Ingersoll Rand Buys Trane for $10 B

123jump.com Staff
17 Dec, 2007
New York City

Ingersoll-Rand has agreed to purchase Trane Inc for $10.1 billion, including the debt of $150 million. Ingersoll will pay $36.50 cash per share and 0.23 stock for each Trane stock. The transaction is expected to be completed at the end of the first quarter 2008. The combined entity estimates revenue of $11 billion in 2008 and hopes to save annually $300 million for the next three years.

[R]9:45AM New York – Ingersoll-Rand agrees to pay $10 billion to purchase Trane Inc.[/R]

Ingersoll-Rand Company Limited has agreed to acquire Trane Inc for cash and stock valuing the company at $10.1 billion or $47.81 per share. Trane, manufacturer of indoor climate control systems is expected to generate revenue of $7.4 billion and with the acquisition Ingersoll revenue is estimated at $17 billion in the year 2008.

Trane Inc, formerly American Standard Companies Inc was recently spun-off as an independent company on November 28, 2007. Trane ((TT)) employs 29,000 people and generated $6.8 billion in sales in the year 2006.

Under the terms of the merger agreement, which has been approved by the Boards of Directors of both companies, Ingersoll Rand will acquire all outstanding common stock of Trane. Holders of Trane''s approximately 200 million common shares will receive a combination of $36.50 in cash and 0.23 Ingersoll Rand shares of common stock per each Trane share. The total value for this transaction was $47.81 per Trane share based on the closing price as of December 14, 2007. The transaction which is expected to close late in the first quarter or early in the second quarter of 2008, is subject to approval by Trane shareholders, regulatory approvals and customary closing conditions.

Fred Poses, Trane chairman and chief executive said, ""On a combined basis, Ingersoll Rand''s climate control operations are projected to have revenues of approximately $11 billion in 2008 and will have a significant presence in all major segments of the associated industries worldwide. It is anticipated this combination will produce annual pre-tax cost and revenue synergies exceeding $300 million by 2010. Anticipated synergies include purchased material savings through supplier rationalization and procurement leverage, improvements in manufacturing costs, and lower general and administrative costs. Longer term, we will benefit from synergies related to cross selling and service revenue expansion.""

[R]8:00AM New York, 6:30PM Mumbai – Nearly 4% decline in Sensex led the Asian market correction on the inflation worries in the U.S.[/R]

The Bombay Stock Exchange benchmark index Sensex fell 3.8% or 769 to 19,261.35 on renewed concerns of rising inflation in the U.S. might make it difficult for the Federal Reserve to make another rate cut.

The 30-share index had moved in a range of 19,177 to 20,032 levels. Heavy selling was noticeable in metals, real estate, and oil and gas stocks.

DLF and NTPC topped the decliners in Sensex index with the stocks sliding over 7.3% each. Tata Steel, HDFC, ONGC, Tata Motors and Hindalco Industries also lost over 5.7 per cent each.

Among the shares on the BSE, 972 advanced, 1,932 stocks retreated, and 23 remained unchanged. Of the 30 index stocks, 29 surged and one fell.

Total turnover on the BSE stood at 9,524 crore rupees and on the NSE was 20,427 crore rupees.

In the broader markets Nifty registered its biggest one-day loss of 4.5% or 270. The 50-share index touched a low of 5,740 levels before closing at 5,777.

Of the NSE-50 stocks, Idea Cellular, Sterlite Industries, SAIL, Nalco, Suzlon and Reliance Petroleum were some of the leading decliners with each losing more than 6%.

Asian markets were subdued on Monday with most of the indices losing over 1.4%. India led the decliners in the region with a loss of 3.8% followed by more than 3% losses in Australia, Singapore, in Taiwan, and Hong Kong.

The India-Sri Lanka: Trade and Investments conference seeking to enhance trade between the two countries opened in India on Monday. The conference which was organised by Observer Research Foundation in conjunction with Confederation of Indian Industries and the Sri Lankan deputy high commission, will also focus on industrial and investment climate and trade related issues.

India and Sri Lanka signed a Free Trade Agreement nine years ago which saw the bilateral trade doubling from $557 million in 1999 to $2.7 billion in 2007.

Of the BSE shares, Reliance Industries declined 3.86% to 2,777.5 rupees, Tata Steel shed 6.2% to 823.85 rupees, Sterlite Industries slid 8.5% to 976.15 rupees on news that the company plans to enter the equipment manufacturing business to profit from the boom in the domestic steel sector.

