October 13, 2007

Carlson to add 30 hotels in India, ties up with PE fund

Carlson to add 30 hotels in India, ties up with PE fund
Sudeshna Sen
500 words
13 October 2007
The Economic Times
English
(c) 2007 The Times of India Group. All rights reserved.

LONDON: Carlson Hotels, the US group that operates the Regent and Radisson chains, is planning to add 30 odd hotels in India in the mid-market segment over the next few years, and has set up a strategic alliance with a new US $1 billion private equity fund to target primarily in India and China.

Carlson Hotels Asia Pacific has plans to expand its Park Inn and Country Inn mid-market brands and economy brands in India in smaller cities and towns, and has tied up with Lotus Hotel Investment Fund, based in London, which is a new fund focused exclusively on the hotel sector in the high-growth markets of India, China and others in the Asian region.

Park Inn is an emerging hotel brand in the Carlson portfolio, with a focus on offering a relaxed environment in the economy category. Country Inns & Suites is one of Carlson's fastest growing, mid-scale hotel brands.

Martin Rinck, President and Managing Director of Carlson Hotels Worldwide - Asia Pacific said: "This is a great opportunity to combine the power of Carlson's world-class hotel brands with the proven expertise of the Lotus management team to maximise the huge potential we see in these markets". Mr Rinck said the expansion would cost $15m-$20m for each hotel, and the group has similar plans for China.

Lotus Hotel Fund is being set up as a Pan Asia specialist hotel fund with a focus on China, India and South East Asia. The alliance will take advantage of surging demand for world-class hotels in the major business and leisure markets across Asia. The alliance will focus primarily on strategic development opportunities in China and India, along with other key growth markets in the region.

The fund targets hotels for development and turnaround, and re-branding opportunities and will partner with global and regional brands to operate them under management contracts. The Fund comprises senior industry professionals with expertise in hotels, Asia, finance and business development. Mr Amarsi was previously CEO and Managing Director of the Singapore-based investment company BIL International Ltd.

Arun Amarsi, CEO of Lotus Hotel Investment Fund, commented: "We are in the process of launching this new fund and are delighted to have Carlson Hotels Worldwide as one of our brand partners to seize the exciting opportunities which we see in markets such as China and India, in particular".

Carlson Hotels Worldwide - Asia Pacific said that it already manages the largest portfolio of hotels of any international hotel group operating in India and is continuing to expand its presence in other key markets across the region, including China, where it has more than doubled its presence over the last four years.

Recent highlights include the opening of Regent hotels in Shanghai and Beijing. Carlson, besides its hotel brands, includes brands like TGIF, Carlson Wagonlit Travel, Regent Seven Seas Cruises, and Carlson Marketing Group.

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Swiss Resolution Merger Unresolved

LONDON - British insurance fund manager Resolution may have fought off a takeover bid by shareholder-rival Pearl, but its planned merger with Friends Provident still looks uncertain.

The world's largest reinsurance company, Swiss Re is joining forces with British insurer Standard Life to make a bid for the company, it was reported Friday.

Swiss Re traded down 1.70 Swiss francs (26 cents), or 1.5%, at 110.60 Swiss Francs ($17.21) in midday trading in Switzerland. Standard Life slipped by 5 pence (10 cents), or 1.7%, to £2.92 ($5.92) in London, while Resolution ticked up 4.63 pence (9 cents), or 0.7%, to £6.96 ($14.11). Shares in Friends Provident also rose by 1.50 pence (3 cents), or 0.8%, to £1.82 ($3.69) in London.

The news came just a day after Resolution said it had rejected a £6.60 ($9.36) a share bid by Pearl, its largest stakeholder on the grounds that it significantly undervalues the company, and insisted that it would be pressing ahead with a £8.6 billion ($17.6 billion) merger with life insurer, Friends Provident (other-otc: FRDPF - news - people )to create Britain's fifth largest insurance company. (See: " A Resolution In Sight ")

The deal with Friends Provident has proved controversial, with entrepreneur Hugh Osmond, who heads Pearl, arguing that Resolution shareholders would lose out from the deal. Both Pearl and Resolution are so-called zombie fund managers, specializing in taking over funds that are closed to new business, and deriving profits from the synergies that they can get from combining many smaller funds into larger ones, and running them down. Friends Provident on the other hand takes on new business.

An analyst who spoke on condition of anonymity said that the acquisition would make sense for Swiss Re, which has bought up a number of closed funds such as Resolution. He added that to succeed the bid would have to be "somewhere north of £7.00 ($9.93)" This would value Resolution above £4.8 billion ($9.7 billion), 12.8 times Resolutions earnings in 2006, though for Swiss Re with a market capitalization of 41.5 billion Swiss Francs ($31.5 billion) and Standard Life, with a market value of £6.4 billion ($12.9 billion) it would be a realistic option. Spokespersons for Swiss Re and Resolution said the companies did not comment on market speculation. In September Standard Life said it was considering making a bid for Resolution.

Millers, Coors To Shake Up U.S. Beer Market

By DAVID KESMODEL and DEBORAH BALL
October 10, 2007; Page A1

The U.S. beer business, battered by a shift in consumer tastes, faces a further shake-up with plans by SABMiller PLC and Molson Coors Brewing Co. to merge their U.S. operations.

With top sellers including Miller Lite and Coors Light, the two are taking aim at long-dominant Anheuser-Busch Cos. They would have about $6.6 billion in annual revenue and a roughly 30% market share in the U.S., second to Anheuser's 48%.

North America's largest brewers are struggling as consumers reach for small-batch "craft" beers, imported brews, wine and spirits. The number of barrels of beer sold in the U.S. is expected to grow only 1.5% this year, according to the Beer Institute, an industry group.
That has set off a merger rush to cut costs. SABMiller and Molson Coors, themselves products of recent mergers, said their tie-up in the U.S. will yield about $500 million in annual cost savings by the third year. The prospect helped drive up Molson Coors shares more than 10% on the New York Stock Exchange, while SABMiller was up 1.4% in London.

"This transaction is driven by the profound changes in the U.S. alcohol-beverage industry," said Pete Coors, who is vice chairman of Molson Coors and will be chairman of the new venture.

The deal, which is likely to face antitrust scrutiny, could increase pressure on Anheuser to pursue a merger outside the U.S., where it has a relatively small presence and where greater opportunities for growth lie. World-wide, Anheuser is the No. 3 beer maker by volume and market capitalization after InBev SA and SABMiller. An Anheuser spokeswoman declined to comment.

In a message to employees, Anheuser Chief Executive August A. Busch IV said the brewer must capitalize on the "significant transition confusion" that he predicted will occur when Miller and Molson Coors blend their U.S. operations. There will "likely be great concern within the SABMiller/Coors field sales and wholesaler organizations as people attempt to determine if they will have a role in this new structure," he said.

