Top Headlines February 2012

US Retailers Struggle With Financial Losses

US Retailers Struggle With Financial Losses

BUSINESS

  • Sears loses $2.4 billion, to close 120 stores
  • Target records profit margin down 28.4%
  • Gap sees profit drop 40%, will close 189 stores

Major American retailers Sears Holding Corp., Target Corp. and Gap Inc. reported losses as high as 40% in the fourth quarter as they attempted to attract price-conscious shoppers.

Sears lost $2.4 billion, marking its largest quarterly loss in nine years. Heavily dependent on malls stores, Sears announced in December it was closing up to 120 under-performing locations.

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Will GM and Peugeot Form A Manufacturing Partnership?

Will GM and Peugeot Form A Manufacturing Partnership?

BUSINESS

  • Car makers would share manufacturing and parts
  • Alliance aimed at cutting European revenue losses
  • Automobile industry has poor history of alliances

The world’s largest automaker General Motors Co. and PSA Peugeot Citroen, Europe’s second-biggest automaker after Volkswagen AG, are in talks to form what the French Labor Ministry calls a strategic partnership.

The goal of the alliance is to cut losses both Peugeot and GM’s Opel division are facing due to a decrease in demand. This year is expected to be the fifth consecutive year where deliveries have dropped. After the alliance is completed, both automakers would share manufacturing and engine development.

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Walmart Becomes Majority Shareholder in Chinese Online Retailer Yihaodian

Walmart Becomes Majority Shareholder in Chinese Online Retailer Yihaodian

BUSINESS

  • Walmart increases ownership in Yihaodian to almost 51%
  • Yihaodian hopes to better meet customer needs with Walmart’s expertise
  • Walmart sees fourth-quarter profit margins fall due to its lower retail pricing strategies

Walmart Stores Inc has increased its shares in Yihaodian, a fast-growing B2C e-commerce website in China, to bring Walmart's total ownership stake to almost 51% – nearly one year after it purchased a minority share in the same e-retailer.

Yihaodian offers over 180,000 products and runs logistics centers in Shanghai, Beijing, Guangzhou, Wuhan and Chengdu, along with delivery stations in 34 cities across China.

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Fortis Ventures Into US Utility Market With CH Energy Group Buy For $1 Billion

Fortis Ventures Into US Utility Market With CH Energy Group Buy For $1 Billion

BUSINESS

  • Deal marks first steps for Fortis into regulated US gas and electricity market
  • Fortis to gain control of distribution in 8 New York counties
  • Fortis expected to buy more US utilities

Canada’s largest investor-owned distribution utility Fortis Inc plans to purchase New York-based energy distributor CH Energy Group for around $1 billion.

In the all-cash deal, Fortis will offer shareholders $65 a share; it will also take on $500 million in debt from CH Energy.

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New York City Hotel Transaction Volume Hits Record High

New York City Hotel Transaction Volume Hits Record High

BUSINESS

  • 18 hotel transactions worth $3.5 billion traded in 2011 for 150% increase over 2010 
  • Manhattan most liquid city for hotel transactions globally in 2011
  • REITs own approximately 20% of room stock in New York
  • NYC expected to continue 2012 as most active hotel transaction market in US

Driven by Real Estate Investment Trusts (REITS), the volume of hotel transactions in New York City reached an all-time record high last year, according to preliminary results from Jones Lang LaSalle Hotels in its report called Hotel Intelligence New York.

Eighteen transactions making up nearly $3.5 billion in assets were traded in 2011, which represented a 150% increase over 2010 volume. About 50% of the city’s acquisition volume was driven by REITS last year, says Jones Lang.

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Prices Rise, Consumer Spending Remains Low in US

Prices Rise, Consumer Spending Remains Low in US

ECONOMY

  • Prices up 0.2% last month, lower than predicted
  • Core inflation expected to rise 1.6% but remain below 2%
  • Prices likely to stabilize as employment increases

Consumer prices in the US increased by 0.2% last month, a figure slightly lower than expected.

The Consumer Price Index, or CPI, is the broadest of three price gauges by the US Labor Department and includes both goods and services. The current rise in consumer prices is due to higher gas, food, rent and clothing prices.

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Encana Selling 40% Stake in Gas Fields to Mitsubishi

Encana Selling 40% Stake in Gas Fields to Mitsubishi

BUSINESS

  • Mitsubishi to pay for $2.9 billion for stake in Canadian natural gas fields
  • Sale helps alleviate Encana’s $251 million fourth-quarter loss
  • Encana joint venture deal with PetroChina fell through last June

Calgary-based Encana Corp. is selling part of its stake in Canada’s natural gas fields to Japan’s Mitsubishi Corp. for $2.9 billion.

The sale will help Encana shore up its balance sheet in the wake of fourth-quarter losses.

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Kellogg To Pay P&G $2.7 Billion For Pringles Brand

Kellogg To Pay P&G $2.7 Billion For Pringles Brand

FINANCE

  • Pringles buy puts Kellogg in number two global position for savory snacks 
  • Pringles expected to bring Kellogg annual sales of $1.5 billion
  • Diamond Foods offer to Pringles was terminated earlier this month

Kellogg will buy Pringles-brand snack chips from Procter & Gamble for $2.7 billion after a previous deal with Diamond Foods fell through.

Kellogg will pay nearly $2.70 billion in cash and take on $2 billion in debt, which adds to the $5 billion it already has in long-term debt. The food giant is known globally for its cereal products, but is also known for its snack products.

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Google Gets Governmental Green Light To Buy Motorola

Google Gets Governmental Green Light To Buy Motorola

BUSINESS

  • Regulators in US, EU approve Google’s $12.5 billion bid for Motorola
  • Motorola purchase largest in Google history, first real experience in hardware market
  • Google to be closely monitored in its use of patents licenses

The US Department of Justice and the European Commission have approved a bid from Google Inc. to purchase Motorola Mobility Holdings Inc. for $12.5 billion. Regulators concluded the purchase would not lessen competition in the market.

Google will purchase Motorola for $40 a share, which represents a 63% premium. Motorola will be operated as a separate business unit.

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Japan Approves Additional $9 Billion In TEPCO Aid

Japan Approves Additional $9 Billion In TEPCO Aid

WORLD

  • TEPCO forecasts loss from reactor meltdowns, compensation claims to near $9 billion
  • TEPCO may seek $25 billion in funding to recoup costs
  • Japanese authorities approve restart of two idled nuclear reactors

Despite receiving over $11 billion in aid from Japanese government just a few months ago, TEPCO was approved for yet another near $9 billion as it struggles to clean up from reactor meltdowns and meet compensation claims following the March 2011 Fukushima nuclear disaster.

By month end March 2012, TEPCO anticipates its losses will be at nearly $9 billion, which is up from its November estimate of almost $8 billion. The company, which has 29 million customers in the general Tokyo area, reported a loss of approximately $16 billion last fiscal year.

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