Delta and Northwest Stocks Fall On Merger Deal

US stocks step slightly into the positive territory Tuesday for the first time in three days on a firmer-than-forecast New York manufacturing report which showed an unexpectedly gain in activity. What’s hogging headlines is the another merger news, this time from the airline industry. Delta Air Lines [[dal]] and Northwest Airlines [[nwa]] have agreed to a $3.63 billion deal, and they are set to become the world’s largest carrier - if they can get past federal regulators and employee union groups. Delta will buy over Northwest in an all-stock swap in which Northwest shareholders will receive 1.25 Delta shares for every Northwest share they own. Although Delta said there will be no closures of any hubs, investors are not so assured of that. Even though the two companies have agreed to the price and structure, the Atlanta-based Delta still has to appease pilots’ groups (especially Northwest pilots) and other employee unions who are dissatisfied with the agreement, and get past antitrust authorities. If they can’t convince the authorities, their case may end up like the failed merger between United Airlines and US Airways in 2001. Both Delta and Northwest shares fell.

Crude oil for May delivery rose to another record high on Tuesday to $113.93 a barrel. Exxon Mobil [[xom]], the biggest US oil company, climbed higher today. Chevron [[cvx]], the second largest, also rose.

Meanwhile, Crocs [[crox]], the manufacturer of colorful clogs, is losing some of its color and shine. Its shares fell after it said it will lay off 600 factory workers in Canada after lowering annual earnings and its first-quarter sales forecasts as consumer spending slowed. The company will shut down its Canadian manufacturing operations, shifting its production to its lower-cost company-owned and third-party facilities. It now expects to lose as much as five cents a share for the first quarter.

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