BlackRock Inc., the world
BlackRock Inc., the world
British police searched the offices of Rupert Murdoch’s British newspapers Saturday after arresting a police officer and four current and former staff of his tabloid The Sun as part of an investigation into police bribery by journalists.
The arrests spread the scandal over tabloid wrongdoing _ which has already caused the closure of one tabloid, the News of the World _ to a second Murdoch newspaper.
London’s Metropolitan Police said two men aged 48 and one aged 56 were arrested on suspicion of corruption early in the morning at homes in and around London. A 42-year-old man was detained later at a London police station.
Murdoch’s News Corp. confirmed that all four were current or former Sun employees.
A fifth man, a 29-year-old police officer, was arrested at the London station where he works.
The investigation into whether reporters illegally paid police for information is running parallel to a police inquiry into phone hacking by Murdoch’s now-defunct News of the World.
Officers were searching the men’s homes and the east London headquarters of the media mogul’s British newspapers for evidence.
Police said Saturday’s arrests were made as a result of information provided by the Management and Standards Committee of Murdoch’s News Corp.
News Corp. said it was cooperating with police.
“News Corporation made a commitment last summer that unacceptable news gathering practices by individuals in the past would not be repeated,” it said in a statement.
A dozen people have now been arrested in the bribery probe, though none has yet been charged.
They include former Rebekah Brooks, former chief executive of Murdoch’s News International, ex-News of the World editor Andy Coulson _ who is also Prime Minister David Cameron’s former communications chief _ and journalists from the News of the World and The Sun.
Two of the London police force’s top officers resigned in the wake of the revelation last July that the News of the World had eavesdropped on the cell phone voicemail messages of celebrities, athletes, politicians and even an abducted teenager in its quest for stories.
Murdoch shut down the 168-year-old tabloid, and the scandal has triggered a continuing public inquiry into media ethics and the relationship between the press, police and politicians.
An earlier police investigation failed to find evidence hacking went beyond one reporter and a private investigator, but News Corp. has now acknowledged it was much more widespread.
Last week the company agreed to pay damages to 37 hacking victims, including actor Jude Law, soccer star Ashley Cole and British politician John Prescott.
Solutia’s prowess in developing chemicals found in everything from car tires to office windows throughout the globe drew the interest of Eastman Chemical Co. last summer. Now it’s buying the Town and Country-based company in a deal worth $4.7 billion.
Eastman, a chemical manufacturer based in Kingsport, Tenn., is acquiring Solutia for $3.4 billion in cash and stock, and assuming $1.3 billion in debt. The deal is set to close in mid-2012, pending shareholder approval.
Solutia makes specialty films and chemicals for the automotive and architectural industries, and employs 3,400 people worldwide, including 450 locally.
With $2.1 billion in revenue last year, Solutia is one of the largest public companies based in the St. Louis region.
Solutia has two local facilities - the Town and Country headquarters, with 300 employees, and a Sauget manufacturing plant where 150 people work.
A Solutia spokeswoman said there was no information yet on the fate of local workers, though headquarters jobs are often a cost-cutting target in mergers. On Friday, Eastman said the headquarters of the combined companies will be in Kingsport.
Menawhile, the Sauget plant - which makes chemicals for tire manufacturing - runs 24 hours a day, seven days a week.
Sauget Mayor Rich Sauget said he spoke with Solutia employees as recently as last week who were unaware that a sale was in the works.
“They mean a lot to us,” Sauget said of Solutia’s local workforce. “We hope, whoever comes in, that they see an opportunity with Solutia and their properties here.”
Despite the uncertainty, Eastman won’t be leaving the region, Solutia’s chairman, president and CEO Jeffry Quinn predicted.
“I certainly would expect the combined company to have a significant presence in St. Louis for some time,” Quinn said in an interview with the Post-Dispatch. Quinn, who joined Solutia in 2003, will leave the company once the sale finalizes.
In the sale announcement, the companies did not disclose how much Quinn stands to gain when the deal closes. However, Solutia’s most recent proxy statement stated last year that Quinn’s compensation, including cash severance and stock options, would have totalled $21.6 million based on the company’s stock price at the end of 2010.
Under the deal, Solutia shareholders will receive $22 in cash and 0.12 shares of Eastman stock for each share of Solutia that they own. Based on Solutia’s closing price Thursday, Eastman offered a 42 percent premium for Solutia’s stock.
Eastman, which had $7.2 billion in revenue last year, plans to fund the cash portion of the buyout with available cash and debt.
