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To be in the market, Detroit-based automaker Chrysler Group has signed a document with China’s biggest automaker, Chery, to build cheapest and fuel efficient car for US market.

Chrysler will begin selling Chery Automobile’s A1 in the first quarter of 2008. American customers will get a 1.3-liter A1 for about half the price of Chrysler’s cheapest model. Chrysler’s least expensive U.S. model is the $13,850 Dodge Caliber.

The vehicles made by Chrysler and Chery could become the first cars produced in China to be sold in the United States. The first exported vehicle will be sold under the Dodge brand. The companies would jointly develop future models, probably with Chrysler styling on a Chery platform.

Chrysler Chairman and CEO Tom LaSorda said:

As part of the Chrysler Group’s global transformation, we are finding new ways to bring vehicles to market faster, more efficiently and with less cost

It’s apparent that American noted automakers have lost their market amidst the galloping oil prices and fuel efficient Asian compact models are taking their place easily. To back in the market, American based automakers have decided to cut down their expenses by reducing workforce and locking their loss making units.

The deal is also a part of money-losing Chrysler’s strategy of trying to cut costs and respond more quickly to market demands through production deals with local partners around the world.

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Via: MSNBC

San Antonio, Texas-based AT&T Inc. has agreed to buy the rural wireless provider, Dobson Communications Corporation for $2.8 billion. AT&T will pay $13 for per share of Dobson. It is expected, this acquisition will improve AT&T’s wireless coverage in the United States.

Oklahoma City based, Dobson has more than 1.7 million subscribers in rural and suburban areas across 17 states of US, including Missouri. Dobson that offers wireless service under Cellular One Brand has provided roaming service to AT&T and predecessor companies since 1990.

According to Randall L. Stephenson, chairman and CEO of AT&T, the company is focused on mobility, which offers the best broadband wireless network to their customers. The combination of two companies will create value for AT&T’s stockholders.

While the chairman of Dobson Communications, Everett Dobson, said

Dobson is proud of the role we have played in bringing wireless service to rural customers, but we also take pride that these operations will become part of a company with the resources and potential of AT&T. Our customers will gain access to the wide range of innovative products and services AT&T offers, such as the revolutionary iPhone, to which they would not have access without this merger.

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Via: Internet Communications

On more than one parameter Hilton Hotels Corp. stands as the biggest hotel group in the world. That all changed yesterday when Blackstone Group agreed to acquire it for $26 billion (£12.8bn). This offer by the private equity firm was the richest amongst the recent PE offers for hotel companies.

The deal is expected to close in the forth quarter this year and is an evidence of the recent buying spree that has swept the private equity market. Also, never has the hotel industry seen such a large buyout.

Under the terms of the deal, Blackstone - New York based Private Equity Company - has agreed to pay $47.50 per share of the Hilton Hotels Corporation. This price translates to a healthy 31.7 per cent premium over Tuesday’s closing share price. Incidentally Hilton’s share-price had risen to $ 36.05 from $33.87, after the deal was officially confirmed. On the initial price, Blackstone’s offer represented a 40 per cent premium.

The transaction is worth $18.5billion in cash and along with it Blackstone would take over $7.5 billion of debt. Blackstone values the total stake in Hilton at $ 20.1 billion, based on Hilton’s 424 million shares at the end of March.

Blackstone had raised $4.1 billion in an IPO late last month. The company said it intends to invest in the Hilton properties and brands globally to grow the business. It also said that it does not anticipate serious divestitures after the takeover.

What’s in it for Blackstone?

Hilton Hotels is one of the most (if not the most) recognized global hotel brands. Its brands include Hilton, Conrad Hotels & Resorts, Doubletree, Embassy Suites, Hampton Inn, Hilton Garden Inn, Hilton Grand Vacations, Homewood Suites by Hilton, and The Waldorf-Astoria Collection. In this deal, Blackstone is looking to acquire the accompanying brand-image. The equity behemoth is also looking to grab a larger piece of the pie that is the hotel sector.

With Hilton’s hotel rooms joining its ranks, Blackstone (with just under 500,000 rooms) has become second in terms of room numbers globally. It is now a mere 60,000 rooms behind Intercontinental Hotels Group, the global leader.

