New York Manufacturing Drops, Sprint Completes Clearwire Deal

Arthi Gupta
17 Dec, 2012
New York City

The U.S. indexes gained on renewed optimism on fiscal cliff talks. Sun Life Financial agreed to sell its U.S. annuity business for $1.35 billion. Laclede agreed to acquire two Southern Union utilities in $1.035 billion deal.

[R]9:40 AM New York – The U.S. indexes gained on renewed optimism on fiscal cliff talks. Sun Life Financial agreed to sell its U.S. annuity business for $1.35 billion. Laclede agreed to acquire two Southern Union utilities in $1.035 billion deal.[/R]

U.S. indexes edged higher in early morning trading after budget negotiations progressed and House Speaker John Boehner offered to increase takes on taxpayers with income of $1 million or more.

The European indexes traded lower after euro zone exports declined but resulted in a trade surplus in October.

The European Council agreed on a roadmap for the completion of the Economic and Monetary Union, as well as the adoption of the Single Supervisory Mechanism and of the new rules on recovery and resolution and on deposit guarantees.

In Asia, Japan''s Liberal Democratic Party led by Shinzo Abe won the parliamentary elections and returned to power after three years. The landslide victory gives the party more leeway to implement reforms for economic growth but weak economy and high government deficits limits the ability to make large changes.

New York Manufacturing Activity Drops

New York manufacturers continued to decline at a modest pace in December, according to the latest data from the New York Federal Reserve released today.

The general business conditions index was negative for a fifth consecutive month, falling three points to -8.1. The new orders index dropped to -3.7, while the shipments index declined six points to 8.8.

AIG to Sell Remaining Stake in AIA

American International Group, Inc. commenced a sale in Hong Kong of its remaining 13.7% stake of about 1.65 billion shares in American International Assurance Group Ltd to certain institutional investors between a range of HK$29.65 and HK$30.65 per share, to raise up to $6.58 billion.

AIG expects to use the net proceeds from the placing of AIA ordinary shares for general corporate purposes.

Sprint Completes Clearwire Acquisition

Sprint Nextel Corp. agreed to acquire the approximately 50% stake in Clearwire it does not currently own for $2.97 per share, equating to a total payment to Clearwire shareholders, other than Sprint, of $2.2 billion.

This transaction results in a total Clearwire enterprise value of approximately $10 billion, including net debt and spectrum lease obligations of $5.5 billion.

Sun Life Financial to Sell U.S. Annuity Business

Sun Life Financial Inc. inked an agreement whereby Delaware Life Holdings, a company owned by shareholders of Guggenheim Partners, will purchase Sun Life’s domestic U.S. annuity business and certain life insurance businesses for $1.35 billion.

Sun Life Financial estimates that the transaction will result in a reduction in book value of $950 million at closing.

Laclede to Purchase Two Southern Union Utilities

The Laclede Group, Inc.’s two newly formed subsidiaries agreed to acquire the assets of Southern Union''s Missouri Gas Energy and New England Gas Company divisions for $1.035 billion, comprising of $1.015 billion in cash and nearly $20 million of assumed NEG debt.

Laclede expects the transaction to be neutral to its earnings per share in the first full year after close and accretive thereafter. This transaction is expected to close before the end of the third quarter of calendar 2013.

Earnings Review

Peabody Energy Corporation ((BTU)), the coal miner said in the first quarter of 2013 there will be a decline of approximately 2 million tons in U.S. sales based on the current demand profile.

Charles Schwab Corp. ((SCHW)), the financial services provider said for November, net new assets totaled $16.2 billion, including a $5.4 billion inflow related to a mutual fund clearing services client and a $0.9 billion outflow related to a planned transfer from corporate brokerage services.

Total client assets reached a record $1.92 trillion as of November, up 15% from a year ago month and up 1% compared to October.

The Scotts Miracle-Gro Company ((SMG)), the consumer lawn and garden products marketer estimates fiscal year 2013 adjusted earnings per share from continuing operations in the range of $2.50 to $2.75.