Titanium Metals Merges with Precision Castparts, Leucadia to Buy Jeffries

Arthi Gupta
12 Nov, 2012
New York City

U.S. indexes gained as fiscal cliff worries recede and investors focus on recent economic data. Precision Castparts agreed to acquire Titanium Metals for $2.9 billion. Leucadia offered $3.6 billion to acquire remaining stake in Jeffries Group. D.R. Horton quarterly net soared.

[R]9:35 AM New York – U.S. indexes gained as fiscal cliff worries recede and investors focus on recent economic data. Precision Castparts agreed to acquire Titanium Metals for $2.9 billion. Leucadia offered $3.6 billion to acquire remaining stake in Jeffries Group. D.R. Horton quarterly net soared.[/R]

U.S. indexes rebounded as lawmakers work to avoid the automatic spending cuts and tax increases.

Investors focused on the recent improving economic data and downplayed the fast approaching fiscal cliff as lawmakers of both parties and President Barack Obama prepare for budget negotiations.

The automatic spending cuts and tax increase are not likely to take effect for several months and are designed to be effective gradually in the year, softening the impact on the economy.

The European indexes traded sideways after Greek lawmakers approved the 2013 budget. Earlier last week the Greek parliament approved the 2013 budget with new austerity measures and spending cuts by a 167 to 128 vote.

Euro group finance ministers meet in Brussels today that may lead to the finalization of the loan as Greece needs €5 billion debt repayment on November 16.

Asian markets edged lower on growth worries and Japan''s gross domestic product contracted 0.9% in the third quarter, the Cabinet Office said in a report. From a year ago the GDP shrank 3.5%.

Jeffries Group in a $3.6 Billion Deal

Jefferies Group agreed to be acquired by Leucadia National Corporation for $3.6 billion.

Leucadia will exchange 0.81 of its share for each share of Jeffries, offering 24% premium from the closing price on Friday.

Leucadia, the diversified conglomerate already owns 28.6% of Jeffries and shareholders of Jeffries will control 35.3% of the newly merged company.

Jeffries will continue to operate as a subsidiary of Leucadia and will file financial reports with the regulatory agency SEC.

Precision Castparts to Acquire Titanium Metals

Precision Castparts Corp. agreed to acquire Titanium Metals Corporation for $16.50 per share in cash. The transaction values Titanium Metals Corporation at a total enterprise value of approximately $2.9 billion, including net cash and equivalents.

The acquisition is expected to be immediately accretive to earnings.

Earnings Review

Beazer Homes USA, Inc. ((BZH)), the diversified homebuilder reported fourth quarter total revenue advanced to $370.93 million from $334.91 million in the prior-year quarter. Net loss in the quarter widened to $66.23 million compared with $43.18 million last year, while quarterly loss per share narrowed to $2.82 from $2.91 a year ago.

D.R. Horton, Inc. ((DHI)), the homebuilder reported fourth quarter homebuilding revenue increased 21% to $1.3 billion from $1.1 billion in the same quarter of 2011. Homes closed in the quarter increased 12% to 5,575 compared to 4,987 homes in the year ago quarter. Net income for the quarter increased 180% to $100.1 million or 30 cents per diluted share $35.7 million or 11 cents per diluted share

For the fiscal year, homebuilding revenue increased 19% to $4.2 billion from $3.5 billion in fiscal 2011. Homes closed in fiscal 2012 increased 13% to 18,890 homes compared to 16,695 homes in fiscal 2011. Net income increased to $956.3 million or $2.77 per diluted share compared to net income of $71.8 million or 23 cents per diluted share for fiscal 2011.

ITC Holdings Corp. ((ITC)), the electric transmission operator estimated operating earnings for 2013 between $4.80 and $5.00 per share.