National Aluminum Company was down 6.9% to 418.50 rupees and Hindalco Industries retreated 5.7% to 200.70 rupees.

Reliance Communications fell 5.6% to 717.80 rupees. The company announced on Monday that it has completed the acquisition of U.S.-based Yipes Holdings that would give the company access to global enterprise data market.

Bharat Heavy Electricals declined 5.3% to 2,425.25 rupees. Bhel announced during the trading hours that it has signed a joint venture agreement with NTPC for establishment of engineering company.

Larsen and Toubro shed 2.2% to 4,082.1 rupees and Suzlon Energy retreated 6.7% 1,828.1 rupees. Tata Motors declined 5.8% to 701.25 rupees on news reports that Ford Motor Company is poised to name the company as preferred bidder for its Jaguar and Land Rover division sale.

ICICI Bank fell 3.3% to 1,167.1 rupees, HDFC Bank retreated 2.9% to 1,678.3 rupees, State Bank of India lost 4% to 2,314.5 rupees on news reports that the bank is planning to buy a bank in Indonesia.

Reliance Energy lost 4.2% to 1,828.95 rupees, NTPC was down 7.3% to 228.6 rupees, Tata Power Company shed 0.4% to 1,295.9 rupees while Power Grid slid 5.6% to 137.55 rupees.

Peninsula Land lost 8.5% to 135.05 rupees, DLF retreated 7.5% to 944.25 rupees, Indiabulls Real Estate shed 8.3% to 679.25 rupees and Unitech traded weaker at 2.7% to 465.35 rupees.

Hindustan Unilever was up 0.8% to 218.6 rupees, HDFC shed 5.9% to 2,877.55 rupees and ONGC was down 5.8% to 1,166.45 rupees.

In Tokyo Nikkei 225 Index added 264.72 or 1.71% to close at 15,249.79, in Hong Kong Hang Seng index closed down 967.06 or 3.51% to 26,596.58, in Australia ASX 200 closed higher by 228.20 or 3.52% to close 6,263.50.

In South Korea Kospi Index decreased 55.23 or 2.91% to close at 1,839.82, Thailand closed down 15.67 or 2.55% to 598.41, and Indonesia edged lower 75.14 or 2.74% to 2,664.92. India lost 769.48 or 3.84% to 19,261.35.


[R]6:00AM New York, 7:00PM Tokyo – Stocks in Japan fell after the U.S. led bailout plan requested $5 billion from the three largest banks.[/R]

Stocks in Japan declined on the worries that rising inflation in the U.S. and Europe may hurt exports. Local newspaper report also suggested that three Japanese banks are asked to contribute $5 billion each in the U.S. led sub-prime bailout fund.

In Tokyo trading Nikkei 225 index slipped 1.71% or 264.72 to 15,249.79, while the broader Topix Index fell 28.55 to 1,472.70. Asian markets across the region fell. Hong Kong, Australia, Singapore, Taiwan, and India lost more than 3%.

In the first section of the Tokyo Stock Exchange 7.4 billion shares valued at 936 billion yen were traded and in the second section 366 million shares valued at 66 billion yen changed hands.

Of the Nikkei 225 stocks 22 gained, 200 declined, and 3 were unchanged. 22 stocks shed 4%. Tokai Carbon Company led decliners with a slump of 8.65% as domestic-oriented stocks fell after demand for services rose 1.1% in October.

Japan’s Ministry of Economy Trade and Industry said that the Indices for Tertiary Industrial Activity rose 1.1% to a seasonally adjusted 1.1% in October. Economists had forecasted a 1.2% increase.

Demand for information and communications jumped 6.1% as financial institutions installed new computer systems. Wholesale and trade firmed 2.0%, finance and insurance climbed 2.8%, services gained 0.8% and real estate inched 0.3% higher.

However METI figures showed demand for eating, drinking and accommodation slumped 2.8%, learning support plunged 12.0%, medical, healthcare and welfare tumbled 1.5%, electricity, gas, heat supply and water declined 1.8%, compound services declined 3.9% and transport retreated 0.9%.

Kyodo news reported today that Japan’s Finance Ministry has initiated preparations to set its draft state budget for fiscal 2008 at more than 83 trillion yen, up from 82.91 trillion.

