Posted at 3:03 p.m., Tuesday, June 19, 2007
Business highlights: Oil prices, Plavix, Best Buy
Associated PressOIL HITS 9-MONTH HIGH
NEW YORK Oil prices inched up Tuesday, setting a nine-month closing high, after labor unions in Nigeria rejected the government's efforts to avert a nationwide strike.
Nigeria is Africa's biggest oil producer and one of the top overseas suppliers to the United States.
Light, sweet crude for July delivery on the New York Mercantile Exchange rose a penny to settle at $69.10 a barrel, the highest close since Sept. 1.
Labor unions on Tuesday rejected the Nigerian government's offer to halve a price hike on automobile fuel, only hours before its strike protesting the increase was set to begin.
The unions are threatening to target the strike action at the oil industry, with the aim of stanching oil exports that count for 90 percent of the government's income.
WALL STREET BRINGS ON MODEST GAINS
NEW YORK Wall Street eked out small gains Tuesday, as investors found solace in declining Treasury yields but remained subdued after Best Buy Co.'s lackluster profit forecast and a drop in new home construction.
The 10-year Treasury note's yield, which hit five-year highs last week, fell to 5.09 percent from 5.14 percent late Monday alleviating some worries about high rates slowing down corporate dealmaking and hurting the already sluggish housing market.
Also lifting the stock market was a rise in General Electric Co.'s stock, after its unit GE Energy Financial Services bought a stake in Regency Energy Partners LP, a natural gas processor and distributor, from HM Capital Partners LLC for $603 million.
HOUSING CONSTRUCTION DROPS IN MAY
WASHINGTON Construction of new homes fell in May as the nation's homebuilders were battered by the crisis in subprime lending and rising mortgage rates.
Housing, which is struggling through its biggest downturn in 16 years, is expected to continue to face troubles in the months ahead before starting to stage a sustained rebound in 2008.
The Commerce Department reported Tuesday that construction of new homes and apartments dropped by 2.1 percent last month to a seasonally adjusted annual rate of 1.474 million units, 24.2 percent below the level of a year ago.
The May decline was in line with expectations and reflected weakness in the South and West, which offset construction gains in the Northeast and Midwest.
HOME DEPOT SELLS SUPPLY UNIT
ATLANTA The Home Depot Inc. announced Tuesday it will sell its wholesale distribution business to a group of private equity firms for $10.3 billion over the objection of some shareholders.
The board of the world's largest home improvement store chain approved the sale of Home Depot Supply to Bain Capital Partners, The Carlyle Group and Clayton, Dubilier & Rice. The sale is expected to close later this year.
The board also authorized a $22.5 billion increase in the company's share repurchase program.
Atlanta-based Home Depot said Feb. 12 it was considering shedding Home Depot Supply as it focuses on its core retail business. The supply unit serves contractors, homebuilders and other business customers.
FEDS APPROVE CERBERUS' CHRYSLER PURCHASE
WASHINGTON Federal antitrust regulators have cleared Cerberus Capital Management's $7.4 billion purchase of Chrysler.
Peter Duda, a Cerberus spokesman, said Tuesday that the Federal Trade Commission made its decision before the end of a standard 30-day review.
Early termination of an FTC review typically signifies there will be no conditions placed on the deal. The FTC declined to comment Tuesday.
DaimlerChrysler agreed last month to transfer an 80.1 percent stake in its money-losing Chrysler unit to New York-based Cerberus.
As part of the deal, Cerberus agreed to invest $6.1 billion in Chrysler and its financing arm and to pay DaimlerChrysler $1.4 billion. DaimlerChrysler would remain liable for certain expenses that could result in it paying Cerberus up to $1.5 billion to complete the transaction.
SALES BLOCKED ON GENERIC BLOOD THINNER PLAVIX
NEW YORK A Canadian company's cheap generic version of the blood thinner Plavix has been blocked from the U.S. market until at least 2011.
U.S. District Judge Sidney H. Stein said Tuesday that Apotex Inc. had failed to prove during a three-week trial in New York City earlier this year that the patent protecting Plavix from competitors was invalid.
Plavix, used by 48 million Americans, is Bristol-Myers Squibb Co.'s best selling product. It is the world's second best selling drug after Pfizer Inc.'s cholesterol-lowering agent Lipitor.
The ruling also was a victory for the French patent-holder, Sanofi-Aventis, which sells Plavix in the United States through Bristol-Myers.
BLACKSTONE SPEEDS UP IPO
NEW YORK Blackstone Group LP, manager of the world's second-largest buyout fund, moved up its much-hyped $4.75 billion initial public offering to this week amid growing scrutiny of the firm on Capitol Hill and in the media.
The New York-based buyout shop, which controls a portfolio of companies from Madame Tussauds wax museums to real estate goliath Equity Office Properties Trust, could join the ranks of the New York Stock Exchange by Friday morning. The landmark deal, originally scheduled for sometime next week, will likely go down as the fourth-biggest IPO in U.S. history.
The unexpected move to speed up the offering comes amid speculation that Chief Executive Stephen Schwarzman might be having second thoughts. A spokesman for Blackstone would not comment, citing the quiet period for initial public offerings.
CADBURY PREPARES TO CUT 7,500 JOBS
LONDON Cadbury Schweppes PLC said Tuesday it plans to close 15 percent of its candy factories by 2011, cutting about 7,500 jobs, and will likely sell the U.S. unit that makes 7-Up, Dr Pepper and Snapple soft drinks.
The company had announced in March that it planned to separate its drinks and candy businesses under pressure from investors led by U.S. billionaire Nelson Peltz but had not indicated whether it would sell the beverage business or spin it off to shareholders.
While the company said Tuesday that it was still pursuing "a twin track process," it appeared that the beverage business would be sold.
A sale would be expected to yield 7 billion pounds to 8 billion pounds ($14 billion to $16 billion), said Jeremy Batstone-Carr, analyst at Charles Stanley in London.
BOEING SCORES WITH DREAMLINER ORDER
LE BOURGET, France Boeing Co. scored a major coup Tuesday, announcing that the original launch customer for its rival Airbus' planned A350 had signed up for another 50 of its own flagship 787 Dreamliners.
Airbus has been fighting to win back support for its entry in the lucrative market for medium-sized long-range jets where it is up against the Dreamliner since it was forced into a redesign of the A350 by unhappy customers.
The most vocal of those was Stephen Udvar-Hazy, chief executive of Los Angeles-based International Lease Finance Corp., the world's largest airline leasing company. IFLC's deal with Boeing, announced at the Paris Air Show in Le Bourget, north of the French capital, makes the company the biggest customer for the 787 with 74 firm orders.
BEST BUY 1ST QUARTER EARNINGS DROP
MINNEAPOLIS Best Buy Co., the nation's largest consumer electronics retailer, lowered its 2008 profit estimate on Tuesday, blaming a softening economy that's steering shoppers away from high-margin items like flat-screen TVs.
The company also reported that first-quarter earnings fell 18 percent, partly in response to the inclusion of the company's new lower-margin business in China. Shares slid $2.83, or 5.9 percent, to $45.18 Tuesday.
Chief Executive Officer Brad Anderson said weakness in the overall economy was a major factor in the company's sales skewing away from high-margin, big-ticket products. A growing amount of its sales is coming from items like notebook computers and gaming hardware, which don't bring as much profit.