Barilla to launch restaurants in U.S.

Barilla SpA, the 135-year-old, family-owned Italian pasta company, is counteracting sluggish demand in Europe with an effort to build demand globally, especially in the U.S., the Wall Street Journal reported.

To increase its U.S. brand recognition, the company will launch a chain of Barilla-branded restaurants next year. Last February, it launched a line of microwavable meals in the U.S.

Guido Barilla, 54, great-grandson of the founder, has been chairman since 2003. A new non-family CEO, Claudio Colzani, will join the company in October; he was chief customer officer at Unilever in the U.S.

The company is also divesting itself of non-core assets, the Journal article said. It has sold a Spanish bakery-products producer and has put a German bread maker up for sale. The Journal report said Barilla will use the funds from asset sales to finance expansion plans in pasta and pasta-related businesses in the U.S. and South America.

In 2011, Barilla's bakery business made up 60% of its sales, down from about 67% in 2006. Pasta, sauces and flour constituted 37% of the company's revenue last year, up from 26% in 2006, according to the Journal report.

The company has been selling dry pasta in the U.S. since the mid-1990s. Of Barilla's total 3.6 billion revenue last year, 365 million euros ($457 million) came from the U.S., up from 220 million euros in 2005, the article said. (Source: Wall Street Journal, Aug. 31, 2012.)

Posted Friday, August 31, 2012 • Permalink

The end for Boston family grocery chain?

Whole Foods Market is in the early stages of negotiations to buy or take over leases of six of the ten Johnnie's Foodmaster locations in eastern Massachusetts, "possibly bringing an end to one of the last urban family grocery chains," the Boston Globe reported.

The chain was founded in East Cambridge, Mass., in 1947 by John DeJesus Sr. and is now run by his son, John A. DeJesus. DeJesus has not commented on whether he would continue operating his remaining four stores, the Globe article said. Citing a trade publication, the Globe said the company's sales in 2011 were about $150 million.

Johnnie's Foodmaster stores are known for their "low prices, friendly managers, loyal customers, and old-school décor -- including carpeted aisles," according to the Globe report. The article said the company has tried new formats in the face of increasing competition. (Source: Boston Globe, Aug. 29, 2012.)

Posted Thursday, August 30, 2012 • Permalink

S. Korean lawmakers propose bill to weaken chaebols

A group of 24 South Korean members of the ruling New Frontier Party have submitted a bill to deny voting rights on cross shareholdings at the country's family-owned conglomerates, known as chaebols, Bloomberg reported. Family dynasties have used this mechanism to control the chaebols with only minority stakes.

The Bloomberg report said that because of the public's discontent with the conglomerates' power and lenient treatment of their leaders who have committed white-collar crimes, the legislation is expected to pass as early as this year. The article said the bill is "being spearheaded by members of a party that controls parliament and is traditionally pro-business."

Under the proposal, "existing cross shareholdings in business groups would carry no voting rights, and any further purchase of stock between chaebol companies would be banned," the Bloomberg article said. Lawmaker Nam King Pil told Bloomberg that the rules are meant to turn the conglomerates into holding companies.

The opposition Democratic United Party wants cross shareholdings to be banned altogether, the report noted.

Kim Sang Jo, a professor at Seoul's Hansung University, told Bloomberg that if the bill passed, successors at Samsung, Hyundai Motor and Hyundai Industries Co. would face difficulties in inheriting control of their families' business empire. Le Sang Hun of Seoul-based HI Investment & Securities Co. told Bloomberg that the conglomerates "will have to take action and shuffle their ownership structures in order to ensure that the owners retain their power."

But Tom Conyer, a consultant to foreign investors in Korea, told Bloomberg, "Over the years politicians of various political parties have tried to reduce the near monopoly of the chaebol in the Korean economy but as we've seen they've always failed." (Source: Bloomberg, Aug. 29, 2012.)

Posted Wednesday, August 29, 2012 • Permalink

Chairman’s daughter promoted at Fidelity Investments

Abigail Johnson, 50, has been promoted to president at Fidelity Investments, Bloomberg reported. Johnson, the daughter of 82-year-old Fidelity chairman Edward C. "Ned" Johnson III, will run all of the financial-services firm's core business units.

"While she will report to her father, who remains Fidelity's chief executive officer, the appointment makes her arguably the most powerful woman in the $12.2 trillion fund industry," the Bloomberg report says. According to observers, the promotion establishes Johnson as her father's clear successor. The Bloomberg article noted:

The younger Johnson has outlasted several senior executives who were seen as candidates to lead the family-controlled firm run by her father for 35 years.

The Boston Business Journal noted: "The announcement also comes on the heels of criticism and concerns raised by analysts over the company's private ownership structure and lack of a clear succession plan."

Johnson began working at Fidelity, which was founded by her grandfather, in 1988 as a mutual fund manager. In 2001, she was named head of Fidelity's mutual fund unit; in 2005, she was put in charge of the firm's retirement business. She added oversight of corporate retirement services and fund sales to individuals in 2007. In 2010, her father split control of the firm: Abigail Johnson was named head of all client-focused businesses, and Ronald O-Hanley was named head of asset management. O'Hanley will continue to oversee asset management and will report to Abigail Johnson, the Bloomberg report said. (Sources: Bloomberg, Aug. 29, 2012; Boston Business Journal, Aug. 28, 2012.)

Posted Wednesday, August 29, 2012 • Permalink

Two more Newhouse papers to cease daily distribution

Newhouse Newspapers announced that it would end daily distribution of the Syracuse, N.Y., Post-Standard and the Harrisburg, Pa., Patriot-News. Both papers will merge their content with local news websites and deliver printed newspapers only three days a week, the New York Times' Media Decoder blog reported.