Bloomberg news said today that the Japan Bank for International Cooperation will lead $3 billion to Abu Dhabi National Oil Company for oil exploration, the construction of pipelines and facilities to increase crude oil output. A third of the amount was raised from Mizuho Financial Group and other financial institutions.

The loan agreement is expected to be signed this week when ADNOC Chief Executive Yousef Omair Bin Yousef and Abu Dhabi Crown Prince Mohammad Bin Zayed Al Nahyan are in Tokyo.

Of the Nikkei 225 index shares Shin-Etsu Chemical Company led advancers with a rise of 3.01% followed by gains in Nippon Oil Corporation of 2.74%, in Alps Electric Company Limited of 2.01%, in Kikkoman Corporation of 1.43%, and in Kansai Electric Power of 1.28%.

Exporters pared losses as the yen weakened from 112.44 last week to 113.05 to the dollar at the close of trade today. Canon rose 0.36% and Hino Motors Limited firmed 1.14%.

Tokai Carbon Company led retreating Nikkei 225 index shares with a fall of 8.65% followed by losses of 7.35% in Sumco Corp, 7.15% in Okama Corp, 6.71% in Shimizu Corporation, and 6.63% in Dowa Holdings.

Financial institutions also declined after Nomura Holdings said that request by the U.S. for banks to contribute $5 billion credit lines for a fund to bailout institutions was an “excessive burden”. Mitsubishi UFJ Financial Group tumbled 4.28%, Mizuho Financial Group slipped 4.99% and Mitsui Sumitomo Financial Group edged down 1.05%. The news first reported by Nikkei News hurt the trading sentiment and led the Nikkei and broader index Topix lower.

Pharmaceutical companies also retreated on Nikkei reports that Japan’s Health Ministry will reduce by more than 1% the amount of money it pays for drugs out of the national health plan, forcing drug makers to reduce prices. Takeda Pharmaceutical fell 1.78% and Astellas Pharmaceuticals declined 1.81%.

Japan Today reported yesterday that Komatsu will spend 6.9 billion yen to build a forklift and construction machinery plant in Yaroslavl, Russia. The plant is scheduled to begin operations in June 2010.

Separately, the online daily reported yesterday that non-life insurer Millea Holdings will acquire British insurer Kiln Limited for 442 million pounds in a bid to expand operations abroad. The operations would be conducted through the wholly owned subsidiary Tokio Marine & Nichido Fire Insurance Company.

Nikkei news reported Sunday that Toyota Motor Corp plans to raise global unit production to 9.9 million in 2008, up by more than 500,000 units projected for the current year.


[R]3:00AM New York, 7:00PM Sydney- ASX 200 index declined 3.5% on regional weakness in financial stocks and BHP halted its stock buy-back to meet regulatory requirements.[/R]

ASX 200 index sharply declined 3.5% or 228.2 to close at 6,263.50. BHP and Rio Tinto both shed 2.8%.

The Preliminary market turnover was 2.05 billion shares worth $7.19 billion with 219 stocks rising, 1,209 falling and 285 unchanged. Centro led the most active stocks list with trading of 120.3 million shares worth $211.69 million changing hands.

Australia''s second-biggest shopping-mall owner, Centro Properties Group today announced that it had revised downwards its operating profit per share from 47 cents to 40.6 cents.

In a statement released today the company blamed the downgrade on increased costs associated with the extension of the debt facilities, and expected costs of the refinancing, and the current credit market malaise.

It added that the U.S. subprime mortgage rout would restrict it from executing some of its growth plans in the United States, which had been expected to generate higher earnings. Centro however said the despite the lowered estimate of the earnings, it still represents 2.1% rise from the previous year when the distribution was 39.8 cents per share.

Centro, which called for a trading halt on Thursday, 13th December 2007, said it has completed certain refinancing arrangements. Centro said it is still negotiating the refinancing of $1.3 billion in its maturing facilities, and had obtained an interim extension until 15th February 2008 of all debt maturing prior to that date. In addition, the U.S. joint venture facilities have also been similarly extended. Centro plunged 76%.

The company said the restructuring and refinancing is forecast to incur a one off cost of $40 million and have been excluded from the fiscal 2008 forecast of operating distributable profit.

In addition, Centro said its $26.6 billion managed property portfolio is performing well as most of its properties are groceries and non-discretionary retail locations.

Zinifex today launched an all-cash offer of 90 cents for each Allegiance share and pledged to increase the bid to $1.00 per share if the company acquires more than 30% of its target, or gains board approval. The deal is valued at $697.44 million at the 90 cents per share offer and it rises to $744.93 million at $1.00 per share.

