U.S. Indexes Higher; Equity Residential Buys Stake in Archstone

Arthi Gupta
05 Dec, 2011
New York City

The U.S. indexes futures edged higher after positive developments in Europe. The Italian Parliament is expected to approve

[R]8:45 AM New York – The U.S. indexes futures edged higher after positive developments in Europe. The Italian Parliament is expected to approve €30 billion of spending cuts and measures. Equity Residential agreed to acquire 26.5% stake in Archstone for $1.3 billion.[/R]

U.S. indexes futures edged higher on hopes of a resolution to the euro area debt crisis and European markets traded higher as leaders in the region work to finalize details of various agreements and proposals before the summit later in the week.

Germany and France worked to settle differences in how to expedite the fiscal integration in the region and tighten the oversight from the European Union to prevent the recurrence of the financial crisis. The fiscal integration may be limited to the euro zone nations as changes to original treaty may take longer and may need public referendum.

The leaders also look for ways to increase the size of the rescue fund and invite participation of the International Monetary Fund that will provide additional funds to the euro zone.

Investors will also focus on a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy in Paris later today.

Italian Cabinet approved measures to trim expenses and stimulate economy on Sunday and estimated that the budget will be balanced in the next fiscal year.

Asian markets traded mixed after Chinese service sector growth fell in November and Australia is likely to lower rate tomorrow after the meeting of the central bank.

The Markit/HSBC composite output index, that measures economic activity in both manufacturing and service sectors, fell to 48.9 in November from 52.6 in October. This was the first decline since July.

Equity Residential Acquires Stake in Archstone

Equity Residential agreed to acquire an approximate 26.5% ownership interest in Archstone, a privately-held owner, operator and developer of multifamily apartment properties for $1.325 billion in cash. The ownership interests under contract represent one half of the collective interests currently owned by affiliates of Bank of America and Barclays Bank PLC.

Commercial Metals Rejects Icahn’s Proposal

Commercial Metals Co. rejected an unsolicited proposal from Carl Icahn and Icahn Enterprises L.P. to acquire the company for $15 per share claiming it substantially undervalues the company.

Icahn Enterprises made an offer for Commercial Metals for about $1.73 billion on November 28. Icahn holds a 10% stake in Commercial Metals.

SAP Acquires SuccessFactors

SAP announced a deal to acquire SuccessFactors for $40 per share in cash, representing an enterprise value of about $3.4 billion.

SAP expects the deal to close in the first quarter of 2012 and be slightly dilutive to its non-IFRS earnings per share in 2012 and accretive in subsequent years.

Earnings Review

Altria Group, Inc. ((MO)), the tobacco maker estimates fiscal year 2011 earnings of $1.58 to $1.64 per share compared to its prior outlook of $1.60 to $1.66 per share.

Dollar General Corp. ((DG)), the discount retailer reported third quarter net sales climbed 11.5% to $3.60 billion from $3.22 billion in 2010, with same-store sales rising 6.3%. Net profit in the quarter rose 34% to $171.2 million, or 50 cents per diluted share compared to net profit of $128.1 million, or 37 cents per share last year.

MetLife, Inc. ((MET)), the life insurer and financial services provider, estimated fourth quarter operating earnings in the range of $1.2 billion to $1.3 billion, or between $1.16 and $1.26 per share.

Walgreen Company ((WAG)), the drugstore chain reported November comparable-store sales rose 1.8% from a year ago with a 2.7% in comparable front end sales and a 1.2% improvement in comparable pharmacy sales.

Total sales in the month increased 4.2% to $6.09 billion from $5.84 billion on the back of a 4.0% hike in front end sales.