The Deal
Sunday, November 22, 
8:14 am

Same story brings out same old bears

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Deal Stocks and the broader market sagged Tuesday due in part to a National Association of Realtors report of the seventh existing home sales decline in eight months, coupled with continued news of soaring oil prices as light sweet crude oil for May delivery neared $120 per barrel in Tuesday trading. The Dow Jones Industrial Average sunk 104.79 points Tuesday to close at 12,720.79. 

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Oil woes looked to have weighed down Delta Air Lines Inc.'s and Northwest Airlines Corp.'s stock despite news that union leaders representing Delta pilots said in a late Monday letter that the group would be open to using arbitration to accelerate the integration of the two airlines' pilot union groups, which has been viewed as one of the major hurdles of Northwest's pending $3.6 billion acquisition of its rival. Delta's stock fell 17.07% to close at $6.80 per share Tuesday and Northwest slid 17.55% to $7.47. 

CIT Group Inc., yet another victim of the subprime lending debacle, fell 15.62% Tuesday to close at $1.99 per share. CIT said on Monday that it would raise $1.5 billion  from selling common and convertible preferred stock, increasing the allotment from $1 billion announced on Tuesday. The troubled lender, which has $9 billion in subprime exposures in late March, drew down its entire $7.3 billion of bank lines to help pay back commercial paper and other debt and is looking at select asset sales. 

Not all was bleak among deal stocks. Clear Channel Communications Inc. rose 4.39% to $29.74 per share on news that lenders for the $25 billion buyout by Bain Capital LLC and Thomas H. Lee Partners LP have offered to arbitrate their dispute over the debt financing. - Michael Rudnick




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