Mining company Anglo American has gained a controlling interest in diamond miner De Beers, paying $5.1 billion for the 40 percent of De Beers shares held by the Oppenheimer family.
The deal potentially raises Anglo American’s stake to 85 percent. The government of Botswana, however, has pre-emption rights to buy one-fourth of the Oppenheimer shares at the time the transaction closes, potentially increasing its stake to up to 25 percent.
“This has been a momentous and difficult decision as my family has been in the diamond industry for more than 100 years and part of De Beers for over 80 years,” said Nicky Oppenheimer, representing the Oppenheimer family interests which are held by CHL Group.
Anglo American shares were up 3.4 percent in midmorning trading in London.
Asian stock markets fell Tuesday as new concerns emerged about the viability of a much-heralded plan to contain Europe’s debt crisis.
Benchmark oil fell to near $92 a barrel. The dollar rose slightly against the yen, a day after jumping about 5 percent following Japan’s move to buy dollars and sell the strong yen to protect its exporters.
Japan’s Nikkei 225 index dropped 1.4 percent to 8,859.21. Hong Kong’s Hang Seng lost 1.4 percent to 19,584.69, and Australia’s S&P/ASX 200 shed 1.5 percent to 4,232.90. Benchmarks in Singapore, India and Indonesia were also down.
South Korea’s Kospi gained 0.1 percent to 1,911.39. Key indexes in Taiwan, Malaysia and Thailand also rose.
Wall Street tumbled Monday, with confidence shaken by the collapse of the brokerage house MF Global. The securities firm filed for bankruptcy protection after it was downgraded by ratings agencies for holding too much European debt.
The company’s collapse startled investors already nervous that the United States _ with an economy growing at the slowest pace since the end of the Great Recession _ is in danger of falling back into recession.
The Dow Jones industrial average spiraled down 2.3 percent to close at 11,955.01. The S&P 500 fell 2.5 percent to 1,253.30, and the Nasdaq composite fell 1.9 percent to 2,684.41.
European leaders reached an agreement Thursday aimed at shoring up the region’s banks and preventing a severe debt crunch in Greece from bringing down Europe’s financial system.
But the European debt crisis is still far from fixed. One troubling sign is that borrowing costs for Italy and Spain have increased, a signal that traders remain worried about those countries’ ability to pay their debts.
Complicating the picture further was the announcement by Greek Prime Minister George Papandreou on Monday that his debt-strapped country will hold a referendum on whether to accept the European debt deal faxless cash advances.
“That puts everything in question. No longer do you have Greece backing it,” said Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong. “It is putting another level of uncertainty into it, and the markets don’t like uncertainty.”
Meanwhile, surveys showing China’s manufacturing remained sluggish in October also weighed on investor sentiment. Hong Kong-listed GOME Electrical Appliance Holdings, China’s largest appliances retailer, fell 5.8 percent. Anhui Conch Cement Co. fell 3.6 percent. China’s biggest steel company, Baoshan Iron & Steel Ltd., lost 0.4 percent.
But Qantas Airways rose 1.6 percent as the world’s 10-largest airline took to the skies again after a debilitating series of strikes and subsequent staff lockout were halted by an Australian court.
Negative earnings also weighed on shares.
Japanese consumer electronics giant Panasonic Corp. tumbled 4.5 percent, a day after reporting a quarterly loss and projecting a huge annual loss due to slumping TV sales and a strong yen.
Australian retailer Harvey Norman fell 3.7 percent after the company reported a drop of almost 20 percent in pre-tax earnings in the three months to September.
In energy trading, benchmark crude for December delivery was down 82 cents at $92.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract slipped 13 cents to settle at $93.19 in New York on Monday.
The euro fell to $1.3804 from $1.3924 late Monday in New York. The dollar rose slightly to 78.07 yen from 78.05 yen.
If you’ve been confused about how to invest your money lately, you are not alone.
Some of the stars of Wall Street, such as Pimco bond fund king Bill Gross and hedge fund manager John Paulson, got it wrong recently. Even the professionals acknowledge that typical investing disciplines don’t fit this unprecedented era in the markets.
