Archive for June, 2010

EU probes Unilever takeover of Sara Lee unit (AP)

Tuesday, June 1st, 2010 | Finance News

BRUSSELS – European Union regulators said Tuesday they will closely investigate Unilever's euro1.28 billion bid for Sara Lee Corp's personal care business because they think the deal could give the new company too much power in some markets.

This delays the deadline for EU regulatory approval of the deal until Oct. 5 and could potentially force Unilever to make changes — such as selling some units — in order to soothe regulators' concerns.

British-Dutch consumer goods giant Unilever is planning to buy U.S.-based Sara Lee's worldwide soaps and personal care businesses, including the Sanex — a cheaper parallel of Unilever's Dove brand — and Duschdas, a German shower gel maker.

It will also buy several strong regional brands such as Radox bubble bath and Switzal, a maker of baby shampoo.

The European Commission says the deal would create a clear market leader in some European countries and remove a strong alternative supplier for deodorants, skin cleansing and fabric care products.

The EU executive checks large deals to make sure a company doesn't gain so much control over a market that it no longer faces much real competition and can hike prices or choke supplies without any challenge.

"The Commission will carefully scrutinize whether the proposed transaction would ultimately lead to higher prices for final consumers," the EU said.

Unilever says the businesses it will acquire had sales of euro750 million and operating earnings of euro128 million in the 12 months ending in June.

Unilever, the world's third-largest consumer products company after Procter & Gamble Co. and Nestle SA, says its Dove, Axe and Rexona lines will complement the Sara Lee brands.

The deal would be the largest purchase for the company since its $2.6 billion acquisition of Ben & Jerry's in 2000, and the first initiated under new CEO Paul Polman.

EU regulators said their investigation was separate from a parallel examination of Procter & Gamble's bid for Sara Lee air fresheners. The EU has set a deadline of June 17 to approve the deal or deepen its probe.

Sara Lee is selling off the businesses to concentrate on food and beverages.

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Oil falls to near $72 as stocks, euro fall (AP)

Tuesday, June 1st, 2010 | Finance News

SINGAPORE – Oil prices tumbled to near $72 a barrel Tuesday in Asia as weakness in global stocks and the euro dragged on appetite for crude.

Benchmark crude for July delivery was down $1.51 at $72.46 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract last settled down 58 cents at $73.97 on Friday because markets in the U.S. were closed Monday for the Memorial Day holiday.

Crude traded as high as $75.17 a barrel in Europe on Monday.

Oil has fallen from $87 early last month amid investor concern a debt crisis in Greece could spread to other European countries and hurt the global economy recovery.

Stock markets in Europe and Asia slid Tuesday and the euro fell to $1.2174 from $1.2304 on Monday. Oil traders often look to equities as a barometer of overall investor sentiment, and dollar-based commodities such as oil become more expensive for investors holding the European currency when the dollar gains.

Some analysts expect strong economic growth in Asia and the U.S. will more than offset a sluggish recovery in Europe and help bolster crude demand this year.

"A Greek economic slowdown has minimal effect on global oil demand growth, and thus, the crude price seems oversold," Melbourne-based ANZ bank said in a report. "Nevertheless, continued uncertainty over the Euro-zone will threaten investors' confidence on risky assets and weigh on oil prices."

The euro will likely drop to $1.15 by year-end while oil will probably trade between $75 and $80 at the end of the year, said Jorg Zuener, chief economist for Liechtenstein-based VP Bank.

In other Nymex trading in June contracts, heating oil fell 1.39 cents to $1.9906 a gallon and gasoline dropped 1.72 cents at $2.0094 a gallon. Natural gas was down 2.1 cents at $4.320 per 1,000 cubic feet.

In London, the Brent crude July contact was down $1.95 to $72.70 on the ICE futures exchange.

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AIG won’t accept lower Prudential offer for AIA (AP)

Tuesday, June 1st, 2010 | Finance News

BANGKOK – U.S. insurer AIG said Tuesday it won't accept a lower offer for its Asian insurance business from Prudential, potentially scuttling the multibillion dollar deal.

London Stock Exchange-listed Prudential PLC was trying to lower the $35.5 billion price agreed for the purchase of AIA, which is the Asian insurance business of American International Group Inc.

"After careful consideration, the company will adhere to the original terms of its previously announced agreement with Prudential," AIG said in a statement. "The company will not consider revisions to those terms."

The deal has faced resistance from Prudential shareholders, who believed the price was too high. Prudential confirmed that it had made a reduced offer of $30.375 billion.

"The board of Prudential is considering its position," the company said in a brief statement to the London Stock Exchange. "A further announcement will be made when appropriate."

Prudential needs to line up support from holders of 75 percent of its shares by June 7. If the AIA deal falls through, Prudential will owe AIG a termination fee of $230.6 million.

Opponents of the deal have formed a Prudential Action Group, which is seeking to muster support for a vote of no confidence in the Prudential's chief executive Tidjane Thiam. The group claims that at least 15 percent of shareholders intend to vote against the deal.

AIG, which received more than $180 billion in aid from the U.S. government during the financial crisis, hoped to raise a total $51 billion from the Prudential deal and the sale of its American Life Insurance Co. division to MetLife Inc.

Prudential said its lower offer included $23 billion cash, $5.375 billion worth of shares in the combined companies and $2 billion in notes.

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