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DealBook: British Soft Drink Companies in Merger Talks

September 5, 2012 by NewsMaker Leave a Comment

Chris Ratcliffe/Bloomberg NewsFruit Shoot juice drink, manufactured by Britvic.

LONDON – The British beverage company Britvic said on Wednesday that it was in talks with a rival soft drink maker, A.G. Barr, over a potential merger worth around $2.2 billion.

The deal would create one of Europe’s largest soft drink companies under the proposed all-stock merger, which would give a 63 percent stake in the combined company to Britvic shareholders. Investors in A.G. Barr would control the remaining 37 percent stake, according to a company statement.

The two companies said discussions were in early stages. If the deal is completed, A.G. Barr’s chief executive, Roger White, would become the new company’s head. John Gibney, Britvic’s chief financial officer, would become head of finance for the combined company.

Britvic and the smaller A.G. Barr have a combined market capitalization of around $2.2 billion.

Shares in Britvic, which controls the British license for Pepsi and 7UP, jumped 11.9 percent, while stock in A.G. Barr rose 5.6 percent in morning trading in London on Wednesday.

Under British takeover rules, the companies have until the beginning of October to announce whether they will pursue a merger.

Article source: http://dealbook.nytimes.com/2012/09/05/british-soft-drink-companies-in-merger-talks/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: investors, percent stake, stock merger

You’re the Boss Blog: Starting Over After a Cyberattack Shuts Down the Business

August 29, 2012 by NewsMaker Leave a Comment

Case Study

What would you do with this business?

Daniel Rosenbaum for The New York Times Peter Justen: ” I had known him for more than 15 years.”

Last week we wrote about the situation faced by Peter Justen, chief executive of MyBizHomepage, after the company’s former chief technology officer set in motion a series of crippling cyberattacks against the company’s Web site.

Once valued by its investors at $100 million, MyBizHomepage was founded in 2006 by Mr. Justen as a way to help small-business owners access financial metrics that can help them run their companies. But then, apparently angered by Mr. Justen’s decision not to sell the company, the chief technology officer tried to start a competing company. When Mr. Justen found out, he fired the officer along with two co-conspirators. And that’s when the cyberattacks began. They rendered the site all but useless, and Mr. Justen struggled with what to do next.

In February 2009, Mr. Justen and his board concluded that they would have to take the site offline, which would effectively close the business and saddle board members like Joe Silbaugh, who had invested more than $1 million, with a devastating loss. “We essentially had no choice because we no longer had a product,” Mr. Justen said. “We also decided to be up front about the decision and explain what happened along with an apology. When bad things happen you can hide under the rug and hope it goes away or you can go public with it and take the teeth out of the tiger. Some people were understanding while others were not.”

The decision did not please the company’s vendors, some of whom quickly filed suit over unpaid bills. But many of the company’s channel partners, who helped distribute the product, decided to stay on. “They told me they liked our product, and they were going to stick with us,” Mr. Justen said. “In tough times, you really get to see who your friends really are.”

Ignoring advice from his lawyers, Mr. Justen, who also had invested heavily in the company, decided not to declare corporate bankruptcy because he did not want to give anyone the opportunity to purchase the company’s intellectual property. He also turned down multiple offers to leave the company and take salaried employment. Rather, he asked his original investors to support him in rebuilding the company from scratch. “We held a shareholder meeting and I told them I would kill myself in trying to restore the company to what it should have been,” said Mr. Justen, who also liquidated his 401(k) and his children’s college funds and invested the money in the company. “Fortunately, they gave me that chance.”

Mr. Justen spent the next two years rebuilding the company, which is now called Five Plus. It features an online subscription software package that synchronizes with a company’s QuickBooks software and presents an easy-to-digest version of critical financial figures such as accounts payable, accounts receivable, cost of goods sold and cash on hand. The new software also embraces social media technology, enabling users to connect with each other and to compare their financial results with those of their industry peers.

While the new business is up and running, Mr. Justen said he and the business remain under cyberattack. In one instance, he was forced to fend off a denial-of-service attack against the new site that attempted to redirect his customers to a site where fraud claims against Mr. Justen and the company’s investors (including Mr. Justen’s 87-year-old mother and deceased father) had been posted. Mr. Justen said he continues to work with the United States Secret Service in attempting to track down the former chief technology officer.