Additionally, the hotel industry is proving attractive for takeovers since building new ones is proving an expensive proposition. Curbs on construction coupled with associated high costs, mean that increasingly firms are looking to strengthen portfolios by resorting to acquisitions. Investors, too, share a perception that U.S. hotel industry is capable of growth and could outperform other sectors if adequate conditions are provided.

Blackstone’s decision may also have been influenced by Hilton’s plans of global expansion, particularly in the emerging markets like India.

As far as Hilton’s place in the equation is concerned, this may be the right way to go ahead in strengthening its global operations. Stephen F. Bollenbach, Hilton’s cochairman and chief executive, said in a statement:

Our board of directors concluded that this transaction provides compelling value for our shareholders with a significant premium.

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Leonard Green & Partners, a private investment firm, has agreed to buy majority stakes in the Dallas based Container Store.

The terms of the deal are not disclosed yet, but it’s expected that both will come out with the details soon.

Los Angeles-based Leonard Green holds investments in more than 40 other companies, including a majority stake in David’s Bridal and Petco Animal Supplies.

Leonard Green & Partners is perhaps attracted by the Container Store’s hefty sales expectations in the present fiscal year, which might possibly reach approximately $600 million, a figure that has steadily grown at 15-20 percent per year on average. The company has 39 stores across the country.

Jon Sokoloff, Managing Partner, Leonard Green & Partners, L.P said:

The Container Store is among the finest retailers in America with a unique and powerful culture and we’re proud to work with them, in what we know will be a long runway for growth, opportunity and success

Experts are emulating that the deal was unlikely to lead to higher prices for consumers or to declines in customer service. The Container Store, which has already been expanding, can open more stores to spur further growth and revenue.

To make the deal more transparent and viable to its shareholders, both companies have agreed to constitute six-member board of directors, in which three Leonard Green executives, along with three senior executives of the Container Store will discuss on the best possible negotiations. Investment firm Leonard Green has already shown its interest to acquire Container Store’s current management.

Leonard Green is hopeful that negotiations will lead to some positive output and will be acceptable to both sides. Sokoloff said:

We don’t look at this like we’re buying and they are selling. We see it as The Container Store bringing in a financial partner that will assist them in continuing to run their business in the principled and trailblazing way they have over the last 29 years

Market analysts assert that the ongoing deal is a wise purchase for Leonard Green because of the company’s productivity, strong vendor relations and popularity with proprietors.

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Detroit’s big three automakers are doing everything possible to return into profit foray.

After losing their pioneer position to Asian automakers, General Motor, Ford and DaimlerChrysler have introduced reconstruction plans, in which they are reducing their additional expenses by slashing workforce and locking loss-making units.

Automakers assert that their plans are getting desired success and toning with their expectations. To get back their acme position from the Asian rivals’, all these efforts do not apparently seem enough; therefore, they’ve played a new card to allure more customers.

Now automakers are covering all segments of customers by offering appealing discounts this holiday week, counting heavily on 0% financing to lure debt-strapped consumers.

World No-2, General Motors, who caped No-1 position for continuous 76 years, has kicked off the sales incentives last week with 0% rates for 36 months, and $1,000 cash back. Now it has extended it up to 60 months. Newly accredited deal includes its hot selling Chevrolets, Buicks, Pontiacs and GMC models, however, Pontiac Solstice roadster or Buick Enclave crossover are not in the list.

Following GM’s footstep, Ford Motor too is offering same 0% financing on all Ford, Mercury and Lincoln brand vehicles. On its trucks and SUVs, the company is giving $2,007 cash back. The deal doesn’t cover Ford Edge, Freestyle, E-Series vans or Lincoln MKX.

Whereas, DaimlerChrysler is expecting to announce its incentives any time today. It’s expected that the company will also go with 0% interest program over 60 months on its pickup, minivan and SUV models.

Market analysts have welcomed automakers’ decision as they assert that the auto industry needs to accelerate their pace in America because of falling home values and higher adjustable-rate mortgage payments have already pinched them hard.

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There must be some secret investment tips that the billionaire investor Warren Buffet shares with his guests during the annual ‘Power Lunch.’ Otherwise, how can he possibly generate so much enthusiasm that the bidders eagerly shell out vulgar amounts to have lunch with him?

