U.S. Housing Market Stabilizes, Blackstone to Buy Vivint for $2 B

Arthi Gupta
19 Sep, 2012
New York City

U.S. indexes gained after housing markets showed the signs of healing. Blackstone agreed to buy residential security provider Vivint for $2 billion and B2Gold agreed to acquire CGA Mining for C$1.1 billion. General Mills quarterly earnings soared 35%.

[R]10:05 AM New York – U.S. indexes gained after housing markets showed the signs of healing. Blackstone agreed to buy residential security provider Vivint for $2 billion and B2Gold agreed to acquire CGA Mining for C$1.1 billion. General Mills quarterly earnings soared 35%.[/R]

U.S. indexes edged higher after housing starts rebounded in August and confirmed the stabilization in the market that has been on the slide in the last four years.

European and Asian markets also rose after the Bank of Japan decided to increase the total size of the asset purchase program by 10 trillion yen to about 80 trillion yen. The central bank will purchase treasury discount bills by about 5 trillion yen and Japanese government bonds by about 5 trillion yen.

The bank also stated that the maximum outstanding amount of financial assets purchased through the program will be about 55 trillion yen or $695 billion and the maximum outstanding amount of loans provided will be about 25 trillion yen.

U.S. Housing Starts Rise

New housing construction in the U.S. rebounded but building permits fell in August.

Construction of homes and apartments rose 2.3% to a seasonally adjusted annual rate of 750,000 in August, from a revised 733,000 in July, according to data released by the U.S. Commerce Department today.

Single-family housing starts rose 5.5% to an annual rate of 535,000 homes in August but are still one third of the peak 2.26 million in January 2006. Residential construction account for 2.5% of all economic activities and for the first time is expected to make a positive contribution to the GDP data this year.

New building permits were at a seasonally adjusted annual rate of 803,000 in August, 1% below the revised July rate of 811,000.

Blackstone to Buy Vivint

Blackstone Group LP agreed to acquire Vivint Inc. from its existing shareholders, including Goldman Sachs, Peterson Partners, and Jupiter Partners for in excess of $2 billion. The transaction is expected to close before the year-end.

B2Gold to Acquire CGA Mining

B2Gold Corp. and CGA Mining Limited entered into a merger implementation agreement to combine the two companies in a transaction valued at approximately C$1.1 billion.

The combination of B2Gold and CGA will result in a merged entity operating the Masbate gold mine in the Philippines.

Earnings Review

Ascena Retail Group Inc. ((ASNA)), the specialty retailer reported fourth quarter net sales rose 29% to $939.7 million from the previous year. Net income in the quarter fell to $1.6 million or 1 cent per diluted share, from $28.2 million or 18 cents per share reported a year earlier.

AutoZone, Inc. ((AZO)), the automotive replacement parts retailer reported fourth quarter net sales rose 4.6% to $2.8 billion from the fourth quarter a year ago. Domestic same store sales increased 2.1% in the quarter.

Net income for the quarter increased 7.4% to $323.7 million or $8.46 per diluted share compared to $301.5 million or $7.18 per share in the prior year.

For the fiscal year, sales were $8.6 billion, an increase of 6.6% from the prior year, while domestic same store sales were up 3.9%. Net income for the year increased 9.6% to $930 million, while diluted earnings per share for the period increased to $23.48 from $19.47.

Cracker Barrel Old Country Store, Inc. ((CBRL)), the restaurant chain reported fourth quarter total revenue increased to $700 million from $612.9 million last year. Comparable store traffic increased 1.4%; comparable store restaurant sales increased 3.8%; and comparable store retail sales increased 3.1%.

Net income increased to $34.7 million or $1.47 per diluted share from $17.5 million or 75 cents per share last year.

Total revenue for the fiscal year was $2.58 billion. Net income for the year was $103.1 million or $4.40 per diluted share compared to $85.2 million or $3.61 per diluted share.

General Mills, Inc. ((GIS)), the consumer foods manufacturer reported first quarter net sales grew 5% to $4.05 billion, reflecting contributions from acquired businesses. Net earnings climbed 35% to $548.9 million or 82 cents per diluted share from $405.6 million or 61 cents per share last year.