April 15, 2024

After Four Years, Lowe Agency Gets a New U.S. Partner

In October 2009, Deutsch, an autonomous agency under the Interpublic umbrella since 2000, became the United States hub of Lowe, which works for marketers around the world like Ikea and Unilever. The alignment was formed by combining the New York office of Lowe with the New York office of Deutsch; an office of Deutsch in Los Angeles was largely unaffected by the merger.

The merger took place after Interpublic had sought to bolster the Lowe American operations by merging several agencies into the New York office of Lowe, among them Ammirati Puris Lintas, Bozell, Goldsmith/Jeffrey and Scali, McCabe, Sloves.

On Tuesday, Interpublic realigned the realignment, designating another of its autonomous agencies, Campbell Ewald, based in Warren, Mich., as the United States hub for Lowe, which has its headquarters in London and offices in about 80 countries. Campbell Ewald will be renamed Lowe Campbell Ewald — and Deutsch, which had been officially called Deutsch, a Lowe Partners agency, goes back to being called Deutsch.

Accounts that Deutsch in New York had absorbed from the New York office of Lowe will remain with Deutsch in New York. They include the Milk Processor Education Program, known for its “milk mustache” campaign, and Outback Steakhouse.

The realignment is taking place after Lowe collaborated with Campbell Ewald — along with another autonomous Interpublic agency, Hill Holliday, based in Boston — to wrest the assignment to create ads for the Cadillac division of General Motors from Fallon Worldwide in Minneapolis, part of the Publicis Groupe.

Campbell Ewald, Hill Holliday and Lowe are all part of a new Interpublic agency, dedicated to Cadillac, being named Rogue. The headquarters for Rogue will be in the Lowe Campbell Ewald headquarters in Warren.

The collaboration between Lowe and Campbell Ewald on Cadillac is clearly a reason to align the two agencies. The fact that the Deutsch Los Angeles office creates campaigns for another automotive company, Volkswagen of America, is also a reason to separate Lowe and Deutsch.

Also on Tuesday, Interpublic named a new top leader for what is now Lowe Campbell Ewald. Jim Palmer, who had been chief client officer at Campbell Ewald, becomes chief executive at Lowe Campbell Ewald, succeeding Bill Ludwig, who, Interpublic said in a statement, is working on a new venture that “could see him remain connected to” Interpublic.

Kathleen Donald, who had been president at Campbell Ewald, was named chief operating officer at Lowe Campbell Ewald, taking on additional duties. Mark Simon continues as chief creative officer at the renamed agency.

Two offices of Campbell Ewald, in Los Angeles and San Antonio, will also be renamed Lowe Campbell Ewald. The agency previously announced plans to leave its headquarters building in Warren and relocate to downtown Detroit in early 2014.

Other clients of Lowe Campbell Ewald, in addition to Cadillac, include Alltel Wireless, Chicken of the Sea, Kaiser Permanente and the United States Navy. For decades, Campbell Ewald had created campaigns for the Chevrolet division of General Motors, an assignment that is now handled by an Interpublic agency named Commonwealth.

The senior management of Lowe remains unchanged with Tony Wright as chairman and Michael Wall as chief executive. Lowe is the smallest of Interpublic’s three global agency networks; the others are McCann Erickson Worldwide and DraftFCB.

Article source: http://www.nytimes.com/2013/07/10/business/media/after-four-years-lowe-agency-gets-a-new-us-partner.html?partner=rss&emc=rss

DealBook: Anheuser-Busch InBev Revises Grupo Modelo Deal

Anheuser-Busch InBev, the maker of Budweiser, is trying to buy control of Grupo Modelo for $20.1 billion.Kirsty Wigglesworth/Associated PressAnheuser-Busch InBev, the maker of Budweiser, is trying to buy control of Grupo Modelo for $20.1 billion.

LONDON – Anheuser-Busch InBev on Thursday revised its $20.1 billion deal for Grupo Modelo, the Mexican maker of Corona beer, in an effort to persuade American antitrust authorities to let the deal proceed.

Under the revised terms, the company offered to sell the rights to Corona and other Grupo Modelo brands in the United States to Constellation Brands, the world’s largest wine company, for $2.9 billion.

A brewery close to the United States-Mexico border currently owned by Grupo Modelo would be sold to Constellation, as well as the perpetual licensing rights to Grupo Modelo’s brands in the United States.

Constellation had agreed to pay $1.85 billion for the 50 percent stake it did not already own in Crown Imports, a joint venture with Grupo Modelo, as part of Anheuser-Busch InBev’s original terms of its proposed takeover of the Mexican brewer.

