April 24, 2024

DealBook: British Water Utility Rejects $7.7 Billion Takeover Offer

A Severn Trent service team work in Newtown Linford, England.Darren Staples/ReutersA Severn Trent service team in Newtown Linford, England.

LONDON – The British water utility Severn Trent has again rejected a takeover offer from a consortium of investment firms that had valued the company at up to $7.7 billion.

It is the second time that Severn Trent, which provides water services to more than four million customers in England and Wales, has spurned the advances of a consortium that includes the sovereign wealth fund Kuwait Investment Authority. The consortium, which also includes the Canadian fund Borealis Infrastructure, made its initial approach for Severn Trent last month.

Under the revised deal announced on Monday, the investment firms had offered shareholders in the British water utility £21.25 for each of their shares in the company, according to statement from Severn Trent.

The takeover price represents a 16 percent premium to the utility’s closing share price on May 13, the day before the initial approach was announced, and values the company at about £5.1 billion ($7.7 billion).

The proposed price, however, would fall to £20.79 a share if Severn Trent paid its investors a 46 pence dividend, which will be voted on next month. Last week, the British utility raised its annual dividend to shareholders to just over 8 percent, as it tried to persuade investors to stick with the company’s current management.

The British utility said the proposed offer did not represent good value for shareholders, adding that the company’s overall value under British regulatory rules was expected to rise to almost £8 billion over the next two years.

The British utility’s share price rose less than one percent, to £20.54, in early afternoon trading in London on Monday.

Rothschild and Citigroup are advising Severn Trent on the proposed deal.

Article source: http://dealbook.nytimes.com/2013/06/03/british-water-utility-rejects-7-7-billion-takeover-offer/?partner=rss&emc=rss

DealBook: Yahoo Shakes Up Its Board

Marissa Mayer, chief of Yahoo.Stephen Lam/ReutersMarissa Mayer, chief of Yahoo.Daniel S. Loeb, the hedge fund manager of Third Point.Steve Marcus/ReutersDaniel S. Loeb, manager of the hedge fund Third Point.

Yahoo announced a number of changes to its board on Thursday, including the addition of Max Levchin, a co-founder of PayPal.

The company also said two directors were stepping down: Brad Smith, the chief executive of Intuit, and David W. Kenny, chief executive of the Weather Channel.

Yahoo’s latest board changes signal its continued push to become a top technology company once more, a strategy it began in July, when it hired Marissa Mayer away from Google to become its new chief executive.

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Since taking over, Ms. Mayer has emphasized ways to modernize Yahoo staples like its e-mail and the Flickr photo service, to help the company square off against ever-newer competitors.

Bringing in Mr. Levchin is intended to help with that push and show a commitment to developing enticing new offerings. He served as PayPal’s chief technology officer before forming Slide, a company that eventually helped produce Web applications for Facebook. Google bought Slide for about $180 million two years ago, and Mr. Levchin left the Internet giant when it closed Slide last year.

“Max is someone I’ve admired throughout my career for his phenomenal sense for great products and keen focus on user experiences,” Ms. Mayer said in a statement. “I’m confident that his strong product and technology expertise will be a tremendous asset to Yahoo as we work to transform the world’s daily habits.”

He will serve as the fourth director nominated by Daniel S. Loeb, the activist hedge fund manager who joined Yahoo’s board in May after mounting a prominent challenge to the company’s directors. Mr. Loeb’s other directors, besides himself, are Michael J. Wolf, a media consultant, and Harry J. Wilson, a turnaround expert who served on the Obama administration’s automotive task force.

Since joining Yahoo’s board, Mr. Loeb has helped orchestrate a number of changes, including hiring Ms. Mayer.

Mr. Loeb was introduced to Mr. Levchin by Mr. Wolf, who had served on Slide’s board of advisers. They met in Silicon Valley ahead of the proxy fight, when Mr. Loeb was recruiting candidates for Yahoo board seats.