Mr. Busch said Anheuser employees "must not lose sight of the fact" that the new venture is "an attempt by these companies to better compete against us." Anheuser shares were down 0.9%.

From its roots in South Africa, the former SAB PLC has grown rapidly over the past decade by expanding into fast-growing economies such as China, Eastern Europe and Latin America. SAB acquired Miller Brewing Co. in 2002, but the U.S. business remained a weak link as the combined company struggled to combat Anheuser's power in marketing and distribution.

Under the agreement, SABMiller will have a 58% economic interest in the joint venture. Molson Coors will have 42%. They will have equal voting interests, and each company will have five representatives on the venture's board. Leo Kiely, chief executive of Molson Coors, is set to become CEO of the joint venture, with Tom Long, CEO of Miller Brewing, becoming president and chief commercial officer. The deal, subject to shareholder approval, is expected to close next year.

SABMiller and Molson Coors discussed a deal on and off for about a year, executives at both brewers said yesterday. The venture "creates a much more robust business, which has the ability...to be much more competitive no matter what the future may throw at us," said Graham Mackay, chief executive of SABMiller, in an interview.

Critical to the alliance, Mr. Mackay said, will be the opportunity for U.S. beer distributors to become "one-stop shops." He said distributors could save time and money by dealing with one company instead of two. About 60% of Miller's volume is distributed by wholesalers also selling Molson Coors brands. U.S. federal law dating to the repeal of Prohibition generally requires beer to be sold through wholesalers.

"I think we'll sell more and our costs will go down, so we should benefit," said Phillip Terry, chief executive of Monarch Beverage Co., a big distributor in Indiana selling 15 million cases of beer annually, including both Miller and Molson Coors products. He said he hopes the merger savings will be "translated into additional market spending, more promotions around the brands."

Anheuser remains a powerhouse in the U.S. beer market, where its top-selling brand is Bud Light. Its U.S. operating profit margin is about 23.6%, compared with margins of less than 10% for both Miller and Molson Coors, according to Mark Swartzberg, an analyst with Stifel Nicolaus in New York.

For years, the nation's beer giants thrived by peddling beers that are relatively light in taste and don't offend Americans' diverse palates. That era has faded. Just as vitamin-infused waters and gourmet coffees have caught fire, more beer drinkers are choosing brews with distinct tastes.

These beers are typically sold by independent local beer makers, although the big names are getting into the act. While craft beers are still a small slice of total revenue -- about 5% of the U.S. market -- they're the fastest-growing segment. Sales of craft beer rose 11% by volume in the first half of this year against year-earlier levels, according to the Brewers Association, a craft-beer trade group in Boulder, Colo. Molson Coors's hottest brand in the U.S. is Blue Moon, a Belgian-style wheat beer.

One potential drawback of combining Miller and Coors under one roof is cannibalization. Both Miller Lite and Coors Light are in the premium light-lager category. While executives for the companies argued yesterday that the brands have different attributes and complement each other, it's unclear whether beer drinkers will recognize the distinctions.

Mr. Mackay said the geographic strengths of the two companies are complementary. Miller is strong in the Midwest, with the leading market share in Chicago, while Coors has a big footprint in the West.

Molson Coors was formed by the 2005 merger of Colorado's Adolph Coors Co. and Canada's Molson Inc., both family-controlled companies. A person familiar with the deal said the Molson and Coors families didn't want to sell their entire company to SABMiller or another buyer. The joint venture allows them to keep some control. Molson Coors, with dual headquarters in Montreal and Denver, has major operations in Canada and Britain that will remain independent of SABMiller.


The companies said the projected $500 million in annual cost savings would come from streamlining production, reducing shipping distances and consolidating corporate staff. The companies haven't decided where the headquarters of the new venture will be. There could be job losses among corporate staff in Denver or Milwaukee, where Miller is based.

The deal could make it easier for the companies to raise prices as they wrestle with higher costs for aluminum, grains and other commodities. It could make them less vulnerable to pricing decisions by Anheuser. Several years ago, price cuts by Anheuser damped profits for its chief competitors.

The deal is likely to get a close look by the Justice Department because it combines the second- and third-largest U.S. brewers. But antitrust lawyers said it appeared unlikely to draw a challenge, given vigorous industry competition and the dominance of market leader Anheuser. The Bush administration has shown reluctance to block mergers.

Analysts speculated about what mergers might be left in the rapidly consolidating beer business. Rob Mann, an analyst with Collins Stewart in London, said Anheuser might be interested in Scottish & Newcastle, an Edinburgh-based brewer that is strong in the U.K., France and Russia. "We are approaching the final round of consolidation," Mr. Mann said. "Most markets have been consolidated at a local level by now."

With the exception of stakes in China, India and Mexico, Anheuser has largely stuck to the U.S. Some analysts think Anheuser may ultimately merge with InBev, based in Belgium. Anheuser imports InBev's European brands, including Stella Artois and Beck's, into the U.S. under a partnership begun this year. A spokeswoman for InBev declined to comment.

Another possible beer acquirer is Diageo PLC, one of the only companies to have significant shares in beer, spirits and wine. Its beer business largely consists of Guinness. Diageo Chief Executive Paul Walsh has said he's interested in a beer takeover, but deal prices are too high.

Spirits companies have raised the pressure on beer giants by rolling out sweet cocktails and other drinks to lure younger drinkers. Premixed bottled drinks such as Smirnoff Ice have seen sales triple in the last decade, according to Merrill Lynch.

SABMiller was advised on the deal by Lehman Brothers Holdings Inc. and J.P. Morgan Cazenove Ltd. Molson Coors was advised by Orbin & Co., Deutsche Bank AG and Morgan Stanley.

--Douglas Belkin, Dennis K. Berman and John R. Wilke contributed to this article.

Write to David Kesmodel at david.kesmodel@wsj.com5 and Deborah Ball at deborah.ball@wsj.com6

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October 12, 2007

Universal Music Takes on iTunes

Universal chief Doug Morris is enlisting other big music players for a service to challenge the Jobs juggernaut

Relationships in the entertainment world can be famously fraught. And few are more so these days than the one between Steve Jobs and Universal Music chief Doug Morris. You may recall that Morris recently refused to re-up a multi-year contract to put his company's music on Apple's iTunes Music Store. That's because Jobs wouldn't ease his stringent terms, which limit how record companies can market their music.
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Now, Morris is going on the offensive. The world's most powerful music executive aims to join forces with other record companies to launch an industry-owned subscription service. BusinessWeek has learned that Morris has already enlisted Sony BMG Music Entertainment as a potential partner and is talking to Warner Music Group. Together the three would control about 75% of the music sold in the U.S. Besides competing head-on with Apple Inc.'s (AAPL ) music store, Morris and his allies hope to move digital music beyond the iPod-iTunes universe by nurturing the likes of Microsoft's Zune media player and Sony's PlayStation and by working with the wireless carriers. The service, which is one of several initiatives the music majors are considering to help reverse sliding sales, will be called Total Music. (Morris was unavailable for comment.)

