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Stock Market & Financial Investment News

News Breaks
June 23, 2014
13:49 EDTETN, MTOREaton climbs after settlement seen as less expensive than expected
Shares of industrial products maker Eaton (ETN) are advancing after the company reached a settlement of the antitrust lawsuit filed against it by ZF Meritor, a joint venture between Meritor (MTOR) and Germany's ZF Friedrichshafen. A number of analysts said that the settlement was more favorable to Eaton than they had expected and Meritor's stock is falling in the wake of the news. WHAT'S NEW: Eaton agreed to pay ZF Meritor $500M to settle the latter company's lawsuit, which alleged that Eaton had sought to stifle competition in the truck transmission market by giving rebates to truckers who bought its transmissions. ANALYST REACTION: In a note to investors earlier today, Wells Fargo analyst Andrew Casey wrote that the $500M amount was lower than most had expected, since Eaton may have had to pay $1.4B-$2.4B if the size of the payment had been decided through a trial. Additionally, the settlement removes uncertainty regarding Eaton, Casey stated. He kept an Outperform rating on the shares. Meanwhile, Morgan Stanley analyst Ravi Shanker responded to the news by raising his price target on Meritor to $17 from $15. The company will receive net proceeds of $209M from the settlement and it will use the proceeds to fund mandatory pension contributions for the next three years, Shanker stated. Additionally, the funds will boost Meritor's EPS and enable it to lower its debt, he added. By the second half of 2015, Meritor will use the remaining funds to help defray the cost of a share buyback program, according to the analyst. Although investors may be disappointed by the size of the settlement and the company's decision to initially channel it towards pension contributions, Shanker said he was not surprised by these developments, given the difficulty of predicting the outcome of the case and Meritor's focus on reducing its debt. He continues to like the company's fundamentals and kept an Overweight rating on the shares. PRICE ACTION: In mid-afternoon trading, Eaton climbed 2.2% to $79.28 and Meritor tumbled 12.3% to $12.80.
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August 25, 2014
08:32 EDTETNEaton shares de-risked at current levels, says KeyBanc
KeyBanc noted that Eaton's stock has dropped nearly 9% since July 29, and the firm expects the company's results to be boosted by strong non-residential construction fundamentals into 2015. The firm keeps an $88 price target and Buy rating on the shares.
August 21, 2014
09:07 EDTMTORMeritor in discussions to sell inventory, assets of its Mascot business
Meritor completed its strategic review of certain remanufacturing product lines within the aftermarket business in North America, and the board of the Company concluded that the company should exit the Mascot business. Mascot is a remanufacturer and distributor of differentials, transmissions and steering gears primarily for certain original equipment manufacturers. The company is in discussions to sell substantially all of its inventory and other assets of its Mascot business. In the event the company is unable to successfully execute a sale transaction, it intends to wind down the Mascot business. The company expects to incur losses on the sale or liquidation of assets of the Mascot business of approximately $24M. The Company also expects to incur severance, other employee costs, and contract termination costs related thereto of an additional $5M. Of these charges, an estimated $5M are expected to result in cash expenditures. The Company is targeting the end of the fourth quarter of fiscal year 2014 for the completion of a sale transaction or a wind down of the Mascot business.
07:18 EDTETNJuly Class 8 sales rose 16% year-over-year, says JPMorgan
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