One of the departing directors, Mr. Smith, was a main supervisor of Yahoo’s turnaround efforts, including its talks with private equity firms about a capital infusion into the Web company and its eventual deal to sell some of its stake in Alibaba back to its Chinese Internet partner.

The other, Mr. Kenny, became the Weather Channel’s chief executive in January and was formerly the president of Akamai Technologies. Mr. Kenny had briefly considered campaigning for Yahoo’s top spot last year.

Both men were stepping down to focus on their respective companies, according to Yahoo.

“Both David and Brad played critical roles in bringing me to Yahoo, so I’m especially grateful for the opportunity and trust they’ve placed in me,” Ms. Mayer said. “We will miss their leadership and partnership, and I know I speak for everyone at Yahoo in wishing them the best.”

Article source: http://dealbook.nytimes.com/2012/12/13/yahoo-said-to-plan-board-shake-up-adding-levchin/?partner=rss&emc=rss

For Law Schools, a Price to Play the A.B.A.’s Way

THE library at the Duncan School of Law may look like nothing more than 4,000 hardbacks in a medium-size room, but it is actually a high-tech experiment in cost containment. Most of its resources are online, and staples like Wright Miller’s Federal Practice and Procedure — $3,596 for the multivolume set — are not here.

“We have a core collection,” says Sydney Beckman, the school’s dean, “and if someone needs something else, we provide it.”

Duncan, which opened two years ago, has 187 enrollees, all of whom have wagered that this library — and everything else about the school — is up to scratch. Because before these students can practice in every state, Duncan needs the seal of approval of the American Bar Association, the government-anointed regulator of law schools.

That means complying with a long list of standards that shape the composition of the faculty, the library and dozens of other particulars. The basic blueprint was established by elite institutions more than a century ago, and according to critics, it all but prohibits the law-school equivalent of the Honda Civic — a low-cost model that delivers.

Instead, virtually every one of the country’s 200 A.B.A.-accredited schools, from the lowliest to the most prestigious, has to build a Cadillac, or at least come close. Duncan’s library costs $750,000 a year to maintain — a bargain when compared with competitors.

Is it Cadillac enough for the A.B.A.?

“We’ll see,” Mr. Beckman says.

The debate about legal education has focused on tuition costs in the stratospheric layers of the law-school world. But what of the ground floor? Duncan hopes to draw students from economically distressed parts of the country, including the Appalachian Mountains of Tennessee, and sincere efforts have been made to keep overhead to a minimum.

But tuition here is still $28,664 a year. With living expenses and various fees, the student handbook warns, the total price tag for a year runs $50,000.

The reason, according to Pete DeBusk, a retired businessman and the school’s main benefactor, is the A.B.A. standards. Without them, he says, Duncan could have cut its tuition in half, maybe by two-thirds.

“The rules, the regulations,” Mr. DeBusk moans, recalling the day he first met with officials of the A.B.A. four years ago. “Massive. Just massive. ‘We’ve got this standard, we’ve got that standard’ — and the standards don’t ever stop. I realized then that I’d bitten off a big bite, O.K.? And I’m still chewing on it!”

Anyone willing to invest $175,000 on a legal education, and hoping to earn a pile of money at a corporate firm, has plenty of options. But let’s say that your ambition is to make a modest living, perhaps in an area that is struggling. Or that you’d rather not enter your mid-20s lashed to a six-figure loan.

If you want a diploma blessed by the A.B.A. — and you don’t have rich parents, a plum scholarship or an in-state public law school with lots of taxpayer support — you are pretty much out of luck. And that is not just a problem for would-be attorneys. The lack of affordable law school options, scholars say, helps explain why so many Americans don’t hire lawyers.

“People like to say there are too many lawyers,” says Prof. Andrew Morriss of the University of Alabama School of Law. “There are too many lawyers who charge $300 an hour. There aren’t too many lawyers who will handle a divorce at a reasonable rate, or handle a bankruptcy at a reasonable rate. But there is no way to be that lawyer and service $150,000 worth of debt.”