After the early morning announcement, Eastman’s stock soared. Based on Friday’s closing prices, Solutia shareholders will receive cash and stock valued at $28.05 for each Solutia share.
Meanwhile, Solutia’s stock jumped more than 41 percent after the sale was announced, closing Friday at $27.52 a share.
Eastman expects about $100 million in annual cost savings by the end of 2013, as the acquisition is expected to help lower costs and help the company purchase raw materials at lower prices payday loans. The company said the deal will immediately boost earnings.
The original Monsanto Co. spun off Solutia in 1997 in an effort to focus on drugs and agriculture. Solutia, burdened with heavy debt loads and retirees’ benefits dating before the spin-off, floundered as raw material prices rose and environmental legal costs increased.
In 2003, Solutia filed for Chapter 11 bankruptcy protection. It didn’t emerge out of bankruptcy until 2008.
During the years in bankruptcy, Solutia grew its international reach while divesting underperforming or non-core brands and businesses such as nylon, acrylic fibers and feed ingredients.
In 2003, only 30 percent of Solutia’s revenue came from international sales. Today, that has jumped to 75 percent.
“We’ve really transformed the company into one of the preeminent specialty chemical companies in the world,” Quinn said. “Many of the products we make are expensive to ship, so we built around the world to serve our customers.”
Growth in the company’s technical specialties division, for example, paralleled the development of infrastructure in places such as China. With the new roads, demand for radial tires - which use a chemical made by Solutia - is on the rise.
That global reach drove the Tennessee company’s interests in Solutia, Eastman’s chairman and CEO Jim Rogers said in a conference call with analysts Friday.
“With the addition of Solutia, Eastman will be adding manufacturing capacity in Asia over the next couple of years to meet growth,” Rogers said.
Eastman, which has 10,000 employees globally, was itself a product of a spin-off. The company was spun-off from camera and film maker Kodak in 1994.
In the conference call, Rogers said Eastman began exploring acquisition opportunities last summer.
“Solutia was number one then, and it has stayed number one through this whole process,” he said.
Talks with Solutia’s board began in the fall and intensified in the past 30 days, Quinn said.
The deal came on the same day Solutia announced fourth quarter and full-year financial results. Solutia’s fourth-quarter net income rose 15 percent to $54 million, or 45 cents per share, from $47 million, or 39 cents per share, a year earlier. Revenue increased 8 percent to $526 million.
For the full-year, Solutia earned $262 million, or $2.16 per share. That compares with earnings of $78 million, or 65 cents per share, in the previous year. Annual revenue climbed 8 percent to $2.1 billion.
Tim Logan of the Post-Dispatch and the Associated Press contributed to this report.
Prime Minister Stephen Harper is gaining support among Canadians for his plan to ship oilsands crude to China after President Barack Obama rejected TransCanada Corp. (TRP)
The biggest year for overseas buyouts by Japan
Few U.S. companies plan to step up hiring in the next six months although they do expect the economy to be a bit stronger this year, according to a poll released on Monday.
The National Association for Business Economics’ industry survey found that two-thirds of respondents expected no change in employment at their companies over the first half of the year. That was the highest share in recent quarters.
Although the U.S. jobless rate fell to a near three-year low of 8.5 percent in December, fewer businesses said they would hire more workers, compared with the previous industry poll.
The survey, which was conducted between December 15 2011, and January 5 2012, found that 65 percent of respondents expect gross domestic product growth to exceed 2 percent between the fourth quarter of last year and the last quarter of 2012.
That was higher than the 1.6 percent growth rate economists polled by Reuters found.
About two-thirds of the companies surveyed said the European debt crisis would have little impact on their sales over the first half the year, while 27 percent of respondents said they expected to see a decline in sales of 10 percent or less.
It takes Mikael Ohlsson five minutes _ and the help of one other person _ to assemble IKEA’s Ektorp sofa.
After 33 years at the Swedish home-ware chain, the 54-year-old chief executive is an expert at configuring IKEA’s famous flat-pack furniture.
But Ohlsson is not bragging about the fact that he can beat the assembly time the company itself advertises by some 10 minutes. What makes him proud is that the Ektorp can be flat-packed at all.
Seated on a “Blekinge white” example of the Ektorp in a cozily furnished exhibition room at an IKEA store in Zaventem, Belgium, Ohlsson recounts how, until recently, the popular couch also came packed in one of the company’s biggest cardboard boxes _ a pain for customers to squeeze into their cars or carry up narrow staircases.
But then in 2010, IKEA’s product designers came up with a way of breaking the Ektorp into different pieces. The results was a package half its former size, which the company claims took some 7,477 trucks off the roads and cut its yearly CO2 emissions by 4,700 tons. Savings in production and transport costs knocked euro100 ($128) off the price IKEA charges its customers, Ohlsson pointed out.
It’s innovations like these, the CEO says, that make IKEA so successful even in the uncertain economic times that some of its biggest markets are facing.
On Friday, IKEA reported a 10.3 percent jump in net profit to euro2.97 billion ($3.81 billion) for the year ended Aug. 31, even though it cut prices by 2.6 percent. Revenue rose 6.9 percent to euro25.17 billion in the same period and Ohlsson says the sales pace has been accelerating since then _ even as stock markets around the world have taken a dive amid the worsening financial crisis in Europe.
“We are becoming a more natural choice when people are looking after their spending or are concerned about the future,” says Ohlsson, his black trousers, black sweater and half-rimmed glasses all possessing the understatement of a Billy bookcase.
“A lot of people see that home is a very important place, maybe the most important place in their lives.”
While sales have fallen in some Southern European countries like Greece, Ohlsson says IKEA has gained market share in all of them.
Over the past decade, the company expanded into big emerging markets like Russia and China, although 79 percent of its sales are still generated in Europe. In the next two or three years, IKEA wants to open stores in Serbia and Croatia and it has recently bought land in South Korea.
But the biggest opportunity may lie in India, a fast-growing country of around 1 bad credit unsecured personal loans.2 billion people, that Ohlsson says IKEA has been eyeing “patiently but also impatiently” for years.
“The impatience is that of course there are a lot of people that are moving into the city, have better incomes and want to furnish their homes and that’s why there is space for us,” says Ohlsson. “And patient because we wanted FDI (foreign direct investment) legislation to change.”
That change happened last week, when the Indian Commerce Ministry announced it would allow foreign companies that sell products under a single-brand name, such as IKEA, to own 100 percent of their stores there.
Ohlsson and his chief financial officer, Soeren Hansen, say the company is still studying the fine print, to make sure, for instance, that requirements to source a certain percentage of products locally won’t interrupt its cherished value chain, where it controls design, production, storage and retail.
In contrast to other companies, which are under pressure to quickly produce new value for shareholders, IKEA can move more slowly. The retailer is not traded on the stock market, but is owned by a foundation controlled by the family of its octogenarian founder Ingvar Kamprad.
That structure not only protects IKEA from being split up or taken over, but, says Ohlsson, allows him to make investments in new markets or store upgrades that may not pay off for several years.
Throughout the conversation, the CEO stresses IKEA’s eco-friendly policies and humble origins in a poor area of Sweden. In the Zaventem store on the outskirts of Brussels, solar panels on the roof provide up to 20 percent of the energy. The company owns several wind parks and one of its Berlin stores uses local wastewater to control internal temperatures.
IKEA has come a long way from its start in the Smaland region in Southern Sweden. Today it employs 131,000 people in 41 countries and its 287 stores drew in 655 million customers last year.
Ohlsson says he believes the urge to upgrade and become more comfortable does not seem to recede during an economic downturn. Asked whether IKEA’s business was “recession-proof,” Ohlsson laughs somewhat embarrassed.
“I wouldn’t say it like that and it would not be humble to say it,” he said.
Australia unexpectedly lost jobs for a second straight month in December, capping the nation
Ralcorp board OKs spinoff — Ralcorp Holdings Inc.’s board has approved the spinoff of its Post cereals business, the food maker said Tuesday, and the stock distribution is set to happen Feb. 3. The St. Louis company said it will complete the separation of the two businesses by giving at least 80 percent of Post Holdings Inc.’s outstanding stock to Ralcorp shareholders of record as of Jan. 30. Each stockholder will get one share of Post for every two shares of Ralcorp held on the record date. Ralcorp will maintain a stake in Post. Ralcorp’s stock will continue to trade on the New York Stock Exchange under the “RAH” ticker symbol. Post is expected to start trading on the NYSE under the “POST” ticker symbol Feb. 3.
