Monday, June 11, 2007

Porsche to Skip Detroit Auto Show (AP)

Porsche will skip Detroit's North American International Auto Show, focusing instead on shows elsewhere in North America, the German automaker said Monday. The decision is part of a wider effort to scale back appearances at trade shows where the opportunity for building customers has fallen, the Stuttgart-based company said in a statement.

"As part of the general reduction in trade-fair appearances which began two years ago, in favor of greater emphasis on direct contact with potential customers, motor show activities will in future be concentrated in the main sales areas," the company said, singling out auto shows in New York, Chicago, Los Angeles, Miami and Toronto.

The company's sales figures backed up its assertion, with more than 20,000 of the 36,669 cars it sold in fiscal year 2005-2006 coming from the U.S. east and west coasts. Detroit's auto show is scheduled to take place Jan. 19-27 with three days of media previews before it opens to the general public. Shares of Porsche AG rose 3.15 percent to 1,311 euros ($1,753.91) Monday.

Gas Prices Drop Seven Cents : Boost In Imports Viewed As Contributing To Ease Of Pain At Pumps

CBS/AP) The national average price for gasoline dropped seven cents in the last three weeks, according to a market survey. It's the first decline since January.

Trilby Lundberg, industry analyst and publisher of The Lundberg Survey, told CBS News that the "wonderful news is that, although prices gained a whole dollar this year, they're down seven cents because imports of gasoline are coming in to rebalance supply and demand."

The U.S. average for self-serve, regular-grade gasoline was $3.11 per gallon as of Wednesday. That's down from $3.18 in the last national survey May 18th.

Lundberg says the modest relief came thanks to a boost in imports of gasoline from foreign producers lured by record-high prices.

Lundberg, however, says the latest numbers don't portend any dramatic price drops. Despite the recent sag, prices still are up 93 cents since the start of 2007.

"Our refining capacity is still coming back from four months of terrific work projects and accidents, and imported gallons are making up the difference," Lundberg said. "That isn't going to change overnight, so we'll probably see a few more cents at the pump here and there over several weeks, but not 93 more cents worth."

Chicago had the nation's highest gasoline prices, at $3.61 per gallon for regular. Jackson, Miss., with regular gasoline selling for an average of $2.87 a gallon, had the nation's lowest average.

Lundberg said there are three main reasons to explain the great variety of gasoline prices around the country: "First is fuel taxes; second is the reformulation requirements for environmental regulations; and third is the cost of doing business is much higher in some areas than others."

Supreme Court rules against Philip Morris

Lawsuit filed against tobacco company cannot move to federal court
By William Spain, MarketWatch

CHICAGO - The U.S. Supreme Court handed Philip Morris a defeat on Monday, ruling unanimously that an Arkansas class-action lawsuit against the tobacco titan does not belong in federal court.
The decision reverses a lower court ruling that would have taken the case -- a lawsuit charging deceptive marketing practices of "light" cigarettes -- out of Arkansas state courts because the products are regulated by the federal government.
Philip Morris, a unit of Altria Group had argued that the Federal Trade Commission was a "federal officer" and because there was an agreement in place for uniform standards and tests on light smokes with it, the case qualified for federal court under a "removal statute."

But Justice Stephen Breyer, writing for the court, disagreed:
"The fact that a federal agency directs, supervises and monitors a company's activities in considerable detail does not bring that company within [the scope of the removal statute]," he said.
A contrary determination, he continued "would expand the statute's scope considerably, potentially bringing within it state-court actions filed against private firms in many highly regulated industries. Nothing in the statute's language, history or purpose indicates a congressional intent to do so."
The case, Watson et al v. Philip Morris charged that the company violated state laws against unfair and deceptive business practices, specifically with its advertisements and packaging on light brands. The suit alleged that the company manipulated cigarette design and used other techniques that caused its cigarettes to register lower levels of tar and nicotine on an industry standard test than smokers would actually get.
The company shrugged off Monday's decision, saying it does "not negatively affect the ultimate outcome" of the case or similar cases around the country.·
"Today's ruling is narrow and merely determined whether the Watson case should be heard in federal court or state court," said William Ohlemeyer, Philip Morris USA's associate general counsel. "We have compelling defenses to the Watson claim that have been advanced in state courts."
But at least one anti-tobacco group hailed the ruling.
"Today's unanimous opinion is terrific news for the Arkansas plaintiffs in the Watson case, since it has reversed an overbroad and historically inaccurate opinion," said Edward Sweda, senior attorney for the Tobacco Products Liability Project.
He said the decision will also "benefit plaintiffs and their attorneys in other 'light' cigarette litigation since Philip Morris' attempt to evade state law simply by virtue of the fact that it is regulated has failed."
Shares of Altria were flat at $70.30 in midday action