This helps explain a paradox: the United States churns out roughly 45,000 lawyers a year, but survey after survey finds enormous unmet need for legal services, particularly in low- and middle-income communities. This year, the World Justice Project put the United States dead last among 11 high-income countries in providing access to civil justice.

It’s not just that many lawyers are prohibitively expensive. It is that when it comes to legal expertise, there are not a lot of cheaper alternatives — not in the United States, anyway. Britain, on the other hand, has a long menu of options, including a tier of professionals called legal executives, who are licensed after getting the equivalent of a community college degree. Counsel is also available from nonlawyers at a variety of nonprofits. And you can buy a simple divorce over the Internet for a set fee, or pay for customized legal advice, online or by phone.

“In the U.S., people and businesses have only one place to go for all their legal help — lawyers who graduated from an A.B.A.-approved law school and who follow mostly A.B.A. rules about how they run their practice,” says Gillian Hadfield, a professor at the Gould School of Law of the University of Southern California. “Everyone else who offers legal advice is engaged in the unauthorized practice of law.”

To understand why Americans have one option for legal counsel, and why even start-up law schools are so expensive, you need to understand the various roles played by the A.B.A., say Ms. Hadfield and others.

With nearly 400,000 members and a staff of 939, the A.B.A. is the pre-eminent association of the profession. It also drafts and amends the Model Rules of Professional Conduct, which have been adopted by every state except California. Then there is the A.B.A.’s gatekeeper role in law school education, through its Section of Legal Education and Admissions to the Bar.

Detractors contend that these responsibilities allow the A.B.A. to behave like a guild — limiting competition and keeping the cost of legal education excessively high.

Article source: http://www.nytimes.com/2011/12/18/business/for-law-schools-a-price-to-play-the-abas-way.html?partner=rss&emc=rss

App Smart: Retail Store Apps Help Navigate Aisles

As a parent, I don’t find the process much better. Wandering around a big-box store in search of a pencil sounds like a game show in which the lucky winner gets to hand over a credit card.

I recently tried to determine whether mobile apps could make the process less frustrating or costly. The answer was a qualified yes.

Of the apps made by big-box stores, those from Best Buy and Target sped up the shopping process slightly, as did Westfield Malls, a new app from Westfield, a mall developer. Others, for Sam’s Club, Staples and Wal-Mart, were less helpful. (At least the apps themselves are a bargain. They’re all free, on both Apple and Android.)

The better ones suggest that they can help you find an item in the local store. Some also offer prices on those goods, but they’re often inaccurate.

I assigned myself the task of finding school backpacks, T-shirts and a 64-gigabyte iPod Touch, and I drove to a stretch of road in suburban Connecticut with a mall and nearly every one of the big-box stores.

Of all the apps I tried, Best Buy’s was the most reliable and filled with features. I used it to find the nearest store and to check the availability of the iPod Touch before driving there.

The app suggested it was in stock, and it was correct. The price inside was $399, but when I pointed out to a sales associate that the app showed it for $370, he said they “can match” the online price.

“Can, or will?” I asked.

“Will,” he said.

From now on, before making a significant purchase at a big-box store, I will download the store’s app so that I have quick access to their online prices.

Like most other apps on my list, Best Buy provides an app-size version of the week’s sales circular for specific stores, and it allows you to collect items on a wish list. Users are also supposed to be able to retrieve product details while in the store by scanning the so-called QR code, a new alternative to bar codes, on many labels.

That sounded promising, so I gave it a try. I repeatedly tried scanning QR codes on five different products, and each time the app returned an error message. So much for that.

Target’s mobile app was also fairly good but a bit more uneven than Best Buy’s. When it came to basic searches for product, the app was good on inventory but bad on prices.

It showed that my local store had the iPod, for instance. But when I arrived, the store’s price was $395, $25 more than the price I saw on the app. I checked my phone again and, in gray print beneath the $370, saw that it was an online-only offer.

Worse still, when I clicked for more information on the iPod, I found out that I couldn’t retrieve an in-store price from the app.

