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Fiat to consolidate two units

Fiat Industrial, Fiat's trucks and capital goods group, will merge with its U.S. CNH unit, which makes farm and construction equipment, the Financial Times reported. The group will move its primary listing and domicile out of Italy in order "to widen its access to financing and eliminate the discount at which it trades relative to its peers," the article said.

Fiat will form a new company, valued at about $13 billion. It will be listed on the New York Stock Exchange with a secondary listing, probably in the Netherlands, according to the report. Fiat Industrial could be pulled from the Milan stock exchange.

The consolidation has reignited talk that Sergio Marchionne, Fiat Industrial's chairman, is preparing to tie Fiat Industrial or its parts, such as truckmaker Iveco, to a rival group through a merger or acquisition. 

Fiat Industrial is the world's third-largest capital goods group after Caterpillar and Volvo. It's controlled by the Agnelli family through Exor, the family's investment company. Fiat Industrial already owns 88% of CNH, the FT article said.

Italian trade unions are worked that Fiat is planning to leave Italy. Last year, the group separated its industrial units from the automotive operations, which could be merged with its U.S. Chrysler brand, the article said. (Source: Financial Times, May 31, 2012.)



Mars trains African cocoa farmers

Family-owned candy company Mars Inc. is working with several groups to provide Afircan cocoa farmers with training and technical assistance in an effort to double their production to eliminate a "cocoa deficit" projected for 2020, the Financial Times reported.

Cocoa demand is rising as supply is falling because land is being used for other crops or being developed, according to the report.

Mars has made a commitment to purchase only certified sustainable cocoa by 2020. Next year, 25% of the cocoa it buys will be certified, the FT article said. (Source: Financial Times, May 31, 2012.)



Graff pulls its Hong Kong IPO

Graff Diamonds has put its Hong Kong initial public offering on hold, citing "adverse market conditions." According to a Financial Times report, the London jeweler received orders for just half of its $1 billion target less than two days before its deadline.

Company managers and advisers had traveled to New York and had planned to meet more than 80 investors, the FT article said. Orders had appeared to be on target after a round of similar meetings in Asia, according to the report.

According to an Associated Press report, Graff's decision to pull the IPO "appears to have been made overnight."

The FT article said Graff had wanted to use the funds to triple its stores in Asia over the next two years and finance a reorganization that included buying "a substantial diamond inventory" from founder and chairman Laurence Graff. According to the report, the aborted IPO will not affect the store rollouts, but the restructuring will likely be put on hold. (Sources: Financial Times, May 31, 2012; Associated Press, May 31, 2012.)



Family member to take helm at Hermes

Axel Dumas, a sixth-generation member of the founding family, has been named the next CEO of Hermès International. He will succeed Patrick Thomas, who will retire at the end of 2013. The Financial Times reported that Dumas, 42, will become co-CEO with Thomas next June and will take over fully after Thomas retires. The succession plan was announced at Hermès's annual meeting May 29.

Thomas, who has been CEO since 2006, is the only non-family member to have headed the company, the FT report noted. Dumas is a nephew of former company leader Jean-Louis Dumas, who died in 2010.

Dumas joined Hermès in 1993 after a banking career. He headed the jewelry department and then ran the leather goods division before becoming chief operating officer a year ago, the FT article said.

Also, Henri-Louis Bauer, deputy chairman of the family holding company, will replace his uncle Bertrand Puech as chairman.

Luxury giant LVMH has raised its stake in Hermès to 22.4%; the Hermès family controls 72%. LVMH began building up its stake only a few months after the death of Jean-Louis Dumas. A Wall Street Journal report noted that at the time of the patriarch's death, "there was no family succession plan in place, and little had been done to identify likely contenders."

The Journal report noted:

Several of [Axel] Dumas's cousins have joined the company or been promoted to senior positions since LVMH's arrival. Of the roughly 40 members of the sixth generation, about 10 work in the family business.

(Sources: Financial Times, May 30, 2012; Wall Street Journal, May 30, 2012.)



Rockefellers, Rothschilds form strategic partnership

Lord Jacob Rothschild's listed investment trust, RIT Capital Partners, will buy a 37% stake in Rockefeller Financial Services, the Financial Times reported.

The report noted that David Rockefeller, 96, and Lord Rothschild, 76, have been friends for five decades.

