Updated from 5:05 a.m. EDT
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Here are five things you must know for Monday, Oct. 24:
1. -- AT&T (T) agreed to buy Time Warner (TWX) in an ambitious $85.4 billion deal that would create a powerhouse in global telecommunications, television and film. The agreement was approved by the boards of both AT&T and Time Warner.
The deal, which would be half in cash and half in stock, values Time Warner at $107 a share, a 20% premium to its $89.48 closing price on Friday. Time Warner shareholders will receive $53.75 a share in cash and $53.75 a share in AT&T stock. The total transaction value is $108.7 billion, including Time Warner's net debt.
Time Warner shares were fairly flat in premarket trading on Monday, while AT&T shares declined 2.1%.
TheStreet's chief investment strategist, Jack Mohr, said AT&T is paying way too much for Time Warner.
Mohr, who co-manages Action Alerts PLUS with Jim Cramer as a charitable trust, said the merger's nearly $110 billion in total consideration is "staggering on so many financial levels" and "reeks of strategic desperation and financial destruction."
Mohr noted that the deal comes at a time when AT&T is still digesting its recent $50 billion mega-takeover of DirecTV. AT&T also had a disappointing earnings report and a 15% share decline. He added that there's a risk that Time Warner's earnings are arguably "approaching peak levels, which makes the deal that much sweeter for TWX shareholders and that much scarier for anyone invested in AT&T."
The acquisition could win U.S. regulatory approval, but would likely face heavy conditions from the Justice Department and the Federal Communications Commission, according to regulatory observers in Washington.
Terms of the deal call for Cedar Rapids, Iowa-based Rockwell Collins to pay $34.10 in cash and stock worth $27.90 apiece for a total consideration of $62 a share in cash and stock for B/E. The deal values B/E's equity at about $6.4 billion, with Rockwell Collins also set to assume $1.9 billion in net debt.
B/E is a maker of aircraft seats and other interior items, including galleys, lighting systems and modular lavatories. The company has long been a subject of takeover speculation, having weathered an activist campaign earlier in the decade that resulted in the spinning off of its KLX Aerospace distribution business as an independent.
B/E Aerospace shares jumped 18.5% in premarket trading to $59.99.
3. -- U.S. stock futures were rising and European and Asian shares rose following a weekend of mergers and acquisition activity, led, of course, by AT&T's blockbuster agreement to buy Time Warner.
The economic calendar in the U.S. on Monday is mostly empty but a host of Federal Reserve officials will be making the rounds.
New York Federal Reserve Bank President William Dudley will provide the opening remarks at the second annual conference on the Evolving Structure of the U.S. Treasury Market in New York at 9 a.m. EDT, while St. Louis Fed President James Bullard will be making a presentation to the Association for University Business and Economic Research in Fayetteville, Ark., at 9:05 a.m.
Chicago Federal Reserve President Charles Evans gives a speech in Chicago at 1:30 p.m., and Federal Reserve Board Gov. Jerome Powell will moderate a panel discussion on the future of the settlement process for Treasury market transactions at the Evolving Structure of the U.S. Treasury Market conference at 1:45 p.m.
4. -- Chinese investment firm, China Oceanwide Holdings Group, agreed to acquire Genworth Financial for about $2.7 billion, or $5.43 a share in cash.
Genworth shares closed Friday at $5.21.
China Oceanwide, founded by Chinese businessman Lu Zhiqiang, also agreed to commit $600 million of cash to address Genworth debt, and $525 million of cash to the U.S. life insurance businesses.
5. -- TD Ameritrade (AMTD) reached a deal to buy online brokerage Scottrade Financial Services for $4 billion in cash and stock.
"The transaction combines two highly complementary organizations with long histories of helping millions of people invest in their financial futures," Ameritrade said in a statement on its website. "For TD Ameritrade, the transaction adds significant scale to its retail business, extends its leadership in trading, and more than triples the size of its geographic sales force footprint."
The cash-and-stock deal is worth $4 billion. TD Ameritrade said it expects $450 million in annual synergies from the deal, plus $300 million in long-term cost savings.
In premarket trading, TD Ameritrade stock was sinking by 1% to $36.70.