Getting it right depends on looking behind a veil of secrecy in China as investors try to figure out whether they can count on emerging markets to propel growth. And it means anticipating political actions that could help or harm the economy in Europe and the U.S.
This is new terrain for fund managers, who are typically evaluating businesses rather than political strategy sessions. And it comes at a time when risks are extraordinary. The U.S. economy is in a malaise, and investors are worried that a failure to solve Europe’s debt issues could infect the financial system and unleash a global recession.
With the situation in Europe unlikely to provide clarity, and U.S. corporate leaders voicing caution as they announce recent earnings, I asked four Chicago-based fund managers how they are navigating this difficult environment. All think the U.S. will avoid another recession. But they agree their crystal balls are cloudy.
Chris Shipley, manager of the Northern Trust Large Cap Fund, has used the convulsions in the stock market to add solid companies to his portfolio while cutting exposure to weaker ones.
“You need to be cautious how you position,” he said. “I do not expect an easy or quick resolution” to the threats in the economy.
Yet, despite that, he thinks investors have been overly nervous, selling stocks so aggressively that they have become overly cheap. Prices are attractive, he said, assuming that European bank problems do not lead to a credit crisis in Europe that infects U.S. banks and the global economy. He believes the chances of that are remote.
He has been selling weaker financial stocks and deploying money instead in those he considers the strongest: companies with good balance sheets, modest debt and consistent earnings.
Investors can look at how companies reacted in the 2007 and 2008 economic slowdown to identify those where earnings held up best, he said.
The stock market’s recent harshness on weak and strong companies produced an opportunity to add strong financial companies such as JPMorgan and technology companies at good prices, he said. He has not been eager to buy companies that make consumer staples. Necessities are considered a defensive move, one preferred by investors amid nervousness, and Shipley said they were relatively expensive now.
According to Morningstar, the most resilient companies in the third quarter were growth companies, especially those in consumer services and utilities, which declined less than 5 percent. Industrial, energy, and basic material stocks declined more than 16 percent, and financial services dropped 19.3 percent.
Besides financial companies, Shipley noted, energy and industrial companies and those that make basic materials have been hammered, but he has not been anxious to buy those stocks yet.
Those cyclical stocks do well in growing rather than slowing economies. He said it was still too difficult to forecast how much China would slow. Some have argued that too much speculation there could end badly, and the government has been trying to tame inflation without slowing growth too much.
“My base case is that growth (in the U.S.) will be positive,” about 2 to 2.5 percent over the next 12 months.
Olin Corp., an ammunition and chemicals maker based in Clayton, reported third-quarter profit of $47.2 million, or 58 cents per share, compared with $31.8 million, or 40 cents, in the corresponding period of 2010. Sales rose to $550.2 million from $432.8 million. Results included pretax restructuring charges of $4.1 million associated with converting the Charleston, Tenn credit score., chlor alkali plant to membrane technology and moving Winchester centerfire ammunition manufacturing from East Alton to Oxford, Miss.
St. Louis-based CPI Corp. said today that it received notice last week from the New York Stock Exchange that it is out of compliance with its listing standards because the company’s average market capitalization fell below $50 million over a consecutive 30-day trading period.
The portrait studio operator of about 3,000 locations, mostly inside Walmart, Sears and Toys R Us stores, said it plans to submit a plan within the required 45 days from the original notice — October 12 — about how it plans to restore compliance within 18 months no fax payday loan.
The company noted that its shares will continue to be listed during this period.
CPI reported a loss of $6.2 million, or 89 cents a share, in its second quarter earlier this year. Overall net sales in the quarter were $70.9 million, down 7 percent from $76.4 million a year earlier.
MEMC Electronic Materials Inc., based in O’Fallon, Mo., said its SunEdison unit sold 33 megawatts of solar energy projects in Spain and Italy to KGAL GmbH & Co., a German investment company.
The transaction follows the sale of 20 megawatts of solar projects to KGAL in the second quarter.