After this case study was published last week, the unnamed former employee contacted The New York Times and identified himself as James Bird. He denied that he had been on the lam and offered an address in Santa Monica, Calif., where he said he is living. While asserting that Mr. Justen owes him $25,000, Mr. Bird acknowledged that he had in fact hacked the MyBizHomepage site.

Mr. Justen discussed the experience — and responded to reader comments — in a brief interview that has been condensed and edited.

You have said that you discovered after the attacks that Mr. Bird had been living off the grid — no driver’s license, not paying taxes. Didn’t you have to have his Social Security number to pay him?

Yes, we paid him as a contractor and did have a Social Security number for him. But what are you going to do with it? He doesn’t use it for anything we could track him with. He doesn’t have credit cards or bank accounts. He paid cash for everything, including his car.

Why didn’t you run a background check on him before hiring?

I had known him for more than 15 years. I was like a mentor to him. He came over to our house for dinner six times a month and played with my kids. He was a very talented software engineer and I highly trusted him.

Why was he upset after the sale of the company didn’t go through? What was in it for him?

He had stock options in the company that would vest over different triggers or events, like a sale. He was in line to make a substantial amount of money.

Were you surprised that two of your senior officers went along with Mr. Bird?

Yes, I was quite surprised. One of them had worked for me for three years as a trusted financial adviser. I think they just got caught up in the drama of it all. I terminated all three individuals on the same day.

Do you think Mr. Bird had help in sabotaging the company?

Yes, I think all three of them worked together. Jim did the technical stuff and the other guys did the rest. They went to our clients and told them they were starting a new company and that Peter’s company had failed. They would even pull up the site, which Jim would then crash, as proof.

What lessons do you draw from this experience?

I realize I made many mistakes and I have learned a number of things from this experience. Inspect what you expect and trust but verify come to mind. A big lesson I learned was to separate business from personal. I let my personal emotions cloud my better business judgment.

What do you say to the readers who asked why you didn’t conduct a security audit on the system?

When you’re a start-up, you have to make some tough calls about where to spend your money. You throw nickels around like they’re manhole covers. At the time, there didn’t seem to be any reason for us to spend $70,000 to verify something that didn’t seem to be a risk. Jim was a cyber security expert. Our software was rock solid against attacks from the outside. I just never expected someone I trusted so much and had known for so long to do what he did from the inside. That’s why with our new system, no one else has all the keys to the kingdom and we keep multiple copies of our backup code in different locations. We’ve taken as much precaution as is humanly possible to make sure this doesn’t happen again.

What did you do to protect your customers once you knew the system had been hacked?

The customer information was never a target. As part of our design, we never collected any personal data on our customers like bank account information. That was part of our design. All we collected was data like company revenues and receivables. But it wasn’t connected to any personally identifiable information.

Were you surprised by the reactions of readers?

I’ll admit that I thought some of the comments must have come from people who have never stepped foot in the arena and tried to start a company — people who never shed blood, sweat and tears trying to build something. But when you hear from customers who tell you that what you built helped save their company, that’s what makes it all worthwhile.

Article source: http://boss.blogs.nytimes.com/2012/08/29/starting-over-after-a-cyberattack-shuts-down-the-business/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: investors, rosenbaum, tiger

DealBook: CVC Capital Is Said to Have Cut Its Stake in Formula One

May 23, 2012 by NewsMaker Leave a Comment

Valdrin Xhemaj/European Pressphoto AgencyA Ferrari at the 2012 Formula One Grand Prix of Spain.

The private equity firm CVC Capital, which owns a controlling stake in the company Formula One, is not taking any chances before the racing company’s proposed $3 billion initial public offering.

Over the last five months, CVC has sold a 21 percent stake in Formula One to three investors for a combined $1.6 billion, according to a person with direct knowledge of the matter.

The combined deals, which value the company at over $7 billion, have reduced CVC Capital’s stake in Formula One to 42 percent, from 63 percent. The sale is part of the private equity firm’s effort to reduce its risk ahead of Formula One’s I.P.O., the details of which began to be presented to investors on Tuesday.

