Stock News Briefs: Sprint-Deutsche Telekom Merger Talk; Citi Downgrades Potash And Mosaic

Sprint-Deutsche Telekom Merger Talk Surfaces; EU Projects 3Q and 4Q Growth; Source: J&J and Elan Restructuring Deal; Chevron Cashing in on Asia Gas Demand; Citi Downgrades Potash and Mosaic; Eli Lilly Sheds 14% of Workforce; American and Delta Bidding for Japan Airline Stake

• Talk of a merger between Sprint Nextel Corp. (S) and Deutsche Telekom AG (DT), emerged yesterday (Monday) sending Sprint’s stock soaring 10% to close at $4.15 a share. If the companies merged, Deutsche Telekom’s T-Mobile Unit would surpass AT&T Inc. (T) and Verizon Communications Inc. (VZ) to become the new leader with more than 30% market share of the U.S. wireless industry, Reuters reported.

• The European Union (EU) yesterday (Monday) said the euro-area economy will likely return to growth in the third and fourth quarters this year after billions in government bailouts. The euro-area economy is projected to expand 0.2% in the third quarter and 0.1% in the fourth. For the full year, the economy may contract 4.0%, the EU said. “We expect to see a relatively good third quarter partly as a consequence of fiscal and monetary stimulus,” Laurent Bilke, a senior economist at Nomura in London, told Bloomberg News. “I wouldn’t call it a recovery, however. The economy will be a bit more resilient in 2010 to face the end of stimulus measures.”

• A source told Reuters yesterday (Monday) that health-care juggernaut Johnson & Johnson (JNJ) is in talks with Irish drugmaker Elan Corp. PLC (ELN) to reduce the price of a $1.5 billion deal signed by the companies last year. A U.S. judge ruled earlier this month that the deal breached a 50-50 partnership to sell multiple sclerosis drug Tysabri between Elan and Biogen Idec Inc. (BIIB).

• Chevron Corp. (CVX) and its partners in the development of Australia’s Gorgon project forecast to earn $258 billion (A$300 billion) from gas sales to China, India and Japan in the next 20 years, Bloomberg reported. “If the demand wasn’t a reality, we wouldn’t see the sort of huge gas contracts we’re seeing right now,” Gavin Wendt, a senior resources analyst at Fat Prophets Funds Management, told Bloomberg. “The Chinese are committing themselves in a massive way. That’s a clear indication.”

• Citigroup Inc. (C) downgraded shares to fertilizer titans Potash Corp. of Saskatchewan Inc. (POT) and Mosaic Co. (MOS) to “hold” from “buy,” saying it expects less fertilizer application in the fall as well as price risks tied to delayed contracts with China, MarketWatch reported. “Many cornbelt farmers are losing money with current spot corn at about $3.15 a bushel, which makes them hesitant to spend money,” Citi analysts said.

• U.S. drugmaker Eli Lilly & Co. (LLY) said it would shed 5,500 jobs worldwide, about 14% of its workforce, hoping to save $1 billion in costs. The company also said it would reorganize into five units:  Oncology, diabetes, established markets, emerging markets and Elanco animal health. “The major emphasis is to prepare us to enter what’s going to be a challenging period for the company, as we see patent expirations, and to speed up new products as we enter that period,” Chief Executive John Lechleiter told Bloomberg in the interview.

• Desperate for more revenue streams, American Airlines and Delta Air Lines (DAL) are considering separate, competing investments in struggling carrier Japan Airlines, Reuters reported. The whispers shot Japan Airlines - which lost about $1 billion last quarter - shares up 5% on yesterday (Monday).

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