This isn't only about Jobs; Morris badly needs to boost his business, and Apple is the one to beat. The iTunes store has grabbed about 70% of downloads in the U.S. And the iPod--well, what's left to say about that juggernaut? Plus, music companies have been here before. A few years ago they launched services with the aim of defeating Napster-style file-sharing--and failed miserably. And let's not forget that existing subscription services have signed up only a few million people, vs. hundreds of millions of iTunes software downloads.

While the details are in flux, insiders say Morris & Co. have an intriguing business model: get hardware makers or cell carriers to absorb the cost of a roughly $5-per-month subscription fee so consumers get a device with all-you-can-eat music that's essentially free. Music companies would collect the subscription fee, while hardware makers theoretically would move many more players. "Doug is doing the right thing taking on Steve Jobs," says ex-MCA Records Chairman Irving Azoff, whose Azoff Music Management Group represents the Eagles, Journey, Christina Aguilera, and others. "The artists are behind him."

Morris and Jobs were once the best of allies. When Jobs began pushing his idea for a simple-to-use download store in 2003, Morris backed him. Industry insiders say Jobs felt that Morris, unlike many other music executives, understood that they had to adapt or die. And in the years that followed, Apple and Universal moved in near lockstep.

But before long, Morris realized he and his fellow music executives had ceded too much control to Jobs. "We got rolled like a bunch of puppies," he said during a recent meeting, according to people who were there. And though Morris hasn't publicly blasted Jobs, his boss at Universal parent Vivendi is not nearly so hesitant. The split with record labels--Apple takes 29 cents of the 99 cents--"is indecent," Vivendi CEO Jean-Bernard Levy told reporters in September. "Our contracts give too good a share to Apple."

After unilaterally breaking off talks with Apple in July, Morris continued offering Universal's roster--Eminem, 50 Cent, U2, and other artists--to Apple, but on a month-to-month basis. That freed Universal to cut special deals with other vendors, such as cell carriers eager to generate revenues. AT&T (T ) is packaging ringtones and music videos of Universal artists and is expected to start selling downloaded tracks with videos soon.

That's not all: In August, Morris announced a five-month test with Wal-Mart (WMT ), Google (GOOG ), and Best Buy (BBY ). The three companies will sell music downloads that can be played on any device--a freedom not available to buyers of iTunes songs, most of which play only on Apple devices and software. Morris wants to see if the downloads, which won't have copy protection, will help cut into piracy and hike sales. And of course he won't be upset if iPod owners bypass iTunes.

With the Total Music service, Morris and his allies are trying to hit reset on how digital music is consumed. In essence, Morris & Co. are telling consumers that music is a utility to which they are entitled, like water or gas. Buy one of the Total Music devices, and you've got it all. Ironically, the plan takes Jobs' basic strategy-- getting people to pay a few hundred bucks for a music player but a measly 99 cents for the music that gives it value--and pushes it to its extreme. After all, the Total Music subscriber pays only for the device--and never shells out a penny for the music. "You know that it's there, and it costs something," says one tech company executive who has seen Morris' presentation. "But you never write a check for it."

The big question is whether the makers of music players and phones can charge enough to cover the cost of baking in the subscription. Under one scenario industry insiders figure the cost per player would amount to about $90. They arrived at that number by assuming people hang on to a music player or phone for 18 months before upgrading. Eighteen times a $5 subscription fee equals $90. There is precedent here. When Microsoft was looking to launch a subscription service for Zune, Morris played hardball. He got the tech giant to fork over $1 for every player sold, plus royalties. Total Music would take that concept even further. "If the object is to wrest control of the market from Steve Jobs," says Gartner analyst Mike McGuire, "this is a credible way to try it."

Of course, Morris still needs Jobs. It's noteworthy that Universal has not pulled its music from iTunes--Morris simply can't afford to do that. Universal's earnings fell 25% in the first half. Jobs, of course, knows that and can afford to be magnanimous. "Doug's a very special guy," the Apple chief told BusinessWeek. "He's the last of the great music executives who came up through A&R. He's old school. I like him a lot."

Sprint Nextel CEO Steps Down

http://abcnews.go.com/Business/WireStory?id=3704401
By PETER SVENSSON AP Technology Writer
NEW YORK Oct 9, 2007 (AP)


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Armani Links With Samsung for Electronics Line

by Stacy Meichtry. Wall Street Journal. Sep 24, 2007

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General Mills, Curves Partner In Cereal Box Appearance Contest


by Tanya Irwin, Tuesday, Oct 9, 2007 5:00 AM ET

BORROWING A PAGE FROM ITS Wheaties' "Breakfast of Champions" playbook, General Mills and Curves International are asking for weight-related success stories from women in a contest where the top prize includes the chance to appear on Curves Cereal boxes nationwide.


The contest, "Real Change, Real Women," focuses on what motivated the women to commit to a healthier lifestyle. Women can find out more about the contest at the Curves Foods Web site, www.CurvesFoods.com. The grand prize also includes $5,000, a year-long supply of Curves Cereal and Granola Bars and a 12-month membership to a Curves Club. Four first-prize winners will each receive $1,000 and a six-month membership to a nearby Curves Club, and 25 short-listed finalists will each receive a Curves Cereal and Granola Bars gift basket.

Daytime Emmy Award-winning actress and "Days of Our Lives" star Judi Evans, who publicly struggled with weight management for years following the birth of her son, encourages women to make a change for good on the contest Web site at curvesfoods.com/contest/. By logging on and creating a personal profile at the site, women have access to a free support group.

Minneapolis-based General Mills and Curves partnered this spring to launch a weight management brand and four products under the Curves name. This is the first long-term consumer food partnership for Curves International. Curves Chewy Granola bars (chocolate peanut and strawberries and cream) launched in the spring while Curves cereal (whole grain crunch and honey crunch) debuted recently. In addition to grocery and retail visibility for the new products, Curves Chewy Granola bars are sold at Curves franchises.

As part of the effort to get word out about the new Curves cereal, single-serve boxes were placed in Sunday newspapers in select markets on Oct. 7. There were also small boxes of Cinnamon Toast Crunch and Nature Valley, along with coupons for all three. The plastic bag containing the paper and cereals was an ad for all three cereals. The portion promoting the Curves cereals includes the headline: "This time, change for good!" and shows a woman jumping in the air. It includes the URL: curveschangeforgood.com. The coupon flyer includes copy: "You'll love the Great Taste of Whole Grain." It includes the new logo "With Whole Grain" with the General Mills logo on top. The same logo appears on GM cereal with at least eight grams of whole grain per serving, including the three brands included with the newspaper.

