U.S. Retail Sales Rise 1.2%; Caterpillar, EMC in Deals

Devan Biswas
15 Nov, 2010
New York City

U.S. stocks and dollar edged higher after two large deals totaling $10 billion were announced. October retail sales increased more than anticipated and lifted the indexes in early trading. General Motors and nine other companies are expected to raise $12.5 billion in public offerings this week.

[R]9:35 AM New York - U.S. stocks fell and the dollar edged higher after two large deals totaling $10 billion were announced. October retail sales increased more than anticipated. General Motors and nine other companies are expected to raise as much as $12.5 billion in a public offering this week.[/R]

Retail sales in October adjusted for seasonality and calendar rose 1.2% to $373.1 billion from September and up 7.3% from a year ago, according to the U.S. Commerce Department.

August to September revised retail sales rose 0.6% from the previous estimate of 0.7% increase.

Bucyrus International Inc agreed to be acquired by Caterpillar that valued the company at $8.6 billion including debt. Caterpillar will offer $92 a share or $7.6 billion in cash and assume the rest in debt. The offer is 32% premium to the company’s stock price on November 12 of $69.62.

EMC agreed to acquire Isilon Systems Inc for $2.25 billion

The dollar jumped 0.35% against the euro to $1.365 and gained 0.5% against the yen to 82.91 and rose to five week high as the U.S. retail sales rise.

Ireland and EU in Emergency Loans Talks

European markets were on the decline as sovereign debt yields of Ireland, Portugal and Greece were on the rise.

Though the officials in Ireland continue to deny that there is a “crisis” and the government needs external support, but 123jump.com sources within the EU in Brussels and the IMF in Washington, D.C. indicate an emergency bailout plan of at least 50 billion euros is in the works.

The EU-IMF led coalition is expected to offer as much as 100 billion euros in loans and guarantees as early as this week to calm bond markets. EU ministers and officials and ECB officials are scheduled to meet tomorrow in Brussels to hash out the preliminary plan of the bailout.

Busy U.S. IPO Calendar

Ten companies are expected to raise as much as $12.5 billion this week as the public offerings heat up to the most since October 2008.

General Motors Co is expected to complete the offering of 365 million shares this week that may raise as much as $10.5 billion at the upper end of its price range between $26 and $29 a share.

U.S. Treasury controls 61% of the automaker that lost $82 billion between 2005 and 2008 and may sell additional 54.8 million shares in the offering that will help the company to repay $49.5 billion bailout.

The largest domestic automaker will be valued at $43.5 billion after the offering and took eighteen months to emerge from bankruptcy protection since June 1, 2009.

Aeroflex Holding Corp, Booze Allen Hamilton Holding Corp, LPL Investment Holding Inc and Harrah’s Entertainment Inc are among the other nine companies expected to raise as much as $2.5 billion.

U.S. Movers

Blockbuster Inc, the video rental chain operating under bankruptcy filing protection said third quarter sales declined 19% to $736.6 million and loss narrowed to $53.5 million from $114.1 million a year ago.

BHP Billiton Ltd increased nearly 1% after the company abandoned its bid to acquire Potash Corp of Saskatchewan Inc and resumed its stock buyback program.