Anheuser-Busch InBev’s decision to sell Compañía Cervecera de Coahuila, the Mexican brewery that produces Corona, Corona Light and Modelo Especial, is an effort to satisfy regulators after the Justice Department sued last month to block the deal.

United States authorities said the proposed merger would increase Anheuser-Busch InBev’s control of the American beer market and enable it to raise prices. Grupo Modelo is the No. 3 beer company in the United States; Anheuser-Busch InBev is the largest, ahead of MillerCoors.

Anheuser-Busch InBev said the revised deal would give Constellation an independent brewing business, as well as lead Grupo Modelo to divest all of its American operations.

“We believe this revised agreement addresses all of the concerns raised by the U.S. Department of Justice in its lawsuit, leaving no doubt about Constellation’s Crown beer division’s complete independence and ability to compete,” Anheuser-Busch InBev said in a statement on Thursday.

Analysts said the new offer, which caught some off guard, could provide the concessions American regulators were seeking.

“The quick settlement is no doubt surprising, but also shows practicality from the Anheuser-Busch InBev side,” Pablo Zuanic, an analyst at Liberum Capital, wrote in a note to investors on Thursday.

Anheuser-Busch InBev shares rose more than 5 percent in morning trading in Brussels on Thursday.

The company added that its proposed deal for Grupo Modelo was still subject to the Justice Department’s legal challenge, and that the new agreement with Constellation was dependent on the completion of the $20.1 billion acquisition.

The move to block the proposed merger is the first time in more than a decade that American regulators have tried to slow down the consolidation in the global beer industry.

A series of takeovers have left a small number of companies in control of many of the world’s leading beer brands, and have led Anheuser-Busch InBev to become the world’s leading brewing company. The company was created in 2008 through the merger of Anheuser-Busch and the Belgian-Brazilian brewer InBev.

Anheuser-Busch InBev said it had increased its projections for annual cost savings from the Grupo Modelo deal by 66 percent, to $1 billion, from estimates provided when the deal was first announced last year. The terms of the original deal for Grupo Modelo remain unchanged, according to a company statement.

Lazard is advising Anheuser-Busch InBev on the deal, while Morgan Stanley is advising Grupo Modelo.

Article source: http://dealbook.nytimes.com/2013/02/14/anheuser-busch-inbev-revises-deal-for-grupo-modelo/?partner=rss&emc=rss

DealBook: R.B.S. Expects Fine Over Libor Investigation

The Royal Bank of ScotlandJeff J. Mitchell/Getty ImagesThe Royal Bank of Scotland said that it expected to enter into negotiations with authorities soon about a potential settlement .

8:53 a.m. | Updated

LONDON — Royal Bank of Scotland said on Friday that it would probably face financial penalties connected to the broad rate-rigging inquiry, as the British bank reported a net loss in the third quarter of the year.

The bank, which is 81 percent owned by the British government after receiving a bailout during the recent financial crisis, is the latest British firm to unveil legal troubles this week.

On Wednesday, the U.S. Federal Energy Regulatory Commission recommended a $470 million fine against Barclays related to past energy trading activity in the firm’s North American operations. The bank said it would defend itself against the allegations. Barclays and local rival Lloyds Banking Group also disclosed that they had set aside additional money to compensate clients who had been inappropriately sold insurance.

R.B.S.’ legal woes relate to a broad industry investigation into potential rate rigging.

The Commodity Futures Trading Commission, the Department of Justice and other authorities around the world are looking into whether big banks tried to influence key benchmarks, including the London interbank offered rate, or Libor. In June, Barclays agreed to pay $450 million to settle charges that it attempted to manipulate Libor to improve profits and make its financial position look stronger.

R.B.S., which is based in Edinburgh, said on Friday that it expected to enter into negotiations with authorities about a potential settlement in the near future. The firm’s chief executive, Stephen Hester, declined to say when those talks might begin or how big the potential fine could be. Mr. Hester said the that bank would likely make an announcement over the matter before reporting its next earnings on Feb. 28.

“We have to dance to the tune of the relevant regulators,” Mr. Hester said on a conference call with journalists.

R.B.S. faces a broader set of troubles.

On Friday, the bank said it posted a net loss of £1.4 billion, or $2.3 billion, in the three months through Sept. 30 after setting aside more money to compensate customers who were inappropriately sold insurance and taking a charge on its own debt. The bank reported a £1.2 billion net profit in the same period last year after it benefited from a financial gain on its own debt.

Without the adjustments, its pretax profit in the third quarter rose to just over £1 billion, compared with £2 million in the same period last year.