The General Mills/Curves product line is part of a long-term partnership in consumer foods that gives General Mills broad, exclusive promotional rights to several key food categories encompassing everything from licensed products to consumer promotion activity. The integrated launch of the new product line will be supported by various promotional and communication vehicles including Web site activation, media and print, as well as the nearly 8,000 Curves locations nationwide.

Among consumer health concerns, weight management is powerfully motivating, according to General Mills. Research shows that 61% of consumers want to lose 20 pounds. General Mills and Curves aim to empower women to adopt a smarter way to manage weight for the long term. The partnership is designed to offer simple, yet effective food and fitness solutions for women to help take weight off and keep it off.



Miller & Coors Merger

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Oracle makes $6.7B bid for BEA

Oracle makes $6.7B bid for BEA
Oracle, in letter to BEA Systems' board, offers cash at a 25% premium; says it seeks friendly acquisition.
By Chris Isidore, CNNMoney.com senior writer
October 12 2007: 8:42 AM EDT

NEW YORK (CNNMoney.com) -- Software provider Oracle is making a cash bid for BEA Systems, offering a 25 percent premium over its closing price.

Oracle (Charts, Fortune 500) is offering $17 a share for BEA (Charts), a leading provider of application software for computer servers. That's worth about $6.7 billion, based on BEA's total shares outstanding.

Oracle has launched a bid for rival business software provider BEA Systems. Activist shareholder Carl Icahn, who owns 13.2 percent of BEA, has said in a filing he would push management to consider a sale.

Shares of Oracle were little changed in pre-market trading following its statement, but shares of BEA shot up 31 percent to $17.86, topping the cash offer price, on the news.

The offer was contained in a letter to BEA's board. Despite releasing details of the offer without a sales agreement, Oracle said it is not looking at this as a hostile bid.

"We believe our all cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers," said a statement from Oracle President Charles Phillips. "This proposal is the culmination of repeated conversations with BEA's management over the last several years. We look forward to completing a friendly transaction as soon as possible."

Oracle has made successful hostile bids for companies in the past, including PeopleSoft, which finally agreed to be purchased in 2004 after more than a year-long battle. But it has also completed friendly acquisitions, including Siebel Systems, a deal that it made in 2006.

Officials at San Jose, Calif.-based BEA Systems were not immediately available for comment on the Oracle announcement.

It has faced pressure from activist shareholder Carl Icahn to sell itself. Filings by Icahn earlier this month list him as now holding 13.2 percent of BEA shares, while other entities associated with him have additional stakes.

Icahn said in a filing a month ago that he believes "that a strategic acquirer could utilize greater resources and market presence" than BEA can as an independent company, and that he would "seek to meet with [BEA] management...to discuss the potential for such a transaction."

BEA products support functions such as transaction processing, billing, customer service, provisioning and securities trading. Oracle's statement said that if it acquires BEA it would continue to support its customers and products for years to come.

BEA has seen solid growth. According to a survey of analysts by earnings tracker First Call, BEA is forecast to see earnings rise 21 percent in the current period, which ends in October, and 31 percent for the full fiscal year, which ends in January. It has topped quarterly earnings forecasts five times in the last eight periods, and met the forecasts the other three times.

But when it missed revenue forecasts for its fiscal third quarter a year ago, it saw its shares plunge 16 percent in one day, and it has yet to recover from that loss.

That has left its shares have underperformed the sector. They are down about 10 percent over the last year, while the Dow Jones U.S. software index is up about 10 percent in the same period.

October 11, 2007

Johnson Controls and Nexterra Energy Form Strategic Alliance to Offer Biomass Gasification

Johnson Controls and Nexterra Energy Form Strategic Alliance to Offer Biomass Gasification
Alliance expands renewable sources of energy supply options for customers
October 11, 2007: 11:03 AM EST

MILWAUKEE, Oct. 11 /PRNewswire/ -- Johnson Controls, Inc., a global leader in facility management and controls, has formed a strategic alliance with Nexterra Energy Corp. to offer biomass gasification solutions to Johnson Controls customers, including higher education, health care, government facilities and industrial operations.

Nexterra's patented gasification technology converts biomass into clean burning syngas that can be used to displace natural gas or fuel oil to generate heat and/or electricity. Under the strategic alliance agreement, the companies will jointly develop and implement biomass gasification projects that will enable customers to reduce energy costs, increase energy security, lower greenhouse gas emissions and become less reliant on fossil fuel by using locally sourced, renewable biomass fuel.

"As the cost of fossil fuels such as oil and natural gas increases and concern about their economic and environmental impacts grows, businesses and institutions are demanding alternative sources of clean energy. We selected Nexterra because it has demonstrated that its technology is cost-effective, versatile, easy to operate, and provides real solutions to real energy problems," said Don Albinger, vice president of renewable energy solutions for Johnson Controls. "Nexterra's capabilities add to a growing alliance of innovative energy technology partners that complement our existing renewable energy solutions and services."

Johnson Controls uses ingenious approaches to incorporate renewable technologies such as biomass, geothermal, solar and wind power with innovative energy efficiency strategies to provide customers long-term, sustainable solutions.

"Johnson Controls has worked successfully with Nexterra over the past four years," Albinger said. "Most recently we partnered with Nexterra to provide a $20 million biomass gasification system for the University of South Carolina that is scheduled for start-up this fall. We look forward to replicating this gasification solution across a range of institutional and industrial markets throughout North America."

"Nexterra is proud that an industry leader such as Johnson Controls has selected our technology as a key component of their renewable energy strategy." said Jonathan Rhone, Nexterra's President and CEO. "The marketplace is ready to commit to renewables, and Johnson Controls is well positioned to help Nexterra fast track our solutions into the institutional market."

About Johnson Controls
Johnson Controls is the global leader that brings ingenuity to the places where people live, work and travel. By integrating technologies, products and services, we create smart environments that redefine the relationships between people and their surroundings. Our team of 140,000 employees creates a more comfortable, safe and sustainable world through our products and services for more than 200 million vehicles, 12 million homes and one million commercial buildings. For additional information, please visit http://www.johnsoncontrols.com/.

About Nexterra Energy Corp.
Nexterra Energy is a leading developer and supplier of advanced biomass gasification systems that enable customers to self-generate clean, low cost heat and/or power using waste fuels "inside-the fence" at institutional and industrial facilities. Nexterra gasification systems provide a unique combination of attributes including design simplicity, reliability, versatility, ultra-low emissions, low cost and full automation to provide customers with a superior value proposition compared to conventional solutions. Nexterra is a private company based in Vancouver, BC, Canada. For more information: http://www.nexterra.ca.

EA to pay $860M for rival game maker

Purchase of VG Holding would give the videogame maker its rivals - BioWare Corp. and Pandemic Studios.
October 11 2007: 5:59 PM EDT

NEW YORK (CNNMoney.com) -- Videogame-maker Electronic Arts said Thursday it is buying rival VG Holding Corp. for $860 million.