The strategic partnership will "focus on setting up investment funds, eyeing joint acquisitions of wealth and asset managers and granting each other non-executive directorships," the FT article said. (Source: Financial Times, May 30, 2012.)



Trial starts in Samsung siblings’ suit

The civil trial in the suit filed by the siblings of Samsung Electronics Co. chairman Lee Kun Hee began May 30. Lee's older brother and sister are demanding at least an $850 million stake in the conglomerate. Their father, company founder Lee Bynng Chul, died in 1987 without a will. A Bloomberg report noted that the lawsuit "threatens to be a costly distraction at a time of intense industry competition."

An analyst told Bloomberg, "Companies that are driven by innovation, as Samsung should be, can't afford much downtime to deal with this kind of turbulence."

The siblings are demanding shares held by Lee Kun Hee in Samsung Life Insurance Co., which is the second-largest shareholder of Samsung Electronics after the company itself. Thus, the Bloomberg report noted, whoever controls the insurance company controls the conglomerate. If Lee Kun Hee were to relinquish the shares, he would no longer would be the largest investor in Samsung Life, and a dispute over control of the conglomerate would arise.

Chae Yi Bi, a researcher at the Seoul-based Center for Good Corporate Governance, told Bloomberg, "This could be a big problem for their overall governance." (Source: Bloomberg, May 30, 2012.)



Diageo to buy Brazilian family’s liquor business

Diageo will pay $450 million to buy Ypióca Agroindustrial, a family-owned Brazilian company that makes cachaça, a liquor derived from sugarcane, the Financial Times reported. Cachaça is used in capirinha cocktails.

According to the FT report, Diageo is also seeking to buy José Cuervo, the Mexican tequila maker, which is also family-owned. (Source: Financial Times, May 29, 2012.)



Asia’s richest man clarifies succession plan

Li Ka-shing, Asia's richest man, has announced that his eldest son, Victor, will succeed him at his companies Cheung Kong Holdings and Hutchison Whampoa. Li also announced that he will financially support businesses owned by his younger son, Richard, according to news reports. Richard's businesses include PCCW, a telecom and media company. Li said he will help expand Richard's enterprise "several fold" through acquisitions, according to the Financial Times.

The Financial Times report noted that the elder Li does not intend to retire imminently. The article said Victor Li, who is managing director of Cheung Kong and deputy chairman of Hutchison, has been more active in managing Hutchison in recent years.

According to Forbes, Li Ka-shing is worth $25.5 billion and Richard Li is worth $1.3 billion.

According to the FT, it's unusual for a Hong Kong tycoon to spell out his succession plans. Independent analyst Philip Tulk told the FT:

"With most of these guys it comes out in the will. To have put it with such clarity is really unusual."

Li said both of his sons would help run his Li Ka-shing Foundation, which "acts like a private equity fund," the FT report said. Dividends from the foundation fund Li's philanthropic initiatives, according to the report.

A subsequent FT report noted that Victor Li has kept a low profile in Hong Kong, so much so that analysts can't say how Victor has shaped strategy at his father's companies.

Meanwhile, Richard Li is bidding for ING's Asian life insurance business. (Sources: Financial Times, May 26-27, 2012 and May 29, 2012; Forbes.com, May 25, 2012.)



Phila.’s Ralph’s is now America’s oldest Italian restaurant

Ralph's Italian Restaurant, based in South Philadelphia, is now America's oldest Italian restaurant, the website Foobooz.com reported. Ralph's has been owned and operated by the Dispigno family since 1900 and has been Philadelphia's oldest restaurant for many years.

Ralph's became the country's oldest Italian eatery after the closing of San Francisco's Fior D'Italia on May 21. Although it had been open for 126 years, Fior D'Italia had had three different sets of owners. (Source: Foobooz.com, May 22, 2012.)



Newhouse making major cuts at New Orleans, Alabama papers

Newhouse Newspapers, which owns the New Orleans Times-Picayune, is planning major staff cuts at the newspaper and may reduce the frequency of its print publication schedule, the New York Times' Media Decoder blog reported. The newspaper drew widespread praise and won a Pultizer Prize for its coverage of Hurricane Katrina.

According to the New York Times report, Newhouse "will apparently be working off a blueprint the company used in Ann Arbor, Mich., where it reduced the frequency of the Ann Arbor News, emphasized the Web site as a primary distributor of news and in the process instituted wholesale layoffs to cut costs."