The annual charity auction that gives people a chance to have lunch with Warren Buffet generated a tremendous response this year too. Mohnish Pabrai, a California based business man, outbid all the others on ebay to snap up a chance to see Buffet in person and have lunch with him. Pabrai submitted a bid of $650,100 - shattering the record of the previous year that stood at $620,100.

It was fifth-time lucky for Pabrai, who had lost for four consecutive years prior to this one. The Irvine, California-based investor models his investment business on Wareen Buffet and was obviously delighted with the prospect of meeting him.

Pabrai, 43, is the managing partner of Pabrai Investment Fund in Irvine, California. He revealed that one-third of his bid was funded by his friend Guy Spier. Both Pabrai and Spier, along with their spouses and Pabrai’s children would be entertained for lunch at New York’s Smith & Wollensky steakhouse.

Pabrai plans to make use of every single minute of this meeting with the Oracle of Omaha and to this effect says:

I’ll probably download the menu and see what we want so we don’t waste our time looking at the menu.

The proceeds of this auction go to the Glide Foundation, which provides social services, like food, health and job training, to the homeless in San Francisco. Buffet, who was named the third-richest man on this year’s Forbes List, has a very active life as a philanthropist. He has already pledged to donate 85 per cent of his holdings in the Berkshire Hathaway to the Bill and Melinda Gates Foundation. Buffet has managed to rake in $2.07 billion for Glide in the three years that this auction has been conducted on the Web.

Pabrai, who manages about $600 million for Pabrai Investment Funds in Irvine, Calif., attributes much of his success to Buffet’s investment strategies. One would hope that after the designated luncheon Pabrai will follow Buffet’s steps in charity as well.

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Cable TV giant Virgin Media is up for sale and Goldman Sachs has already started negotiating with possible buyers after it received approaches from various private equity firms.

Carlyle Group has shown interest to buy Virgin Media and valued it at around $10 billion.

The London Evening Standard calculates that the expected offer is valued at between $33 and $35 a share, which is higher to the previous close of $24.37. At $35 a share, the offer would be valued at around $11.7 billion. The Britain based company, which is also listed in New York, has additional $12.21 billion of long-term debt.

Virgin and Carlyle did not disclose the development, whereas Goldman Sachs remained silent over the deal. It’s expecting that Goldman is preparing an information memorandum for potential bidders and company can make announcement in any time today.

Richard Branson, who owns 10.5 per cent of Virgin’s shares, is said to be ’supportive’ of a sale to private equity, after negotiating a ‘collar and cuff’ arrangement last month.

Virgin Media, which comprises cable television, telephone, high-speed Internet and mobile phone services, was formed by accumulative union of Britain’s cable operators NTL and Telewest year before. The new company then acquired Virgin Mobile from Branson and rebranded the entire group as Virgin Media.

Company has about 15.3 million subscribers to its individual services, some of who even pay for more than one.

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General Motors agreed to sell its Allison Transmission commercial and military truck business to the Carlyle Group and Onex for $5.6 billion.

The Detroit based automaker is battling to revamp its auto business and is busy reconstructing its business to get its pinnacle position back from Toyota motors. The proposed sale is the latest example of a cash-strapped automaker selling off a big piece of it to a private-equity firm. Carlyle Group and Onex will have a 50-50 percent holding in Allison Transmission.

Allison, which governs the market for delivery vehicles, work trucks and school buses, had about $2 billion in revenue last year and employs 3,400 people. The deal includes seven manufacturing plants, most of which are in Indiana.

GM will keep an Allison plant at White Marsh, near Baltimore, which builds transmissions for pickup trucks and sport-utility vehicles, and gas-electric hybrid systems for trucks.

Battling for funds, the automaker is confident that the deal will shore up GM’s liquidity capacity and will provide additional money to support new products and technology investments. But analysts were singing in different rhythm, saying that GM may be stockpiling cash that the automaker might give to the United Auto Workers in exchange for an agreement to limit GM’s responsibility for future medical costs for retirees.

Among other Detroit based automakers, all had lost their lucrative North American market to Asian rivals. Toyota leading the race, while other automakers like Honda and Nissan are following it.