Analysts said R.B.S. had made great strides to reduce its exposure to risky assets and pare back its balance sheet since the financial crisis began. Yet continued weak underlying performance, coupled with expected future losses in the fourth quarter of the year related to one-off charges like a potential Libor fine, remains a concern.

“The management has made good progress,” said Ian Gordon, a banking analyst at Investec Securities in London. “But for me, the bank’s earnings outlook hasn’t improved.”

Royal Bank of Scotland shares fell 1 percent in morning trading in London. Stock in the bank has risen almost 22 percent so far this year.

The British bank said it had made a new provision of £400 million to reimburse clients who were sold payment protection insurance, which covered customers if they were laid off or became ill. Many customers did not know they had been sold the insurance when they took out loans or mortgages. Others have found it difficult to make claims on the policies, which often paid out only small amounts.

In total, the bank said it had now set aside a combined £1.7 billion to compensate customers. Britain’s banks, including Barclays and HSBC, have made total provisions worth almost £11 billion to reimburse clients, and analysts say that figure may rise to £15 billion.

“All of the banks have been guilty of underestimating the response rate,” to payment protection insurance, Bruce Van Saun, chief financial officer of R.B.S., told reporters on Friday.

In an effort to repay the British government’s bailout, the bank has been trying to sell assets and raise additional cash. Last month, the firm earned £787 million through the initial public offering of its insurance unit Direct Line. The bank failed to sell a number of its branches in Britain for around £1.7 billion, however, after Banco Santander of Spain backed out of the deal.

Despite the tough economic conditions across Europe, the bank said pretax profit in its investment banking unit reached £295 million in the third quarter, compared with a £348 million net loss during the same period last year. The bank has been scaling bank its risky trading activities through actions like closing or selling its cash equities unit and spinning off of its advisory business.

The number of employees in the investment banking division fell 5 percent, to 11,900, during the three months through Sept. 30. Earlier this year, the bank said it planned to layoff around 3,500 people in the unit.

The bank’s retail and commercial banking unit continued to suffer from weak consumer confidence related to the European debt crisis. Pretax profit in the division fell 7 percent, to £1.1 billion, during the third quarter.

This post has been revised to reflect the following correction:

Correction: November 2, 2012

An earlier version of the story incorrectly state that Barclays settled over the rate-rigging investigation in July. It settled the matter in June.

Article source: http://dealbook.nytimes.com/2012/11/02/r-b-s-expects-libor-fine-amid-third-quarter-loss/?partner=rss&emc=rss

DealBook: Facing Fresh Legal Woes, Barclays Swings to a Loss

A branch of Barclays in London. On Wednesday, the British bank posted a net loss of £106 million ($170 million) in its latest earnings report.Facundo Arrizabalaga/European Pressphoto AgencyA branch of Barclays in London. On Wednesday, the British bank posted a net loss of £106 million ($170 million) in its latest earnings report.

LONDON – The British bank Barclays faces more legal trouble, disclosing on Wednesday two new investigations by American authorities that clouded already weak third-quarter results.

The bank said the Justice Department and the Securities and Exchange Commission were investigating whether Barclays broke anticorruption laws in its capital-raising efforts during the financial crisis. The inquiries follows similar efforts by British regulators.

The United States Federal Energy Regulatory Commission is also investigating the past energy trading activity in the bank’s American operations. American authorities have until Wednesday to charge the bank in the matter. Barclays said it would defend itself against any charges stemming from the inquiry.

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The fresh legal woes, coming on the heels of a rate-rigging scandal that erupted this summer, complicate a difficult turnaround effort by the bank.

On Wednesday, Barclays posted a net loss of £106 million ($170 million) in the three months ended Sept. 30, a steep drop from a £1.4 billion net profit it reported in the period a year earlier. The results were hurt by a charge on its own debt and provisions connected to the inappropriate sale of insurance to clients.

Libor Explained

Antony Jenkins, chief of Barclays.Justin Thomas/VisualMedia, via Agence France-Presse — Getty ImagesAntony Jenkins, chief of Barclays.

“The last three months have been difficult for Barclays,” Antony P. Jenkins, the bank’s chief executive, said on a conference call with reporters on Wednesday.

Shares in Barclays fell 3.8 percent in morning trading on Wednesday in London.

Mr. Jenkins took over as chief executive from Robert E. Diamond Jr., who resigned in July after Barclays agreed to pay $450 million to settle charges that it attempted to manipulate a key benchmark, the London interbank offered rate, or Libor. In the aftermath, Mr. Jenkins promised to increase the focus on retail banking, shifting away from riskier activity in the firm’s investment banking unit.