Earlier this year, Newhouse announced that it would stop printing a daily edition of the New Orleans Times-Picayune and at its Alabama newspapers.

Patriot-News reporter Sara Ganim won a Pulitzer Prize this year for her coverage of the Jerry Sandusky child-abuse scandal at Pennsylvania State University.

The Post-Standard will publish on Tuesdays, Thursdays and Sundays starting in January. The Syracuse Media Group, which will oversee the newspaper, is considering whether to publish a newspaper, but not deliver it, on the other four days.

Also starting in January, the Patriot-News will publish on Sundays and two other days that have yet to be determined, according to the New York Times report. (Source: Media Decoder, New York Times, Aug. 28, 2012.)

Posted Wednesday, August 29, 2012 • Permalink

Best Buy gives Schulze access to its books

Best Buy Co. has given its founder, Richard Schulze, access to its books. The agreement allows Schulze, who owns 20% of the company, to form an investment group and prepare a takeover bid for the company.

According to the Wall Street Journal, under the agreement Schulze has 60 days from the start of his due diligence to present an offer. If the board rejects it, he may present a second proposal, but not until January -- after the holiday shopping season. If the board rejects the second offer, he may take a bid directly to shareholders.

The Best Buy board also will offer two board seats to Schulze, reflecting his stake in the company, but will withdraw that offer if Schulze takes his proposal directly to shareholders or violates provisions of his agreement with the company, the Journal article said. (Source: Wall Street Journal, Aug. 28, 2012.)

Posted Tuesday, August 28, 2012 • Permalink

Benihana is sold to private equity group

Benihana shareholders approved the sale of the company to private equity group Angelo, Gordon & Co., the South Florida Business Journal reported. The company was delisted from Nasdaq, the report noted.

The family of Rocky Aoki, the late founder of the company, was among the major shareholders who cashed out, the article said. (Source: South Florida Business Journal, Aug. 21, 2012.)

Posted Monday, August 27, 2012 • Permalink

N.Y. Times Co. sells About.com to Ask.com parent

Barry Diller's IAC/InteractiveCorp, the parent company of Ask.com, has agreed to buy The About Group from the New York Times Co. for $300 million in cash, the Associated Press reported. The Times Co. acquired About.com in 2005 for approximately $410 million. IAC's bid beat out a $270 million offer from Answers.com.

A Wall Street Journal article noted that the Times Co. took a $195 million write-down on the value of its investment in the site in July.

According to the Journal report, Times Co. chairman Arthur Sulzberger Jr. said, "This sale will allow the Times Company to focus on the development and growth of our core brands locally, nationally and on a global scale." The Journal report noted that the Times Co. said it would use the cash for "general corporate purposes." (Sources: Associated Press, Aug. 27, 2012; Wall Street Journal, Aug. 26, 2012.)

Posted Monday, August 27, 2012 • Permalink

Elisabeth Murdoch’s remarks reveal family tensions

Elisabeth Murdoch, who delivered the keynote MacTaggart lecture at the MediaGuardian Edinburgh International Television Festival on Aug. 23, "explicitly contradicted her brother James," The Guardian reported. According to The Guardian report, when Elisabeth Murdoch spoke, "tensions within the world's most powerful media family were dramatically laid bare." James Murdoch delivered the MacTaggart lecture in 2009; their father, Rupert Murdoch, has also presented the MacTaggart speech.

Elisabeth Murdoch said the BBC was "a strategic catalyst to the [U.K.'s] creative industries." This contradicted James Murdoch's MacTaggart remarks in 2009, when he called for an end to BBC domination of the U.K. market, a Financial Times report noted.

The FT article pointed out that Shine, the TV production company chaired by Elisabeth Murdoch, has a close relationship with the BBC. Shine was acquired by Rupert Murdoch's News Corp. last year for $673 million; shareholders filed suit over the deal, saying the purchase price was too high.

Elisabeth Murdoch also said that "profit without purpose is a recipe for disaster," while her brother said in 2009 that profit is the "only reliable and perpetual guarantor of independence," the FT article said.

She referred to the U.K. government inquiry into British media practices, saying, "when there has been such an unsettling dearth of integrity across so many of our institutions, it is very difficult to argue for the right outcome, which must be the fierce protection of a free press and light-touch media regulation."

The FT report said "she devoted almost a quarter of the lecture to charting her career" and noted that "some people speculated that Ms Murdoch was establishing her credentials as a future leader of News Corp."

But, citing friends of Elisabeth Murdoch, both the FT and The Guardian said she had no interest in taking a larger role in her father's company. The report also said that plans for her to join the News Corp. board were now off the table.

The Wall Street Journal -- which is owned by News Corp. -- reported that Elisabeth Murdoch "quoted from her father's version of the MacTaggart Lecture, saying he had inspired her with his words about the role of broadcasting." (Sources: The Guardian, Aug. 23, 2012; Financial Times, Aug. 23, 2012; Wall Street Journal, Aug. 24, 2012.)

Posted Friday, August 24, 2012 • Permalink

Best Buy resumes due-diligence talks with founder

Best Buy Co. has resumed talks with its founder and former CEO, Richard Schulze, about an agreement to allow him to conduct due diligence in his effort to acquire the company, Bloomberg reported. Schulze wants to take Best Buy private.

The Bloomberg report noted that Best Buy resumed the discussions shortly after announcing quarterly earnings that missed analysts' estimates.

The Minneapolis/St Paul Business Journal reported that the talks had stopped "when Schulze and the Best Buy board couldn't come to an agreement over how much financial information to give Schulze, whether to limit his contact with insiders and how much time to give him to pull together an offer." (Sources: Bloomberg, Aug. 23, 2012; Minneapolis/St Paul Business Journal, Aug. 23, 2012.)

