Top Stories: Business and Finance
The following are the day's top business stories:
1. Groupon Is Said to Walk Away From Google's $6 Billion Acquisition Offer 2. EU's Bailout Fund May Be Increased, Reynders Says in a Break With Merkel 3. U.S. Expansion Struggles to Become Broad-Based as Job Growth Lags Behind 4. Hedge Funds Decline in November Amid Europe Debt Crisis, Stock Market Drop 5. U.S. Stocks Gain on Economic Data, Europe's Attempts to Stem Debt Crisis 6. China's Central Bank May Order Reserve-Requirement Boost, Adviser Li Says 7. U.S., South Korea Rework Trade Accord to Appease Ford on Tariff Timetable 8. J&J Hip Replacement Lawsuit Proceedings Assigned to One U.S. Judge in Ohio 9. Cathay Chief Tyler Bequeaths Deeper China Ties, Stock Gain in Move to IATA 10.Asian Stocks Rise on U.S. Housing Data, Plan for Europe's Sovereign Debt 11. Hooky Detectives Track Down Corporate Ferris Buellers on Their Days Off 12.Most Read on Bloomberg: Stock Climb, Ireland Wins Aid, Spanish Bonds Drop
1. Groupon Is Said to Walk Away From Google's $6 Billion Acquisition Offer
Groupon Inc., a Chicago-based Internet-coupon service with more than 35 million users, walked away from an acquisition offer from Google Inc. yesterday, according to a person with knowledge of the matter. The proposed acquisition fell through amid hesitation by Groupon´s founding team, said the person, who requested anonymity because the talks are private. The startup will decide next year whether to sell shares in an initial public offering instead,the person said. The discussions could resume if both sides overcome their differences. Google had offered $6 billion, including incentives that would be paid to the target´s managers if performance targets were met, people familiar with the matter had said this week. Groupon would have helped its new owner expand in the $133 billion U.S. local-ad market and lessen its reliance on Internet-search advertising. "Clearly Google wants to get into the local space and Groupon was one way," said Aaron Kessler, an analyst at ThinkEquity LLC in San Francisco, who has a "buy" rating on Google and doesn´t own it. "I don´t think from a Google perspective that if they miss out, that there´s not other ways to get into local."
2. EU's Bailout Fund May Be Increased, Reynders Says in a Break With Merkel
Belgian Finance Minister Didier Reynders said the euro region could increase the size of its 750 billion-euro ($1 trillion) bailout fund, breaking ranks with German Chancellor Angela Merkel and France´s Nicolas Sarkozy. Reynders told reporters in Brussels yesterday that the current cash pool could be increased if governments decide to create a larger fund as part of a permanent crisis mechanism in 2013. "If we decide this in the next weeks or months, why not apply it immediately to the current facility?" European officials are under pressure to find new ways to stop contagion spreading from Greece and Ireland amid concern the bailout package may not be large enough to rescue Spain if needed. While Sarkozy and Merkel rejected expanding the fund on Nov. 25, European Central Bank President Jean-Claude Trichet on Dec. 3 indicated governments should consider just such a move. The International Monetary Fund also supports boosting the facility after 2013, Reynders said at the end of a week in which Belgian bond spreads jump to the highest in at least 17 years.
3. U.S. Expansion Struggles to Become Broad-Based as Job Growth Lags Behind
The U.S. economy is struggling to achieve a broad-based expansion as companies remain reluctant to ramp up hiring 18 months after the end of the recession. The unemployment rate rose to seven-month high of 9.8 percent in November as payroll growth slowed to 39,000 from 172,000, a Labor Department report showed yesterday. Hours worked and earnings stalled, while a record 6.4 million women in the labor force were without work last month. The worse-than-projected job numbers followed a recent series of statistics indicating the economy was picking up steam. Sales at retailers rose by the most in eight months in November while manufacturing kept expanding, data this week showed. "We haven´t hit escape velocity," said Mark Zandi, chief economist at Moody´s Analytics Inc. in West Chester, Pennsylvania. "We´re approaching it, but the coast is not clear." He defined "escape velocity" as consistent economic growth of 3 percent or more and monthly increases in payrolls of at least 175,000.