Rising gasoline prices is the main destructor behind American automaker’s fiasco. GM and Ford’s gas engulfing vehicles added additional expenses in the list of customers, whereas on the other side, Asian automaker’s fuel-efficient vehicles overlap the market.

To catch up, all major Detroit-based automakers are implementing reconstruction plan, in which they are selling loss making units and reducing workforce to cut additional unwanted expenses. Ford has sold Aston-Martin brand to a consortium of private-equity investors and is further selling Jaguar and Land Rover luxury brands to revamp its business.

Last year, GM sold 51 percent stake in GMAC, its finance unit, to a group of investment firms led by Cerberus Capital Management for $14 billion.

To make their efforts more viable, Detroit-based automakers are preparing for contract talks with the UAW, which they consider as a turning point for the ongoing negotiations given the poor financial condition of the companies.

GM shares mounts by 74 cents and lifted its value up $38.15. The stock reached a two-year high during trading.

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Via: Todaystrucking

To grasp the world market, both Airbus and Boeing are ready to take on Asian runways with their highly ambitious new carriers.

On one side, European plane maker Airbus is betting for its A380 super jumbo, whereas Boeing is confident for its 787 Dreamliner.

Asia will be on the radar for both the planemakers, as the region will contribute notably in their businesses. Keeping in mind the booming Asian market, Airbus assert that its A380 super jumbo will be vital as Asia’s growing middle class too is taking to the skies more frequently, on the contrary, archrival Boeing is also set to build smaller planes.

Economy growth of Asian countries is attracting all sorts of invertors, which would certainly give boost to the airline industry too. It’s expected that by 2025, half of the world’s 20 largest airports will be in the Asia Pacific and the region will account for about 56 percent, or 708 planes, of world deliveries over the next 20 year for the very large aircraft sector. The region demands 1,665 planes to meet the expectations.

Boeing expects that over the next 20 years, airlines will need an extra 28,600 new airplanes with a delivery value of US$2.8 trillion. It predicts that more than 96 percent of those will be planes that seat 400 passengers or less.

Over the next 20 years, Airbus sees demand for 15,330 single aisle planes, of which Asia Pacific will account for 26 percent, and 5,668 twin aisle planes, of which Asia Pacific will account for 39 percent.

To capture the galloping market, both players are coming with their advanced versions - Airbus is unveiling its highly ambitious A380, whereas, Boeing will try to rock the world with its 787 Dreamliner.

After delay of more than a year, due to production problems, Airbus is scheduled to deliver its first A380, which seats 555, to Singapore Airlines in October. Boeing, however, believes there will be greater demand for planes like its 787 Dreamliner, which seats 210-250 and is scheduled to be rolled out next month, with its first flight in August or September.

To be in the market, both industry leaders will have to compete hard with each other. Airbus needs to revamp its long-standing problem to compete with the American plane makers, whereas Boeing has to concentrate on more models apart from 787 Dreamliner.

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Via: IHT

Rupert Murdoch seems near to get Wall Street Journal as he said that $5 billion is enough to get the prestigious journal.

Murdoch is hopeful to merge the Wall Street Journal in its mammoth media empire as he assert that any deal with Dow Jones & Co. would likely be resolved in the next two or three weeks, or “not at all.”

It was expecting that Murdoch would increase the bid slightly to seal the deal, but he completely brushed aside the possibility and said:

Everything is done we are just waiting for a final approval of the Bancroft family, the final approval is in the next two, three weeks’ time or not at all

A spokesman for Dow Jones declined to comment on Mr. Murdoch’s remarks.

News Corp., which is offering $5 billion for the owner of The Wall Street Journal, has reached an agreement in principle with Dow Jones on editorial protections for the company, which was the main matter of concern in the deal. It considers it as a major leap toward getting Wall Street Journal. That clears the way for discussion of the price that the News Corp would pay - a matter that has so far taken a backseat as far as the question of how much control the company and its chairman, Rupert Murdoch, will have over the pages of the WSJ.

There are still a few “open items” to be resolved, and the two sides haven’t worked out the terms of an overall deal, these people said. Any deal would need to be approved by the Bancroft family, which controls 64% of Dow Jones’s voting stock and has been ambivalent about a sale.