Times-Picayune editor Jim Amoss and two managing editors will leave the paper, and longtime publisher Ashton Phelps Jr. is retiring, the Times report said.

The New York Times report said that the Newhouse family bought the Times-Picayune in 1961 and merged it with the afternoon dialy. The paper has been published since 1837.

Media blogger Jim Romenesko noted on his website that the Times-Picayune remains profitable.

Romenesko also reported that Newhouse is making similar changes at its Alabama papers. The newspapers will be printed only three days a week starting in the fall, and staff will be cut, the blog report said. Newhouse's Alabama Media Group includes the Birmingham News, the Press-Register of Mobile, and the Huntsville Times. (Sources: Media Decoder, New York Times, May 23, 2012; JimRomenesko.com, May 24, 2012.)



Spain drops Botin tax-evasion probe

Spain's high court has dropped an investigation into possible tax evasion by the family of Emilio Botín, chairman of Banco Santander, the Financial Times reported.

The court said a voluntary 2010 settlement of 200 million euros by Botín, his brother Jaime and ten of their children was sufficient, according to the report.

The investigation had also named Ana Patricia Botín, daughter of Emilio Botín and head of the bank's U.K. operations.

The investigation was prompted by Spanish authorities' discovery of a Swiss bank account set up by Botín's father in 1937, the article said. (Source: Financial Times, May 23, 2012.)



Pension fund to vote against Walmart directors

CalSTRS, the second-largest U.S. public pension fund, will vote against the re-election of Walmart's directors at the company's annual meeting, the Financial Times reported. The pension fund manages money for California teachers.

CalSTRS says it will vote against the entire board because it believes current and former company leaders did not react adequately to signs of "unethical conduct" related to bribery allegations in Mexico and that the board lacks independence, according to the FT report.

Two proxy advisory groups, Institutional Shareholder Services and Glass Lewis, have recommended that Walmart investors vote against certain directors, including current CEO Mike Duke and former CEO Lee Scott, the article said. ISS also recommended voting against Robson Walton, Walmart's chairman and the son of founder Sam Walton, the FT report said.

A group of New York City public pension funds also will vote against five Walmart directors, the FT article said.

According to the FT report, New York City comptroller John Liu noted in a letter to other investors:

"Although the directors' re-election is assured given that the Walton family and other insiders control a majority of shares, outside share owners like us can deliver a strong message about the need to restore credibility to Walmart's boardroom."

The Walton family owns nearly 50% of Walmart's shares, the FT article noted. (Source: Financial Times, May 23, 2012.)



Ex-Stryker CEO’s relationship caused problems

The Wall Street Journal reported that Stephen P. MacMillan, who was forced to resign in February, was ousted "partly because certain board members became bothered by his handling of a relationship with a former flight attendant for the company's corporate jets while his wife pursued a divorce."

The article said MacMillan had told the company's chairman, William U. Parfet, and the head of the board's governance and nominating committee, Louise Francesconi, about the relationship in late September. They gave their approval for him to date the employee, Jennifer Koch, as long as she quit her job with the company. But suspicions arose that the relationship had begun before MacMillan approached the directors.

"The board hired a lawyer to investigate, and while he turned up no evidence of wrongdoing, Mr. MacMillan had lost the confidence of some directors and was forced to resign," the Journal article said.

Ronda E. Stryker, granddaughter of the company's founder and its biggest individual shareholder, remained upset that the still-married CEO was having an affair with the ex-employee, a person familiar with the matter said.

(Source: Wall Street Journal, May 23, 2012.)



Benihana to be sold, will go private

Private-equity firm Angelo Gordon & Co. will buy Benihana Inc. in a cash deal worth about $296 million, the Wall Street Journal reported.

The restaurant company was founded in 1964 by the late Hiroaki "Rocky" Aoki and went public in 1983.

According to the Journal report:

Some of Benihana's investors may be less than thrilled with the acquisition, after undergoing a proxy fight with Benihana's board last year in hopes of preventing the company from moving to a single share class. In November, shareholders approved the board's controversial plan, which in turn gave the board and management greater voting power while scaling back that of the founding family.

(Source: Wall Street Journal, May 22, 2012.)