Rexam raises 285.9 mln stg in placing for O-I Plastic buy

LONDON (Thomson Financial) - Rexam PLC said it has placed 58,354,700 new shares at 490 pence each, raising 285.9 mln stg before expenses, to part-fund the acquisition of O-I Plastic Products FTS Inc.

The beverage can maker announced this morning it would buy the US manufacturer of rigid plastic healthcare packaging for 1.8 bln usd cash.

Rexam had said it was funding the deal through a combination of a 500 mln stg bond issue, the 449 mln stg proceeds of the sale of its glass business and an equity placing of about 58.35 mln new shares, representing approximately 9.99 pct of its share capital prior to the placing.

2-Chinalco to buy Peru Copper for C$840 mln

TORONTO, June 11 (Reuters) - Peru Copper Inc. (PCR.TO: Quote, Profile, Research has agreed to be bought by state-owned Aluminum Corp. of China Ltd. (601600.SS: Quote, Profile, Research in a friendly deal worth C$840 million ($792 million) in cash, the Canadian company said on Monday.

The offer of C$6.60 a share is a 21 percent premium to Peru Copper's 20-day volume weighted average price of C$5.45 on the Toronto Stock Exchange ended May 23.

The company's shares were up 10 Canadian cents at C$6.45 after the announcement on Monday.

It has been conducting a strategic review of its options since last November, and said in May that it was in exclusive talks with a third party.

Peru Copper buys and explores for copper deposits in Peru and is listed in both Toronto and Lima.

The Vancouver, British Columbia-based company owns the Toromocho copper project, which it has said could become one of the biggest copper mines in Peru by 2010, producing 300,000 tonnes of refined copper a year.

The company's board of directors has unanimously recommended the deal, while 34 percent of its shares are committed via lockup agreements, it said.

Aluminum Corp., also known as Chinalco, said the deal was an important step it its strategic growth outside China.

"(It) will provide us with an opportunity to leverage the strength of our balance sheet and our extensive project development expertise to advance the Toromocho project," Chinalco president Yaqing Xaio said in a statement.

"We look forward to identifying further investment opportunities in Peru and around the world."

The announcement comes as Chinese companies increasingly snap up mining players to satisfy demand for commodities.

Chinalco also said it has purchased about 13.2 million shares of Peru Copper in a private placement at C$5.30 a share, or C$70 million.

The private placement, which is not conditional on the success of the takeover deal, will give Chinalco 9.9 percent ownership in Peru Copper.

Peru Copper will have to pay a C$21 million break fee to Chinalco if the deal doesn't go through.

UBS Investment Bank is acting as financial adviser to Peru Copper, while BMO Capital Markets is advising Chinalco.

($1=$1.06 Canadian)

Blackstone co-founders to make $2.3bn from IPO (Financial Times)

By James Politi, Ben White and Francesco Guerrera in New York

Blackstone co-founders Pete Peterson and Steve Schwarzman will receive a combined $2.3bn pay-day from the US private equity group's initial public offering, it emerged on Monday, as the firm disclosed a set of long-awaited details on compensation.

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The sum highlights the extraordinary wealth that private equity executives have created for themselves amid the industry's boom in recent years. This has both elevated their status and influence in global business and attracted increasingly intense scrutiny from politicians and regulators around the world.

Mr Peterson, the 80-year-old senior chairman of Blackstone, will be selling 59.9 per cent of his stake in the company, for a sum of $1.88bn, which will mostly be donated to charity. The former Nixon administration official will only own 4 per cent of Blackstone after the stock market listing, which is expected later this month.

Mr Schwarzman, the 60-year-old chief executive who runs the firm, will be selling a 5.7 per cent stake for $677m. After the IPO, Mr Schwarzman will by far be the largest shareholder in Blackstone, with a stake of 23 per cent worth more than $7bn.

In pressing ahead with an IPO, Blackstone is blazing a trail that many of its peers in the private equity and hedge fund world are expected to follow. But many buy-out executives are reluctant to move their business away from operating as private partnerships partly for fear of the impact of disclosing their net worth and compensation.