4. Hedge Funds Decline in November Amid Europe Debt Crisis, Stock Market Drop
Hedge funds declined the most in six months in November as the European debt crisis pushed stock markets lower across the globe. The Bloomberg aggregate hedge fund index fell 1.5 percent, the most since May, when a sudden selloff in stocks known as the "flash crash" prompted investors to cut risk. Long-short equity funds, whose managers can bet on rising and falling stocks, dropped 1.6 percent last month and gained 6.1 percent since the start of the year. Global stocks slumped 2.3 percent in November amid concern Europe´s debt turmoil may engulf Spain and Portugal after a bailout of Ireland failed to persuade investors that the crisis will be contained. Standard & Poor´s said last week it may cut Portugal´s credit rating. Prime Minister Jose Socrates has rejected suggestions the country may need a bailout. Europe is "on the verge of collapse," James Melcher, founder of New York-based hedge fund Balestra Capital Partners LP, said last week at the Hedge Funds New York conference, organized by Bloomberg Link. "Germany may leave the euro with a couple of stronger countries." The main Bloomberg hedge fund index is weighted by market capitalization and tracks 2,627 funds, 1,198 of which have so far reported returns for November. The index fell to 116.71 last month, compared with a peak of 130.38 in July 2007.
5. U.S. Stocks Gain on Economic Data, Europe's Attempts to Stem Debt Crisis
U.S. stocks rose this week, sending benchmark indexes to their biggest gains in a month, amid improved economic data and efforts by the European Central Banks to stem the region´s debt crisis. Home Depot Inc. jumped 8 percent, the biggest gain in the Dow Jones Industrial Average, as construction spending and existing home sales topped economists´ estimates. Bank of America Corp. and JPMorgan Chase & Co. advanced at least 5.6 percent after Goldman Sachs Group Inc. recommended financial stocks. Abercrombie & Fitch Co. rose 16 percent, its biggest weekly advance since July, after same-store sales surged. The Standard & Poor´s 500 Index increased 3 percent to 1,224.71 in the five days yesterday, its largest gain in four weeks. The Dow rallied 290.09 points, or 2.6 percent, to 11,382.09. The 30-stock gauge had its biggest two-day rally since July on Dec. 1-2, surging 3.2 percent. "With Europe, it appeared some of the recent flare-up on the continent was going to subside and markets reacted positively," said Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC, which oversees more than $50 billion in Philadelphia. "There are continued signs of improvement but the economy isn´t yet completely out of the woods. The market´s going to be subject to setbacks."
6. China's Central Bank May Order Reserve-Requirement Boost, Adviser Li Says
China may order higher reserve requirements for banks to counter capital inflows and a possible jump in lending at the start of 2011, said Li Daokui, an adviser to the central bank. Li was commenting on the Communist Party Politburo announcement that the nation will move next year to a "prudent" monetary policy from the current "moderately loose" stance. The statement, which endorsed a continued "proactive" fiscal policy, was reported by the state-run Xinhua News Agency. Boosting reserve requirements would counter inflows of money and "China´s own economic cycle, such as the fact that banks tend to lend more at the beginning of a year," Li said in a phone interview in Beijing yesterday. China already has been winding back stimulus to rein in liquidity and combat accelerating inflation. Inflows of capital to Asia, the region leading the global recovery, threaten to fuel price gains and asset bubbles.
7. U.S., South Korea Rework Trade Accord to Appease Ford on Tariff Timetable
The U.S. and South Korea agreed to change automobile provisions in a pending free-trade deal, gaining the support of Ford Motor Co. and lawmakers in both parties for the stalled accord. Both nations will scale back initial tariff cuts for cars, and South Korea said it would allow more imports of U.S.-made vehicles that meet American standards and not Korean rules. The U.S. will maintain a 25 percent tariff on truck imports for eight years instead of beginning to phase it out immediately. "This was the only way to reverse the historic, lopsided pattern of one-way trade with South Korea," Representative Sander Levin, chairman of the House Ways and Means Committee and a critic of the earlier accord, said yesterday in a statement supporting the agreement. With almost $68 billion in trade between the nations, a deal would be the U.S.´s largest since the North American Free Trade Agreement in 1994, and would help President Barack Obama meet his goal of doubling American exports in five years. It was backed by companies including Citigroup Inc., Caterpillar Inc., General Electric Co. and JPMorgan Chase & Co.
