Laclede to double customers in $1 billion deal with Energy Transfer

 Natural gas distributor Laclede Group Inc is buying two utilities from Energy Transfer Equity LP for $1 billion, doubling its customer numbers and boosting its exposure to more stable state-regulated income.
More than 91 percent of Laclede's earnings will come from rate-regulated business after the acquisition of Missouri Gas Energy and New England Gas Co, owned by Energy Transfer's affiliate, Southern Union Co.
About 68 percent of Laclede's operating revenue of $1.12 billion came from its regulated gas distribution business in the year ended September 30.
"With lower ... prices, more and more customers are interested in using natural gas," Chief Executive Suzanne Sitherwood told Reuters. "The other emerging market that is taking place is with natural gas vehicles."
Gas prices have fallen sharply from their peak of more than $13 per million metric British thermal unit (mmBtu) to about $3 now due to vast supplies from shale fields in North America.
This has prompted increased use of gas for heating and power generation. Westport Innovations Inc , General Motors Co , Caterpillar Inc and Ford Motor Co are some of the companies developing technologies to drive the use of the fuel in vehicles.
Laclede too has been working on fueling natural gas vehicles and has received a lot of interest for possible partnerships, Sitherwood said. She did not name the interested parties.
GOOD PRICE FOR ETE
Missouri Gas and New England Gas, which had combined revenue of about $517 million for the year ended September 30, serve more than 500,000 customers in western Missouri and about 50,000 in Massachusetts.
The acquisition, which includes debt of about $20 million, will take Laclede's customer base to 1.2 million, the company said in a statement.
Laclede expects the acquisition to be neutral to its earnings per share in the first full year after close, likely in the third quarter of 2013.
Energy Transfer Partners LP , a unit of Energy Transfer Equity and a party to the deal, said the transaction was part of the company's efforts to divest non-core assets.
The gas utilities passed into Energy Transfer's hands when it bought pipeline operator Southern Union Co last year.
"For the Energy Transfer family, this (deal) compares favorably to our previously modeled $710 million sale estimate," analysts at Robert W. Baird wrote in a note to clients.
St Louis, Missouri-based Laclede said Wells Fargo Bank will provide a $1 billion bridge facility for the purchase.
Laclede shares were down about 2 percent at $39.12 in afternoon trading on Monday on the New York Stock Exchange. Shares of Energy Transfer Equity and Energy Transfer Partners were slightly up.
Wells Fargo Securities LLC advises Laclede, while Credit Suisse Securities LLC is advising Energy Transfer and Southern Union. Moelis & Co gave the fairness opinion to Laclede.

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Sun Life sells U.S. annuity business, shares drop

