Thursday, 27 March 2008

Battle over Clear Channel

Bain Capital and Thomas H Lee Partners had agreed to acquire Clear Channel as part of a mega buyout funded by a consortium of six banks, including Citigroup. The battle over Clear Channel Communications however escalated today after a US judge issued a temporary order directing six banks not to interfere with the $20 billion (£10 billion) merger by refusing to fund it or demanding new terms.

But the private equity firms are determined to press ahead with the deal and late on Wednesday they filed lawsuits in New York and Texas, accusing the banks of backing out of their commitments.

Clear Channel itself has also joined in the Texas lawsuit.

In a statement, Clear Channel said that Judge John Gabriel, of the Bexar County district court in Texas, on Wednesday night found that the company would suffer irreparable harm if the banks refused to fund the merger. Clear Channel had agreed last May at the height of the private equity boom to be acquired by Bain and Thomas H Lee for $39.20 a share.

Citigroup, Morgan Stanley, Deutsche, Credit Suisse, Royal Bank of Scotland and Wachovia had all originally signed up to back the deal. Under the original plans, the six banks were to fund $16 billion (£8 billion) of new debt to take Clear Channel private. (source: Timesonline)

The luxury UK-based brands Jaguar & Land Rover owned by Ford have been sold to Tata the Indian company owned by billionaire Ratan Tata. Tata, India's biggest vehicle maker, is paying $2.3 billion (£1.15 billion) for the British brands after months of negotiations over price and supply relationships.

Although Land Rover remains profitable, Ford has never managed to make money from its investment in Jaguar. Ford has been forced to sell the two companies, based at Solihull and Castle Bromwich in the West Midlands and Halewood on Merseyside, in order to concentrate on its loss-making core US car business, which it hopes to turn around in the next two years.

The $2.3 billion price tag is about half the amount Ford originally paid leading some analysts to argue that the purchase was a mistake. Ford sold its iconic Aston Martin brand to a UK-led investment consortium in a deal worth $955.2 million (£482.4 million) last year. (source: BBC News)

Thursday, 20 March 2008

Losses for Borders

Weakening economy and higher borrowing costs were raised as the issues why Borders, the American-owned bookstore chain, were showing slowing sales and losses in seven of the last eight quarters. Borders could be up for sale after it suspended its dividend and hired advisers to review options for the business.

Chief executive George Jones said: "We will be slowed in our progress and expect that we'll reach them later than originally anticipated. Still, we believe that our strategic plan remains the right path toward achieving these goals. The company is determined that additional capital was required to execute our operating plan. The current credit environment has made many of these alternatives prohibitively expensive or entirely unavailable.”

Pershing Square Capital Management, Borders' largest shareholder, has agreed to bail it out by lending it $42.5 million and making an offer for some of the bookstore chain's international businesses.

The company faces stiff competition from online retailers and grocery stores for sales of books, CDs and DVDs. Shares have dropped by 66% in the last year.

Borders reported a net profit of $64.7 million (£32 million) in the three months to the end of December compared with a loss of $73.6 million (£36.8 million), a year earlier when it took large charges associated with the closing of Waldenbooks stores. (source: Timesonline)

Wednesday, 19 March 2008

Yahoo! to apply pressure on Microsoft

The online search engine, Yahoo!, yesterday tried to apply new pressure on Microsoft to raise its hostile takeover offer, after outlining a rosy outlook for the next two years. Yahoo! shared its internal revenue projections with shareholders and claimed that, according to numbers drawn up in December, the board expects sales to rise by more than 70% over the next three years. That would see total sales of $8.8 billion (£4.4 billion) by 2010.

At the beginning of February, Microsoft made an offer to the Yahoo! board outlining its proposals for $31 (£15.5) a share, payable in cash and shares. At the time, the deal valued Yahoo! at $44 billion (£22 billion) – a 61% premium to the Yahoo! share price the day before the approach was made public. (source: Timesonline)

Donald Trump’s top 10 list of things that he always emphasize in all his speeches.