Posted Friday, August 24, 2012 • Permalink

Cardone Industries names new CEO

Cardone Industries, a family-owned auto parts manufacturer based in Philadelphia, has named Kevin Cramton as its new CEO, the Philadelphia Business Journal reported.

Cramton replaces Michael Cardone Jr., who will continue to serve as the company's chairman.

Cramton is the former CEO of Revstone Industries LLC, an auto components maker in Southfield, Mich.

Cardone Industries had agreed to sell its North American operations to private investment firm TPG, but both parties called off the deal earlier this year, the journal report noted. (Source: Philadelphia Business Journal, Aug. 23, 2012.)

Posted Friday, August 24, 2012 • Permalink

Heineken further increases its stake in Asia Pacific Breweries

Heineken has acquired an additional $40.2 million worth of shares in Asia Pacific Breweries, raising its direct stake to 12.54%, Fox Business reported.

Heineken bought the shares -- 0.37% of the company -- through block trades and open-market purchases on Aug. 22, according to the report. On Aug. 21, Heineken bought more than 6.9 million ABP shares, or 2.68% of the company.

Heineken and Fraser & Neave Ltd., a Singapore conglomerate, share a 50-50 joint venture that owns 64.8% of APB. F&N owns a 7.3% direct stake.

Heineken is bidding to acquire F&N's direct and indirect stakes in APB. It has upped its bid from 50 to 53 Singaporean dollars per share.

Heineken's direct and indirect stake now is about 44.9%, Fox Business reported. If F&N shareholders approve the sale, Heineken's interest in APB would rise to 84.61%, the report said. (Source: Fox Business, Aug. 22, 2102.)

Posted Thursday, August 23, 2012 • Permalink

Trinchero to market Tres Agaves Tequilas

Trinchero Family Estates, a family-owned Napa Valley wine and spirits company, has will import, sell and market Tres Agaves Tequilas and cocktail mixes, the company announced.

Tres Agaves was founded in 2005 by restaurateurs Eric Bubin and Barry Augus and is the top-selling premium tequila in the U.S.

The wine, spirits and beer website Shanken News Daily noted that Trinchero opened a new spirits unit, TNS Brands, in July. (Source: Shanken News Daily, Aug. 20, 2012.)

Posted Thursday, August 23, 2012 • Permalink

Cabela’s planning an expansion

Cabela's, a direct marketer and specialty retailer of outdoor gear, is expanding into Delaware in 2014, the Philadelphia Business Journal reported. Also planned for 2014 is a store in Anchorage, Alaska.

The journal report noted that the company plans to open stores in Saginaw and Grandville, Mich.; Columbus, Ohio; Louisville, Ky.; Green Bay, Wis.; and Thornton and Lone Tree, Colo., in 2013.

This year, Cabela will open stores in Rogers, Ark., and Union Gap, Wash., the article said.

Cabela's currently has 38 stores in the U.S. and Canada. It became a public company in 2004. The founding Cabela family still owns more than 50% of the company. (Source: Philadelphia Business Journal, Aug. 22, 2012.)

Posted Thursday, August 23, 2012 • Permalink

Report: Succession in question at Tootsie Roll

The secretive, though publicly traded, Tootsie Roll Industries Inc. has not revealed its succession plan, though the chairman and CEO, Melvin Gordon, is in his 90s, the Wall Street Journal reported.

Gordon, who has headed the company since 1962, runs it with his 80-year-old wife, Ellen, daughter of founder Leo Hirshfield. They control the company through super-voting class B shares, the report noted. The three non-family board members range in age from 65 to 74. Ellen Gordon is president and chief operating officer.

The company does not give interviews or hold quarterly earnings calls. Revenues were up 2% last year, to $528.4 million, while profit declined to $43.9 million, the article said. The company's other products include Charleston Chew, Sugar Babies, Junior Mints and Blow Pops.

Activist investor Mario Gabelli raised his stake in Tootsie Roll to about 6% in 2008, the Journal report noted.

"The Gordons have given no hint that they intend to retire and no indication of health problems," the Journal article said. They each receive an annual salary of $999,000. Last year, the couple together received total compensation of $7.6 million, which includes bonuses and use of a company plane. The company pays $10,000 a month to rent an apartment for them in Chicago, according to the Journal report.

A spokeswoman for the company told the Journal that the company has a succession plan that it has shared with the board but is not making public. The Journal article said:

There is no public indication that the Gordons' four children have any interest in taking over management of Tootsie Roll. Some observers think that is part of the reason the couple is holding on to control well into their golden years.

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

Posted Wednesday, August 22, 2012 • Permalink

Bertelsmann completes change of legal structure

Bertelsmann has completed its change of legal structure from the German "AG," or joint-stock company, to "KGaA," a partnership limited by shares, the Financial Times reported.

With the switch, Bertelsmann can sell stock to investors without diluting the control of the Mohn family, the FT report noted. The current owners have become general partners with full control of the executive board.

According to the FT report:

Their unwillingness to sell stakes or float Bertelsmann has hamstrung the company for almost a decade as it was forced to shy away from big acquisitions and focus on small deals and organic growth instead.

(Source: Financial Times, Aug. 22, 2012.)

Posted Wednesday, August 22, 2012 • Permalink

Heineken buys Temasek’s stake in Asia Pacific Breweries

Heineken, which is bidding against Thai Beverage for control of Asia Pacific Breweries, has acquired Temasek Holdings' 1.4% stake in APB, the Financial Times reported. Temasek is a Singaporean sovereign wealth fund.

The FT report said the acquisition could make it harder for Thai Beverage to block Heineken's most recent bid. (Source: Financial Times, Aug. 22, 2012.)