Ford gets its logo back

Moody's Investors Service has raised Ford Motor Co.'s credit rating, enabling the company to reclaim its blue oval logo, Bloomberg reported. Executive Chairman Bill Ford, great-grandson of founder Henry Ford, had put up the logo as collateral for a $23 billion loan from a syndicate of banks during the financial crisis in 2006.

Under the terms of the loan, two major rating agencies had to restore Ford Motor's rating to investment grade in order for the company to get its logo back. Fitch Ratings had raised the company's investment-grade rating on April 24.

According to the Bloomberg report, Bill Ford said in a conference call:

"When we pledged the blue oval it was enormously emotional for me personally and for my family, because we weren't just pledging an asset, we were pledging our heritage. To get that back feels wonderful and this is one of the best days I can remember."

Ford announced the upgrade to employees at the company's headquarters over a public-address system normally used for fire drills, the Bloomberg article said. In an earlier Bloomberg Businessweek report, company treasurer Neil Schloss said, "Getting the blue oval back has been a huge rallying cry, and one that we all feel emotionally connected to."

The company has repaid more than $21 billion of the $23 billion loan, according to the Bloomberg report.

The Bloomberg Businessweek article said the oval first appeared on the Model A in 1927, and the cursive script inside the oval dates to at least 1906. The blue oval was removed from cars after World War II but was restored by Henry Ford II, the founder's grandson, for the company's 75th anniversary in 1978. Former CEO Jacques Nasser took it off the company's headquarters in 1999, but when Bill Ford fired Nasser in 2001, "one of his first acts was to put the blue oval back...." the article said. "To this day, when Bill Ford signs his autograph, he uses the script F on his last name." (Sources: Bloomberg, May 23, 2012; Bloomberg Businessweek, May 21-17, 2012.)



Shareholders reject pay package for Simon Property CEO

Shareholders in mall operator Simon Property Group rejected an eight-year compensation package for David Simon, the company's CEO, the Wall Street Journal reported. The package, which was rejected by a vote at the company's annual shareholder meeting, included an annual base salary of $1.25 million and stock awards valued at $132 million over the eight-year term.

David Simon has been CEO of the family-founded business since 1995, the article said. The company owns about 300 malls and outlet centers.

The report noted that the vote wasn't binding and that "Simon isn't likely to revise the deal." However, "the compensation committee will canvass shareholders on future executive compensation," the article said.

The Journal report noted that before the shareholder vote, proxy governance firms Institutional Shareholder Services and Glass Lewis & Co. had criticized the deal.

Critics were particularly opposed to the stock units given to Mr. Simon as a retention incentive. They pointed out that Mr. Simon will be able to convert them into stock no matter how the company performs.

(Source: Wall Street Journal, May 22, 2012.)



Founder and family set for windfall in Graff IPO

Ultra-high-end jeweler Graff Diamonds will be valued at $3 billion to $4 billion when it lists on the Hong Kong Stock Exchange on June 8, according to news reports.

The company seeks to raise $1 billion by selling between 25% and 30% of the group in what would be the second-largest Hong Kong IPO this year, the Financial Times reported. Graff would use the proceeds to finance a reorganization, pay down $150 million in debt and expand, particularly in Asia, the FT article said.

The FT noted that as part of the restructuring, founder and chairman Laurence Graff will sell some businesses and stone collections into the larger group. The reorganization will include the sale of Graff stores in London, New York and Monaco. Graff will also buy back non-core assets, including a South African vineyard and luxury estate and paintings valued collectively at $8.2 million.

Graff and his family will receive $290 million from the reorganization, the FT reported. According to the report, the family received a $50 million dividend last year when the company took on nearly $100 million in debt. The article noted that the company "relies on [Laurence] Graff's expertise in sourcing some of the world's most valuable stones and selling them on to his most treasured clients."

Forbes.com reported that Laurence Graff and his son Francois, the company's CEO, have met with potential investors. The Forbes.com report noted that their company is "one of the few that have a mine-to-market operation that includes sourcing its own diamonds and gemstones and making its own jewelry." (Sources: Financial Times, May 18, 2012 and May 19, 2012; Forbes.com, May 21, 2012.)



Margarita Louis-Dreyfus taking charge at trading house

Margarita Louis-Dreyfus, who took the helm of Louis Dreyfus Commodities after the death of her husband, Robert, in 2009, "appears to be firmly in control" at the trading house after "a hesitant start," the Financial Times reported.

