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Market Update

U.S. Stocks Fall After Home Construction Declines 8.5%

Author: Nichole Harper
Last Update: 11:54 AM ET February 20 2013

11:55 AM New York – U.S. stocks declined after home construction fell 8.5% in January after surging 15.7% in December. The weakness in the housing data dragged market sentiment. Office Depot agreed to buy OfficeMax for $1.2 billion.

U.S. stocks were on the decline after the indexes reached five-year high on the latest release of housing data.

Total housing starts that include single family homes and multi-family complexes declined to annual rate of 890,000 in January according to the data released by the Commerce Department.

Single family home construction increased to the most since July 2008 to an annual rate of 613,000.

European markets traded mixed and Spain estimated budget deficit to fall to 7% in 2012, the smallest since 2008.

Markets in Asia closed higher but the yen strengthened ahead of the central bank governor’s appointment announcement.

Office Depot to Buy OfficeMax

Office Depot agreed to acquire OfficeMax in all stock deal that will create a company with total sales of $18 billion. The new company will trail Staples Inc with largest revenues in the office supply category with sales of $24 billion.

Under the merger agreement Office Depot will offer 2.69 new shares in exchange of each share of OfficeMax. The merger proposal values OfficeMax at $13.50 a share based on the closing price of Tuesday.

The committee of equal representation from both companies will search for new chief executive and consider chief executives of both companies and outside candidates for the position.

Office Depot based in Boca Raton, Florida has 1,675 stores and employed 39,000 with global sales of $11.5 billion.

OfficeMax based in Naperville, Illinois employed 29,000 with a network of 900 stores and $7 billion in sales.

Stocks in Review

Caterpillar declined 2% to $94 after the maker of earth moving machinery reported global retail sales declined 4% in the quarter to January.

Garmin Ltd plunged 10% to $35.30 after the GPS device maker reported fourth quarter earnings per share of 68 cents missing the estimates as high as 72 cents a share. The company also guided 2013 revenues and earnings that were lower than expected.

NetSpend Holdings Inc soared 30% to $15.80 after Total Systems Services Inc agreed to acquire the pre-paid debit cards company for $1.4 billion in cash.

Office Depot reported revenues in the December quarter fell 12% to $2.62 billion and a loss of $7.3 million or 6 cents a share.

OfficeMax reported revenues declined 7.4% to $1.7 billion and a loss of $33.4 million or 39 cents a share in the quarter to December.

Rambus Inc gained 3% to $6 after the high-speed memory designer estimated first-quarter revenues in the range of $65 million to $69 million.

Toll Brothers fell 3% to $35.10 after the luxury home builder reported fiscal first-quarter earnings that were lower than expected and weaker average home prices.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc