Archive for December, 2008

Dow scrambling to keep $15 billion Rohm takeover alive: report (Reuters)

Monday, December 29th, 2008 | Finance News

SINGAPORE (Reuters) –
Dow Chemical (DOW.N) is scrambling to keep its $15 billion takeover of rival Rohm & Haas (ROH.N) alive after a surprise decision by the Kuwaiti government to scrap a joint venture with Dow, the Financial Times reported on Tuesday.

The Kuwaiti decision deprived the U.S. group of about $9 billion in planned financing which it would have used for the Rohm deal, but unidentified people close to the situation told the FT that Dow could still tap a $13 billion bridge loan to pay for the takeover.

The sources also said Dow was likely to try to renegotiate the price of the deal to reflect the recent drop in Rohm's share price, the newspaper said, adding that both Dow and Rohm declined to comment.

Midland, Michigan-based Dow agreed in July to buy Rohm & Haas for $78 a share to broaden its specialty product offerings. The deal carries a termination fee of $750 million payable to Rohm & Haas.

Shares of Dow Chemical and Rohm & Haas plunged more than 16 percent on Monday in reaction to Kuwait's decision, reducing Rohm's share price to $53.34.

Dow, the largest U.S. chemical company, could be hurt even if it goes ahead with the Rohm & Haas purchase as it would be saddled with a large debt load from the deal, analysts said.

Analysts told Reuters Dow was now under pressure to renegotiate its bid for Rohm & Haas or, if possible, walk away from the deal.

In the past, Dow has said it could close the Rohm & Haas deal without the funds from the Kuwaiti joint venture.

Rohm & Haas said in a statement on Sunday that completion of Dow's joint venture was not a condition for the closing of the acquisition. It said it was working to complete the deal early in the new year.

Dow had planned to use part of the proceeds from the Kuwait joint venture to pay off a one-year, $13 billion bridge loan by a group of banks led by Citigroup, Merrill Lynch and Morgan Stanley, who advised the company on the Rohm & Haas deal.

Kuwait said decision to scrap the joint venture plan was due to the global financial crisis. Dow and other chemical companies are also struggling because of recession in most developed countries and a sharp slowdown in emerging economies.

If the acquisition does fall through, it would join a long list of deals withdrawn in 2008 amid a lack of available credit and plunging stock markets, including BHP Billiton Ltd's (BHP.AX) $66 billion offer for Rio Tinto Plc (RIO.L) and Hexion's $6.5 billion bid for chemicals firm Huntsman Corp. (HUN.N)

(Editing by Kazunori Takada)


Kerkorian sells off Ford shares at deep loss (Reuters)

Monday, December 29th, 2008 | Finance News

DETROIT (Reuters) –
Billionaire investor Kirk Kerkorian has sold off all of his remaining shares of Ford Motor Co, completing a retreat from a high-profile stake in the No. 2 U.S. automaker that cost him hundreds of millions of dollars.

A spokeswoman for Kerkorian's investment firm, Tracinda Corp, said that the firm's remaining Ford shares had been sold. A spokesman for Ford had no comment on the development.

Tracinda, which briefly ranked as Ford's largest outside investor, said in a regulatory filing in October that it had begun working with bankers to sell the 133.5 million shares of the No. 2 U.S. automaker it still held at that time.

It was not immediately clear when Tracinda had completed those remaining sales of Ford stock over the past two months.

The pullout from Ford by Kerkorian caps a two-year period during which the activist investor took a run at all three Detroit-based car companies as they struggled to restructure.

Kerkorian, 91, previously held a nearly 10 percent stake in General Motors Corp and made a failed bid for Chrysler LLC last year.

Since October, he has been cutting his losses on a $1 billion investment in Ford that had lost most of its value.

It was not immediately clear how deep Kerkorian's losses on the Ford investment were. But even if Tracinda sold all its remaining shares at the recent high for Ford stock, the firm would have been facing a loss of some $475 million based on its average acquisition cost for the shares.

If the firm had sold out at the bottom of the market for Ford stock in November, it would have lost more than $800 million.

Kerkorian surprised analysts and investors in April when he began buying Ford shares and spent more than $1 billion to take a stake in the automaker at an average price per share of $7.10.