Louis-Dreyfus lacked business experience when she took over, the article said. The previous chairman, Jacques Veyrat, left the firm over disagreements about strategy and a failed merger with Olam, an agricultural trading house.

Louis-Dreyfus says she has three objectives for the firm: "continue the work of her late husband ...; focus on the long term; and keep it named after the family," the FT report said.

Louis-Dreyfus holds a majority stake in the firm via a trust set up for her and her three children. The trust, named Akira, controls 65% of the parent firm, Louis Dreyfus Holding. Four family members hold a smaller stake. The parent company holds 80% of the trading house; about 500 senior executives and traders hold the rest, the FT article said.

The four family members have a put option that gives them the right to sell their equity back to Akira. "The existence of the put option agreement has triggered constant rumours about an initial public offering," the FT report noted. But Louis-Dreyfus told the FT that the sale of the firm's U.S. commercial real estate portfolio and natural gas business last year gave Akira the ability to continue buying back the shares. Last year, some family members sold shares, and Akira's holding increased from 61% to 65%, the article said.

The report noted that the firm is aggressively investing in an effort to shift from being a pure middleman to owning production, processing and logistical assets. (Source: Financial Times, May 14, 2012.)



L’Oreal scion has little business experience

A New York Times profile of L'Oréal, the giant, family-controlled cosmetics company, said that 25-year-old scion Jean-Victor Meyers, newly named to the company's board, is a "sheltered, publicity-shy scion with a taste for fashion but little experience in business affairs. His main qualification is his family name." Meyers has been a salesman at a Louis Vuitton store and an assistant product manager at L'Oréal's Yves Saint Laurent cosmetic line. He is now starting up a high-end men's label, Exemplaire.

Meyers replaced his grandmother Liliane Bettencourt, daughter of the company's founder, on the 14-member board. He is "the youngest administrator at any publicly listed company in France," the Times article said.

Observers are speculating about whether Swiss food company Nestlé, which owns slightly 29.7% of L'Oréal, might try to acquire the 30.9% of the shares held by the Bettencourt family via a holding company. The family's holding company is the largest shareholder; Nestlé is the second-largest, the Times report noted. The family invited Nestlé to acquire a stake in L'Oréal in 1974 because they feared that François Mitterrand, then a Socialist candidate for president of France, might nationalize the company, the article said. Their agreement with Nestlé is due to expire in 2014.

"The move proved unnecessary, but nearly 40 years later it has put Nestlé in a position to take action once the pact expires," the Times article said.

According to the report, Meyers has "been thrust into the role of diplomat" as his grandmother has feuded with his mother, Françoise Bettencourt-Meyers. Bettencourt-Meyers, who feared that people in her mother's entourage were taking advantage of her, sued a photographer who had befriended her mother and had received lavish gifts from her. The feud sparked a wave of lawsuits and escalated into a political scandal. According to the Times report:

Mrs. Bettencourt Meyers was made her mother's legal guardian. Mr. Meyers, who is close to his grandmother and watched the events with dismay, now watches over her health and personal life after a judge determined he was the only one who could "ward off all conflict between Liliane Bettencourt and Françoise Bettencourt-Meyers."

The article said the family always votes in unison at L'Oréal shareholder meetings, led by Bettencourt-Meyers and her husband, Jean-Pierre Meyers. "The son, despite his role ads buffer between mother and grandmother, is close to his parents and seems unlikely to raise boardroom challenges."

Nestlé's CEO, Paul Bulcke, was recently also named to L'Oréal's board, the Times article noted. (Source: New York Times, May 5, 2012.)



N.Y. Times sells its stake in Fenway Sports Group

The New York Times Co. has sold its remaining stake in Fenway Sports Group for $63 million, the Boston Globe reported.

Fenway Sports Group includes the Boston Red Sox baseball team, the Liverpool Football Club, 80% of cable TV channel New England Sports Network and 50% of NASCAR team Roush Fenway Racing.

The Times Co. sold its stake to "undisclosed buyers believed to be current minority owners of the team," the Globe article said. The company tripled its investment over ten years; it had been selling off portions of its original 17.5% stake in the team over a period of years, according to the report. The company bought the original stake for $75 million and has raised a total of $225 million from selling it in pieces.