Posted Wednesday, August 22, 2012 • Permalink

Diller’s firm bids for Times Co.’s About.com

According to a Reuters report, Barry Diller's IAC/Interactivecorp has bid $300 million to acquire About.com from the New York Times Co. IAC's bid is higher than the $270 million offer from Answers.com, which reportedly had signed a letter of intent to buy About.com.

Times Co. has said it is "engaged in discussions regarding the potential sale of its About Group" but has not named any of the parties it is speaking with, the Reuters article noted.

Sources told Reuters that Times Co. has not yet responded to IAC's bid.

An Adweek report said that because the Times Co. would lose about $140 million under the terms of the Answers.com deal, it's possible Diller's offer would trigger a bidding war. The Reuters article noted that IAC has nearly $1 billion in cash and cash equivalents on its balance sheet and "could easily raise its offer." (Sources: Reuters, Aug. 21, 2012; Adweek, Aug. 21, 2012.)

Posted Wednesday, August 22, 2012 • Permalink

Santander to sell a stake in Mexican subsidiary

Banco Santander plans to sell up to 24.9% of its Mexican subsidiary, the Financial Times reported. The Spanish bank will sell up to 6.2% on the Mexican stock exchange and up to 18.7% through an offering on the New York Stock Exchange, the article said.

The shares being offered could be worth between $3 billion and $4 billion, the article said. Santander would retain a controlling stake in the subsidiary, Grupo Financiero Sanrander Mexico.

An earlier FT report said Santander is selling stakes in its subsidiaries to raise capital "at a time when the Spanish bank's access to funding has been hindered by the sovereign debt crisis." Santander spun off part of its Brazilian arm in 2009 but has put on hold a listing of its U.K. subsidiary, according to the earlier report.

(Source: Financial Times, Aug. 19, 2012 and Aug. 16, 2012.)

Posted Tuesday, August 21, 2012 • Permalink

Heineken makes deal for control of Asia Pacific Breweries

Heineken will acquire control of Asia Pacific Breweries for about $4.5 billion, the New York Times' Deal Book blog reported. The company will pay about $42.28 a share for Fraser & Neave's 39.7% stake in Asia Pacific, and about $130 million for other F&N assets, the article said.

The offer is worth nearly 10% more than Heineken's initial offer, according to the New York Times report.

Through the agreement, Heineken will own 81.6% of Asia Pacific. It then plans to spend an estimated $2 billion to buy out the remaining shareholders, the New York Times article said.

According to the New York Times report, Heineken plans to fund the deal through cash on hand, an existing revolving credit facility and new financing from its banks.

The Financial Times called the bidding for Asia Pacific "one of the most hard-fought -- and complex -- bid battles in Asia in recent times." Two weeks earlier, a partnership called Kindest Place, affiliated with the controlling shareholder in Thai Beverage, countered Heineken's original offer with a higher bid for a 7.3 stake held by F&N directly in Asia Pacific.

Shareholder approval of the deal is still pending, but F&N must pay Heineken a break-up fee of about $45 million if shareholders reject Heineken's offer, the New York Times article said.

The FT report noted that Thai Beverage is the largest shareholder in F&N, with 26.4%. Kirin, the second-largest shareholder, has 15%; insurer Prudential is the third-largest shareholder. "ThaiBev would need to muster slightly more than Kirin and Prudential's votes to give it the simple majority needed to block a Heineken offer," the FT article said. (Source: Deal Book, New York Times, Aug. 17, 2012; Financial Times, Aug. 19, 2012.)

Posted Tuesday, August 21, 2012 • Permalink

George Soros invests in Manchester United

Billionaire hedge fund manager George Soros has bought nearly 8% of the listed shares of Premier League soccer club Manchester United, the Financial Times reported. He acquired the stake via Quantum Partners, the investment arm of his family office.

Soros is now one of the club's largest shareholders after the Glazer family, the article said. Quantum bought the stake for about $43.4 million, according to the report.

The IPO raised an estimated $233 million, about have of which went to the Glazer family, the report noted. The Glazers bought the club for $1.25 billion in 2005. The IPO had originally been expected to raise as much as $330 million.

The FT report noted:

Interest from many institutional investors has remained thin as the shares pay no dividend. Another turn-off may be Manchester United's dual-class share structure, which enables the Glazer family to retain control through shares that have 10 times more voting power than the publicly traded class A shares.

(Source: Financial Times, Aug. 21, 2012.)

Posted Tuesday, August 21, 2012 • Permalink

Family-owned Janesville newspaper has ‘a crazy week’

The family-owned Janesville (Wis.) Gazette had "a crazy week" after Rep. Paul Ryan (R-Wis.), who hails from Janesville, was named as Republican presidential candidate Mitt Romney's running mate, Gazette editor Scott Angus wrote in an email to media blogger Jim Romenesko.

Angus told Romensko that up to 20 staffers at the paper worked 12- to 16-hour days to produce 12 pages of coverage and have fielded requests for information and interviews from international media. (Source: JimRomenesko.com, Aug. 16, 2012.)

Posted Tuesday, August 21, 2012 • Permalink

Recent moves at N.Y. Times raise speculation

Recent moves by the New York Times Co. have raised speculation that the company might be planning to go private, Bloomberg reported.

"Times Co. would have about $840 million in cash and short-term investments -- equal to 61 percent of its $1.37 billion market value -- if it succeeds in selling how-to website About.com," according to the Bloomberg report.

Times Co. has sold off its regional newspapers and its stake in the Boston Red Sox. Reed Phillips, co-founder of investment bank DeSilva & Phillips, which focuses on the media industry, told Bloomberg, "They have been ‘cleaning up' the business by selling off orphan assets for some time now."

However, a Times Co. spokesman told Bloomberg, "The company does not plan to go private and is not for sale."