SunEdison said it will continue to monitor, maintain and operate all of the projects under long-term agreements. Other terms of the sales weren’t disclosed.
Surrounded by corn fields, bicycle routes and a nature reserve, the eight huge cooling towers of the Dukovany nuclear power plant have dominated the Czech countryside near the Austrian border for almost three decades.
Against the odds, the government has worked to keep it that way for many years to come.
Defying growing global skepticism over the use of atomic energy, it is planning to dramatically increase the country’s nuclear power production _ a move that would give the country a place among Europe’s most nuclear-dependent nations.
The Czech plan reflects a sharp division over nuclear use among European nations, and relations with neighboring countries that have decided to go nuclear free could be seriously harmed.
German Chancellor Angela Merkel’s government decided to phase out nuclear energy by 2022 following the March meltdown at Japan’s Fukushima plant, and Switzerland has followed suit. Austria abandoned nuclear energy after the 1986 Chernobyl nuclear disaster and strictly opposes the Czech nuclear program.
Other former Soviet bloc nations, now in the EU, are following the Czechs’ lead on nuclear power _ reflecting diverging economic needs between east and west.
Slovakia is currently building more nuclear facilities. And Poland has engaged in talks with French, U.S. and Japanese firms about know-how and technology for its first nuclear installation to be completed by 2030.
The Czechs argue nuclear energy is needed because it is a clean and cost efficient source.
They currently rely on six nuclear reactors _ four 440-megawatt reactors in Dukovany and two 1,000-megawatt reactors at another plant in Temelin located an hour’s drive north of the Austrian border _ for 33 percent of their total electricity. The government hopes to at least double that output.
“We consider increasing electricity production in nuclear plants from some 30 percent to about 60 percent by 2050,” Deputy Industry and Trade Minister Tomas Huner told the Associated Press.
“We have been mining uranium and there’s no doubt nuclear energy is irreplaceable for us in the long term,” said Huner, whose ministry has to present the new energy overhaul for the next 50 years to the government by year’s end.
A trio of big players _ U.S.-based Westinghouse Electric Co., a subsidiary of Japan’s Toshiba Corp., France’s state-owned nuclear engineering giant Areva SA and a consortium led by Russia’s Atomstroyexport _ are already bidding to win a lucrative multibillion tender to build two more reactors at the Temelin plant. The reactors are expected to be operational in the middle of the next decade.
The plant has been heavily protested by Austrian environmentalists who demand it be closed because of security concerns cheap credit report. Czech authorities insist both plants are safe and will have no problems passing so-called nuclear reactor stress tests currently being conducted across Europe after the Japanese disaster.
Opened a year before the Chernobyl disaster, Dukovany’s life was expected to expire in some 30 years. Germany is closing plants of the same age _ but the Czechs refuse to do that despite international pressure.
The nation’s biggest electricity source last year has already undergone a 26 billion koruna ($1.4 billion) overhaul aimed at increasing its output and improving control systems, as the plant gets ready to ask the nuclear authority for a license extension of at least 10 more years, plant spokesman Petr Spilka said.
At least one new 550-megawatt reactor is to be built at the Dukovany site and more places have been identified for new plants, Huner said.
Huner said a completely new 2,000-megawatt plant in the northeastern part of the country could be operational by 2060.
Unlike the Austrian and German publics, the Czechs support nuclear energy _ though they may not be happy to have a plant in their backyard.
Local environmentalists called the government plan “bizarre,” saying it would lead to the creation of an unpredictable energy sector.
“Such a heavy reliance on one dominant source of energy could be problematic,” said Martin Sedlak, an energy expert for the Friends of the Earth Czech Republic. “The investments into nuclear energy are economically too demanding and unpredictable.”
They are not alone.
Austrian Foreign Minister Michael Spindelegger has vowed to use any legal and political means to stop the Czechs, and his Environment Minister Nikolaus Berlakovich said his country considered the Czech plan “the wrong one” in the wake of Japan’s nuclear disaster.