 Sun Life Financial Inc will sell its U.S. annuity business for $1.35 billion to a firm connected to Guggenheim Partners in a deal that should reduce the exposure of the insurer's earnings to market swings and boost its cash levels.
While the deal could bring long-term benefits to Sun Life, whose earnings have been derailed by wild market swings during recent years, investors pulled the company's shares down by nearly 4 percent as the financial terms fell short of initial expectations.
"The stock's sort of correcting back because the deal isn't quite as big a windfall as I think the market was anticipating," said National Bank financial analyst Peter Routledge.
Delaware Life Holdings, owned by certain Guggenheim clients and shareholders, will rename itself Delaware Life Insurance Co following the cash purchase. Guggenheim will provide investment management services to the new company.
Sun Life, Canada's No. 3 insurer, said last year it would stop selling variable annuities and individual life products in the United States to focus more on group insurance and voluntary benefits.
Variable annuities - retirement products that guarantee the investor a minimum monthly payment - became a source of earnings volatility for Sun Life in the wake of the 2008 financial crisis. That is because low interest rates and Canadian accounting rules force insurers to take upfront losses on products that will not come due for years.
"The business makes money, but not enough," said Routledge.
Weak equity markets and low bond yields sent Sun Life's profit down 87.5 percent during the second quarter of 2012 and caused losses during the third and fourth quarters of 2011.
EARNINGS HIT
The deal will cut Sun Life's profit by 22 Canadian cents a share annually and reduce book value by C$950 million ($965 million), the company said in a statement. According to Thomson Reuters I/B/E/S, Sun Life was expected to earn C$2.53 a share on a net basis in 2013.
The deal has also prompted Sun Life to take a second look at its 2015 financial targets, which include a goal of C$2 billion in operating profit.
In an interview, Sun Life Chief Executive Dean Connor said he would update the market on the targets after the deal closes, which is expected during the second quarter next year.
"I'm not saying we will necessarily reduce them. I'm not saying we will necessarily leave them as they are, because we don't know yet," he said.
The deal is also expected to reduce the company's earnings sensitivity to equity markets by 50 percent and its sensitivity to interest rates by 35 percent, compared with estimates on September 30.
It will raise Sun Life's cash position to C$1.9 billion.
"Over time, we'll redeploy that cash to fund growth," said Connor. He said the growth could include acquisitions on the "smaller end of the spectrum."
Sun Life, which also owns U.S. asset manager MFS Investment Management, is targeting growth in its Asian business.
SHARES DOWN
Sun Life shares, which have outperformed its rivals with a 47 percent year-to-date rise coming into Monday's session, ended down 3.9 percent at C$26.74 on the Toronto Stock Exchange. Despite the strong rise this year, the stock still trades at less than half its all-time high set in 2007.
Robert Sedran, an analyst at CIBC World Markets, said in a research note that the earnings and book value reductions were worse than he had expected.
"Moreover, while the decline in the earnings sensitivity to market variables improves the risk-reward profile, we did not view those sensitivities as excessive to begin with," he said.
However, he said the deal will free up time and capital that would otherwise have been engaged in what is essentially a closed business, which is a positive.
Morgan Stanley & Co advised Sun Life on the transaction financials.
Law firm Debevoise & Plimpton LLP was legal adviser to Sun Life, while Skadden, Arps, Slate, Meagher & Flom advised Guggenheim Partners.

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FactSet forecasts second-quarter results largely below estimates, shares fall

 FactSet Research Systems Inc reported lower-than-expected first-quarter revenue, and the financial information provider forecast current-quarter results largely below estimates as banks and brokerages cut costs.
FactSet shares fell 5 percent before the bell on Tuesday.
The company, which provides data to portfolio managers, research analysts and investment bankers, forecast second-quarter earnings of $1.11 to $1.13 per share, on revenue of $212 million and $215 million.
Analysts on average were expecting earnings of $1.13 per share on revenue of $216.3 million, according to Thomson Reuters I/B/E/S.
FactSet's financial sector clients are cutting staff and trimming costs to cope with increased regulation and a struggling global economy.
In the United States, financial companies have announced plans to cut 28,000 jobs through the first nine months of this year, compared with 54,000 during the same period in 2011, according to executive placement firm Challenger, Gray & Christmas.
FactSet said its net income rose to $49.8 million, or $1.11 per share, in the first quarter, from $45.5 million, or 99 cents per share, a year earlier.
The company earned $1.22 cents per share, excluding items.
Revenue rose 7.5 percent to $211.1 million for the quarter ended November 30.
Analysts on average had expected earnings of $1.11 per share, on revenue of $212.3 million.
FactSet rival Thomson Reuters Corp, the owner of Reuters News, last month reported a 15 percent fall in operating profit for the quarter ended September 30, on declining revenue and higher costs in its division that serves the financial industry.
FactSet's shares closed at $96.39 on the New York Stock Exchange on Monday.

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Jefferies results beat estimates on higher fixed-income revenue

