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Super-SIV clear to sign more banks
Posted at 05:59 by Gwen Robinson
The three US banks behind the planned $75bn superfund for distressed mortgage assets have revised their proposal in a move that should allow them to start signing up other banks within the next 10 days. Citigroup, Bank of America and JPMorgan have agreed to simplify the plan, which many banks and investors declared unworkable, but it still must be signed off by top management at the banks and by credit rating agencies. Officials are optimistic the fund could be up and running by the middle of next month as originally hoped.
BHP mulls share buyback for Rio bid
BHP Billiton would buy back $30bn of stock to sweeten its all-share £67bn ($140bn) takeover proposal for fellow miner Rio Tinto, the company said Monday, reports the FT, while the Sunday Times reports that BHP is also considering the sale of BHP Petroleum, one of its largest units, to help finance a hostile takeover of Rio. In a statement Monday, BHP predicted annual cost savings of $3.7bn if it succeeded in acquiring Rio and said it was considering the stock buyback. Rio’s directors last week rejected BHP’s three-for-one stock offer which put a 28% premium on the value of its shares. The FT also reports that BHP will this week appeal to Rio shareholders and pursue Rio management to support its approach, despite the board’s rejection. On Friday, BHP lined up a $70bn financing package with Citigroup. Rio shares rose as much as 15% to A$149.99 in Australia on Monday before falling back to A$139.83, while BHP fell 0.5% to A$42.23.
New Citi chief to determine strategy
Citigroup’s board is telling candidates for the post of CEO that they would be free to decide on significant disposals or even a break-up of the group. Robert Rubin, who was elected chairman last Sunday after the resignation of Chuck Prince, told the FT there should be “no strategic constraints” on the CEO and said reports suggesting he was against big changes in strategy were misleading. The board’s position will encourage critics of Citi’s strategy who favour splitting up the group. Rubin’s statement makes it more likely that John Thain, chief of NYSE Euronext, will get the job, after he made it clear he wants all options on the table.
UK’s Osmond nears Resolution victory
Hugh Osmond, the UK entrepreneur, was on the verge of victory in the six-month battle for Resolution Life’s closed life funds on Sunday after a sudden decision by rival bidder Standard Life to walk away. Standard blamed the recent sharp fall in its share price for its decision not to increase or restructure its cash and shares offer, which languished at 691p a share on Friday against the 720p a share cash bid from Osmond’s Pearl Group, which owns 24.18% of Resolution. Mr Osmond is likely to meet Clive Cowdery, Resolution chairman, this week, who is expected to try to force his arch rival to increase his £4.94bn offer in exchange for a recommendation.
Arnold plans Northern Rock rescue
Luqman Arnold, former chief executive of UBS and Abbey National, has joined prospective bidders for Northern Rock with a plan to turn round the mortgage lender. Working through Olivant, his boutique private equity firm, Mr Arnold is drawing up a proposal that would see his team of experienced executives take a hands-on role at Northern Rock in return for a minority shareholding. News of Mr Arnold’s interest comes amid growing recognition that the UK government’s role in supporting Northern Rock is likely to last beyond February, the deadline for providing state support under EU rules.
Carlsberg digs in over S&N
Carlsberg’s new chief executive, Jørgen Buhl Rasmussen, is preparing the Danish brewer for a war of attrition with Scottish & Newcastle, its UK rival. Mr Rasmussen, who took over from Nils Andersen as chief executive on October 1, told the FT that Carlsberg was prepared to be patient after S&N last month rebuffed its indicative offer of 720p a share. Carlsberg has not launched a hostile bid as it wants access to S&N’s financial books and has formed a consortium with Heineken to try to buy S&N. But relations between the two teams deteriorated last week over prospects for their lucrative Russian joint venture, Baltic Beverage Holdings.
Overnight markets
US markets (on Fri)
DJIA down 223.55 at 13,042.74
S&P 500 down 21.07 at 1,453.70
Nasdaq down 68.06 at 2,627.94
Asia markets (on Mon)
05.20am GMT
Nikkei trading down 440.52 at 15,142.90
Topix trading down 40.00 at 1,454.35
Hang Seng trading down 1,282.45 at 27,500.96
European markets (on Fri)
FTSE100 down 76.99 at 6,304.88
Eurofirst 300 down 24.24 at 1,511.57
Currencies
05.20am GMT
€/$ 1.4635 (1.4720)
$/Y 110.13 (112.71)
£/$ 2.0777 (2.1112)
Commodities
ICE Brent fell $0.11 to $92.07 a barrel
Nymex WTI fell $1.32 to $95.00 a barrel
Copper fell $15 to $7,030 a tonne
Gold fell $14.40 to $820.30 a troy ounce
10-year govt bond yields
US 4.20% (4.28%)
UK 4.76% (4.81%)
Germany 4.09% (4.12%)
Japan 1.51% (1.55%)
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