Dow and Russell 2000 drop
The Russell 2000 index and the Dow fell on a day market by news of the latest corporate deal making. The Russell 2000 lost 1.91 points, or 0.23%, to finish at 846.28. The Dow Jones Industrial Average lost 26.50 points, or 0.19%, to 13,612.98.
With little news to occupy investors’ minds, the markets reacted to news that Australia’s BHP Billiton Ltd. (NYSE: BHP), the world’s largest mining company, is renewing its $40 billion bid for Pittsburgh, Pa.-based aluminum producer Alcoa Inc. (NYSE: AA), according to press reports.
Elsewhere, Rupert Murdoch’s News Corp. (NYSE: NWS) might be facing a rival bid in his attempt to buy the Dow Jones & Company, Inc. (NYSE: DJ). According to The Wall Street Journal, the publisher of the Financial Times might join General Electric Co. (NYSE: GE) to make a higher offer.
Meanwhile, the price of oil reached a 10-month high, clearing $69 a barrel, up more than one dollar, due to a drop in supplies following news of an upcoming strike in Nigeria and attacks on the country’s oil infrastructure.
Among specific small-cap companies:
Shares of Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX) gained ground following news the company has reached a financing agreement with investment firm The Invus Group LLC. Under the terms of the agreement, The Woodlands, Texas-based drug maker will receive $205 million in 2007 and up to $345 million over the next years, the company said on Sunday, June 17. In return, Invus will receive a 40% stake in Lexicon. Shares added $0.24, or 8%, to close at $3.32.
Footwear and apparel retailer The Finish Line, Inc. (Nasdaq: FINL) will acquire rival Genesco Inc. (NYSE: GCO) for $54.50 per share in cash, or about $1.5 billion in total. The transaction, which has been approved by both boards, is expected to generate approximately $15 million to $20 million in annual cost savings during the first year, the Indianapolis, Ind.-based company announced before the start of trading. The Finish Line said also that it hopes the deal will lead to increased sales and strengthen its product line. Nashville, Tenn.-based Genesco had previously rejected a bid by Foot Locker, Inc. (NYSE: FL). Shares fell $1.10, or 9%, to settle at $11.53.
Shares of Encysive Pharmaceuticals Inc. (Nasdaq: ENCY) plummeted $1.78, or 43%, to $2.32, on news that the U.S. Food and Drug Administration has declined to approve its drug for the treatment of pulmonary arterial hypertension. Encysive has received a letter from the FDA stating that the development program for the drug Thelin does not show the effectiveness needed for approval, the Houston-based company said after the close on Friday, June 15. Pulmonary arterial hypertension is an increase in blood pressure in the heart, which leads to dizziness and shortness of breath during periods of heavy exertion.
