Magna shares slump on U.S. antitrust probe

Magna shares slump on U.S. antitrust probe

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WASHINGTON (Global Markets) - Shares of Magna International (MG.TO) (MGA.N) slipped on Thursday after the auto-parts maker said it was co-operating with a U.S. antitrust investigation into the automobile tooling industry.

Analysts said the Justice Department investigation was likely part of a broader antitrust probe into the auto parts sector, which has been underway for at least 18 months, and did not expect the outcome to have a material impact on the Ontario-based Magna, one of the world's largest auto-parts makers.

Magna said the DOJ had requested documents related to various tooling bids, including a program for which a subsidiary within its Cosma International unit acted as tier 1 tooling supplier.

"I am confirming that the antitrust division is investigating the possibility of anti-competitive practices in the automotive tooling industry," said Justice Department spokeswoman Gina Talamona.

Tooling, which is the equipment used to make auto parts, makes up about 8 percent of Magna's sales and a smaller portion of its profits, Canaccord Genuity analyst David Tyerman said.

"It seems unlikely that any fine would be large enough to materially impact the company, given that it has $1.7 billion in cash currently," Tyerman said.

The Justice Department has a separate antitrust investigation into the auto parts business, said Talamona, who declined to say which companies were involved.

The Justice Department has contacted TRW Automotive Holdings Corp (TRW.N) and Autoliv Inc (ALV.N) in connection with possible violations of antitrust law, the two companies have said.

Magna's shares were down C$1.82 at C$37.13 on the Toronto Stock Exchange on Thursday afternoon. In New York, the stock closed down 5 percent at $36.41.

($1=$1.02 Canadian)

(Reporting by Nicole Mordant in Vancouver and Sakthi Prasad in Bangalore; editing by Rob Wilson, Bernard Orr)

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Diamond Foods slides on report of criminal inquiry

Diamond Foods slides on report of criminal inquiry

Stock Market Predictions

(Global Markets) - Shares of Diamond Foods Inc (DMND.O) fell as much as 11 percent on a report that federal prosecutors have launched a criminal inquiry into the company's walnut payments.

The Wall Street Journal said on Thursday that the Justice Department has launched a criminal inquiry into the snack maker's accounting of payments to walnut growers while it was in talks to buy Pringles from Procter & Gamble (PG.N).

"It is prudent to go to the sidelines until the audit committee investigation is complete ... and we have more clarity on the outcome of these additional inquiries," KeyBanc Capital Markets analyst Akshay Jagdale wrote in a note to clients.

He downgraded the stock to "hold" from "buy."

Shares of the company were down 9 percent at $30.03 in early trade on the Nasdaq, after touching a two-week low of $29.36.

(Reporting by Arpita Mukherjee in Bangalore; Editing by Unnikrishnan Nair)

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Cardinal wins order lifting DEA suspension in Florida

Cardinal wins order lifting DEA suspension in Florida

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BOSTON/WASHINGTON (Global Markets) - Cardinal Health Inc (CAH.N) won an order on Friday blocking the U.S. Drug Enforcement Administration's suspension of its license to distribute potentially addictive medicines from its Florida facility.

The DEA ordered suspension because Cardinal knew, or should have known, that the pharmacies were inappropriately filling prescriptions for oxycodone by physicians for illegitimate reasons, the company said.

Cardinal filed a request in federal court in Washington for a temporary restraining order to block the DEA order, saying it unfairly affected all shipments of all controlled substances to about 2,700 pharmacies, hospitals and other customers.

U.S. District Judge Reggie Walton responded quickly in granting Cardinal's request, noting the company had already suspended shipments to the four pharmacies in question, two independent and two CVS outlets.

The DEA suspension order "is unnecessary to address the problem the DEA alleges because the plaintiff is not currently supplying controlled substances to the four pharmacies identified," Walton wrote in a brief order.

Cardinal "has also pledged to terminate sales of controlled substances to any pharmacy or customer that the DEA believes is likely engaging in illegal activity or diversion."

He noted the suspension would have disrupted supplies to thousands of hospitals, pharmacies and healthcare providers.

On a conference call with Wall Street analysts, Cardinal Chief Executive George Barrett said he was "outraged" at the imperial way in which the DEA suspended its license, saying the agency had not contacted the company beforehand or given it the "opportunity to be heard."