The company stopped paying a dividend after 2008 and has reduced its debt to $776 million from $1.28 billion in the first quarter of 2009, the Bloomberg report noted. Evercore Partners analyst Doug Arthur told Bloomberg:

"When you start to put all the pieces together -- the liquidation of the assets, paying down the debt, getting the pension liability under control, not buying back stock, not paying a dividend -- you have to wonder what's going on."

Anonymous sources told Bloomberg the family is unlikely to sell the company outright.

Media analyst Edward Atorino told Bloomberg that Times Co.'s remaining debt might make it difficult to take the company private.

The Bloomberg report noted that members of the founding Ochs/Sulzberger family had received more than $20 million annually in dividends. Citing anonymous sources, Bloomberg said "some family members have expressed concern about the loss of the quarterly payment" and that the company has considered reinstating it after new CEO Mark Thompson is in place.

The company entered into a leaseback option on its 21 floors of its new headquarters building in 2009 that has almost doubled in value. The Bloomberg report noted that Times Co. could sell the seven floors it owns and the option for almost $600 million. Citigroup analyst Leo Kulp told Bloomberg that if the company monetized that asset, "they could go private with cash on hand and then go rent somewhere."

Alex Jones, co-author of a book on the Ochs/Sulzberger family, told the Financial Times, "I think if they could get out from under the scrutiny of Wall Street, that would have a lot of appeal."

Meanwhile, Capital New York noted that the company is focusing on a business strategy known as "Invest in the Times." The report said the goal is to extend the reach of the New York Times brand by increasing investment in mobile offerings, video, social media and new global markets with some resources coming from the sale of other properties. The strategy was developed before Thompson was named as CEO and was developed "without a specific C.E.O. in mind," the article said.

Capital New York noted that Arthur Sulzberger Jr. "ranks below the Times Company C.E.O. as publisher of The New York Times but above him or her as chairman of the board of directors. This has created a perception that no matter what, the new C.E.O. was always going to be a functionary of Sulzberger...."

Author Jones told the FT, "You have to understand that he's not going to be a CEO in the traditional sense."

The Capital New York article pointed out that the print edition "was not targeted as one of the four investment areas, underscoring the company's belief that newsprint is not the key to its future."

According to the report, the fact that Thomson, previously director-general at the BBC, has no print experience "is being paraded by Sulzberger as an asset to wary activist shareholders who worry about the precipitous declines in ad revenue."

In the FT, Jones noted that the family has not squabbled publicly, even as the company's stock has collapsed and dividends were discontinued. But Jones told the FT that Thompson "is going to have to manage up and manage down." (Sources: Bloomberg, Aug. 16, 2012; Capital New York, Aug. 16, 2012; Financial Times, Aug. 17, 2012.)

Posted Tuesday, August 21, 2012 • Permalink

Carlson promotes its CFO to CEO’s post

Trudy Rautio, who had been chief financial officer at Carlson Cos. for eight years, has been named as the company's new chief executive. Rautio, who has worked at Carlson for 15 years, replaces Hubert Joly, who resigned to become CEO at Best Buy Co. Inc.The Minneapolis/St. Paul Business Journal reported that according to Carlson co-owner and board chair Marilyn Carlson Nelson, Joly was not asked to leave.

The journal article noted that Rautio is the fifth CEO of the giant, 74-year-old hospitality and travel company. Carlson is the parent of Radisson hotels and T.G.I. Friday's.

Before joining Carlson, Rautio was CFO at Jostens Inc. and was an executive at Pillsbury before it merged with General Mills Inc., the journal article said. (Source: Minneapolis/St. Paul Business Journal, Aug. 19, 2012.)

Posted Tuesday, August 21, 2012 • Permalink

Best Buy hires ex-Carlson CEO as founder seeks LBO

Best Buy Co. Inc. has named Hubert Joly as its new CEO. Joly resigned from his position as CEO of Carlson Cos. to take the Best Buy job.

Meanwhile, Best Buy's founder, Richard Schulze, continues to press his attempt to take the company private.

The New York Times' Deal Book blog reported that Best Buy announced it had offered to grant Schulze access to information to help him form an investor group, but Schulze rejected its offer. According to the Times report, the company said it was willing to waive a provision of Minnesota corporate law that would allow Schulze to formalize his investor partnership and take it to shareholders after Jan. 1.

The Times reported that Schulze "was unhappy with some of the terms" of Best Buy's offers.

Initially, Best Buy had demanded that Schulze refrain from going to shareholders or calling a special investor meeting fro 18 months, the Times article said. This period was later shortened to one year and then again reduced to Jan. 1.

Schulze owns 20.1% of Best Buy's stock. His deal would be worth $8 billion to $9 billion and would be financed through private equity investment, his own equity and debt financing, a Minneapolis/St. Paul Business Journal article said. (Sources: Deal Book, New York Times, Aug. 19, 2012; Minneapolis/St. Paul Business Journal, Aug. 19, 2012.)

Posted Tuesday, August 21, 2012 • Permalink

Report: Investors on the fence about Best Buy founder’s plan

Several private equity firms that have been approached to join Best Buy founder Richard Schulze's buyout of the company "are sitting on the fence," Reuters reported. The article said the investors cited "the lack of a tangible plan by Schulze, and doubts about his ability to pull off the deal."

Including the assumption of Best Buy's debts, Schulze's proposal would total $10.9 billion and would be the year's biggest leveraged buyout thus far, the article said.

According to the Reuters report, in demanding access to financial information from Best Buy, Schulze said:

"I am deeply concerned about the direction of the company and, as Best Buy's largest shareholder, I cannot simply stand aside. I still hope to work with the board on a mutually beneficial transaction, but you should know that I am not going away."

(Source: Reuters, Aug. 16, 2012.)

