U.S. Inflation Flat; United Rentals Offers $1.9 Billion for RSC

Nichole Harper
16 Dec, 2011
New York City

U.S. stocks advanced after latest read on the inflation was lower than expected. Bank stocks were in focus after another rating downgrade cut the debt rating of banks Goldman Sachs, Bank of America and Credit Suisse. Zynga, the social game developer raised $1 billion in a public offering.

[R]12:31 PM New York – U.S. stocks advanced after latest read on the inflation was lower than expected. Bank stocks were in focus after another rating downgrade cut the debt rating of banks Goldman Sachs, Bank of America and Credit Suisse. Zynga, the social game developer raised $1 billion in a public offering.[/R]

U.S. stocks traded higher after the latest read on the inflation was in line with the Fed’s target rate and Italy approved the austerity measures to reign in expenses. Banks were also in focuse after Fitch Ratings lowered its views on several banks including Bank of America, Credit Suisse, Goldman Sachs and Citigroup.

U.S. consumer prices were flat in November following a 0.1% decline in October according to the latest data released by the Labor Department. Core consumer prices, excluding food and energy prices, rose 0.2% in the month.

For the 12-month to November, consumer prices rose 3.4% and declined from 3.5% increase in the period to October and the smallest annual price increase since April.

The clothing prices increased at the fastest pace in the last twelve months at 4.8% and housing rental costs increased 2.4%.

Monti Wins Confidence Vote

European markets traded mixed as investors focused on the bureaucratic approvals of the latest austerity measures in Italy and Greece. Bonds of Spain and Italy rallied for the second day after better than expected auctions earlier in the week.

Italian Prime Minister Mario Monti won a parliamentary confidence vote as expected on its austerity measures by 495 votes to 88.

The Chamber of Deputies approved €33 billion package of austerity measures and spending cuts and the package now heads to the Senate for its approval before Christmas.

The measures proposed by Monti did face stiff opposition from the Northern League and unions and have been in force since December 4 but needed a parliamentary approval in sixty days.

United Rentals Offers $1.9 Billion for RSC

United Rentals Inc agreed to acquire RSC Holdings Inc for $1.9 billion. The rental company offered $18 a share, a 58% premium to RSC’s closing price yesterday to bolster its revenue from less volatile sectors in the economy.

United Rentals revenues have plunged in the last three years after housing market collapsed and construction dipped to the lowest level in many decades.

For each RSC share held by investors, United will offer $10.80 in cash and 0.2783 share of United Rentals according to the company statement on its Web site.

The deal is worth $4.2 billion after including $2.3 billion of total debt held by the company an RSC’s largest shareholder Oak Hill Capital Partners agreed to vote its 33.5% stake in the company in favor of the deal.

Stock Movers

Zynga, ((ZNGA)) the online game developer on social media sites, priced its public offering of 100 million shares for $10 a share. The company priced its offering at the upper end of its filing range between $8.50 and $10.

United Rentals, Inc ((URI)) increased $1.15 to $27.18 after it agreed to acquire RSC Holdings for $1.9 billion. RSC Holdings ((RRR)) soared $6.26 to $17.63.

Morton’s Restaurant Group, Inc ((MRT)) soared 32.2% to $6.82 after the company agreed to be acquired by Tilman Fertitta for $116.6 million. The offer is 33% premium to its closing price.

Fertitta, owner of Landry’s Restaurants Inc, earlier terminated his $137 million tender offer for McCormick & Schmick controlled Seafood Restaurants Inc.

Research in Motion Limited ((RIMM)) plunged 11.3% to $13.43 after the company reported a delay in next generation of BlackBerry smartphones.

The company also announced third quarter net profit of $256 million or 51 cents compared to $911 million or $1.74 from a year ago period Revenues in the quarter declined 6% from a year ago quarter to $5.2 billion.

The smartphone maker also said it would ship between 11 million and 12 million units in the current period compared to 14.1 million phones in the third quarter.

Bank of America added 3 cents to $5.23, Citigroup increased 19 cents to $26.11 and Goldman Sachs declined 68 cents to $91.22.

Fitch Ratings lowered its debt rating to A from A+ for Bank of America Corp, Goldman Sachs Group and Citigroup Inc.

The rating agency also cut the debt rating of Credit Suisse Group AG, Deutsche Bank AG and BNP Paribas SA.