He also said the order will not affect its financial forecasts and that, if necessary, the company was prepared to ship medicines from its Mississippi facility.

A spokesman for the U.S. Justice Department, which oversees DEA and represents it in court, declined to comment. A DEA spokesman was not immediately available for comment after normal business hours.

The dispute highlights a growing rift between the DEA and companies that make painkillers, stimulants, tranquilizers and other potentially addictive medicines at a time of increased prescription drug abuse. Florida is one of states most affected by the problem.

Cardinal said the DEA suspended the company's license based on increased shipments made to four pharmacies, but the company said volume alone is not sufficient evidence to assume products are being diverted for recreational use.

The needs of pharmacies are varied, and higher volumes might be appropriate based on factors such as pharmacy size, patient demographics and proximity to acute care centers, the company said.

PREVIOUS SUSPENSION

In 2007, the DEA suspended Cardinal's license to distribute controlled substances from the same Lakeland center and another center, in Auburn, Washington, saying the company failed to maintain effective controls of its distribution to retail pharmacies.

The DEA at the time cited the sale of the painkiller hydrocodone to pharmacies that allegedly dispensed the drug based on improper prescriptions from Internet pharmacy websites.

Barrett said the company has since taken significant steps to rebuild its systems and hire new personnel to oversee the process. He said it already scans for potential misappropriation of the drugs and that a spike in volume is one red flag.

He blamed the DEA for not sharing information that would make it easier to prevent drugs from being diverted and added today's action "does nothing to solve the problem."

Cardinal's shares closed down 0.4 percent at $42.05 in regular trading on the New York Stock Exchange.

The case is Cardinal Health Inc v. Holder, U.S. District Court, District of Columbia, No. 12-185.

(Reporting By Toni Clarke in Boston; Additional reporting by Jeremy Pelofsky in Washington; Editing by Matthew Lewis, Tim Dobbyn editing by Andre Grenon)

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DOJ seeks trustee in Solyndra bankruptcy

DOJ seeks trustee in Solyndra bankruptcy

Stock Market Predictions

(Global Markets) - The U.S. Department of Justice is seeking to give control of Solyndra's estate to a bankruptcy trustee, citing the refusal by executives at the solar power company to answer questions about its operations.

Just days after the company's September 6 bankruptcy filing, the Federal Bureau of Investigation raided Solyndra's headquarters in Fremont, California. And Congress is investigating the role political connections played in securing a government loan guarantee for Solyndra, which was visited by U.S. President Barack Obama last year.

Solyndra Chief Executive Brian Harrison and CFO W.G. Stover refused to answer several questions about the company at a Congressional hearing last week.

A Chapter 11 trustee is responsible for management of an estate's property, operation of the business and possibly the filing of a reorganization plan.

In a court filing on Friday, the Justice Department's bankruptcy representative said it was not making any allegations of wrongdoing.

Still, executives have a fiduciary duty to provide information about the company's operations, it said. Executives should reveal whether the company paid bonuses after management realized the company's poor financial condition, it said, as well as whether financial information submitted to creditors was accurate.

"Transparency and disclosure are the linchpins of the bankruptcy system," the DOJ filing said.

In addition to Harrison and Stover's appearance before Congress, a Solyndra lawyer declined to provide information about the extent and nature of Solyndra's contracts with customers to the DOJ bankruptcy representative, the filing said.

A Solyndra representative, along with attorneys for Harrison and Stover, could not immediately be reached for comment on Friday.

Solyndra executives' assertion of their right to avoid self-incrimination is "incompatible" with their duty to act in the best interests of the estate and its creditors, the department said in its filing.

As an alternative to the appointment of a Chapter 11 trustee, the Justice Department asked the Delaware bankruptcy court to convert the Solyndra bankruptcy to a Chapter 7, or liquidation.

Separately, Stirling Energy Systems filed for Chapter 7 liquidation last week, yet another in a string of solar companies to seek bankruptcy protection.

The Scottsdale, Arizona-based company was working on technology that concentrates the sun's rays onto an engine that creates electricity. The technology was to run in two solar plants under development from Tessera Solar, a company that shared a majority owner, NTR, with Stirling.

Tessera sold both those plants.

Stirling had assets in the $1 million-$10 million range and liabilities in the $50 million-$100 million range, it said in court filings.

(Reporting by Dan Levine and Sarah McBride in San Francisco; editing by Andre Grenon and Richard Chang)

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