“It can’t be that someone expands nuclear energy after Chernobyl and especially Fukushima,” Berlakovich told APTN. “Austria is interested in good neighborly relations with the Czech Republic. But in the interest of our people’s security we will also reserve all political and legal steps.”
The Czechs remain determined to go ahead.
“We consider that what happened in Fukushima did not, by any means, put into question the arguments for nuclear energy,” President Vaclav Klaus said at the U.N. last month. “These arguments are strong, economically rational and convincing. Nuclear power is a stable, legitimate, and in some countries, irreplaceable source of energy today.”
TORONTO
The football season just started, but Doritos is already thinking about the Super Bowl.
The snack chip brand is going to have its sixth annual “Crash the Super Bowl” contest, which allows viewers to submit their own Doritos commercials and fans to vote on their favorites to appear during the big game.
If the ads score well on the USA Today Ad Meter, which measures the popularity of Super Bowl commercials, contestants win cash prizes of up to $1 million.
This year, Doritos has added a twist: It has enlisted Andy Samberg, a comedian on the popular “Saturday Night Live” program, and The Lonely Island, a creative team that consists of Samberg and two childhood friends, to create an ad to compete in the contest.
If their ad wins, they’ll donate the prize money to charity. If they don’t, they’ll work with the winners on a future yet-to-be-determined Doritos project.
“I see this year as really us raising the stakes a little bit,” said Tony Matta, vice president of marketing. Instead of just cash and recognition, he says winners will get “a career-changing opportunity.”
The Super Bowl is advertising’s largest showcase; the football championship garnered a record 111 million viewers when it aired on Fox in February, according to Nielsen.
In order to get more bang for their buck _ a Super Bowl ad costs about $3 million per 30 seconds _ marketers are increasingly seeking ways to promote their advertising online and get publicity before and after the big game.
“The challenge for marketers today is to really engage consumers using both traditional and new forms of media,” said Tim Calkins, Clinical Professor of Marketing at the Kellogg School of Management at Northwestern University.
“Crash the Super Bowl” has been Doritos’ way to create buzz. The brand, which is made by PepsiCo Inc.’s Frito-Lay division, saw video submissions for the contest increase 38 percent to 5,600 for the most recent game played earlier this year. The contest finalists’ videos were viewed 22 million times. Doritos also saw a 30 percent increase in Twitter activity and a 25 percent increase in Facebook activity during the contest high quality business cards.
This year, they’re amping it up by teaming with the partnership The Lonely Island. The team, which also includes Akiva Schaffer and Jorma Taccone, wrote, directed and appeared in a series of popular digital shorts for “Saturday Night Live” with Justin Timberlake. The team also wrote and shot a music video for a song called “I’m on a Boat,” which was nominated for a Grammy.
Samberg said The Lonely Island agreed to work on the campaign in part because the Super Bowl is “such a large stage,” and he added “we just thought it was cool that young filmmakers get an opportunity to get that break.”
So far, winners of the contest have garnered some commercial work but there has been no breakout success story yet. The winners from the telecast earlier this year, Tess Ortbals and J.R. Burningham, started their own company, Mythmakers Entertainment, to pursue commercial work after creating an ad that took the stop spot on the Ad Meter.
That ad, “Pug Attack” shows a man mocking a dog with a bag of Doritos through a glass door. The pug then knocks down the door and eats the chips.
The first $1 million winners, Joe and Dave Herbert, brothers who won the contest in 2009, have gone on to direct several beverage spots and have shot several Web commercials. They’re also developing a feature film.
Matta said the goal is to one day launch a winner who can capitalize on the break and become a big-name director. “I would love in two or three years from now for the winner of this year’s program be directing or producing major motion picture film, that is true success,” he said.
Participants can enter the contest this year by submitting a 30-second Doritos ad at http://www.crashthesuperbowl.com between Oct. 3 and Nov. 21. Five finalists will be announced in January 2012, ahead of NBC’s Feb. 5, 2012 Super Bowl XLVI broadcast.
Midwestern commodity growers could lose billions in federal funding in the coming year
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