1. Never give up! Do not settle for remaining in your comfort zone. Remaining complacent is a good way to get nowhere.

2. Be passionate! If you love what you're doing, it will never seem like work.

3. Be focused! Ask yourself: What should I be thinking about right now? Shut out interference. In this age of multitasking, this is a valuable technique to acquire.

4. Keep your momentum! Listen, apply and move forward. Do not procrastinate.

5. See yourself as victorious! That will focus you in the right direction.

6. Be tenacious! Being stubborn can work wonders.

7. Be lucky! The old saying, "The harder I work, the luckier I get" is absolutely right on.

8. Believe in yourself! If you don't, no one else will either. Think of yourself as a one-man or one-woman army.

9. Ask yourself: What am I pretending not to see? There may be some great opportunities right around you, even if things aren't looking so great. Great adversity can turn into great victory.

10. Look at the solution, not the problem. And never give up! Never never never give up. This thought deserves to be said (and remembered and applied) many times. It's that important.

Tuesday, 18 March 2008

The Ben Way story

The Storey about Ben Way – I thought that it would be so much interesting to publish this then to go on about business news again about the credit crunch etc. Hope you enjoy this. For me this guy is an inspiration to have achieved so much at such an early age. Enjoy!

When Ben Way's teachers told him that his dyslexia would stand in the way of success, he was determined to prove them wrong. His Young Enterprise (YE) company, Grass Heads, produced home-grow grass plants, so Ben spent evenings packing seeds and sawdust into tights. He went on to become one of the first dot com millionaires when he was only fifteen years old. He attracted media attention following his early success, and he also featured in numerous media stories. Before his eighteenth birthday, Ben had negotiated a £25 million deal to launch an internet-based business to business data aggregation service which continues to trade. He has won "New Business Millennium Young Entrepreneur Of The Year" in 2000 which was given to him by (now Prime Minister) Gordon Brown.

However, after a dispute with the investors in 2001 he was diluted out of the business and lost everything. It is reported that he was in the Sunday Times Rich List under Robbie Williams the same day he could not buy a tube ticket.

He then went on to advise both the UK and US governments in 3rd Generation Mobile Technology, before heading up technical and environmental investments and due-diligence for the Rotch Property Group who have over £1 billion in asset management. It was with the latter company that he developed his passion for environmental technologies.

In 2003 he started a successful mobile innovations company that developed one of the first remote monitoring medical devices as well as many other projects, this evolved into the Rainmakers after developing a number of successful innovations for clients and the market. The Rainmakers continues to grow. Due to the success of The Rainmakers, he was able to in 2006, appeared on the Channel 4 TV show “Secret Millionaire” where he gave away £40,000 in a philanthropic act after spending two weeks in Hackney as a volunteer. £20,000 was given to a youth organisation, £10,000 to a young entrepreneur, and another £10,000 as a thank you to one key member of the Hackney community.

He is now regarded as one of the leading experts on web 2.0 the Semantic web and also sits on a one hundred million dollar venture capital fund called Brightstation Ventures. Has been quoted as describing the Semantic Web as "the most powerful development of information management since the creation of the database"

In early 2007 he was invited to join Brightstation Ventures an $100 million (£50 million) technology Venture Capitalist fund as the CIO (Chief Innovations Officer) where he has worked with projects such as miomi and Shiny Media. Launched in 2007a social website HorsesMouth made it into the top 25 UK web 2.0 start ups. In September 2007 he also launched the world’s first POIP service, ViaPost which allows printing of documents over the internet which are then sent by Royal Mail.

The way he is developing new innovations at such an early stage is just astonishing. He refused to give up after he lost everything and proved to be a typical entrepreneur that he can make it again.

Monday, 17 March 2008

Bear Sterns to be sold to JPMorgan Chase

Bear Sterns the famous investment bank, will be acquired by rival giant JPMorgan Chase for a bargain $236.2 million (£124.2 million). The last-minute buyout was aimed at averting a Bear Stearns bankruptcy and a spreading crisis of confidence in the global financial system.

Early indications, though, pointed to continued fear about the stability of the US market, as the dollar hit fresh record lows against the euro, gold broke through 1,015 an ounce and Asian stocks sank. JPMorgan said it will guarantee all business - such as trading and investment banking - until Bear Stearns' shareholders approve the deal, which is expected to be completed during the second quarter.