At the peak of his investment, Kerkorian held a 6.5 percent stake in Ford. In June, he had also offered to support the automaker's turnaround efforts with an infusion of additional capital.

Ford has been widely considered to be the best-positioned of the three Detroit automakers at a time when all three have been hit hard by declining sales and tight credit.

When GM and Chrysler negotiated $17.4 billion of emergency loans from the U.S. government earlier this month, Ford held back, saying it expected to be able to weather the downturn on its own.

But conditions across the auto industry have taken a dramatic turn for the worse since September when credit suddenly tightened for both car shoppers and dealers.

In late October, Tracinda began selling Ford shares at $2.43, representing a loss of almost 66 percent from what the fund paid on average.

Since then, Ford's shares have traded between a low of $1.02 in November and a high of $3.54 earlier this month.

Ford shares closed down 3 percent on Monday to end the New York trading day at $2.22.

The Ford family holds slightly less than 3 percent of the automaker's shares but controls 40 percent of the voting power through a separate class of shares.

Kerkorian's offer of additional capital for Ford had been seen as an endorsement of the company's strategy and management under Chief Executive Alan Mulally.

But Kerkorian's record as an activist investor had also raised questions earlier this year about whether his investment could be a threat to the Ford family's continued control of the automaker.

(Reporting by Kevin Krolicki; editing by Phil Berlowitz and Matthew Lewis).


Two potential bidders shun Boston Globe, Red Sox (Reuters)

Monday, December 29th, 2008 | Finance News

Two Boston businessmen have denied they were interested in buying The Boston Globe newspaper and a stake in the Red Sox baseball team, which are owned by the New York Times Co.

Monday's denials came from two of a handful of names mentioned in media reports as likely bidders for the properties, whose sale would be important for the Times to pay off looming debt that threatens its financial health.

Shares, which were already down Monday morning, fell 8 percent in after hours trade to $6.47 from their close on the New York Stock Exchange at $7.02.

Patrick Purcell, owner and publisher of the Globe's rival daily, the Boston Herald, said on Monday that he had not been approached by potential bidders for the Globe, nor has he contacted the New York Times to discuss buying the newspaper.

Former advertising executive Jack Connors, meanwhile, told the Boston Globe that he was not interested in the New York Times' properties.

Earlier in December, Purcell was hired as executive chairman of Ottaway Newspapers, a group of local papers owned by Rupert Murdoch's News Corp. He continues to run the Herald as a separate business.

He said a Financial Times report that described a scenario of merging the Globe into News Corp and shutting down the Herald "is completely unfounded and not rooted in reality."

Purcell wants to make sure that Boston remains a two-newspaper town, an increasing rarity in the United States where papers face an uncertain future as readers desert their print editions.

"Mr Purcell is steadfast in his desire to keep two editorial voices in Boston," the statement said.

Connors, who expressed interest in buying the Globe two years ago along with former General Electric Co chief Jack Welch, told the Globe that he was not interested in the paper or a 17.5 percent stake in New England Sports Ventures, which owns the Red Sox.

The Wall Street Journal and Financial Times reported last week that the New York Times had approached Connors. He could not be reached for comment. A New York Times spokeswoman and a spokeswoman for Welch declined to comment.

The New York Times is looking for someone to buy its stake in New England Sports Ventures, a source familiar with the matter but not authorized to speak about it, confirmed on Saturday. Media reports have said the Globe could be sold, either along with the sports ventures stake or separately.

The New York Times could raise about $200 million from the sports ventures stake, analysts and bankers have said, which it could use to repay debt and shore up its cash resources as it faces a severe decline in newspaper advertising revenue.

New England Sports Ventures owns the Red Sox, the Fenway Park field where the Boston-based team plays, and 80 percent of the New England Sports Network, a cable network that covers New England and broadcasts Red Sox games.

Timing could prove crucial for the sale. The New York Times has a $400 million credit line due next May. It also is borrowing $225 million against its Manhattan headquarters. The company has made other moves to conserve cash, including cutting its dividend by nearly 75 percent.

The Globe likely would garner far less money. Barclays estimated the newspaper's value at about $20 million. The New York Times bought the paper and related assets for about $1 billion more than a decade ago.

(Reporting by Robert MacMillan in New York and Ben Klayman in Chicago; editing by John Wallace, Matthew Lewis, Leslie Gevirtz)