VG Holding is the owner of both BioWare Corp. and Pandemic Studios, both videogame makers.

"This acquisition gives EA a strong competitive position in key genres in interactive entertainment: action, adventure and role-playing games," EA said in a statement.

BioWare and Pandemic have 10 games under development, including six wholly owned games, EA said in its statement.

BioWare Corp. is currently developing Mass Effect, set to be published by Microsoft in November and is in the early development stages of a multiplayer online game.

Pandemic Studios has the upcoming multiworld games Mercenaries 2: World in Flames and Saboteur, in addition to several unannounced projects.

"I think they needed to do it," said Daniel Ernst, an analyst at Soleil-Hudson Square Research. "EA has a nice cash balance, and they are trying to stay on top of the market. To do that, you need games to sell."

Ernst credited BioWare Corp. with having a top-notch design team but said the real question is seeing which employees stick around after the deal.

"That's always the question when you buy talent," he said. "Talent goes out the door every day."

EA said it will pay up to $620 million in cash to the stockholders of VGH and will issue up to an additional $155 million in equity as management retention arrangements to certain employees of VGH, which will be subject to time-based or performance-based vesting criteria.

EA will also assume outstanding VGH stock options, valued at around $50 million. In addition, EA has agreed to lend VGH up to $35 million through the closing of the acquisition.

The purchase is expected to take 30 to 40 cents per share off EA's 2008 earnings.

Share in Electronic Arts (Charts) fell 2 percent in after hours trading.

About 800 people work for Pandemic Studios and BioWare Corp. in four studios located in Edmonton, Canada, Los Angeles, Austin, Texas, and Brisbane, Australia.

Microsoft's new search guru talks strategy

By Elinor Mills, News.com
Published on ZDNet News: Sep 26, 2007 9:01:00 PM

When it comes to Web search, Microsoft is the undisputed underdog, a position it doesn't usually find itself in.
The company has anywhere from a 8 percent to 13 percent market share in the United States, depending on who is collecting the traffic data, putting it behind Yahoo (20 percent to 23 percent share) and far behind Google (54 percent to 64 percent share). And Microsoft's share seems to be slipping, nearly 4 percentage points from a year ago, according to Hitwise.

How does Microsoft propose to narrow the gap? Earlier this year, the company launched a program called Microsoft Search and Win that rewards people for using the Live Search site. The program bumped up Microsoft's market share this summer. But while compensating people to use your search engine may provide a temporary market share increase, it isn't a good long-term strategy to build market share.

Microsoft is hoping that it can catch up to rivals in overall search and find a few key areas where it can go into more depth, by offering tailored searches. For now, it is eyeing celebrities and entertainment, product searches, local search and health care as fertile areas worth having specialized results.

CNET News.com talked to Satya Nadella, corporate vice president of search and advertising at Microsoft, about how the company plans to improve its market share and improve search for the long haul shortly before the company launched new features in its Live Search site at a "Searchification" event Wednesday.

Q: How much of your search traffic is coming from search embedded within other Microsoft Internet properties versus people going directly to the main Live.com search page?
Nadella: The search bar on MSN is where we get a lot (of traffic), and we do get even a bunch from people who choose to use us as the default provider on their browser, as well as people who install our toolbar. So, those are the top three sources.

Some folks have said it's about 1 percent of your traffic that comes from people typing in the Live.com Web address?
Nadella: That's probably true. We've not really marketed Live.com. In fact, we've really focused, even with this release we'll be very, very focused on basically having the Live search experience power MSN, and that's a fairly explicit strategy of ours, if you will, because we feel that that's the place where we can gain a lot by showing a better search experience, and getting the customers and the consumers who are doing searches with us on top of MSN to do more.

So, you're not going to be trying to narrow the gap with Google and even Yahoo on just general Web search and trying to attract people to Live.com?
Nadella: Yahoo is very much like MSN. People type in Yahoo.com, and they go to a portal, and MSN is one such portal, so it has search, and we'll keep innovating on how to highlight that. Whereas when we think about Google as just a destination site, we have that with Live, and we think that with Windows Live and other places we'll start building some organic traffic. But I would say that in the fall you will see us, just because these 70 million users today are our lowest hanging fruit in terms of being able to increase the engagement with them, that we will put a lot of energy in just marketing ourselves through MSN.

Microsoft has turned to paid programs, either direct-to-consumer promotions or promotions with businesses, in the last year to gain share, or really recoup lost share. Is that something you expect to increase, stay level, or decrease in the coming year?
Nadella: We believe that we will sustain that. We built a generalized loyalty program/platform called the Live Search Club, which helps us raise awareness to the fact that we are in this search game and helps us get more engagement and then builds loyalty through things like prizes. We'll do more of that, and generally use this as a loyalty program going forward, and experiment with multiple ways to engage users.

What about paying businesses to use you?
Nadella: So, we have some pilots that you've seen us talk about. We will definitely move that. But I would say the core focus at least in the fall would be for the consumer push through MSN.

Some of the new features launched this week are already offered by your rivals. Is catching up really much of a game changer at this point?
Nadella: That's a good question. You have to be in the game with the core (relevance), and then you have to differentiate in these high-value vertical domains. If we have 70 million people using our search engine today, if we are getting better at core relevance, and delivering some differentiated experiences in verticals, what can our share position be?

In some sense, it's perhaps not the position we'd like to be in, but we are in a position where quite frankly we have nothing to lose. We want to be able to come out, take some risks, do some innovation, get to a place where we have parity on some of the table stakes, and differentiate. The 70 million users we have is a substantial number, and if we can get them to do more searches, we will have gains.

There is a perspective that you guys have perhaps pushed search as much as you can on the base of users that you have--it's integrated in every possible MSN thing. Is the gaining really to be had among the people that are already using MSN, or have you tapped them pretty well, and you actually need to gain more users?
Nadella: Our data shows we have a higher share of users than our search share, and they use multiple search engines. So, it's not primarily a switching issue; it's an issue of a product and the experience being compelling enough to earn a higher share of their searches.

So, I would say I get your feedback, I get your comment, but my only comeback on that one would be that there is a little bit of a perspective here about, hey, we've been in this game for four years, and we've been trying to get to a place where our search experience is, one, good, and has differentiation. We feel like we've gotten to a point where last year's release got us to a good state and we're able to compete, and this year we will get that to even be further.

Then the other thing I would say is our own network in MSN--I talk about 70 million users, whereas MSN has 500 million unique users a month. So, even within our own network, if our product and our experience improves, people will probably not type in Google.com. So, that's another opportunity as well.

It seems like you might be able to have a conversation around the differentiation points, but you'd have a tough time winning over general search queries just by catching up.
Nadella: Whenever I look at my traffic, I look at the people who do a search query and abandon our search engine and go somewhere else. So, that's kind of where I feel if we get to a place where people find what they are looking for on our search engine, they will keep coming back.