JPMorgan Chase chief financial officer Michael Cavanaugh did not say what would happen to Bear Stearns' 14,000 employees worldwide or whether the Bear Stearns name would survive. (source: The Independent)

Air France-KLM’s takeover offer for Alitalia, the ailing state airline was accepted yesterday and values it at just €139 million (£107 million), a fifth of its market capitalisation at the end of last week.

Alitalia said two weeks ago that it had less than €300 million (£232 million) in cash remaining, having lost more than €3 billion (£2.32 billion) since 2000, and warned it could be forced to stop trading by the middle of the year. Alitalia's problems over the past 10 years include the emergence of the budget airlines Easyjet and Ryanair, which both now provide stiff competition in the airline's home market. However, the company is also regarded as inefficient and over-manned.

The French company plans to cull 1,600 jobs from Alitalia as it cancels unprofitable routes and eliminates inefficiencies. It has also said it will take over only part of Alitalia's ground services division, which could mean the airline faces more job losses than publicly stated.

This business model is likely to put Air France at loggerheads with Italian trades unions, which must back the deal in order for it to go ahead. The takeover also needs clearance from the Italian government, which may take some time following the collapse of the administration led by Romano Prodi in January.

In addition to the €139 million (£107 million) purchase price, Air France has also agreed to buy out the airline's convertible bond holders for €608 million (£471.3 million), taking its total outlay to €747 million (£579.05 million). (source: The Independent) - (further articles on this Velocity Interactive Group - New Investment Company, ArcelorMittal to by China Oriental Group Co., Alitalia SpA in sight for Air France-KLM)

Friday, 14 March 2008

Virgin Mobile USA lost £124 million

Virgin Mobile USA that was set up six years ago between Sir Richard Branson’s Virgin Group and Sprint (the US telecoms company) has lost $250 million (£124 million) after an 85% collapse in the company’s share price since its flotation last year. Poorer than expected fourth-quarter results caused the mobile phone operator’s share price to drop a further 41% yesterday to close at $2.46 (£1.23) in New York.

The initial public offering (IPO) for Virgin Mobile USA took place in October and Virgin Group reduced its holding from 42% to 37%.

The listing price was $15 (£7.50) a share and in early trading on the first day. However, the price has slid since then and the company now has a market capitalisation of only $130 million (£65 million). This has reduced the value of Sir Richard’s holding from $295 million (£140 million) to $48 million (£24 million).

The poor performance of Virgin Mobile USA is an embarrassment for the Virgin Group, which promotes itself as a private equity-style investor. After years of treating stock markets with suspicion, Sir Richard’s asset managers have looked at a number of possible IPOs to release value in the group’s divisions but the rapid drop in value within Virgin Mobile USA may encourage Virgin Group to keep companies private.

Service revenue rose 8% to $293.6 million (£148.28 million) and new customer additions were 958,000, down from 1.29 million after the company refused to cut prices in the run-up to Christmas.

Virgin Mobile USA has also come under increasing pressure from national carriers expanding into its pay-as-you-go space. The company expects revenue in 2008 will be flat and earnings to be between $105 million (£53 million) and $130 million (£65.6 million). These forecasts were also lower than Wall Street expectations. (source: Timesonline)

Michael (37) and Xochi (36) Birch made an estimated $600 million (£295 million) yesterday after the sale of their 70% stake in Bebo, the social networking site, to the AOL division of Time Warner for $850 million (£429.9 million) in cash. The Briton and his Californian wife set up Bebo – their sixth internet business – in 2005 and are not expected to remain with the company, which is the second most popular social networking site in the UK and the third globally after MySpace and Facebook.

No financial data regarding Bebo’s performance was released yesterday, although Randy Falco, chairman and chief executive of AOL, contrasted the price that Time Warner had paid with the $260 million (£125 million) that Microsoft paid for a 1.6% stake in the $15 billion (£7.5 billion)-rated Facebook. Bebo has 40 million users. Facebook is thought to have generated $100 million (£47 million) in revenues in 2007, which is likely to represent a benchmark for Bebo.