A Financial Times report noted that the sale will raise cash for the Times Co. "at a time when the group's About.com consumer information site is losing sales, dividend payments have been suspended and payments into one of its pension plans have been frozen." The FT article said the sale of Fenway "have fueled speculation" that the company might sell About.com and the Boston Globe, which it also owns. (Sources: Boston Globe, May 11, 2012; Financial Times, May 12-13, 2012.)



Report blasts Washington Post Co.’s strategy

A scathing report by deputy editor Ryan Chittum in the Columbia Journalism Review criticized the Washington Post Co.'s dividends and share buybacks.

Chittum noted that the Post's Kaplan education unit's sales dropped 14% from 2010 to 2011 and fell another 11% in the first quarter of 2012, as for-profit schools have been cited for predatory practices. At the same time, the Post's newspaper division suffered a 7% decline in revenue and reported an operating loss of $23 million in the first quarter.

"Despite this, the company continues to fork over hundreds of millions of dollars to shareholders in the form of dividends and share repurchases," Chittum wrote. He noted that the company as a whole is still profitable -- it has earned $546 million since early 2008 -- but it has spent $1.1 billion on buybacks and dividends.

Chittum wrote:

Much of that money is being squandered to appease the short-term interests and cash needs of shareholders, who very much include the Graham family, which controls the voting shares of the Post.

The author noted that the Post Co. has raised its dividend in nine of the last ten years, for a total increase of 69%. In addition, he wrote, the Post has spent $912 million over the past six years to buy back its shares from investors. "In the last two years alone," Chittum wrote, "the company has spent $653 million on share repurchases, buying in at an average $383 a share, 12 percent above their current price...."

Chittum also noted that the Post's newspaper division has cut its newsroom staff nearly in half through buyouts and layoffs. "The Post won't take risks betting its cash on its namesake news organization's future," he wrote. "It will unload nearly a billion dollars into its own pitiful stock." He pointed out that the losses on the company's share buybacks in 2010 and 2011 could have provided more than three times the funding to save the newsroom from cuts.

Chittum pointed out that the company has raised home delivery prices for the Washington Post 76% while failing to introduce a paywall for its digital edition. Meanwhile, digital ad revenue has fallen by 8% in the first quarter.

Chittum noted that Washington Post Co. executives declined to comment on his analysis. (Source: Columbia Journalism Review, May 11, 2012.)



News Corp. doubles its share buyback program

News Corp. has doubled its share buyback program to $10 million, the Financial Times reported.

Last July, it had announced a $5 billion share buyback, which helped the company's share price recover from the phone-hacking scandal at the company's British newspaper unit, the article said.

According to the FT report, chairman and CEO Rupert Murdoch "was once seen as adamantly against share buybacks."

COO Chase Carey said the company was not considering asking Rupert's son James Murdoch to step down from the boards of News Corp. or British Sky Broadcasting and had no plans to spin off its publishing business, the FT article said. (Source: Financial Times, May 10, 2012.)



Blommer offers first media tour in 70+ years

Blommer Chocolate Co. invited members of the media inside its Chicago facility for the first time in more than 70 years, the Chicago Tribune reported.

The company, founded in 1939 and notorious for its secrecy, was promoting its new cocoa sustainability initiative during the Sweets & Snacks Expo, held in Chicago. The Blommer plant in the city is one of four located in North America.

Company president Peter Blommer told journalists, "We thought it was time to open our doors and start a conversation," the Tribune article said.

Blommer processes 45% to 50% of North America's cocoa, according to the report. It does 95% of its business in North America but is considering expanding overseas, the article said. Peter Blommer said the company's sales by volume have increased 10% each year since 1990, according to the report.

The company initiated sustainability efforts in the 1950s, when founder Henry Blommer began an organization now known as the World Cocoa Foundation, the Tribune article said. Blommer now plans to use only sustainable palm oil by 2015, according to the report. It is launching a new Sustainable Origins brand and plans to invest $45 million toward sustainability education and other efforts. According to the Tribune report, about 10% of Blommer's cocoa production is certified sustainable. (Source: Chicago Tribune, May 9, 2012.)