And when you think about shopping, entertainment, local and health searches, they will add up to a substantial portion of the general Web queries where we will have more differentiated experiences as well.

When we have a conversation a year from now, what types of results do you expect to be able to have shared? What are some markers that we can say a year from now, if you've done this, this and this, you've been successful?
Nadella: I think at the end of the day we absolutely think market share is an important metric. So, from a year from now I believe that MSN searchers, basically the 70 million and even the 500 million unique users that MSN has, will be searching more with us.

What are your plans in terms of marketing?
Nadella: Our core priority for the fall will be on the network on MSN. Obviously the word of mouth and the engagement and the satisfaction of the customers who are doing those searches are going to be a critical factor.

So, it sounds like the primary audience or effort is basically the people that you reach already and not so much the people that aren't using Microsoft in some way or another today?
Nadella: That's right. We want to be able to break through to them about the core relevance of our search experience, and also to show value and differentiation in some of these high interest domains.

I just want to make sure I understand. The new features and improvements you showed us today, many of which seem to really just catch up to what others are already doing, are going to be enough in your opinion to get those Microsoft network users, who are using other search engines and not Microsoft, or who are using other search engines in addition to Microsoft, to stop using those other search engines?
Nadella: Yes. The improvements in core relevance and the differentiated features in mobile search, image, video, shopping, health and entertainment, do create both the combination of being caught up, plus differentiated features that will cause those users to do more searches with us.

I've asked this question before, but to make sure that I'm understanding the answer, is it the case that you think you'll gain significant share without being better at the core? The features you showed on the core side were all features that Google has today. Don't you have to be better at the core to win?
Nadella: I do believe that there will be classes of queries where we will be marginally better in the core, and I would say our goal would be to keep at it, and as I said, this is a continuous game, so therefore we feel confident.

The fact that we caught up with somebody who was sort of the leader in the industry and started a lot before us should give us hope that we can do even better. But do I say that that would be the only time we'll gain the first point of share? I don't believe so, because one, we've proved that we can even gain share.

Let's sort of forget for a second that we lost share first. If I look at what we have done on the engagement side with the Live Club, and all these differentiated features we have, in addition to the core, I believe we can gain share.

Will we be No. 1 instantly because we just caught up? That's a very debatable point. But at the same time, do I believe that we can do better than our current share position, given that we have these 70 million users and these 5 million users and (are) giving them a better search experience than the alternative? I believe so.

When Big Deals Go Bad -- and Why

Title: When Big Deals Go Bad -- and Why.
Authors: Rosenbush, Steve
Source: Business Week Online; 10/4/2007, p2-2, 1p

Amid a flurry of bad news for big deals, it bears remembering that successful mergers heed the basic rules of business
The greatest business successes are often engineered by bold visionaries who altered industries: Think Microsoft (MSFT), Berkshire Hathaway (BRKB), and Southwest Airlines (LUV). Unfortunately, when that type of grand thinking is applied to the mergers-and-acquisitions arena, disaster often ensues. Multibillion-dollar deals are based on personal relationships and egos, grandiose plans for so-called transformational changes to an industry, and a sense that the new sum will be far greater than all the previous parts. And, of course, the path for much of the wheeling and dealing is well lubricated by fee-hunting bankers and lawyers.

The wreckage of deals gone bad litters the business landscape these days. On Oct. 4, shareholders of German automaker DaimlerChrysler (DAI) are expected to approve renaming the company Daimler, jettisoning the last vestiges of the disastrous 1998 acquisition of Chrysler, for which it paid some $40 billion. While retaining a 19.9% stake in the Michigan company, Daimler's shareholders will be more than happy to forget the whole episode, which saw litigation over the deal, a dearth of hit models, cultural and operational snags between U.S. and German managers, and heavy financial losses. In May, Daimler agreed to sell the bulk of the company [BusinessWeek.com, 5/14/07] to private equity firm Cerberus Capital Management for a mere $6 billion.

On Oct. 1, online auction house eBay (EBAY) conceded that it had overpaid in its $2.6 billion acquisition of Internet telephone service Skype Technologies in 2005. EBay took a writedown of $1.4 billion, and Skype founders Niklas Zennstrm and Janus Friis departed [BusinessWeek.com, 10/1/07] from their former suitor.

And years after the catastrophic merger of Time Warner and AOL, Time Warner (TWX) is still trying to make the deal work. Time Warner's latest move: Focus AOL on the advertising market and move AOL headquarters from Virginia to Manhattan. "AOL is for keeps," Time Warner Chief Executive Richard Parsons has said, arguing that it wouldn't make sense to part with the Internet property just as advertising dollars are shifting online.

"Game-Changing" ROI and Disasters
How is it that such deals come together in the first place? In each case, managers were clearly swinging for the fences, pouring huge sums into the bet like a Vegas gambler desperate to score a big win as he sees his chips dwindle. And bad deals often are born of fear or desperation. A rival -- or potential rival -- is forging a new market or making inroads into the existing one and the incumbents must respond. Sometimes there's a surfeit of confidence about what the future will hold and management's ability to stitch the various pieces together nicely. In other cases, the deal may make strategic sense but at a price that is wildly off the mark.

No doubt, some large deals yield rich rewards. One of the richest was the 1965 deal that merged Pepsi-Cola and Frito-Lay to form PepsiCo. (PEP). In the decades since, the Purchase [N.Y.] company has become a global juggernaut, with more than 15 brands that each tout annual sales of over $100 million. And in July, 2005, many people questioned the wisdom when Rupert Murdoch's News Corp. (NWS) paid $580 million for the social networking site MySpace. Analysts now figure the popular property could be worth $10 billion, just as rival site Facebook is reportedly mulling selling a 5% stake [BusinessWeek.com, 9/25/07] that would also value it at around $10 billion. Two years on, Murdoch appears to have gotten an extraordinary bargain.

In many cases, the deals that end in disaster often come with descriptions like "game-changing" and "transformational," and hype attains currency. In every major disaster, the acquirer was a major player run by professional management and overseen by a board of directors. The target companies were scrutinized by analysts, vetted by advisers, and ultimately approved by shareholders, including sophisticated institutional investors. Yet those safeguards weren't adequate to prevent disaster at Time Warner, eBay, or Daimler. So why do they still happen so regularly?

Bad Decisions Lead to Understanding
M&A tends to go awry when well-run orderly deal machines are thrown off kilter by volatility or emotion. The tech and telecom sectors are rife with bad deals because revolutionary technological and regulatory change provoked fear and uncertainty, leading executives into bad decisions. That helped produce debacles such as AOL Time Warner. Arrogance, envy, and untamed ambition often lead to poor decisions as well. "Psychology is a big part of M&A. It's not all of it, but it's a big part," says veteran banker Hal Ritch, co-chief executive of M&A adviser Sagent Advisors and a former co-head of M&A at Citigroup (C), Credit Suisse in the U.S., and Donaldson Lufkin & Jenrette, which was acquired by Credit Suisse (CS).