Will new car sales rise? — That clunker in America’s driveway has reached a record old age, but there are signs that people may be growing confident enough in the economy to get a whiff of that fresh new car scent very soon. The average age of a car or truck in the U.S. hit a record 10.8 years last year as job security and other economic worries kept many people from making big-ticket purchases. That’s up from the old record of 10.6 years in 2010, and it and continues a trend that dates to 1995, when the average age of a car was 8.4 years, according to a study of state vehicle registration data by the Southfield, Mich.-based Polk automotive research firm. However, Polk Vice President Mark Seng says that a rebound in sales last year and expected growth for the next couple of years is likely to slow the growth rate in the age of cars as a whole in America.
Airbus touts record in orders — Airbus took in a record number of orders for new commercial aircraft last year as strong demand for its revamped single-aisle plane helped it best U.S. rival Boeing Co. in the race for orders for the fourth year running. The European jet maker said Tuesday that it took in 1,419 net new orders in 2011, worth $140 billion, well above Boeing’s total of 805 aircraft. That topped the previous record of 1,413 net orders recorded by Boeing in 2007. Airbus also delivered 534 aircraft last year, up from 510 a year earlier and keeping the title of world’s biggest jet maker that it has held since 2003. Boeing delivered 477 aircraft last year.
Yahoo co-founder leaves firm — Yahoo co-founder Jerry Yang is leaving the struggling company’s board. The departure, announced Tuesday, comes just two weeks after Yahoo Inc. hired former PayPal executive Scott Thompson as its CEO. Yang expressed his support of Thompson in his resignation. He had been on Yahoo’s board of directors since the company’s 1995 inception. Yang also is stepping down from the boards of China’s Alibaba Group and Yahoo Japan. Yahoo is negotiating to sell its stakes in both companies.
Citigroup’s loan portfolio improved late last year, partly because Americans were better about paying down credit card debt. But choppy financial markets hurt its investment banking profits, and the bank missed expectations. Profit fell 11 percent in the last three months of last year. to $1.16 billion, or 38 cents per share, on revenue of $17.2 billion. A year earlier, Citigroup made $1.3 billion on revenue of $18.4 billion.
Lee Enterprises, owner of the Post-Dispatch and other newspapers, reported a profit of $14.6 million, or 32 cents per share, for the quarter that ended Dec. 25. That compares to $19 million, or 42 cents per share, in the same quarter of 2010. Lee, based in Davenport, Iowa, said the year-over-year comparison would be positive if not for refinancing costs and other unusual items. Excluding such matters, profits would equal 38 cents per share for the recent quarter, compared with 32 cents a year earlier. Operating revenue was down 3.9 percent in the quarter compared with a year earlier. As in earlier periods, Lee showed sharp gains in digital advertising while print ads, which make up the bulk of its advertising, continued to decline. Combined print and digital advertising was down 6.1 percent. Lee filed for Chapter 11 bankruptcy last month, submitting a reorganization plan pre-approved by the vast majority of its creditors. Chief Financial Officer Carl Schmidt said Tuesday that the court will be asked to set Jan. 30 as the date to make the plan effective, allowing the company to exit bankruptcy. (Staff reports)
Pulaski Financial Corp., owner of Pulaski Bank, reported a slight decline in profit in the first fiscal quarter, compared with a year earlier. The bank earned of $2.525 million, or 23 cents per share, compared with $2.601 million, or 24 cents, a year earlier. CEO Gary Douglass said he expects “meaningful, year-over-year earnings improvement” for this year. (Jim Gallagher)
TD Ameritrade said its fiscal first-quarter net income grew 5 percent, though its revenue was almost unchanged. The online brokerage posted $152 million in net income, or about 27 cents per share, up from $145 million, or 25 cents, a year earlier. Revenue fell less than 1 percent to $653.4 million.
A steadier mortgage business, higher commercial lending and an increase in deposits lifted Wells Fargo & Co.’s fourth-quarter profit by 20 percent. The bank reported that the amount of mortgages it wrote in the last three months of last year jumped 35 percent compared with the third quarter, to $120 billion. Overall loan balances rose to $769.6 billion, up 2 percent from a year earlier. The bank, the largest consumer lender in the U.S., reported a 2 percent increase in commercial loans, to $5.6 billion, reflecting direct lending and the purchase of portfolios from other lenders. The bank’s brokerage division, Wells Fargo Advisors, is based in St. Louis.
— Find full versions of these stories at stltoday.com/business
Those that count out exact change for their morning brew at Tim Hortons will either have to practice ordering a different size or fork over a few extra pennies.
The beloved Canadian coffee joint will shift the names of its sizes starting next Monday to make room for a 24 oz. cup
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