Dow Jones management is planning to give detailed presentations on the company to News Corp. today, a discussion that could last several days and is likely to lead the parties to a negotiation on price. Although Murdoch has shown its reluctance to increase even a single penny, but it’s apparent that Dow Jones people will press him to get better out of the deal.

So far, Dow Jones has not come up to the negotiation table and has also not disclosed its expectation from the deal. Other suitors are still in the foray to get WSJ, however, Dow Jones is still meeting with other interested parties, such as Internet entrepreneur Brad Greenspan, which is expected to meet with representatives of Dow Jones and the Bancroft family today. He is leading an investor group that is proposing to buy 25% of Dow Jones for $60 a share and make an additional $250 million investment in the company.

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Ford Motors and Chrysler Group have joined a group of companies and environment organizations pushing the federal government to enact laws aimed at curbing greenhouse gas emissions.

To combat global warming sagaciously the alliance of big business and environmental groups told President Bush in January that mandatory emissions caps are needed to reduce the flow of carbon dioxide and other heat-trapping gases into the atmosphere.

As for its part in the green fight, Ford and Chrysler are joining the United States Climate Action Partnership, along with General Motors Corp. (GM), the first automaker to add its heft to the cause.

Confirming his presence and willingness to combat collectively with the warming threat Chrysler CEO Tom LaSorda said:

Now is the time for advancing a national approach to climate change where all of us - individuals, industry and government - take action toward reducing emissions of greenhouse gases

Ford added a few more things in the conversation as its President and CEO Alan Mulally said:

We have been actively developing a range of advanced technology vehicles to address the climate change issue, reducing our energy consumption on a global basis and working to create vehicles with the environmental innovation our customers desire

Last week, the Senate passed a bill that includes raising the Corporate Average Fuel Economy standards to 35 miles per gallon by 2020, a 40% increase from the standards currently imposed on autos rolling off assembly lines.

Other members include General Electric, Dow Chemical, PepsiCo, Royal Dutch Shell’s U.S. arm , London-based oil company BP, Houston-based ConocoPhillips and Alcoa — all seeking economy-wide cap-and-trade carbon legislation and clarity in the nation’s stance on carbon emissions.

With his vow to join the forces, battling Ford’s shares surges 3.6% at $9.28, while DaimlerChrysler tacked on a penny to $89.77. GM jumped almost 3% to $37.41.

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Capital One Financial Corp., the largest independent U.S. credit card issuer, is reducing its workforce by slashing 2,000 jobs, which accounts to about 6 percent of its total workforce.

The company has set a target to save $700 million by 2009 and is expecting that the resent change will help it to achieve about $400 million of pretax savings in 2008 and an additional $300 million in 2009.

Capital One, based in McLean, Va., expects to incur $300 million of pretax charges for the revamping; company will take a pretax charge of $200 million this year, including $90 million in the second quarter, to pay severance and other expenses. The charges will reduce earnings by about 15 cents per share in the second quarter and 33 cents for the year.

Approximately half of the planned job eliminations have already occurred and the affected employees have been notified. Other cuts will come through attrition and the elimination by the end of next year of selected positions that are currently vacant. Capital One currently has about 32,000 employees.

The McLean, Virginia-based Company has struggled with weaker credit quality and losses in a mortgage business it acquired late last year when it paid $13.2 billion for Melville, New York’s North Fork Bancorp Inc. The company fell short of analysts’ earnings estimates in April, posting a 24 percent decline in first-quarter profit to $675.1 million as customers missed debt payments and its mortgage business had a loss.

In 1995, Capital One was primarily a credit card issuer with five million accounts. In the decade since, it has evolved into a robust and broadly diversified Fortune 200 company with more than 50 million customer accounts worldwide and one of the most recognized brands in America.

As the news became familiar in the market, Capital One’s shares respond negatively as they fell 3 cents to $78.77 in after-market trading. The stock has declined 6.6 percent over the past year, compared with an 8 percent rise in the 24-member KBW Bank Index.

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Via: USA Today

Basell, the Dutch chemicals group, is buying US-based Huntsman for $9.6 billion including debt, in a bid to strengthen its position as a global chemicals group.

Under the terms of the agreement, Basell will acquire all of Huntsman’s outstanding common stock for $25.25 per share in cash. The price represents a 34 percent premium over the company’s Monday closing stock price of $18.90. The proposed deal is double the size of Basell.