Posted Thursday, August 16, 2012 • Permalink

Chaebol chairman receives prison term

Kim Seung-youn, 60, chairman of Hanwha, was sentenced to four years in prison for embezzlement, the New York Times reported. Hanwha is a South Korean chaebol, or family-controlled conglomerate.

Kim, who was ordered to prison directly from the courtroom, was convicted of embezzling nearly 300 billion won ($264 million). He was also ordered to pay a fine of 5.1 billion won, the Times article said.

Kim was accused of "illegally using money from Hanwha affiliates to support subsidiaries he and his family owned," according to the report.

Heads of chaebols who have been charged with corruption historically have received light sentences, the report noted. South Korea will elect a new president in December, and the public has called for stricter punishment in corruption cases, the article said.

These were not the first charges against Kim, according to the Times report. In 1993, he was charged with smuggling cash to help buy a Los Angeles mansion and received a light sentence that was suspended. In 2004, he received a small fine for an illegal payment to a politician. In 2007, he served a short time in jail for assaulted bar workers who had brawled with his son.

Kim plans to appear the ruling, the Times reported. (Source: New York Times, Aug. 16, 2012.)

Posted Thursday, August 16, 2012 • Permalink

Ikea to build budget hotels in Europe

Ikea, the giant retailer of budget furniture, plans to build and develop at least 100 budget hotels across Europe, the Financial Times reported. The pan is part of an effort "to put its cash into long-term businesses in an attempt to earn a good return," the article said.

Inter Ikea, the company that owns Ikea's intellectual property rights, plans to build hotels in markets where the company already has property interests, the FT article said. According to the report, the hotels will not use the Ikea name and will not be run by Ikea. The FT article said Ikea is also considering building student residences.

Ikea, which rarely discloses financial information, has a complex structure in which ownership of the furniture stores is separate from ownership of its brand name and other intellectual property rights, the FT article said. "The brand is controlled by Inter Ikea, which receives money from all Ikea franchises, who must pay it a percentage of their revenues." The company recently said the Ikea brand is valued at 9 billion euros, according to the report.

Inter Ikea's other investments include shopping centers, financial investments and property, the article said. (Source: Financial Times, Aug. 15, 2012.)

Posted Wednesday, August 15, 2012 • Permalink

N.Y. Times Co. names new CEO

Mark Thompson, outgoing director general of the British Broadcasting Corporation, has been named as the new president and CEO of the New York Times Company. He will also serve on the company's board. The New York Times reported that Thompson will join the company in November.

Thompson has spent nearly his entire career at the BBC. "The Times reached outside its own company, its own industry and even its own country to find a leader to guide it in an uncharted digital future," the New York Times article said.

Times Co. chairman Arthur Sulzberger Jr. told the New York Times:

"We have people who understand print very well, the best in the business. We have people who understand advertising well, the best in the business. But our future is on to video, to social, to mobile. It doesn't mirror what we've done. It broadens what we are going to do."

The Times article said Thompson "was regarded as an unorthodox choice not just because he was from television but because he worked for a public broadcaster and had no experience running a publicly traded concern like the Times Company."

The Daily Beast noted, "Though his managerial and political skills will stand him in good stead with the paper's empire and the Sulzberger family, it won't necessarily generate new readers willing to fork out money for digital versions of the paper." (Sources: New York Times, Aug. 14, 2012; Daily Beast, Aug. 15, 2012.)

Posted Wednesday, August 15, 2012 • Permalink

Icahn gives his son $3 billion to manage

Noted activist investor Carl Icahn will allocate up to $3 billion to his son Brett and Brett's partner David Schechter, an expansion of their role in running his investments, Bloomberg reported.

Brett Icahn, who turns 33 in August, and Schechter have been managing $300 million for Carl Icahn, 76, according to the report. Carl Icahn owns more than 90% of holding company Icahn Enterprises LP, which has $24 billion in assets. "The arrangement expires after Carl turns 80 in 2016, giving Brett the chance to both prove his mettle as a successor and develop a track record to start his own hedge fund," the Bloomberg article said.

Carl Icahn hired Brett as an investment analyst a decade ago and allocated the $300 million to Brett and Schechter in April 2010. That arrangement enabled the duo to invest in loans and securities of companies with less than $2 billion in equity value. Citing a filing with the Securities and Exchange Commission, the Bloomberg report said those investments generated a gross cumulative gain of 96% by the end of June. The new agreement enables Brett Icahn and Schechter to invest Carl Icahn's capital in companies with stock market values between $750 million and $10 billion, the article said.

Under the arrangement, Icahn Enterprises will allocate up to $2.4 billion in its investment unit to Brett Icahn and Schechter, including the money they already have under management. High River LP, one of Carl Icahn's personal investment vehicles, will allocate $600 million. The managers are entitled to a lump-sum payment equaling 7.5% of any profits that exceed an annual 4% compounded hurdle rate, the Bloomberg article said. (Source: Bloomberg, Aug. 14, 2012.)

Posted Tuesday, August 14, 2012 • Permalink

Bankrupt suburban Phila. garden center fights for survival

Waterloo Gardens, a mainstay of suburban Philadelphia's Main Line for 70 years, filed for Chapter 11 bankruptcy in late June and is struggling to keep its last remaining location open, the Philadelphia Inquirer reported.

The family-owned store's flagship location in Devon, Pa., has closed and is up for sale. The family "has scraped for weeks to stay open" at its Exton, Pa., store, the article said. The business's troubles stem from a failed expansion in 2007, just before the economy collapsed, according to the report.

Second-generation CEO Zelinda LeBoutillier died of cancer last year at age 76; her son, Bobby LeBoutillier, is "determined to rescue what is left of the business," the Inquirer article said.