The plan is to develop Bebo internationally, with new sites around Europe, while at the same time trying to promote Bebo using AOL’s AIM instant messenger and ICQ chat technologies. (source: Timesonline)

Thursday, 13 March 2008

Profit increase for Morrisons

The troubled Morrison supermarket, today signalled a turnaround in fortunes by reporting profits up 66% and a pledge to return £1 billion to shareholders over two years. The capital return, through a share buy-back, was announced as the supermarket chain's veteran chairman, Sir Ken Morrison, confirmed that he will retire from the company from today.

Morrisons began to struggle after difficulty integrating rival Safeway, which it acquired in 2004. The company said pre-tax profits rose from £369 million to £612 million for the 12 months to February 3, 2007, on total sales up 6% to £13 billion. Like-for-like sales rose 4.6%, a fall on 5.2% in the previous period. Total dividend increased 20% to 4.8p, up from 4p.

Morrisons plans to open eight new stores in 2008 and extend 19 with an additional 100,000 square feet of selling space.

Keith Bowman, an analyst at Hargreaves Lansdown, said that “all the group’s key financial metrics were moving in the right direction, noting that its shares had out performed rival Tesco by 13.5% in the last six months and that the acquisition of Safeway was now behind it. However, the remaining management at Morrisons will know that they cannot afford to be complacent, today's success comes from a low starting base and the comparatives will become much harder going forward. In addition, UK consumers under pressure from numerous angles will not prove easy to satisfy.” (source: Timesonline)

Wednesday, 12 March 2008

Ian Kerr to be replaced by Bert Pijls

Ian Kerr, the chief executive of Egg since November 2006, has resigned after the internet bank was accused of unfairly withdrawing credit cards from thousands of responsible customers. Mr Kerr will be replaced by Bert Pijls, the country manager for Citigroup, Egg’s parent company in the Czech Republic.

Egg last month sent out an unexpected warning to 161,000 card users saying it would end their agreements in 35 days because they had a “higher than acceptable risk profile”. The cards were withdrawn on Thursday last week.

Egg has even blocked some borrowers with perfect credit histories from using their cards. Experts said the bank, which has 2.3 million card customers, was effectively penalising these borrowers for being good with their money because they were not profitable customers, and that other banks are likely to follow Egg’s lead.

Mr Kerr, the former HBOS retail banking head, was also the head of UK consumer banking for Citigroup, which bought Egg from insurer Prudential last May. George Awad, Citigroup’s consumer chief executive for Europe, the Middle East and Africa, said he was disappointed to loose Mr Kerr, but respected his decision.

Mr Pijls will move to London this month from the Czech Republic where he turned the consumer franchise around with high double-digit year-on-year growth, according to Citigroup. (source: Timesonline) - Egg dumps millionaires

Tuesday, 11 March 2008

Financial losses for EADS

Europe’s leading aerospace group, EADS, the owner of the Airbus aircraft company, suffered a heavy financial loss last year, burdened by a weak US dollar and restructuring charges. They recorded a net loss of €446 million (£341 million) compared with a €99 million (£75 million) profit in 2006. They are expected to deliver more aircraft this year with delivering revenues of €40 billion (£30.3 billion), up from €39.1 billion (£29.6 billion) in 2007.

The aerospace group said it hoped to capture 700 aircraft orders in the current year and deliver 470 planes to customers. In 2007, EADS delivered 453 units to airlines, up from 434 in the previous year. Airbus however still suffered a €1 billion revenue hit from the weakening US dollar while profits were hurt by the cost of restructuring charges.

EADS chief executive, Louis Gallois, was optimistic, forecasting earnings before interest and tax of €1.8 billion (£1.36 billion) in 2008. Mr Gallois said “there had been a promising start to 2008 with improvements across the board and recent success in the US military aircraft market. EADS is gaining speed and altitude. Our short-term focus is now to further improve programme management and to secure the ramp-ups ahead."