The buyers include Waddell Reed, a money manager based in Kansas, which paid $1.1 billion at the start of the year for a 13.9 percent stake in Formula One. The investment management firm BlackRock bought a 2.7 percent share in April for $196 million, the person added, who spoke on the condition of anonymity because he was not authorized to speak publicly about the sale.

Norges Bank Investment Management, the Norwegian sovereign wealth fund, bought a 4.2 percent stake from CVC Capital for $300 million.

The motor racing company, which has focused on Asia as a major growth area, intends to set the final pricing of its offering in mid-June and to have its shares begin to trade in Singapore a week later, according to another person with direct knowledge of the matter.

By selling stakes in Formula One to new investors, CVC Capital also hopes to build momentum for other potential buyers for the I.P.O., according to one of the people with direct knowledge of the matter.

Unlike other companies, Formula One has few similar publicly traded sports franchises that can be used to guide investors on the price of its stock offering.

Formula One employs 200 people and last year recorded revenue of 1.17 billion euros ($1.5 billion), according to a statement on CVC’s Web site. The racing teams will meet at the Monaco Grand Prix this week, which is the most important series race of the year for sponsors and for media exposure during the race weekend.

The lead underwriters on the deal are Morgan Stanley, UBS and Goldman Sachs. The Singaporean lender D.B.S., the C.I.M.B. Group of Malaysia and Banco Santander of Spain also are involved.

Article source: http://dealbook.nytimes.com/2012/05/22/cvc-capital-is-said-to-have-reduced-its-stake-in-formula-one/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: initial public offering, investors, private equity firm

Stocks & Bonds: Shares Hesitate After Growth Disappoints

January 30, 2012 by NewsMaker Leave a Comment

The stock market closed mixed Friday, after the government reported that economic growth was slower at the end of last year than economists expected.

The Dow Jones industrial average had its first losing week of 2012, and spent all of Friday in the red. It ended down 74.17 points, or 0.58 percent, at 12,660.46. The loss snapped a three-week winning streak for the Dow, which fell 60 points for the week, but is still up 3.63 percent for the year.

The Standard Poor’s 500-stock index declined 2.10 points, or 0.16 percent, to 1,316.33 and finished the week up just slightly — 0.95 point. It is up 4.67 percent for the year.

The Nasdaq composite index rose 11.27 points, or 0.4 percent, to 2,816.55. It rose 29.85 points this week and is up 8.11 percent for the year.

The Treasury’s 10-year note rose 14/32, to 100 31/32. The yield fell to 1.89 percent, from 1.94 percent late Thursday.

Economic growth for October through December came in at an annual rate of 2.8 percent. That was the fastest of 2011, but lower than the 3 percent that economists were expecting.

Utility companies led the way down with a fall of 1.3 percent. Most of the other nine industries in the S. P. also declined, but only slightly, continuing a curious trading pattern this year: Trading has been calm in the last four weeks, a big change from the violent moves up and down during much of 2011.

Friday was the 17th day in a row of moves of less than 100 points up or down for the Dow. The last time the index had a longer period of such small moves was a 34-day stretch that started Dec. 3, 2010.

Despite the drift lower, investors displayed some bullishness.

The Russell 2000 index of smaller stocks rose 1.8 percent for the week. Investors tend to sell stocks in the Russell when they are worried, because smaller companies often do not have much cash and other resources when times get tough.

“Risk-taking is picking up,” says Jeffrey A. Schwarte, a portfolio manager at Principal Global Equities. He says his firm has been buying small companies since late last year. “We’re still finding attractive stocks.”

Earlier in the week investors had plenty of reason to hope the indexes would keep moving higher. On Wednesday, the Federal Reserve announced it would most likely keep benchmark interest rates near zero through late 2014, more than a year longer than it previously indicated. That helped send the Dow to its highest close since May.

Also lifting spirits: Apple had its best quarter for profits, trouncing expectations.

On Thursday, the Dow kept rising, briefly passing its highest close since the financial crisis three years ago. But the rally faded after news that new-home sales in December had dropped.

Chevron fell 2.47 percent, or $2.63, to $103.96, the most of the 30 stocks in the Dow average, after its quarterly profit and revenue came in well below what analysts were expecting. Oil and natural gas production declined.