Family sells rights to Fred Segal name

The Segal family has sold worldwide rights to the Fred Segal name to Sandow Media, a New York design firm, the Los Angeles Times reported. Fred Segal operates two high-end clothing stores in Los Angeles and Santa Monica, Calif. The two stores were not included in the deal, whose terms were not disclosed, the article said.

The sale enables Sandow Media to put the Fred Segal logo on merchandise and open Fred Segal stores around the world.

Fred Segal, 78, who founded the family-run company in 1961, is now retired. His son Michael has run the business for the last 30 years, the article said. Michael's daughter Kirsten Segal, who heads marketing and public relations for the family business, told the LA Times, "We had a connection, and it felt right, so it was the right time." (Source: Los Angeles Times, May 4, 2012.)



Rinehart’s lawyer says children can remove trust assets

An attorney for Australian mining billionaire Gina Rinehart said Rinehart's four children are free to remove their assets from a multibillion-dollar trust, Bloomberg reported.

Three of Rinehart's four children have accused her of misconduct and are seeking to have her removed as trustee. Her youngest daughter, Ginia Rinehart, has taken her mother's side in the dispute. The three siblings' lawsuit says Rinehart unilaterally extended her control of the trust until 2068, saying the family would otherwise face bankruptcy because of capital gains taxes.

But on April 30, 2012, Rinehart vested the trust, effectively allowing the children to take control of their assets without having to wait until 2068; her lawyer contends that the move makes further litigation unnecessary, according to the Bloomberg report.

Citing the Sydney Morning Herald, Bloomberg reported that the three oldest children will continue their suit to remove Rinehart as trustee and can't decide whether to take ownership of the assets because they don't know the tax implications.

The trust was created by Rinehart's father, Lang Hancock, for the benefit of his grandchildren. The trust holds 23.45% of the voting shares of giant mining company Hancock Prospecting. Bloomberg reported that the company's CFO calculated the value of each child's share of the trust at A$600 million. Based on those calculations, withdrawing the assets would cause each of the children to owe A$253 million in taxes, the Bloomberg article said. (Source: Bloomberg, May 10, 2012.)



Third Kwok brother is arrested

Walter Kwok, the former chairman of Hong Kong's Sun Hung Kai Properties, has been arrested in connection with an investigation of the company by the city's anti-corruption agency, the Financial Times reported.

Kwok's younger brothers, Raymond and Thomas, co-chairmen of Sun Hung Kai, were arrested March 29. All three brothers have been released on bail, the article said. Hong Kong's former chief secretary, Rafael Hui, was also arrested in the probe. None has been formally charged.

Four years ago, Raymond and Thomas Kwok removed Walter as a beneficiary of the trust that controls the $32 billion company. Their mother intervened, and Walter Kwok was forced out as chairman, the article noted.

The FT report said Walter Kwok blamed his brothers for the company's relationship with Hui. According to the report, he said he still owns a one-third stake in the company. (Source: Financial Times, May 5-6, 2012.)



Pension plan sues Wal-Mart leaders

The California State Teachers' Retirement System (CalSTRS), one of the largest U.S. pension plans, is suing Wal-Mart's board and several current and former executives and directors, the New York Times reported. The suit accuses them of breaching the company's fiduciary duty in connection with a bribery scandal at the company's Mexican subsidiary. An earlier Times article reported evidence that the Mexican unit bribed officials in Mexico and that some company executives ignored the bribery accusations.

The suit was filed on behalf of Wal-Mart itself against the company leaders, which the pension plan contends have failed in their duties to the company, the Times report noted. CalSTRS owns only less than 1% of the company -- about 5.3 million shares, worth about $313 million -- the article said.

The suit, known as a derivative suit, asks that damages be awarded to the company, and that the company improve its corporate governance and internal procedures, the Times article said.

A spokesman for Wal-Mart told the Times that the company is "reviewing the lawsuit closely and ... thoroughly investigating the issues that have been raised."

The article said the lawsuit names all of Wal-Mart's current directors and several other current and former officials, including CEO Michael T. Duke, a board member; former CEO H. Lee Scott Jr., also a board member; vice chairman Eduardo Castro Wright; and chief administrative officer Thomas A. Mars. (Source: New York Times, May 3, 2012.)



U.K. lawmakers: Murdoch not fit to lead

The U.K. House of Commons Culture Committee issued a report that said News Corp. Chairman Rupert Murdoch is "not a fit person" to lead a major international company. The committee investigated allegations that News International, the company's British unit, misled Parliament about the extent of phone hacking at its News of the World tabloid.