Allegiance rebuffed the takeover offer saying that it was unsolicited, opportunistic and designed to take advantage of the company prior to first production from its flagship Avebury project in Tasmania - scheduled for early 2008.

The company said its board was unanimous in its view that Allegiance shareholders should take no action or make any decision in relation to their shareholding until the offer was reviewed. Zinifex chief executive Andrew Michelmore said the takeover would help Allegiance gain an ''attractive entry'' into the nickel industry.

""Avebury is just the start of our strategy to vigorously grow in Zinifex''s chosen base metals of copper, nickel and zinc,'''' Mr Michelmore said in a statement.

The Avebury nickel project, located near the Zinifex''s Rosebury zinc mine, is expected to produce about 8,500 tons of nickel in concentrate annually. Zinifex amassed a war chest of more than $2 billion to fund potential acquisitions, after the sale of its smelting assets this year. Allegiance rose 38% while Zinifex shares fell 7%.

BHP Billiton share nose-dived today following a decision by the mining giant to suspend the $11.63 billion (US$10 billion) buyback of its London-listed stock.

The company said in a statement that it had continued to buy-back its London-listed shares since the market became aware of a $160 billion proposal for rival Rio Tinto through a third party under an ""irrevocable mandate"", the plan has been in place since February of this year.

Insider trading regulations stipulate a company cannot buy-back its own stock if it is privy to market sensitive information and BHP Billiton said the buyback had been suspended until ""further notice"".

BHP Billiton shares dropped 4% and Rio Tinto shares lost 3.9%.

Meanwhile, the UK Takeovers Panel will hand down its decision on Rio Tinto''s request to set a deadline for a formal takeover bid from BHP Billiton. The so-called ''put-up or shut-up'' clause under Britain''s takeover laws would set BHP Billiton a six to eight week period in which to launch a formal bid or withdraw from the takeover process.

If BHP Billiton fails to lodge a bid within the scheduled timeframe or withdraws, the company has to wait for six months before it can make any takeover attempt.

Rio Tinto rebuffed a merger proposal of three BHP Billiton shares for every Rio Tinto share, which is valued at about $147.7 billion (US$127 billion).

A merger would create the largest mining company in the world with interests in coal, iron ore, copper, aluminum and coal.

The Australian dollar was significantly lower at the close today after the U.S. dollar strengthened. The Australian dollar was trading at US$0.8609/13, down sharply from Friday''s close of US$0.8778/83.

Of the ASX 200 index shares, Resmed In led the gainers with a rise of 5.6% followed by increases in Sonic Healthcare of 1.6%, in AGL Energy Limited of 1.5%, in Singap Telecom of 1.3%, and in Coates hire Limited of 0.6%.

Of the ASX 200 index stocks, AED Oil led the decliners with a loss of 11% followed by losses in Queensland Gas of 8%, in Lihir Gold of 6.7%, in Caltex of 6%, and in Paperlinx Ltd and Valad Property of 5%.

In the banking sector Commonwealth Bank of Australia shed 1.2%, National Australia Bank fell 2.5%, Australia and New Zealand bank lost 2.4%, and Westpac dropped 2.4%.

In the energy sector, Oil Search was lower at 5.6%, Woodside Petroleum dropped 1.4% and Santos shed 4.4%. In the gold sector Newcrest Mining was down 4.8% and Lihir shed 7.2%.

The retailers across the sector traded lower, Harvey Norman shed 1.6%, Woolworths was down 0.9%, David Jones was lower at 1.7%, and Wesfarmers fell by 3.6%.

In the properties sector several stocks fell sharply after Centro lowered its profit outlook.

Goodman Group plunged 26%, Valad Property Group fell 18%, Westfield slipped 5.8% and James Hardie Industries dropped 2.3%.

Leighton Holdings Ltd., Australia''s biggest builder, fell 3.8% after borrowing $434 million to help pay for a stake in Dubai-based Al-Habtoor Engineering. The Sydney based company agreed to pay $870 million for 45% of Al- Habtoor in September.

Qantas Airways Ltd slipped 4.1% after its workers hinted on possibility of a strike next month over working conditions they claim are unsafe. A total of 500 staff may stop work if Qantas doesn''t address the complaints, Transport Workers Union spokesman Tony Sheldon was reported to have said.