Target doesn’t offer QR scanning, but you can create wish lists and have coupons sent to your phone via text messages. My coupons were for women’s jeans and macaroni and cheese, neither of which I needed.

At least Target knew that the iPod was in my local store. The Sam’s Club app suggested that the iPod wasn’t available, but it was (at a cool $349, no less). Wal-Mart’s app suggested the iPod was available in the store, but it was not.

Staples was less ambitious. Its app posted products but didn’t try to predict in-store availability, and the prices, according to the app, “may vary by store and online.” That’s not very useful.

Home Depot isn’t exactly a back-to-school shopping destination, but as a big-box store, it’s worth mentioning. The app’s product search feature is fast and it includes a long list of video tutorials and even a tape measure function. Plus, the store map is good for charting out shopping trips.

But I digress. Back to school we go.

Few people know, or care, who owns the nearest mall, but it may be worth your while to look it up. Westfield, one of the bigger mall developers in the United States, recently introduced a useful iPhone app that tries to offer information on store inventory.

With my younger son and daughter in tow, I tested out the app at a Westfield mall in Milford, Conn., which includes a Target. We found a bench, opened the Target and Westfield apps and searched for T-shirts and backpacks.

Westfield’s product search function was spotty. I typed “women’s graphic T-shirts,” and the app produced no results. I tried related search terms, and came up empty until I tried “Graphic T.”

More than 23,000 T-shirts appeared, so I sorted the results to show only one result per retailer. Fifteen appeared — inexplicably, the ones at Target’s didn’t make the list — so my daughter chose an Aéropostale shirt for $24.50.

Using the app’s map, we quickly found the store and the shirts, which were on sale (two for $15).

Still on the Westfield app, we searched for backpacks and found a promising one at Target: the Sumdex Impulse Full Speed, for $68. We walked to the store and wandered through one section of backpacks.

No Sumdex. We browsed through a second section. No Sumdex.

We walked for a few minutes until we found an employee who could direct us to any other backpacks, and he pointed us to a wall of them. No Sumdex backpacks existed at the store.

I gave up on Westfield and opened the Target app, which showed several Sumdex models available.

Online only.

The apps didn’t fail us completely. I turned from the backpacks to find my daughter racing toward a package of pens. “Those are my favorites,” she said, then looked around at all the school supplies nearby. “This is so much fun!”

Quick Calls

Cut the Rope: Experiments ($1 on iPhone and $2 on iPad) is as big a hit as the original, and every bit worth the download. Liz Claiborne Inc.’s Love Is Not Abuse (free on Apple), for parents of teenagers, simulates dating-abuse situations and offers resources for more information.

Article source: http://feeds.nytimes.com/click.phdo?i=14ff659222004aa57c6714047512ee08

Poor Weather Pushes Prices Up for Corn and Soybeans

Prices for corn and soybeans jumped in commodities markets on Thursday after the Department of Agriculture said that the onslaught of bad weather, from heat and drought in some areas to heavy rains and flooding in others, would reduce yields for those critical crops.

Commodities experts said that would ultimately lead to higher prices to consumers for staples like vegetable oil, pasta and meat.

“The message, based on today’s report, is these higher costs should not be expected to abate any time soon,” said Bill G. Lapp, president of Advanced Economic Solutions, a commodity consulting firm that works with restaurant companies and food manufacturers. “It implies higher cost forthcoming and subsequent margin pressure, and at some point the need to increase prices at the retail level or on the menus.”

The report, based on a survey of farmers and visits to fields, predicted a national average corn yield of 153 bushels an acre, down from nearly 159 bushels in the government’s previous forecast. It also predicted a small drop in the number of acres of corn that would be harvested this fall.

Very hot temperatures and below average rainfall will lower yields, the report said. The dry, hot weather increases stress on the corn plant and keeps it from channeling an optimal amount of energy into the formation of kernels, according to Joel C. Widenor, a meteorologist with Commodity Weather Group, an agricultural consulting firm.