Jefferies Group Inc reported a higher-than-expected adjusted quarterly profit as the investment bank benefited from higher earnings from its fixed-income unit, and said its business expansion in Asia has started delivering.
The midsized investment bank has been expanding in China and India and recently poached bankers from the Royal Bank of Scotland to expand its business in China.
Jefferies said it also benefited from a pickup in trading across the board in September thanks to fresh stimulus plans from the U.S. Federal Reserve, and that it was gaining market share from larger rivals. The Fed had unveiled a program to purchase $40 billion in mortgage bonds.
The company saw its trading revenue more than double to $293 million from $141 million a year earlier.
"Our competitive position is very strong so across the products within fixed income I think we're gaining market share," Chief Executive Richard Handler said on a post-earnings conference call.
As the first investment bank to report earnings, Jefferies is often viewed as an indicator for larger Wall Street banks such as Goldman Sachs Group and Morgan Stanley .
Jefferies, founded in 1962 in Los Angeles to trade large stock orders away from the New York Stock Exchange, agreed last month to be bought by top shareholder Leucadia National Corp for $2.76 billion in stock.
"Combining our company with an extremely well-capitalized parent will allow us to continue to aggressively add value to our clients," Jefferies said in a statement on Tuesday.
Compensation costs at the company remained high with the company paying 59.9 percent of net revenue to employees, in line with previous periods but higher than the 50 percent industry peers generally target.
Net income rose to $72 million, or 31 cents per share, in the fourth quarter from $48 million, or 21 cents per share, a year earlier.
On an adjusted basis, earnings were 35 cents per share.
Analysts had expected the company to earn 32 cents per share, according to Thomson Reuters I/B/E/S.
Revenue for the quarter rose 39 percent to $769 million, above estimates of $722.6 million. Investment banking revenue rose 8 percent to $283 million.
Jefferies shares, which have risen 12 percent since the Leucadia deal was announced in mid-November, was trading up 2.5 percent at $18.70 on the New York Stock Exchange on Tuesday.

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Oracle 2Q earnings rise 18 pct as tech spending up

 Oracle says its latest quarterly earnings rose 18 percent as companies splurged on more software and other technology toward the end of the year.
The results announced Tuesday are an improvement from Oracle's previous quarter, when the company's revenue dipped slightly from a year earlier.
The latest quarter spanned September through November. That makes Oracle the first technology bellwether to provide insights into corporate spending since the Nov. 6 re-election of President Obama and negotiations to avoid the so-called fiscal cliff began to heat up.
Oracle Corp. earned $2.6 billion, or 53 cents per share, in its fiscal second quarter. That compares with net income of $2.2 billion, or 43 cents per share, last year.
Revenue increased 3 percent to $9.1 billion.
Oracle is based in Redwood Shores, Calif.

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UK 'plebgate' scandal becomes police crisis

The "plebgate" scandal started with an angry exchange over a bicycle in front of Downing Street. The controversy over what a senior politician did or didn't say to officers guarding the prime minister's official residence has now grown into a full-blown crisis which is raising new questions about the ethics of Britain's largest police force.
Scotland Yard's reputation has already been battered over its failure to curb law-breaking journalists and police corruption exposed in the phone hacking scandal which exploded last year.
The force faces renewed scrutiny after Andrew Mitchell, formerly the Conservative Party's chief whip, said a police report quoting him as abusing officers as "morons" and "plebs" — a term of abuse for working-class people — was based on lies.
"For the next three weeks, these awful phrases were hung round my neck in a concerted attempt to toxify the Conservative party and destroy my political career," Mitchell wrote in The Sunday Times, describing the period which followed the leak of a police report into the incident.
"I never uttered those phrases; they are completely untrue."
Mitchell has long acknowledged losing his temper and swearing as he tried to maneuver his bike into Downing Street on the evening of Sept. 19. He was running late and officers were refusing to open the main gate, he said. But he has long denied using the term "pleb" or telling officers to "learn your place," words which he described on Sunday as "a bad caricature of what an ill-mannered 1930s upper-class lout might say."
In Britain, a country very sensitive to issues of social class, the story dominated the headlines for weeks. Some police constables, or PCs, walked around with T-shirts bearing the words "PC Pleb." Political opponents called for Mitchell to lose his job. When an email from what appeared to be an independent witness emerged to corroborate the police account, Mitchell found himself with little choice but to resign in October.
The police account, however, has now been challenged; the independent witness was allegedly a policeman who wasn't even at the scene. Security camera footage taken from Downing Street and broadcast by Britain's Channel 4 didn't seem to line up with the officers' accounts. Two people have been arrested as Scotland Yard has pledged to get to the bottom of what happened.
"The allegations in relation to this case are extremely serious," Scotland Yard chief Bernard Hogan-Howe said in a statement Sunday. "For the avoidance of doubt, I am determined there will be a ruthless search for the truth — no matter where the truth takes us."
If it turned out that officers conspired to frame Mitchell, it would be another dark chapter for the respected force, which has already seen several high-profile resignations and arrests and a wrenching police corruption probe spawned by the phone hacking scandal. Politicians are already talking of the need for reform.
Britain's former policing minister, Nick Herbert, said journalists and public servants might reflect on whether they jumped to conclusions about Mitchell, but added that "it is the police service which above all must take stock and examine its own culture."
The scandal, meanwhile, has revived Mitchell's political fortunes, with many calling for him to be reinstated to Prime Minister David Cameron's Cabinet.