Company has total 221.9 million outstanding shares; the deal is worth about $5.6 billion.

Huntsman was built through a series of acquisitions, but a heavy debt forced company founder Jon Huntsman to sell its 49 percent shares of the family-owned company to MatlinPatterson, the US private equity firm. Basell will retain Huntsman brand and its CEO Peter Huntsman will remain on the acme position.

Basell, which is owned by privately held U.S. industrial group Access Industries, is a leading producer of polypropylene, which is used in products like textiles, reusable containers and laboratory equipment. The deal would broaden Basell’s holdings and give it access to Huntsman’s technology, which is used in paints, footwear and cleaning products.

Huntsman discloses that other private equity groups also approach company to buy before the board accepting Basell’s offer. The combined group would match Basell’s polyolefin with Huntsman’s expertise in polyurethanes and pigments, with annual sales of $26billion and 20,900 employees.

The deal, which is subject to get approval from Huntsman shareholders and European regulators, was unanimously approved by the boards of both Basell and Huntsman. Company’s majority stake holders MatlinPatterson and the Huntsman family have already approve the acquisition.

As the news of acquisition hits the market Huntsman Corp. shares invigorates and increases to $28.1 percent from $24.21.

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Via: Financial Times

Oracle Corp.’s, the world’s third-largest software maker, fourth-quarter profit beat Wall Street expectations, increases 23 percent, as the business software maker harvested more sales from the crop of customers picked up in a $25 billion shopping spree that has buried much of its competition.

Company earned $1.6 billion, or 31 cents per share, for the three months ended in May compare to $1.3 billion, or 24 cents per share, at the same time last year.

In the fourth quarter company revenue rose to $5.83 billion, an increase of 20 percent from $4.85 billion in the same quarter a year ago.

The Redwood Shores-based company marked its sixth consecutive quarter profit as it surged by at least 20%.Management has already promised to boost its earnings by at least 20 percent annually during the next two years, too.

In its latest fiscal year, Oracle earned $4.27 billion, or 81 cents per share, a 26 percent increase from the previous year. Full-year revenue increased 25 percent to hit $18 billion for the first time.

Overall sales of new software licenses, a closely watched measure in the corporate software business, grew 17 percent to $2.48 billion. New license revenue from database and middleware increased 18 percent, while license revenue from its application software was up 13 percent. Services revenue increased 26 percent, to $1.1 billion.

Quarterly profit report pushes Oracle’s Shares as it grows by more than 1 percent to $19.40 after issuing its earnings forecasts, after initially slipping 2 percent from its close at $19.16 on NASDAQ.

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Via: CNN

To avoid strike, bankrupt auto parts maker Delphi Corp. has offered $140,000 to its workers in exchange of wage concessions.

Delphi and United Auto Workers have signed the agreement. However, to implement, it needs consent of company’s 17,000 UAW members and a federal bankruptcy judge in New York. If auto parts maker succeeds to get unions and federal judge’s approval than the pact would end the threat of a strike.

Delphi, which lost $533 million in the first quarter and $5.5 billion in 2006, has disclosed its plan to restructure its business by reducing labor costs. Auto parts maker has made agreement with the UAW in which they will reduce labor cost to $14 per hour, from $28 per hour.

The proposed deal with union would provide three annual payments of $35,000 each for about 4,000 UAW workers who would see their hourly wages cut from Oct.

Auto parts maker has also shortlisted other incentives for the workers, to make their effort more transparent and viable. The company seeks to include all section of the worker departments and try to persuade them with lucrative deal.

• A $140,000 buyout for workers with more than 10 years of service and a $70,000 buyout for those with the company for less than 10 years.

• A $35,000 payment to encourage workers with at least 30 years of service to retire. Retirement benefits for workers age 50 and above with at least 10 years of service.

• A program for workers with at least 26 years of service that allows them to stop working but be paid as active workers at the lower rates until they reach 30 years of service and retire.

• $1,500 per month severance pay for every month worked - up to $40,000 - for all supplemental and temporary employees who choose to leave the company.

As per the restructure plan, Delphi will retain and operate four plants under a tentative agreement with the UAW. Company would also set to close at least 10 plants.

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Via: MSNBC