In Monday's filing with the Securities and Exchange Commission, Blackstone said Mr Schwarzman earned $398.3m in salary and gains from investments last year, while Mr Peterson earned $212.9m and Tony James, the chosen successor at the firm, earned $97.3m.

Mr Schwarzman's 2006 compensation is about seven times the $54m earned by Lloyd Blankfein of Goldman Sachs, the highest paid chief executive of a publicly traded Wall Street investment bank. But it is well below the amounts earned by the heads of the world's biggest hedge funds. For instance, James Simons, head of quantitative hedge fund group Renaissance Technologies, made about $1.7bn, according to Alpha magazine.

The fact that Mr Schwarzman earned significantly less than many hedge fund managers could provide somewhat of a boost for the private equity industry in its current battles on Capitol Hill. Some members of Congress and union groups want to change the law to treat carried interest as regular income, taxable at up to 35 per cent, rather than as capital gains, currently taxed at 15 per cent.

However, efforts to highlight the less-than-stunning nature Mr Schwarzman's annual pay could be undermined by the Blackstone chief executive's net worth following the IPO, which will be among the largest in the world.

Jim Melican, chairman of Proxy Governance, which advises investors on corporate governance issues, said: " Putting out numbers like these is going to cause renewed focus on how much private equity executives are paying themselves and whether there is any justification for it given that they are already very wealthy individuals"

The filing also disclosed that Goldman Sachs is now among the underwriters of the Blackstone IPO, which it had previously and controversially been excluded from amid reports that insiders at the bank disagreed with the proposed valuation.

Stocks Trade Flat As Bond Yields Rise (AP)

By TIM PARADIS - AP Business Writer

NEW YORK — Stocks recovered from early losses to trade flat Monday as investors grappled with higher bond yields and a partial rebound in oil prices from a sell-off Friday.

The yield on the Treasury's 10-year note rose to 5.14 percent Monday from 5.11 percent late Friday. Last week, investors took stubborn inflation to mean that a rate cut by the Fed was unlikely, and they sent stock and bond prices tumbling; since yields move in the opposite direction from bond prices, market interest rates soared. The 10-year Treasury yield climbed above 5 percent for the first time since last summer. The Fed has kept the federal funds rate, the interest banks charge each other for overnight loans, unchanged at 5.25 percent since last summer, following a string of increases over about two years.

While U.S. stocks rose sharply Friday, Wall Street still logged its worst week in about three months amid interest rate concerns.

"I don' think that there is a lot of clarity as to monetary policy for the rest of 2007 and I think that in general puts markets on edge," said Les Satlow, portfolio manager at Cabot Money Management. "I think it's a reflection of institutional ambivalence," he said of the back-and-forth direction of stocks.

In midday trading, the Dow Jones industrial average rose 6.26, or 0.05 percent, to 13,430.65.

Broader stock indicators rose. The Standard & Poor's 500 index rose 2.77, or 0.18 percent, to 1,510.44 and the Nasdaq composite index advanced 2.24, or 0.09 percent, to 2,575.78.

Stock markets abroad rose after steep declines last week. Japan's Nikkei stock average rose 0.31 percent and China's often-volatile Shanghai Composite Index rose 2.1 percent. Britain's FTSE 100 rose 0.96 percent, Germany's DAX index advanced 1.52 percent, and France's CAC-40 rose 0.97.

Oil prices, which also stirred inflation concerns last week, rebounded Monday after falling sharply Friday. Iran's oil minister said Monday the Organization of Petroleum Exporting Countries doesn't plan to release more oil into the market ahead of its next policy meeting in September. Light, sweet crude rose 73 cents to $65.49 per barrel on the New York Mercantile Exchange.

Amid an absence of economic and earnings reports, investors will likely focus on moves of individual stocks as they await data on inflation due later in the week. On Thursday, the Labor Department releases its producer price index and on Friday the consumer price index is due.

"If the Fed isn't going to clearly telegraph what it's going to do, then we'll just have to pay a little more attention to what the companies say and go on a case by case basis," Satlow said, referring to the mood among many investors.

The Fed's message on inflation has been that it remains too high and that holding down rising prices remains its focus. Cleveland Fed President Sandra Pianalto, speaking in Germany on Monday, said U.S. inflation remains higher than the Fed would like and that spikes in prices, liquidity crises or fiscal imbalances could upend central banks' notions of how contained inflation might be.

