U.S. Durable Goods Orders Climb, Pinnacle to Acquire Ameristar for $2.8 B

Arthi Gupta
21 Dec, 2012
New York City

U.S. manufactured durable goods orders, personal income and spending rose more than anticipated in November. Pinnacle Entertainment agreed to acquire Ameristar for $2.8 billion. Mohawk is acquiring Marazzi for $1.5 billion in cash and equity.

[R]10:40 AM New York – U.S. manufactured durable goods orders, personal income and spending rose more than anticipated in November. Pinnacle Entertainment agreed to acquire Ameristar for $2.8 billion. Mohawk is acquiring Marazzi for $1.5 billion in cash and equity.[/R]

U.S. indexes and the European indexes edged lower after House lawmakers failed to pass Republican plan to increase tax on the wealthy tax payers.

The U.S. House Speaker John Boehner’s proposal to raise taxes on people earning more than $1 million met with dissent from his own party members. His Plan B failed to win enough support from the conservative wing of the Republican Party.

Markets in Asia sold off sharply after reacting first to the late evening news yesterday and European markets opened lower. A private survey showed that Germany''s consumer sentiment is set to decline in January.

U.S. Durable Goods Orders Climb

U.S. manufactured durable goods orders rose more than estimated in November, according to a report released by the Commerce Department today.

New orders for U.S. manufactured durable goods in November increased $1.6 billion or 0.7% to $220.9 billion. Orders increased six of the last seven months, followed a 1.1% increase in October.

Excluding transportation, new orders increased 1.6% in November.

Shipments of manufactured durable goods in November increased $3.4 billion or 1.5% to $227.1 billion. This followed a 0.1% increase n October.

U.S. Personal Income, Spending Rise

Personal income in the U.S. increased $85.8 billion or 0.6% in November. In October, personal income increased $7.5 billion or 0.1%

Disposable personal income increased $74.7 billion or 0.6% in November compared to the $6.4 billion, or 0.1% gain in October, according to the Bureau of Economic Analysis.

Personal consumption expenditures increased $41.3 billion or 0.4% in November after declining $6.6 billion or 0.1% in October.

[GE to Buy Avio Aviation Business

General Electric Co. agreed to purchase the aviation business of Avio S.p.A., the Italy-based manufacturer of aviation propulsion components and systems for civil and military aircraft, for $4.3 billion or €3.3 billion.

The purchase price represents a multiple of 8.5 based on 2012 estimated earnings before interest, taxes, depreciation and amortization.

This acquisition will strengthen GE’s global supply chain capabilities as its engine production rates continue to rise to meet growing customer demand.

Pinnacle Entertainment to Acquire Ameristar Casinos

Pinnacle Entertainment, Inc., the casino operator agreed to acquire Ameristar Casinos Inc. for a total enterprise value of $2.8 billion. This includes debt of $1.9 billion and cash on hand of $116 million as of September 30.

Under the terms of the deal, Pinnacle Entertainment will acquire all of the outstanding common shares of Ameristar for $26.50 per share in cash. The offer price represents a 20% premium of to Ameristar''s closing stock price of $22.07 a share on Thursday.

Mohawk to Purchase Marazzi

Mohawk Industries, Inc. is acquiring Marazzi Group S.p.A. the Italian ceramics manufacturer for €1.17 billion or approximately $1.5 billion, with a combination of cash and equity.

Marazzi''s estimated 2012 EBITDA of €145 million represents a purchase multiple of about eight times.

Crane Agrees to Buy MEI Conlux

Crane Co. agreed to purchase 100% of the equity interests in MEI Conlux Holdings (U.S.), Inc. and its affiliate MEI Conlux Holdings (Japan), Inc. from Bain Capital and Advantage Partners for about $820 million on a cash free and debt free basis.

The transaction is expected to close in the second quarter of 2013.

Earnings Review

Nike, Inc. ((NKE)), the athletic shoes and apparel maker said second quarter revenues rose 7% to $5.96 billion from $5.55 billion in the same quarter last year. Net income in the quarter fell 18% to $384 million compared to $469 million for the year-ago quarter.

Red Hat, Inc. ((RHT)), the Linux software seller reported third quarter total revenue grew 18% to $344 million from last year. Net profit in the quarter dropped to $34.8 million or 18 cents per diluted share from $38.2 million or 19 cents per share last year.

Research In Motion Limited ((RIM)), the BlackBerry maker reported third-quarter revenues plunged 47% to $2.73 billion from last year. Net income in the quarter plummeted to $9 million or 2 cents per diluted share compared with net income of $265 million or 51 cents per share last year.

Walgreen Company ((WAG)), the drugstore chain operator reported first quarter sales decreased 4.6% from the prior-year quarter to $17.3 billion. Brand-to-generic prescription drug conversions negatively impacted sales by $883 million or 4.9 percentage points in the first quarter.

Net earnings in the quarter declined 25.5% to $413 million or 43 cents per diluted share compared with $554 million or 63 cents per diluted share in the year-ago quarter.