Ford fell 4.16 percent, or 53 cents, to $12.21, after reporting disappointing earnings because of weak sales in Europe. The company said its results were also hurt by problems at parts suppliers in Thailand because of flooding there.

Procter Gamble, which makes Tide, Crest and other consumer products, fell 0.77 percent, or 50 cents, to $64.30, after cutting its earnings outlook.

The investment management company Legg Mason lost 4.76 percent, to $26.02, after its earnings fell by half because clients withdrew money. Legg Mason posted earnings of 20 cents a share. Analysts had expected 25 cents, according to FactSet.

Article source: http://feeds.nytimes.com/click.phdo?i=3083d1d915497ffc1e60e10595af5bbc

Filed Under: Economy News Tagged With: drift, economic growth, investors

Fed to Maintain Rates Near Zero Through Late 2014

January 25, 2012 by NewsMaker Leave a Comment

The announcement means that the Fed does not expect the economy to complete its recovery from the 2008 crisis over the next three years. By holding short-term rates near zero beyond mid-2013, its previous estimate, the Fed hopes to hasten that process somewhat by reducing the cost of borrowing.

The Fed said in a statement that the economy had expanded “moderately” in recent weeks, but that unemployment remained at a high level, the housing sector remained in a deep depression, and the possibility of a new financial crisis in Europe continued to threaten the domestic economy.

The statement, released after a two-day meeting of the Fed’s policy-making committee, said that the Fed intended to keep rates near zero until late 2014.

In a separate set of statements, the Fed said that 11 of the 17 members of the committee expected that the Fed would raise interest rates at the end of that period. It noted that the committee expects growth to accelerate over the next three years, from a maximum pace of 2.7 percent this year to a maximum pace of 3.2 percent next year and up to 4 percent in 2014.

This is the first time the Fed has published such detailed predictions by its senior officials about future policy decisions. The Fed’s chairman, Ben S. Bernanke, said Wednesday that he hoped the forecast would stimulate growth by convincing investors that interest rates will remain low for longer than previously expected.

The economic impact, however, is likely to be relatively modest. Investors already expected the Fed to keep rates near zero into 2014, a judgment reflected in the prices of various assets whose values depend on the movement of interest rates.

Moreover, interest rates on many kinds of borrowing already are hovering near historical lows, and pushing rates down gets harder as you approach zero. And tight lending standards make it impossible for many people and businesses to get loans.

“I wouldn’t overstate the Fed’s ability to massively change expectations through its statements,” Mr. Bernanke said at a press conference Wednesday. “It’s important for us to say what we think and it’s important for us to provide the right amount of stimulus to help the economy recover from its currently underutilized condition.”

The new forecast is part of an effort by the Fed to exert greater influence over the expectations of investors to increase the impact of its policies. The Fed can influence current interest rates directly, but its influence over future rates depends on what investors think the Fed will do in the future.

The Fed also issued Wednesday a statement elaborating on its legal mandate to maintain stable prices and to limit unemployment.

The statement said that the Fed aims to increase prices and wages by about 2 percent each year. It is the first time that the Fed has publicly described an inflation target, although its commitment to that goal has been widely understood for years. Mr. Bernanke has long supported a formal inflation target.

The Fed also said that it was equally committed to minimizing unemployment, but that its goal would vary based on economic circumstances. At present, the statement said, it would like the unemployment rate to drop below 6 percent.

The Fed said in a statement that “such clarity facilitates well-informed decision-making by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society.”

The economic projections that the Fed released Wednesday show that the central bank expects to meet its inflation goal over the next three years, but that unemployment will remain significantly above its goal.

The Fed said that it expects the economy to expand between 2.2 percent and 2.7 percent this year, a slightly slower pace than its November forecast that growth could reach 2.9 percent. The Fed also reduced its forecast of growth in 2013. It now projects growth of up to 3.2 percent instead of 3.5 percent.

Article source: http://www.nytimes.com/2012/01/26/business/economy/fed-to-maintain-rates-near-zero-through-late-2014.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: depression, domestic economy, investors

The Fed Will Publish a Forecast on Rate Moves

January 4, 2012 by NewsMaker Leave a Comment

The change was approved at the most recent meeting of the Fed’s policy-making committee, in December, but was kept secret until Tuesday afternoon, when the Fed released an account of the meeting after a standard three-week delay.