James Paolini, Zelinda LeBoutillier's father, founded the business in Devon 1942. In 1959, he opened nurseries in Exton to stock the Devon store; the site became a Waterloo Gardens store in the 1970s. In 1972, Paolini sold the business to his daughter and her husband; at the time, suburbia was expanding and gardening had become trendy, the report noted.

Paolini died in 1990 and left most of his assets to his housekeeper, prompting a legal battle. "The family rift would play out in court for several years before fading away," the Inquirer article said.

Part of the business' financial problems stemmed from its emphasis on having a wide selection of stock; excess inventory ate into cash flow, the article said.

The company prospered from 2005 through 2997; it did not foresee the economic collapse. In 2007, the company spent about $8 million to acquire a store in Warminster, Pa., and opened a location in Wilmington, Del. The Warminster store closed at the end of 2008 and the Wilmington location closed in December 2011. At the two remaining locations, revenue fell 80% in 2010, 12% in 2011 and 20% so far this year, according to the report. Payment terms for deliveries were tightened, and the company's lender "has resisted Waterloo's efforts to continue spending its cash to finance operations in Exton," the Inquirer report noted. (Source: Philadelphia Inquirer, Aug. 12, 2012.)

Posted Monday, August 13, 2012 • Permalink

Jon Huntsman Jr. named to adviser post at his family firm

Jon M. Huntsman Jr., former Utah governor and former U.S. Ambassador to China, will receive $27,500 a month plus expenses to "provide strategic advice on political, economic and business matters, particularly in connection with markets and opportunities in Asia" through December 2013 at Huntsman Corp., the business blog Footnoted.com reported. Huntsman was a Republican candidate for president until January 2012.

Huntsman's father, Jon Huntsman Sr., is the company chairman; his brother Peter Huntsman is CEO.

Jon Huntsman Jr. is also a member of Huntsman Corp.'s board; he was appointed as a director on Feb. 1, 2012. Huntsman Corp. board members are paid $120,000 a year, the Footnoted.com report said.

Also in February, Huntsman was named a director at Ford Motor Co.; in April, he became a board member at Caterpillar, the blog reported. Both companies seek to increase sales in China, the blog post said. (Source: Footnoted.com, Aug. 8, 2012.)

Posted Thursday, August 09, 2012 • Permalink

N.Y. Times Co. to sell About.com

The New York Times Co. has reached an agreement to sell the About Group, its unit that includes the About.com online resource guide, to Answers.com for $270 million, the New York Times' Media Decoder blog reported.

The Times Co. bought About.com in 2005 for $410 million, one of former CEO Janet Robinson's first moves, the Wall Street Journal noted. The company is now seeking a new CEO. Robinson was ousted in December.

When the Times Co. bought the unit, "analysts questioned how compatible About.com was with the broader company goals," the Times report said. The Times noted that the unit initially was profitable, but profits shrank in 2011 after a change in a Google algorithm led to a decline in online traffic and advertising.

The Times Co. has also recently sold its stake in the Fenway Sports Group, which owns the Boston Red Sox baseball team, and its regional newspaper group. "The sales have helped the Times repair its stress balance sheet but haven't helped the company resolve its major challenge: declining print advertising revenue at its core products," the Journal report said. (Sources: Media Decoder, New York Times, Aug. 8, 2012; Wall Street Journal, Aug. 9, 2012.)

Posted Thursday, August 09, 2012 • Permalink

News Corp. writes down its newspaper business

News Corp. announced in its Aug. 8 earnings call that it has written down its newspaper business by $2.8 billion and taken a $224 million charge to cover the cost of scandal investigations at its U.K. publications, the Financial Times reported. The company plans to spin off its publishing assets into a separate company next year. News Corp. lost $1.6 billion in the quarter that ended June 30.

The New York Times reported that in preparation for the split, News Corp. "will most likely cut costs on many of its smaller businesses." Its tablet-only digital publication, The Daily, is laying off nearly a third of its 170 full-time employees, and layoffs are expected at Dow Jones, publisher of the Wall Street Journal, according to the New York Times report.

A Bloomberg Businessweek report noted that News Corp. chairman and CEO Rupert Murdoch was not present at the earnings call, but his son James "made a surprise appearance."

The Bloomberg Businessweek article also said the Church of England has sold its £1.9 million stake in the company; the Church said its ethical investment body "does not feel that the company has brought about sufficient change." A journalist at News Corp.'s U.K. tabloid The Sun was recently arrested, marking the 70th arrest in the British government's investigation of crimes that include bribes, phone hacking and obstruction of justice, Bloomberg Businessweek noted. (Sources: Financial Times, Aug. 8, 2012; New York Times, Aug. 8, 2012; Bloomberg Businessweek, Aug. 9, 2012.)

Posted Thursday, August 09, 2012 • Permalink

Thai group bids against Heineken for APB

A group linked to Thailand's second-richest man is bidding against Heineken to buy out Asia Pacific Breweries, which makes Tiger beer, Reuters reported. Heineken already controls about 42% of APB, mostly via a joint venture with Fraser and Neave (F&N), according to the report.

Kindest Place, a company owned by Charoen Sirivadhanabhakdi's son-in-law made a counter-offer to acquire F&N's direct stake in APB. The offer topped Heineken's bid for the part of the company it doesn't already own by 10%, the Reuters article said.

Earlier, companies controlled by Charoen paid $3 billion for stakes in F&N and APB. Heineken countered by bidding $6 billion for F&N's direct and indirect stakes in APB.

"Charoen and his companies, including Thai Beverage PCL, and Heineken are vying for influence over F&N's crown jewel, APB, due to its exposure to fast-growing emerging beer markets in southeast Asia," the Reuters report said.