In corporate news, Neurochem Inc. rose $1.33, or 23 percent, to $7.08 as investors awaited an update Monday on Alzhemed, a drug in development for treatment of Alzheimer's disease.

Biotech drug maker Medivation Inc. soared $4.09, or 25 percent, to $20.26 after the company said its Alzheimer's drug Dimebon showed favorable results. The company's previous 52-week high was $21.85.

Steelmaker Nucor Corp. warned its second quarter profit will fall because customers had increased orders in the first quarter ahead of an expected increase in prices, making for lower orders in the second quarter. Nucor fell $4.13, or 6.2 percent, to $62.48.

Bearingpoint Inc. fell 22 cents, or 3 percent, to $7.38, after a Jefferies analyst lowered his rating on the management and technology consulting company citing increased competition and lower demand in the sector. The dollar was mixed against other major currencies, while gold prices rose. Declining issues outnumbered barely outpaced advancers on the New York Stock Exchange, where volume came to 558.4 million shares. The Russell 2000 index of smaller companies fell 1.92, or 0.23 percent, to 833.39.

Brookfield to buy Multiplex for A$7.3 bln

TORONTO, June 11 (Reuters) - Brookfield Asset Management Inc. (BAMa.TO: Quote, Profile , Research) (BAM.N: Quote, Profile , Research) said on Monday it has offered to acquire Multiplex Group's (MXG.AX: Quote, Profile , Research) stapled securities in an all-cash deal with an enterprise value of A$7.3 billion ($6.1 billion).

Brookfield, an asset manager with interests in real estate and power generation, said the offer is to acquire 100 percent of the stapled securities, which comprise the shares of Multiplex Ltd. and units of Multiplex Property Trust, at A$5.05 apiece.

Toronto-based Brookfield has entered agreements with Roberts Family Nominees Ltd., which hold 25.6 percent of Multiplex shares.

The per stapled security price, including a June distribution, represents a 39.2 percent premium to the six-month volume weighted average price for Multiplex shares prior to the announcement of talks with Brookfield and Roberts Family on Jan. 25, Brookfield said.

Multiplex's directors support the deal.

Under the terms of the offer, the minimum acceptance condition is 50.1 percent of Multiplex Group securities and other conditions.

Brookfield has over $26 billion of property assets worldwide. Multiplex Group, which suffered millions of pounds of losses from its Wembley football stadium project in the United Kingdom, has operations also in Australia, New Zealand and the Middle East.

Shares of Brookfield Asset Management were down 1 Canadian cent at C$41.40 midmorning on the Toronto Stock Exchange; the stock was up 7 cents at $39.04 on the New York Stock Exchange.

IBM To Buy Telelogic For $745 Million

By Stacy Cowley, CRN

IBM has agreed to buy Swedish software lifecycle management technology developer Telelogic for $745 million, the companies announced Monday.
The news drew cheers from attendees at IBM's Rational Software Development Conference in Orlando, where Rational general manager Danny Sabbah announced the acquisition at the start of his opening keynote. Citing last week's acquisition of security vendor Watchfire, Sabbah spoke of IBM's commitment to providing customers and partners with the tools and applications they require.

"We need to refocus on complex systems development, and we're dong that in spades today with our announcement of our intent to acquire Telelogic," Sabbah said.

Based in Malmo, Sweden, with U.S. operations headquartered in Irvine, Calif., Telelogic makes modeling, design, change management, governance and other software development lifecycle tools. Serving industries including defense and financial services, Telelogic touts its software use by more than one-third of the world's 500 largest companies. It reported a profit of $22.9 million last year on sales of $217.9 million)

IBM, in Armonk, N.Y., plans to fold Telelogic into its Rational software group. IBM did not offer an estimated close date for the deal, which still needs to clear shareholder and international regulatory approvals.

Bonds retreat as Kiwi dollar dives

Scott Murdoch (The Australian)

THE worldwide jump in bond yields inspired by US Treasuries last week has retreated marginally in some markets as analysts consider whether the sudden shifts can be sustained.

In restricted trade around the world yesterday, some bond yields fell back slightly, especially in the New Zealand trading session. But in early London trade, the march of yields on US 10-year bonds continued with 10-year Treasuries adding 1 basis point. The bond yield was fluctuating at 5.12 per cent, after last week's rally added 15 basis points. The Reserve Bank of New Zealand sent shock waves through the financial markets yesterday when it confirmed it had intervened in its foreign exchange market.