Mr. Widenor said July was the hottest in Corn Belt states since 1955. It was the fourth-hottest July in the prime corn-growing region in the last 117 years, he said.

Because the acreage planted this year was very high, the total corn crop will still be near record levels. But since high demand for corn for animal feed and ethanol production has tapped out stockpiles, the drop in expected yield means that prices will remain high. And high corn prices help push up the price for other grains, like wheat.

The Department of Agriculture’s report also lowered the forecast for soybean yield and the total soybean harvest.

“The extreme blowtorch of heat this summer took our yield down,” said Don Roose, president of U.S. Commodities, an Iowa commodities broker and consulting firm. “The wet weather we had early took our harvested acres down. Between the two of them we’re in a situation where now we have to ration supplies.”

December corn futures on the Chicago Board of Trade opened by jumping 30 cents, the maximum daily increase allowed, to $7.18 a bushel. Trading ended the day at $7.14. Soybean futures for the November contract opened at $13.53 a bushel, an increase of $0.52. The contract closed at $13.32.

“The markets over the past couple of weeks have been trying to figure out which is dropping faster, supply or demand,” said Chad E. Hart, an assistant professor of economics at Iowa State University. He said the U.S.D.A. report, called the World Agricultural Supply and Demand Estimates and known as Wasde, provided an answer. “What the Wasde report said is, supply,” he said.

Prices for agricultural commodities had fallen in recent days, as financial turmoil and political uncertainty roiled the stock market. But even so, prices for most commodities remain at historically high levels.

Article source: http://feeds.nytimes.com/click.phdo?i=ffbd9e6aa065b3a1783c7064dedfc98e

Economix: Looking Inside the Consumer Bust

DAVID LEONHARDT

DAVID LEONHARDT

Thoughts on the economic scene.

A few commenters responded to my Sunday column by asking whether consumer spending had really declined all that much. A blog post by Jared Bernstein discusses this issue. The crux of the argument is this chart, showing that consumer spending does not make up a smaller share of gross domestic product than a few years ago:

Bureau of Economic Analysis, via Haver Analytics

There are three reasons, though, why it’s a mistake to read this chart as saying there has not been a consumer bust.

First, consumer spending has retained its G.D.P. share because G.D.P. has done so poorly. It is only marginally higher than it was in late 2007, more than three years ago. Which is to say that consumer spending is only marginally higher than it was three years. As Mr. Bernstein explains, “the fall in consumer spending is proportionate to the decline in G.D.P.” In the more than 60 years that the government has been keeping records, consumer spending has never had a weaker three-year period than in this downturn.

Second, the government’s definition of consumer spending is not the same definition the rest of us would use. The government largely excludes house purchases for consumer spending. If you were to add spending on new homes to the official version of consumer spending — call it “spending by consumers” — the category’s share would be down significantly. The following chart understates the case — because it focuses on spending on newly built homes and misses much of the spending on so-called existing homes, which make up the majority of home sales — but it makes the case nonetheless:

Bureau of Economic Analysis, via Haver Analytics

Third, all of these consumer-spending numbers include staple goods and services that many families cannot go without, like food and health care. Spending on these staples has continued to rise over the last few years. Spending on groceries and utilities have both risen slightly faster than overall consumer spending. Spending on health care services (up 7.9 percent since late 2007, even after adjusting for inflation) and pharmaceuticals (up 5.5 percent) have risen considerably faster, according to data from IHS Global Insight. If you took out these staples and instead focused on discretionary consumer spending, you would see bigger declines still.

In the paper, we reproduced a version of the Federal Reserve Bank of New York’s powerful chart on discretionary service spending, which has dropped more than in any previous recession on record.

Having said all this, I do think the commenters are pointing to something important. Despite the consumer bust, consumer spending — as it’s defined by the government — remains near an all-time high. It also remains much higher than in other rich countries. I’m not sure that will always be the case, which means that the future of consumer spending probably isn’t very bright, either.

Article source: http://feeds.nytimes.com/click.phdo?i=7d11294d9ee84c4b822e020c38ee9979