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UK household finances worsen sharply in December - Markit

- Britons suffered the biggest deterioration in their finances in seven months in December and turned more downbeat about 2013, a survey showed on Monday.
The Markit Household Finance Index fell to 36.8 - the lowest since May - from November's near two-year high of 39.3, sinking further below the 50 level that would mark no change in the financial situation compared with a month ago.
Around a third of respondents said their finances had worsened in December, while only 6 percent reported an improvement. Overall, households also felt less secure in their jobs than in November.
"The latest survey suggests that domestic consumer demand will remain under pressure in the near term, especially since inflation perceptions remain elevated and job insecurities are prevalent across the UK," said Markit economist Tim Moore.
Three quarters of respondents expected their finances to worsen or to show no improvement next year.
In a further worrying sign for policymakers, inflation expectations for the year ahead picked up slightly from the three-month low posted in November.
The survey of around 1,500 people was conducted between December 13 and December 17.

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Russian opposition leader faces new probe

A prominent Russian opposition leader faces his third investigation in five months as authorities intensify pressure on the opposition.
The Investigative Committee said in a statement on Monday that they launched a new probe against Alexei Navalny, who was already charged with theft and with fraud and money laundering in two separate cases.
Investigators now say they also suspect Navalny of defrauding the Union of the Right Forces, a now defunct liberal party, of 100 million rubles ($3.2 million) in 2007.
Navalny, a charismatic 36-year-old lawyer, made his name exposing corruption in state-controlled companies. Last winter, he spearheaded a series of street rallies in Moscow that drew up to 100,000 people before March's vote that handed Putin a third presidential term.
In July, the lawyer was charged with the theft of half a million dollars from a state-owned timber company. Earlier this month, Navalny and his brother were charged with defrauding a transportation company of about $1.8 million.
The opposition leader dismissed the accusations as politically motivated, and pointed to the fact that there was no injured party in either of the cases.
Leonid Gozman, a former senior figure at the Union of the Right Forces, was quoted by the Interfax news agency, as denying reports of fraud at his party.
"This is another provocation, total nonsense," he said.
Navalny tweeted "that's enough," referring to the slew of criminal cases against him.

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Pope lights Christmas candle in his Vatican window

VATICAN CITY (AP) — Pope Benedict XVI has lit a Christmas peace candle set on the windowsill of his private studio.
Pilgrims, tourists and Romans gathered below in St. Peter's Square for the inauguration Monday evening of a Nativity scene and cheered when the flame was lit.
Later, he will appear in St. Peter's Basilica to lead Christmas Eve Mass. The ceremony begins at 10 p.m. (2100 GMT) instead of the midnight start time, which was changed at the Vatican years ago to let the pontiff rest before a Christmas Day speech to be delivered from the basilica's central balcony.

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Pope leads a packed Christmas Eve Mass

VATICAN CITY (AP) — Heralded by the blare of trumpets, Pope Benedict XVI is presiding over Christmas Eve Mass in a St. Peter's Basilica packed with tourists, Italians and other faithful.
The ceremony began at 10 p.m. (2100 GMT) Monday night instead of the traditional midnight start time. The schedule was changed at the Vatican years ago to let the pontiff rest before he is to deliver a Christmas Day speech hours later from the basilica's central balcony.
A smiling Benedict, dressed in gold-colored vestments, waved to photo-snapping pilgrims and applauding church-goers as he glided up the center aisle toward the ornate main altar of the cavernous basilica on a wheeled platform guided by white-gloved aides. The platform is employed to save the 85-year-old pontiff's energy.
As a men's choir chanted, Benedict sprinkled incense around the altar, and wished the faithful "peace" in Latin.
A few hours before Mass, Benedict lit a Christmas peace candle and set it upon the windowsill of his studio window overlooking St. Peter's Square.

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