Citing European analysts, the report said the Kindest Place might be trying to push Heineken into raising its bid, allowing Kindest Place to sell out at a profit. But the analysts said they don't expect Heineken to increase its offer, and they believe F&N's board will continue to recommend Heineken's bid. A source told Reuters the Thai company is willing to share control of ABP with Heineken. (Source: Reuters, Aug. 8, 2012.)

Posted Wednesday, August 08, 2012 • Permalink

N.Y. realty company buying Daffy’s out of bankruptcy

New York real estate company JEMB Realty Corp. is buying Daffy's Inc., Reuters reported. The announcement was made one day after the discount retailer filed for bankruptcy protection.

JEMB Realty will pay back all of Daffy's creditors in full. A JEMB affiliate will buy three of Daffy's real estate properties. JEMB will acquire certain intellectual property from Daffy's if the court approves.

Bloomberg reported that JEMB would pay $43 million for Daffy's assets.

The Bloomberg report said Marcia Wilson, Daffy's main shareholder, owns the company along with five family trusts that hold voting stock. (Sources: Reuters, Aug. 2, 2012; Bloomberg, Aug. 2, 2012.)

Posted Wednesday, August 08, 2012 • Permalink

Asian family conglomerates facing succession crisis

"Dozens of large family-controlled businesses across Asia face the prospect of awkward or disruptive successions," according to a recent Financial Times analysis. Many of these conglomerates, "especially those controlled by Chinese families," have put off succession planning "because of deep-rooted taboos associated with patriarchy" and the difficulty of allocating assets among multiple children, the article said.

Citing statistics from Credit Suisse, the FT analysis noted that family-controlled businesses "account for about half of all listed companies and 32 per cent of total market captialisation across 10 Asian countries."

Joseph Fan, a professor at the Chinese University of Hong Kong, told the FT:

"Succession can be a systemic risk to a country or region if big businesses are under transition around the same time. This is the case in Hong Kong and other emerging markets where tycoons are fading away."

On the bright side, the FT report said many second- and third-generation members of Asian business families, often in their 30s and educated at Western business schools, are well qualified to join their family firms. (Source: Financial Times, Aug. 7, 2012.)

Posted Tuesday, August 07, 2012 • Permalink

Best Buy founder wants to buy the company

Richard Schulze, founder and former chairman of Best Buy Co., has made an informal proposal to buy the company for about $10 billion and take it private. Schulze owns 20% of the Minnesota-based company and is its largest shareholder, the Wall Street Journal noted.

Schulze "remains tied to Best Buy through a web of business deals and a foundation that also involve his brother and daughter," the Journal article said.

Schulze stepped down from the chairman's post in June amid lagging sales and a corporate governance scandal. Best Buy's audit committee found that he knew about former CEO Brian Dunn's inappropriate relationship with a female subordinate before the board knew.

Under Minnesota law, Schulze needs the approval of the board before he can submit a formal bid, the Journal report noted. The article said the board faces a dilemma: "How does it deal with a man who no longer calls the shots but still has considerable sway over its future?"

The Journal article said some investors have questioned Schulze's ability to secure financing for a buyout. Such a deal would involve more debt than other recent large buyouts, the article said. (Source: Wall Street Journal, Aug. 7, 2012.)

Posted Tuesday, August 07, 2012 • Permalink

Si Newhouse’s influence declining at Conde Nast

Condé Nast chairman Si Newhouse, 84, has backed off from day-to-day involvement in the company, according to a report in The Observer. The shift has resulted in a culture change, the article said.

Recent hires "have dramatically altered the character of the company's leadership," the article said. Consumer marketer Bob Sauerberg, now Condé Nast's president, promised the controlling Newhouse family board that he would bring in millions in non-advertising revenue, The Observer reported. Sauerberg has "reconfigured the top of the company to look less like a magazine publisher, and more like a sales and marketing organization," according to the report. "The new management structure crowds out the once-crucial editorial director." Much of the print corporate sales staff has been laid off, the article said.

Si Newhouse, whose full name is Samuel Irving Newhouse Jr., was the eldest son of newspaper mogul Samuel Irving Newhouse. Si learned at the feet of mentors such as Condé Nast editor Leo Lerman and artist Alexander Liberman, read every line of copy when he worked at Glamour and Vogue, and discovered talented editors like Tina Brown, the profile reported.

Citing the book Newhouse by Thomas Maier, the article said a tax loophole that expires on the death of the family's second generation will leave the third generation with "an unprecedented tax burden."

The Observer report noted Si's first cousin Jonathan, who runs Condé Nast's international business, "is said to be happily stationed in Europe." Si's nephew Steven Newhouse, chairman of the family's Advance Publications, has been cutting the frequency of Advance's print newspapers in order to focus on digital. Steven's wife, Gina Sanders, who is CEO of Condé Nast's sister company, Fairchild, is said to be "a favorite internal candidate to replace Si." But the article said that as Condé Nast diversifies its business, a sale of the magazines is not unthinkable. (Source: The Observer, Aug. 1, 2012.)

Posted Wednesday, August 01, 2012 • Permalink

Wells Enterprises reportedly up for sale

Wells Enterprises, the family-owned maker of Blue Bunny ice cream, is up for sale, according to a report in the Financial Times that cited anonymous sources. The sources told the FT that the Le Mans, Iowa, company has hired JPMorgan to run an auction.

The FT article said private equity buyers including Oaktree Capital Management were interested in acquiring the company, but no strategic buyers were believed to be interested.

Wells spokesman Dave Smetter told the FT that the company has begun a strategic review and seeks to raise capital. He did not rule out a sale, the article said.

Wells, founded in 1913, tried to find a buyer a few years ago but ended up remaining privately held, the FT article said. (Source: Financial Times, July 31, 2012.)

Posted Wednesday, August 01, 2012 • Permalink