The annual loss for EADS was higher than market expectations of some €320 million (£242.4 million). The Airbus business was affected by €881 million (£667.42 million) in provisions for restructuring and delays in the A380 and the A400M heavy lift aircraft. The A380 secured 33 new orders during the year making a total of 180 "firm orders" for the superjumbo aircraft. The Airbus order book stood at €283 billion (£214.39 billion) at the year end, up from €210 billion (£159 billion). (source: Timesonline)

Monday, 10 March 2008

World Duty Free to be sold to Autogrill

Italian caterer Autogrill spent $1.5 billion (£742 million) on airport retail assets on Monday, making it the world's top airport retailer and easing the financing problems of one seller, Spain's Ferrovial.

Autogrill said it would buy World Duty Free from construction and services group Ferrovial and acquire full control of another airport retail operation, its joint venture Aldeasa, for a total 990 million euros (£742 million).

The Italian catering giant paid Ferrovial 715 million euros for World Duty Free funds, which should help the Spanish company towards refinancing of £9/£10 billion pounds in debt related to its purchase of British airports operator BAA in 2006.

Autogrill, which operates restaurants on motorways and in airports, also bought the 49.95% stake it does not own in Aldeasa from Altadis, now controlled by Imperial Tobacco Group Plc after a takeover last year.

Autogrill, which bought Britain's Alpha Airports last year, said it expects annual synergy benefits of about 40 million euros by 2011. It said the acquisitions would add to earnings from 2009 and be neutral this year. (source: Reuters)

Thursday, 6 March 2008

The World's Richest People

If you want to become one of the richest people in the world, then, change you nationality its seems to be Russian. The average age of Russia’s elite is 46, bringing the overall average of the world’s richest to 61.

Warren Buffett has finally unseated Bill Gates from the top spot for the first time in 13 years. The surging share price of Berkshire Hathaway saw his personal wealth rise to $62 billion (£31 billion). This is up by £5 billion from a year ago.

Gates is now worth $58 billion (£29 billion) and is ranked third in the world. He is up $2 billion (£1 billion) from a year ago and would have been perhaps as rich -- or richer -- than Buffett had Microsoft not made an unsolicited bid for Yahoo at the beginning of February.

Mexican telecom tycoon Carlos Slim HelĂș is the world's second-richest person, with an estimated net worth of $60 billion (£30 billion). His fortune has risen $11 billion (£5.5 billion) since last March. Fourth on the list is Laksi Mittal from Ancelor Mittal the world’s largest steel provider. The world’s youngest US billionaire is the CEO and owner of Facebook, Mark Zuckerberg with an estimated wealth of $1.5 billion (£750 million).

Wednesday, 5 March 2008

Virgin Mobile India to be derailed by Vodafone

A few days after going live with sell mobile phones in India, the world’s fastest-growing market, it seems like Sir Richard Branson faces being derailed by Vodafone. On Sunday, Sir the Virgin Group unveiled a partnership with Tata Indicom, under which the Indian company will market a mobile service aimed at young consumers using the Virgin brand.

However, a very powerful industry group, which includes Vodafone, the world's largest mobile operator, has now demanded that the Indian Government declare the deal void. The Cellular Operators Association of India claims Virgin is entering the market via the backdoor as an illegal "mobile virtual network operator" (MVNO), where it effectively buys mobile capacity wholesale from Tata and sells it on under its own brand - a model not permitted in India.

A spokesman for the Indian Department of Telecommunication said that Virgin could be ejected from the Indian market. "The spectrum [used by the Virgin-branded mobile service] was allocated to Tata. It is up to Tata to intimate any transfer of that spectrum to the department," he said.

Virgin runs virtual networks in six countries. When it launched in 1999, Virgin Mobile UK was the world's first MVNO – breaking with tradition by not having its own network but using another service provider's. Being denied access to India's explosive growth would be a severe blow to Virgin. While Western markets are largely saturated, it is estimated that more than 870 million of India's 1.1 billion population are yet to own a mobile.

It is only two years since India raised the ceiling for foreign ownership in telecoms groups to 74% from 49%, a move that led to a flood of new investment. The Indian authorities have received more than 550 applications from more than 45 domestic and foreign firms to launch mobile services in the country. (source: Timesonline)