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Top 10 News for 8/25 - 8/29: S&P 500's New Record; U.S. Q2 GDP Outpaces Views; Major Mergers Aplenty

August 29, 2014 3:50 PM EDT Send to a Friend

1. Following speculation earlier in the week, Tim Hortons Inc. (NYSE: THI) and Burger King Worldwide Inc. (NYSE: BKW) announced Tuesday a definitive agreement under which the two companies will create a new global powerhouse in the quick service restaurant sector. With approximately $23 billion in system sales, over 18,000 restaurants in 100 countries and two strong, thriving, independent brands, the new company will have an extensive international footprint and significant growth potential. Under the terms of the transaction, which has been unanimously approved by the Board of Directors of both companies, Tim Hortons shareholders will receive C$65.50 in cash and 0.8025 common shares of the new company per Tim Hortons share.

2. The S&P 500 index closed above 2,000 points for the first time on Tuesday after reaching above the mark last Monday. It was the 20th record close for the index this year despite having moved up only 8.2 percent in 2014. It took the index 16 years to add 1,000 points since reaching the prior milestone in 1998. Stock valuations have come down since the 1,000 level; stocks in the S&P 500 were trading for 23.1 times expected 12-month earnings as of March 1998, versus 15.5 percent at the close last Friday. The 10-year average is at 13.9 times.

3. Last Sunday, Roche (OTCBB: RHHBY) announced that it agreed to acquire InterMune (Nsdaq: ITMN) $74 per share in cash, or a 38% premium to Friday's market close. The transaction is worth $8.3 billion on a fully diluted basis. The merger agreement has been approved by the boards of InterMune and Roche. Under the terms of the merger agreement, Roche will promptly commence a tender offer to acquire all of the outstanding shares of InterMune's common stock at a price of $74.00 per share in cash. The closing of the tender offer will be subject to the tender of a number of shares that represents a majority of the total number of outstanding shares on a fully diluted basis.

4. Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.2 percent in the second quarter of 2014, according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent. Consensus estimates were looking for a reading of 3.9 percent growth.

5. Markets were notably weaker towards the end of the week on headlines that Russian troops and military machinery are on the ground inside Ukraine. While Russia denied initial reports, NATO released photos on Thursday showing Russia engaged in military activity inside Ukraine borders. Ukrainain president Petro Poroshenko also told security chiefs that Russia entered the country to support pro-Moscow rebels. The president said the situation was extraordinarily difficult ... but controllable, according to reports. News came as Ukraine lost control of Novoazovsk to the rebels on Thursday. The U.S., for its part, also warned about possible new sanctions against Russia.

6. On Monday night, Amazon.com (Nasdaq: AMZN) announced that it has reached an agreement to acquire Twitch Interactive, Inc., the leading live video platform for gamers. In July, more than 55 million unique visitors viewed more than 15 billion minutes of content on Twitch produced by more than 1 million broadcasters, including individual gamers, pro players, publishers, developers, media outlets, conventions and stadium-filling esports organizations.

7. New orders for manufactured durable goods in July increased $55.3 billion or 22.6 percent to $300.1 billion, the U.S. Census Bureau announced today. (The Street was looking for a gain of just 8 percent.) This increase, up five of the last six months, was at the highest level since the series was first published on a NAICS basis in 1992, and followed a 2.7 percent June increase. Excluding transportation, new orders decreased 0.8 percent. Excluding defense, new orders increased 24.9 percent.

Inventories of manufactured durable goods in July, up fifteen of the last sixteen months, increased $2.1 billion or 0.5 percent to $401.9 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.5 percent June increase.

8. Highly anticipated IPO Alibaba (NYSE: BABA) reported Q2 EPS of $0.84 on Wednesday morning, from EPS of $0.31 reported in the same period last year. Revenue was RMB15.77 billion ($2.54 billion), versus RMB10.78 billion in the prior-year period. Operating margins fell from 50 percent down to 43 percent from the prior year. Notably, bottom-line numbers benefited from a one-off re-valation gain, which added $1 billion to net profits. Valuation for the company's IPO dropped by $25 billion to around $200 billion, according to some estimates.

9. Apple (Nasdaq: AAPL) sent out invitations to its September 9 iPhone event, where the company is expected to release two versions of the iPhone 6 and maybe the iWatch. The event will be held on September 9, 2014 at 10AM PST at the Flint Center for the Performing Arts in Cupertino, CA. It's expected that Apple will produce a slew of new iPhones at the end and potentially debut a new wearable device, which could very well be the fabled "iWatch" that has been in discussion for nearly two years. However, shipments of the wearable device might not begin until early 2015.

10. RadioShack (NYSE: RSH) shares ramped higher this week. Standard General LP said to explore potential rescue funding for RadioShack, according to Bloomberg headlines. The plan may include issuance equity, debt, or a combination of both by Standard General. Click here for more color.





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