The inaugural forecast, set for Jan. 25, will show the range of predictions made by Fed officials about the level of short-term interest rates in the fourth quarter of 2012, 2013 and 2014, although it will not list individual predictions.

It also will summarize when they expect to start raising short-term rates, which they have held near zero since late 2008. And it will describe their plans for the Fed’s investment portfolio.

The forecast could reduce borrowing costs for businesses and consumers by convincing investors that the Fed intends to keep rates near zero for longer than expected. But the benefits most likely would be modest, as rates already are very low and already are widely expected to remain near zero into 2014.

A more significant possibility, is that the changes will set the stage for the Fed to announce an expansion of its existing economic aid campaign, for example, by once again increasing its purchases of Treasuries and mortgage-backed securities.

According to the meeting minutes, “a number of members” of the 10-person committee “indicated that current and prospective economic conditions could well warrant additional policy accommodation, but they believed that any additional actions would be more effective if accompanied by enhanced communication.”

This, however, is unlikely to have any broad impact on the economy, because the Fed lacks the power to address the most important issues weighing on growth, including a lack of demand from gloomy consumers, high levels of debt throughout the economy and the depressed condition of the housing market. Stock traders took the Fed’s announcement in stride as indexes continued their rise in the first day of trading in 2012.

The Standard Poor’s 500-stock index closed up 1.6 percent. The Fed’s staff, which prepares an economic forecast noted for its unusual accuracy in an uncertain business, reduced its medium-term outlook for growth, citing the impact of events in Europe, according to the minutes.

“The Fed’s core problem right now is that the parts of the economy through which those interest rate effects would normally get traction are blocked,” said Vincent Reinhart, chief United States economist at Morgan Stanley and a former senior Fed staff official. “It is not clear how effective any of these policies will be.”

The change in communications policy is part of a broader effort by the Fed’s chairman, Ben S. Bernanke, to improve public understanding of the central bank’s goals and methodology. It formalizes a series of experiments with forecasting that the Fed has made in recent years, beginning with its statement in December 2008 that rates would remain near zero “for some time.”

Talking about future policy was a longstanding taboo among central bankers, who worried that investors would treat the predictions as promises and react badly when some predictions inevitably were off base. But the Fed now is casting its lot with the growing camp that regards shaping expectations as a primary tool for monetary policy, and is eager to seize any opportunity.

The forecast will summarize the predictions of the Fed’s five governors — two seats on the board are vacant — and the 12 presidents of its regional banks, only five of whom hold votes on the committee at a given time. It will be included in an existing forecast of economic conditions — the rates of growth, inflation and unemployment — that the Fed publishes four times a year.

In presenting those forecasts, the Fed excludes the three highest and the three lowest estimates submitted by the officials. It then reports the highest and lowest predictions among the remaining 11 forecasts, showing a range that it describes as the “central tendency.”

For example, the forecast published in November, showed the committee expected growth of 2.5 percent to 2.9 percent in 2012.

The Fed also will publish what it described as “qualitative information” regarding the committee’s expectations about the management of the Fed’s balance sheet.

The Fed’s plans for buying or selling assets are, at present, of even greater interest to most investors than the path of short-term interest rates.

Support for the changes was not unanimous, according to the minutes, which said that some “did not see providing policy projections as a useful step at this time.” But no formal vote was recorded. Instead, the minutes reflect that the participants — not just the 10 members with votes — reached a consensus.

Article source: http://feeds.nytimes.com/click.phdo?i=ef751cea62ea4695213334237bc6448a

Filed Under: Business News Tagged With: consumers, investors, mortgage backed securities

Bucks Blog: Friday Reading: Report Assails Single-Sex Education

September 24, 2011 by NewsMaker Leave a Comment

September 23

Friday Reading: Report Assails Single-Sex Education

Report assails single-sex education, fast-charging E.V. units for Nissan Leaf owners, investors flee gold and other consumer-focused news from The New York Times.

Article source: http://feeds.nytimes.com/click.phdo?i=0d63f5c40d7b9e1ff323a5cf4ac6893d

Filed Under: Your Money Tagged With: investors, nissan, sex education