For the first time, the central bank sold New Zealand dollars in a bid to bring the powering Kiwi under control. The policy prompted the market to speculate that monetary policy tightening would now end, with rates at 8 per cent. The front end of the yield curve on New Zealand government paper shifted downwards on the likelihood of no further interest rate rises.

Economists said the market believed that the Reserve Bank of New Zealand would not raise rates at the same time as selling currency to suppress the NZ dollar. On the back of the news, the currency fell from US76.20c to US75.25c, with further downward pressure expected to emerge today.

The shift created a positive tone for the Australian dollar, which will probably benefit from the New Zealand move because of the carry trade. Carry trade investors will further favour the Australian dollar, despite the increase in New Zealand interest rates last week. Last night, the domestic currency was hovering at US84.26c, up 0.025c. Analysts said the dollar could stay above the US84c market in the medium-term, as that level was seen as the next technical barrier for the currency.

AirTran extends Midwest tender offer to August 10

ORLANDO (Thomson Financial) - AirTran Holdings Inc, the parent of AirTran Airways, today said it has extended its hostile 15 usd per-share offer for rival Midwest Air Group until August 10.

At the close of business on Friday June 8 - the previous deadline - Midwest shareholders had agreed to tender more than 14.6 mln shares to AirTran (nyse: AAI - news - people ) subsidiary Galena Acquisition Corp, representing 59.5 pct of all outstanding shares of Midwest Air Group, (amex: MEH - news - people ) or 64.1 pct of outstanding shares not held by the Midwest board or management.

'We are gratified by the response we are receiving from Midwest's shareholders regarding both the tender offer and the slate of directors that we have nominated for the Midwest Board,' said Joe Leonard, AirTran Airways' chairman and chief executive officer.

'Based on the support we have heard from Midwest shareholders and other observers, they want a new set of eyes and a fresh, independent voice inside the Midwest boardroom so that the AirTran offer can get a full and fair hearing.'

Midwest's Annual Shareholders Meeting is scheduled for June 14 and AirTran has called for shareholders to support the election of John Albertine, Jeffrey Erickson and Charles Kalmbachat to the board.

The incumbent board of Midwest unanimously rejected AirTran's revised 15 usd per-share offer on April 13, describing it as 'inadequate'.

Qwest CEO stepping down after five years

By Marguerite Reardon, CNET
Qwest Communications International's chairman and chief executive officer, Richard Notebaert, is retiring from both positions, the company said Monday.

Notebaert, who is 59, will remain in his role until the board of directors can replace him. The company said it is actively working to fill his job, though it did not offer a timetable for the search. Qwest said it has no plans to change its strategy or operations as a result of Notebaert's retirement.

Notebaert has been chairman and CEO of the telecommunications giant since June 2002. He helped guide the troubled company in 2006 to its first-ever year of operational profitability.

"The time has come for me to spend more time with family and focus on other commitments," Notebaert said in a statement.

When Notebaert took the helm at Qwest, the company had been mired in scandal. He was the replacement for then-CEO Joseph Nacchio, who earlier this year was convicted of 19 counts of insider trading in connection with the sale of $52 million worth of Qwest stock in April and May 2001. Nacchio, who plans to appeal his case, is expected to be sentenced July 27 and could get 10 years in prison.

Before taking the top job at Qwest, Notebaert briefly served as president and CEO of Tellabs, a communications equipment provider. Prior to that, Notebaert spent 30 years with phone company Ameritech. He served as CEO of that company from 1994 to 1999. He announced his retirement from Ameritech in October 1999, three days after the company was sold to SBC Communications (which is now AT&T) for more than $70 billion.

When Notebaert was named CEO of Qwest, a number of Wall Street watcher speculated that he would help broker a big merger. But over the past couple of years, Qwest has remained the only Baby Bell that has not merged with any other large company. Last year, Verizon gobbled up long-distance provider MCI. SBC merged with AT&T. And less than a year later, the newly named AT&T bought BellSouth. Qwest has actively lobbied against these mergers.

But Notebaert sided with other phone company executives, like former AT&T CEO Ed Whitacre, by supporting the idea of a tiered Internet that would provide guaranteed bandwidth to certain services running over the Qwest network.