The new joint investigation from the Justice Department and S.E.C. relates to the bank’s capital-raising efforts during the recent financial crisis.

Unlike the Royal Bank of Scotland Group and the Lloyds Banking Group, Barclays turned to sovereign wealth funds in Abu Dhabi and Qatar for new capital. Barclays raised a total of $7.1 billion from Qatar in July and October 2008.

The bank disclosed this year that British authorities were investigating the legality of payments to Qatari investors in connection with the bank’s capital-raising. Barclays said on Wednesday that American regulators were also pursuing similar inquiries, adding that the bank was cooperating.

Despite its net loss, Barclays is making progress as its underlying businesses show signs of improvement. Excluding the adjustments, Barclays said pretax profit rose 29 percent, to £1.7 billion, in the third quarter.

In the face of continued market volatility, Barclays said pretax profit in its investment and corporate banking division more than doubled in the quarter, to just over £1 billion, on a strong performance in fixed income and equities. The European debt crisis, however, weighed on the bank’s retail and business banking franchise, where pretax profit fell 31 percent, to £794 million.

Ian Gordon, a banking analyst at Investec Securities in London, said the decline in revenue in the investment banking division raised some questions about the unit’s performance. He added, however, that Barclays was in a position to win market share, as competitors like UBS, which announced plans on Tuesday to eliminate 10,000 jobs, moved to reduce trading activity.

“As others pull back,” Mr. Gordon said, “there’s a potential to win a greater share of the piece.”

Barclays warned, however, that continued difficulties in Europe and uncertainty in global markets could weigh on future profitability. “We continue to be cautious about the environment in which we operate,” the bank said in a statement.

Given the challenging environment, Barclays is moving to insulate its businesses. The bank, which operates throughout the European Union, said it had reduce its presence in heavily indebted countries like Spain and Greece. The bank said it had cut its exposure to the sovereign debt of Spain, Italy, Portugal, Greece and Cyprus by 15 percent, to £4.8 billion.

It is also bolstering its capital to protect against potential losses. The bank’s core Tier 1 ratio, a measure of its ability to weather financial shocks, rose to 11.2 percent at the end of September from 10.9 percent at the end of the second quarter.

This post has been revised to reflect the following correction:

Correction: October 31, 2012

An earlier version of this article misstated the pretax profit Barclays attributed to its retail and business banking franchise. It was £794 million, not £794.

Article source: http://dealbook.nytimes.com/2012/10/31/barclays-reports-third-quarter-loss-on-credit-charges/?partner=rss&emc=rss

G.M. Earnings, Like Its Rivals, Are Hurt by Europe

G.M. reported that its net income for the quarter was $1.48 billion, down from $1.73 billion in the same period last year. The company said global revenue increased to $37.6 billion, up from $36.7 billion in the third quarter of 2011.

Like many other automakers, G.M.’s losses broadened in the troubled European market. The company said its pretax loss in the region was about $500 million compared to about a loss of about $300 million a year ago.

Pretax income from G.M.’s North American operations also declined during the quarter to $1.8 billion, down from $2.2 billion last year.

The automaker’s chief executive, Daniel Akerson, called the quarter “solid” and said the company was gaining traction with new vehicles while addressing financial challenges, like pension costs.

“G.M. had a solid quarter because customers around the world love our new vehicles and we’re also seeing green shoots take hold on tough issues like complexity reduction, pensions and Europe,” Mr. Akerson said in a statement.

G.M. also said that about 30 percent of eligible salaried retirees in the United States had elected to take lump-sum payments in exchange for giving up regular pension benefits. Ongoing pension obligations for the rest of the company’s salaried retirees in the United States will be transferred to Prudential Insurance next month, G.M. said.

The company said it would take a $2.9 billion pretax charge in the fourth quarter in connection with the pension changes.

G.M. gave no new details on how it would turn around its European operations, which are now on track to post a pretax loss of $1.5 billion to $1.8 billion for the full year.

Ford Motor Company, G.M.’s Detroit rival, last week said it would close three plants in Europe and eliminate 5,700 factory jobs in an effort to revitalize its European business.

G.M.’s chief financial officer, Dan Ammann, said in a statement that the company is working to improve its European unit, where plants are operating at well below capacity because of the sharp downturn in vehicle sales in the region. G.M. is also conducting a search for a new chief executive of the European business.

“While we still have a lot of work to do, especially in Europe, it is encouraging to see our results begin to reflect the discipline we are bringing to bear on the overall business,” Mr. Ammann said.