The committee's report said Murdoch "turned a blind eye and exhibited willful blindness to what was going on in his companies and publications."A Bloomberg article noted that U.K regulator Ofcon may draw on the report's findings and deem News Corp. unfit to hold a broadcasting license.

The report said the company "misled the committee about the true nature and extend of the internal investigations they professed to have carried out in relation to phone hacking. Their instinct throughout was to cover up rather than seek out wrongdoing."

The Bloomberg article noted that the committee's members were split along party lines. The six Labour and Liberal Democrat members voted to conclude that Murdoch is "not a fit person"; the four members of Prime Minister David Cameron's Conservative Party voted against that conclusion.

The partisan division "may lead to further suggestions that Cameron and his Conservatives are too close to Murdoch," the Bloomberg article said.

A New York Times article said the committee's report "went much further in lambasting Mr. Murdoch than had been expected."

News Corp. issued a statement said it was reviewing the report and "will respond shortly." The company also said it "fully acknowledges significant wrongdoing at News of the World and apologizes to everyone whose privacy was invaded," the Times article said.

The Times article noted that the committee report criticized Rupert Murdoch's son James, who was in charge of the company's U.K. unit, for failing to act earlier. The report said, "Had James Murdoch been more attentive to the correspondence that he received at the time, he could have taken action on phone hacking in 2008, and this committee could have been told the truth" during a 2009 inquiry.

According to the Times, the report also said News Corp. had tried to blame lower-ranking executives while "striving to protect more senior figures, most notably James Murdoch." (Sources: Bloomberg, May 1, 2012; New York Times, May 1, 2012.)



Polish firms facing succession issues

A recent Financial Times report noted that the Polish companies that were founded after the collapse of communism in 1989 are now beginning to face succession issues.

The report cited the case of ITI Group, which owns a stake in Polish broadcaster TVN. ITI's co-founder Jan Wejchert, who died three years ago at age 58, was married four times and had five children.

Both Wejert and his co-founder, Mariusz Walter, put their family members in key positions in the company. The death of Wejchert, whom the FT called "the dominant force" in ITI, led to a family feud, the article said. Wejchert's eldest son, Lukasz, and two siblings were bought out. Wejchert's fourth wife, Aldona, remains as a large shareholder and deputy chairman of the company. An analyst told the FT that the company needs money to pay out Wejchert's heirs.

Canal Plus, a pay-TV unit of Vivendi, has taken a 40% stake in TVN through a joint venture with ITI. The Polish company is also talking with Swiss-German joint venture Ringier Axel Springer about taking a strategic share in Onet, ITI's Internet portal, the FT article said.

The head of a Warsaw private equity investment firm told the FT that an increasing percentage of his deals are founder sales. (Source: Financial Times, May 1, 2012.)



Andersons plan to take Books-A-Million private

Clyde B. Anderson, chairman of Birmingham, Ala.-based Books-A-Million Inc., announced a plan to acquire the company for about $48.8 million and take it private. The Anderson family owns about 53% of the company's common stock.

The Anderson family would pay $3.05 per share at a 20% premium. The family would "merge the company with a newly formed acquisition entity and retain the current management," the Birmingham Business Journal reported.

The Business Journal article said that Books-A-Million's stocks and sales have slumped as the popularity of e-books has grown.

A Reuters report noted that the transaction, which would not proceed without the approval of a special committee of independent directors, "would be financed through borrowings available under Books-A-Million's existing credit line, and is conditioned on availability of sufficient funds under the credit line."

A Wall Street Journal report contrasted the Books-A-Million news with the recent report that Microsoft will invest in Barnes & Noble’s Nook e-book technology. Barnes& Noble’s stock rose 52% on the news, the report noted.

A subsequent Birmingham Business Journal report said that according to ShareholdersFoundation Inc., a legal monitoring service, an investor has suedBooks-A-Million’s board of directors, accusing the Anderson family ofundervaluing the company with its $48.8 million offer. The shareholder was notnamed.  (Sources: BirminghamBusiness Journal, April 30, 2012 and May 7,2012; Reuters, April 30, 2012; Wall Street Journal, May 1, 2012.)

 

 



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