To put such failures in perspective, it's helpful to understand what makes a good deal work. Companies with solid track records in M&A, such as Internet-equipment maker Cisco Systems (CSCO), tend to buy on a regular basis. They have methodical processes for selecting targets and integrating businesses postdeal. And they don't buy companies to prop up earnings or to enter dramatically new lines of business.

"We don't favor large, transformational deals," says Ned Hooper, senior vice-president of corporate business development at Cisco [BusinessWeek.com, 4/9/07]. "We think M&A works best when it is part of a regular and stable business process. The best deals tend to bolster existing lines of business, or open new lines of business in adjacent markets. And we don't do deals to boost near-term earnings. We do deals to acquire promising new technology and to capture market transitions to open up new areas of growth." It may not hurt that buyers such as Cisco tend to work on their own, without much outside influence from investment bankers. Hooper runs Cisco's M&A group as part of its overall business development unit, vetting ideas for acquisitions with his team.

M&A: Not a Cure-All
Many of the worst deals have come about because management tried to use M&A to fix a fundamental business problem, such as a market that faces a terminal regulatory or technological threat. Companies such as AT&T (T) and the former drugstore chain Revco sought acquisitions to steer their businesses out of troubled markets and move into new opportunities.

In AT&T's case, it tried to move from the traditional landline phone business -- which was dying -- into the newer and more promising broadband Internet and cable businesses. M&A proved to be a poor route for that transition. Years later, Verizon had more success [BusinessWeek.com, 10/1/07] by expanding from telecom into cable and broadband via large capital investments and relying on organic growth. Revco tried to move out of the pharmacy business with its 1983 acquisition of discounter Odd Lots, sealing the company's demise the next decade.

Just like AT&T, toymaker Mattel (MAT) nearly went bankrupt using M&A as a way to keep pace with technology. The company spent billions to buy software and game publisher the Learning Co. That, and a string of disappointing profit results, led to the ouster of former Chief Executive Jill Barad.

Market and Cultural Landscapes
Managers tend to make the biggest M&A blunders when they convince themselves that times have changed and that basic business rules no longer apply. "The best acquirers make a habit of constantly scouring the landscape for acquisition opportunities that make fundamental sense, and don't depend solely on whether the market is up or down at the moment," Ritch says. If that sounds like the description of a certain legendary billionaire businessman from Omaha, it's hardly a coincidence. That doesn't necessarily mean that all M&A targets must be profitable. Cisco often buys startups that have never turned a profit, as long as they possess a solid business plan.

Good acquirers also pay close attention to a potential deal's cultural fit and the odds that the two organizations can be integrated successfully. To this day, huge cultural divides remain between the staffs at the AOL and Time Warner units, making it difficult to construct a successful operation, industry insiders say.

As a general rule, the larger and more ambitious the deal, the more "landscape-shifting" it appears, the higher the risk. Time after time, deals heralded as transformational have merely transformed a troubled business into a terminal case headed for bankruptcy.

October 10, 2007

Miller, Coors to Shake Up U.S. Beer Market

Miller, Coors to Shake Up U.S. Beer Market
By DAVID KESMODEL and DEBORAH BALL
The Wall Street Journal, October 10, 2007; Page A1

The U.S. beer business, battered by a shift in consumer tastes, faces a further shake-up with plans by SABMiller PLC and Molson Coors Brewing Co. to merge their U.S. operations.

With top sellers including Miller Lite and Coors Light, the two are taking aim at long-dominant Anheuser-Busch Cos. They would have about $6.6 billion in annual revenue and a roughly 30% market share in the U.S., second to Anheuser's 48%.

North America's largest brewers are struggling as consumers reach for small-batch "craft" beers, imported brews, wine and spirits. The number of barrels of beer sold in the U.S. is expected to grow only 1.5% this year, according to the Beer Institute, an industry group.

That has set off a merger rush to cut costs. SABMiller and Molson Coors, themselves products of recent mergers, said their tie-up in the U.S. will yield about $500 million in annual cost savings by the third year. The prospect helped drive up Molson Coors shares more than 10% on the New York Stock Exchange, while SABMiller was up 1.4% in London.

"This transaction is driven by the profound changes in the U.S. alcohol-beverage industry," said Pete Coors, who is vice chairman of Molson Coors and will be chairman of the new venture.

The deal, which is likely to face antitrust scrutiny, could increase pressure on Anheuser to pursue a merger outside the U.S., where it has a relatively small presence and where greater opportunities for growth lie. World-wide, Anheuser is the No. 3 beer maker by volume and market capitalization after InBev SA and SABMiller. An Anheuser spokeswoman declined to comment.

In a message to employees, Anheuser Chief Executive August A. Busch IV said the brewer must capitalize on the "significant transition confusion" that he predicted will occur when Miller and Molson Coors blend their U.S. operations. There will "likely be great concern within the SABMiller/Coors field sales and wholesaler organizations as people attempt to determine if they will have a role in this new structure," he said.

Mr. Busch said Anheuser employees "must not lose sight of the fact" that the new venture is "an attempt by these companies to better compete against us." Anheuser shares were down 0.9%.

From its roots in South Africa, the former SAB PLC has grown rapidly over the past decade by expanding into fast-growing economies such as China, Eastern Europe and Latin America. SAB acquired Miller Brewing Co. in 2002, but the U.S. business remained a weak link as the combined company struggled to combat Anheuser's power in marketing and distribution.

Under the agreement, SABMiller will have a 58% economic interest in the joint venture. Molson Coors will have 42%. They will have equal voting interests, and each company will have five representatives on the venture's board. Leo Kiely, chief executive of Molson Coors, is set to become CEO of the joint venture, with Tom Long, CEO of Miller Brewing, becoming president and chief commercial officer. The deal, subject to shareholder approval, is expected to close next year.

SABMiller and Molson Coors discussed a deal on and off for about a year, executives at both brewers said yesterday. The venture "creates a much more robust business, which has the ability...to be much more competitive no matter what the future may throw at us," said Graham Mackay, chief executive of SABMiller, in an interview.

Critical to the alliance, Mr. Mackay said, will be the opportunity for U.S. beer distributors to become "one-stop shops." He said distributors could save time and money by dealing with one company instead of two. About 60% of Miller's volume is distributed by wholesalers also selling Molson Coors brands. U.S. federal law dating to the repeal of Prohibition generally requires beer to be sold through wholesalers.

"I think we'll sell more and our costs will go down, so we should benefit," said Phillip Terry, chief executive of Monarch Beverage Co., a big distributor in Indiana selling 15 million cases of beer annually, including both Miller and Molson Coors products. He said he hopes the merger savings will be "translated into additional market spending, more promotions around the brands."