G.M.’s other overseas operations fared better than Europe. The company said its international unit, which is anchored by its large Chinese business, earned pretax income of about $700 million compared with $400 million last year. Its South American division reported pretax income of about $100 million, up from break-even in 2011.

G.M.’s share of its core American market has dropped since last year, primarily because of the resurgence of Japanese automakers that were constrained by inventory shortages in 2011 from the earthquake and tsunami in Japan.

In the first nine months of this year, G.M. had an 18.1 percent market share in the United States compared with 20 percent during the same period a year ago, according to the research firm Autodata.

One analyst said the company’s third-quarter performance was consistent with industry trends, particularly its troubles in Europe. “G.M.’s global performance is hardly out of line with any other automaker, whether it’s the company’s strength in the North American market or its weakness in the European market,” said Jessica Caldwell, an analyst with the auto research company Edmunds.com.

Article source: http://www.nytimes.com/2012/11/01/business/gm-earnings-like-its-rivals-are-hurt-by-europe.html?partner=rss&emc=rss

Weakness in Europe Undercuts Ford’s Profit

Ford, the second-largest American automaker, after General Motors, on Tuesday reported flat profits for the third quarter, as the sharp downturn in its European business continued to undercut its strong performance in the North American market. The company said that it earned $1.63 billion in the quarter, compared with $1.65 billion in the same period last year. Its global revenues dropped slightly to $32.1 billion, down from $33.1 billion in the third quarter of 2011.

The results underscored both Ford’s success in its home market and its festering problems in Europe, where the auto market has fallen to its lowest sales levels in nearly 20 years.

Ford said its pretax profits in North America increased to $2.32 billion in the quarter, from $1.55 billion a year ago. The results were driven by new vehicles like the Escape S.U.V. and higher transaction prices.

But its European operations floundered because of lower sales and higher incentives. Ford reported a pretax loss of $468 million in the region during the quarter, compared with a pretax loss of $306 million in the third quarter last year.

The company forecast severe economic conditions in Europe into 2013 and possibly beyond. Ford’s chief financial officer, Robert L. Shanks, said it would be up to the North American operations to provide the bulk of its income until Europe recovers.

“It has been the foundation and still is,” Mr. Shanks said of the North American market.

Ford has now lost more than $1 billion in Europe this year, and has said it expects its full-year loss to exceed $1.5 billion. Last week, the company said it would close three factories in the region and eliminate 5,700 jobs to better balance production there with shrinking demand for new vehicles.

Ford’s chief executive, Alan R. Mulally, said the automaker would continue to face stiff challenges in Europe as it restructured. “While we are facing near-term challenges in Europe, we are fully committed to transforming our business,” he said in a statement.

Other auto companies in Europe have so far resisted making large-scale overhauls like Ford’s.

“This industry has a lot of excess capacity and needs to restructure,” Mr. Shanks said. “It won’t get any better if other companies avoid the situation.”

He said the company expected “difficult and interesting” discussions with its unions in Belgium and Britain about separation agreements for factory workers.

Ford’s other regional operations contributed little to its bottom line during the quarter. The company said it earned $45 million in pretax profits in Asia, in contrast to a $43 million loss a year ago. Pretax profits in South America fell to $9 million from $276 million a year ago.

The healthy profits in North America reflect Ford’s turnaround in its home market since a financial crisis crippled the United States auto industry in 2008. Unlike its rivals General Motors and Chrysler, Ford survived without a government bailout or filing for bankruptcy.

Since then, Ford has revamped its product lineup to offer a broader range of smaller, more efficient models. The company said its operating profits in North America were its highest since 2000, and it forecast similar results through the remainder of 2012.

“Ford’s more balanced product mix, with a stronger presence in the small-car segments, enabled the company to operate at highly profitable levels in the North American and Asian markets, whereas the European operations continued to struggle,” said Jesse Toprak, an analyst with the auto-research Web site TrueCar.

Ford ended the quarter with $24.1 billion in automotive cash reserves, an improvement from $20.8 billion a year ago.

The company produced 1.36 million vehicles in the third quarter, about the same number as a year ago. Ford said it would build 1.48 million cars, trucks and S.U.V.’s in the fourth quarter, an increase of 112,000 from the same period in 2011.

General Motors, the largest American automaker, is scheduled to report its third-quarter earnings on Wednesday. Chrysler, which has little exposure in the European market, said Monday that its profits improved 80 percent during the period.

Article source: http://www.nytimes.com/2012/10/31/business/ford-sees-little-change-in-net-income.html?partner=rss&emc=rss