8. J&J Hip Replacement Lawsuit Proceedings Assigned to One U.S. Judge in Ohio
All pretrial proceedings in federal lawsuits against Johnson & Johnson over recalled devices used in hip-replacement surgery will be overseen by a federal judge in Ohio, a judicial panel decided. U.S. District Judge David A. Katz in federal court in Toledo will supervise evidence-gathering efforts in cases over the ASR XL Acetabular System, which J&J´s DePuy Orthopaedics unit recalled on Aug. 26 after the implants stopped functioning properly. Such consolidation "will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation," according to the Judicial Panel on Multidistrict Litigation. About 150 federal lawsuits are pending, and plaintiff´s lawyer Steven T. Baron of Baron & Budd in Dallas said he represents "hundreds of claimants" with defective hips. "I´m highly confident there will be thousands of lawsuits," Baron said in an interview. "I think this is a very significant liability for Johnson & Johnson. I believe that the damages that they´ve caused are in the billions of dollars."
9. Cathay Chief Tyler Bequeaths Deeper China Ties, Stock Gain in Move to IATA
Cathay Pacific Airways Ltd. Chief Executive Officer Tony Tyler will leave after three years in the job having navigated the slump, extended the carrier´s reach in China and outshone Singapore Airlines Ltd. in the stock market. Tyler, 55, will depart the world´s third-biggest airline by market value to become head of the International Air Transport Association trade body, according to a statement yesterday. He´ll be replaced by Chief Operating Officer John Slosar. During his time as CEO, Tyler has spent billions of dollars on planes from Airbus SAS and Boeing Co. while returning Cathay to profit following the first loss in a decade as deeper ties to mainland China helped it weather the recession. That has helped shares of the carrier jump 21 percent since he became chief on July 1, 2007, compared with a 10 percent drop at Singapore Air. "Beyond all the other challenges involved in running an airline, Tyler has had to manage the relationship with China," said Tim Coombs, managing director at Aviation Economics in London. "Cathay was an offshoot of a big British trading company with a massive history, and he had to manage it into something quite different culturally and from a business point of view."
10.Asian Stocks Rise on U.S. Housing Data, Plan for Europe's Sovereign Debt
Asian stocks rose this week, reversing three consecutive weeks of declines, after U.S. economic reports and eased concern over Europe´s sovereign debt crisis added to confidence in the global economic recovery. Honda Motor Co., the Japanese carmaker which receives 80 percent of its sales abroad, gained 2.6 percent in Tokyo. James Hardie Industries SE, the biggest seller of home siding in the U.S., soared 16 percent in Sydney as the National Association of Realtors said purchases of existing homes in the U.S. unexpectedly jumped. HSBC Holdings Plc, Europe´s biggest bank, advanced 1.8 in Hong Kong after European government officials threw debt-strapped Ireland a lifeline. The MSCI Asia Pacific Index rose 3.5 percent to 133.44 this week, reversing three consecutive weeks of declines. Reports in the U.S. showed consumer confidence rose to the highest level in five months in November and jobless benefits over the past month on average dropped to a two-year low. "The economic data is clearly improving," said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., which manages about $93 billion and is a unit of AMP Ltd., Australia´s second-largest asset manager. "U.S. housing is showing signs of life and the employment trend is finally looking encouraging. The easing of European debt concerns is releasing a handbrake on markets."
11. Hooky Detectives Track Down Corporate Ferris Buellers on Their Days Off
Rick Raymond parked his black Kia SUV behind a row of trees and peered out at his target. It was 4 a.m., and Raymond -- a seasoned private detective who has worked roughly 300 cases, from thieves to philandering spouses -- was closing in on a different sort of prey. Raymond recently has come to occupy a new and expanding niche in the surveillance universe, Bloomberg Businessweek reports in its Dec. 6 edition. Corporations pay him to spy on workers who take "sick days" when they may not, in fact, be sick. Such suspicion has led Raymond to bowling alleys, pro football games, weddings and even funerals. On this morning it has taken him to a field outside the home of an Orlando, Florida, repairman whose employer is doubtful about his slow recovery from a car accident. While Raymond tries to be impartial about his subjects, "80 to 85 percent of the time," he said, "there´s definitely fraud happening."
-0- Dec/05/2010 00:35 GMT
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.