Anheuser remains a powerhouse in the U.S. beer market, where its top-selling brand is Bud Light. Its U.S. operating profit margin is about 23.6%, compared with margins of less than 10% for both Miller and Molson Coors, according to Mark Swartzberg, an analyst with Stifel Nicolaus in New York.

For years, the nation's beer giants thrived by peddling beers that are relatively light in taste and don't offend Americans' diverse palates. That era has faded. Just as vitamin-infused waters and gourmet coffees have caught fire, more beer drinkers are choosing brews with distinct tastes.

These beers are typically sold by independent local beer makers, although the big names are getting into the act. While craft beers are still a small slice of total revenue -- about 5% of the U.S. market -- they're the fastest-growing segment. Sales of craft beer rose 11% by volume in the first half of this year against year-earlier levels, according to the Brewers Association, a craft-beer trade group in Boulder, Colo. Molson Coors's hottest brand in the U.S. is Blue Moon, a Belgian-style wheat beer.

One potential drawback of combining Miller and Coors under one roof is cannibalization. Both Miller Lite and Coors Light are in the premium light-lager category. While executives for the companies argued yesterday that the brands have different attributes and complement each other, it's unclear whether beer drinkers will recognize the distinctions.

Mr. Mackay said the geographic strengths of the two companies are complementary. Miller is strong in the Midwest, with the leading market share in Chicago, while Coors has a big footprint in the West.

Molson Coors was formed by the 2005 merger of Colorado's Adolph Coors Co. and Canada's Molson Inc., both family-controlled companies. A person familiar with the deal said the Molson and Coors families didn't want to sell their entire company to SABMiller or another buyer. The joint venture allows them to keep some control. Molson Coors, with dual headquarters in Montreal and Denver, has major operations in Canada and Britain that will remain independent of SABMiller.

The companies said the projected $500 million in annual cost savings would come from streamlining production, reducing shipping distances and consolidating corporate staff. The companies haven't decided where the headquarters of the new venture will be. There could be job losses among corporate staff in Denver or Milwaukee, where Miller is based.

The deal could make it easier for the companies to raise prices as they wrestle with higher costs for aluminum, grains and other commodities. It could make them less vulnerable to pricing decisions by Anheuser. Several years ago, price cuts by Anheuser damped profits for its chief competitors.

The deal is likely to get a close look by the Justice Department because it combines the second- and third-largest U.S. brewers. But antitrust lawyers said it appeared unlikely to draw a challenge, given vigorous industry competition and the dominance of market leader Anheuser. The Bush administration has shown reluctance to block mergers.

Analysts speculated about what mergers might be left in the rapidly consolidating beer business. Rob Mann, an analyst with Collins Stewart in London, said Anheuser might be interested in Scottish & Newcastle, an Edinburgh-based brewer that is strong in the U.K., France and Russia. "We are approaching the final round of consolidation," Mr. Mann said. "Most markets have been consolidated at a local level by now."

With the exception of stakes in China, India and Mexico, Anheuser has largely stuck to the U.S. Some analysts think Anheuser may ultimately merge with InBev, based in Belgium. Anheuser imports InBev's European brands, including Stella Artois and Beck's, into the U.S. under a partnership begun this year. A spokeswoman for InBev declined to comment.

Another possible beer acquirer is Diageo PLC, one of the only companies to have significant shares in beer, spirits and wine. Its beer business largely consists of Guinness. Diageo Chief Executive Paul Walsh has said he's interested in a beer takeover, but deal prices are too high.

Spirits companies have raised the pressure on beer giants by rolling out sweet cocktails and other drinks to lure younger drinkers. Premixed bottled drinks such as Smirnoff Ice have seen sales triple in the last decade, according to Merrill Lynch.

SABMiller was advised on the deal by Lehman Brothers Holdings Inc. and J.P. Morgan Cazenove Ltd. Molson Coors was advised by Orbin & Co., Deutsche Bank AG and Morgan Stanley.

October 9, 2007

NBC to buy Oxygen media for $925 million

October 9, 2007

NBC Universal, the media division of GE (GE) announced Tuesday that it is buying Oxygen Media, which owns the Oxygen cable television channel, a network that caters mainly to women, for $925 million.

This is the second significant acquisition for NBC involving women’s media in the past year and a half. The company acquired Web site iVillage for $600 million last year. The Oxygen network is available in 74 million homes and competes primarily with cable network Lifetime, which is co-owned by Walt Disney (DIS) and magazine publisher Hearst Corporation.

In a statement, NBC Universal president and CEO Jeff Zucker called Oxygen “the crown jewel of independent networks? and said that the acquisition will increase NBC’s “foothold in the advertiser-coveted young, upscale, female demographic.? NBC said that it expects the deal to close in November and that Oxygen should ad $35 million in revenue and cost savings in 2008.

In addition to bolstering NBC’s presence among women, the Oxygen acquisition will also increase NBC’s position in the cable television business, which has been an area of the TV market that has held up better than broadcast television. While many advertisers have started to shun the traditional TV networks, ad revenues at many cable networks have been climbing, helping to boost the fortunes of media firms such as Disney, News Corp. (NWS) and Time Warner (TWX), which is also the parent company of CNNMoney.com.

That trend is clearly visible at NBC Universal as well. While NBC’s flagship network has struggled to keep viewers during the past few years and has finished in fourth place among the key advertiser-friendly 18-49 year old demographic, for three consecutive seasons, NBC Universal’s cable stations, which include USA, Bravo and SCI FI, have all enjoyed healthy ratings thanks to hits such as USA’s “Monk? and Bravo’s “Project Runway.?

So NBC is clearly making a bet that it a combination of Bravo, which in addition to “Project Runway? has many other female-skeiwing shows, and Oxygen with its iVillage properties will be a must-buy package for advertisers looking to reach young, affluent women.

As such, it will be interesting to see if adding Oxygen to the NBC Universal portfolio can help iVillage in its efforts to gain back ground to the rapidly growing upstart Glam Media, an online network focusing on women that supplanted iVillage as the top online destination for women earlier this summer.

It will be also interesting to see how Oxygen and iVillage, which both launched with much fanfare in the past decade, will do under the same corporate roof. Both Oxygen and iVillage had hopes of becoming mainstream media companies as independent firms and ultimately each decided that it was in their best interests to sell out to a larger rival instead.

“This deal with NBCU is the best way for Oxygen to grow. In seven years, we built a spectacular brand for women. We built Oxygen from scratch – we became profitable, grew from zero to 74 million subscribers and produced original programming that resonates with young women everywhere. I couldn’t be more proud of my team. Now together with NBCU, Oxygen can become an even bigger brand,? said Oxygen chairman and CEO Geraldine Laybourne in a statement.

Laybourne co-founded Oxygen with talk show host and media mogul Oprah Winfrey as well as television producers Marcy Carsey, Tom Werner and Caryn Mandabach.