that is a product of problems that developed over many years will take time to work out, and working out requires that each nation -- industrial and developing and each international financial institution -- do its part.''

All together now...