The following are the day's top business stories:
1. BP's Rosneft Deal Replaces Reserves Lost in Post-Spill Sales at Half Price 2. Goldman Chief Blankfein Said to Visit Groupon to Pitch Initial Share Sale 3. BP Will Increase Holdings of Ex-Yukos Assets After Share Swap With Rosneft 4. Wall Street Secret Society Kappa Beta Phi Inducts Members With Lehman Rite 5. European Stocks Increase for Second Week; Banks, Danisco, ARM Shares Gain 6. Copper Market Deficit May Climb to 600,000 Tons This Year, JPMorgan Says 7. Marchionne's Italy Factory Revamp Approved, Clearing Way for Chrysler Plan 8. Kraft Says It Faces `Irreparable Harm' If Starbucks Ends Distribution Deal 9. Summers Projects U.S. Economy Will Grow Between 3% and 4% in Coming Years 10.Lehman Lacks Creditor Support to Exit Bankruptcy, Paulson Fund Lawyer Says 11.Asian Currencies Gain on Easing Concern About Europe Debt, Interest Rates 12.Most Read on Bloomberg: Trader Pay Beats Surgeons; Stocks Drop; U.S. Snow
1. BP's Rosneft Deal Replaces Reserves Lost in Post-Spill Sales at Half Price
BP Plc´s $7.8 billion share swap with OAO Rosneft will replace almost all the reserves it sold to pay for the Gulf of Mexico spill at less than half price. Rosneft´s market value prices its oil and gas reserves at $5.33 a barrel, the fourth-lowest among the world´s biggest oil producers, data compiled by Bloomberg show. That´s 60 percent below the $13.20 average price BP got for fields sold last year holding 1.7 billion barrels, according to bank DnB NOR ASA. After the deal, BP´s 10.8 percent Rosneft holding will represent about 1.6 billion barrels of proved reserves. "They are buying at cheaper prices than the assets they´ve just been selling, and they are paying with a devalued currency" in their own shares, said Christine Tiscareno, an equity analyst at Standard & Poor´s in London. "It´s not for current production, it´s future resources." Chief Executive Officer Robert Dudley´s biggest deal since taking charge in October will lessen BP´s dependence on the Gulf of Mexico, where the company may be cut off from exploration after the worst U.S. oil spill. The agreement with Russia´s largest oil producer opens up Arctic fields in an area the size of the U.K. North Sea that may hold about 100 billion barrels.
2. Goldman Chief Blankfein Said to Visit Groupon to Pitch Initial Share Sale
Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein visited the Chicago headquarters of Groupon Inc. yesterday to pitch executives on hiring his firm for a possible share sale, a person familiar with the matter said. Morgan Stanley is also in talks with Groupon to arrange an initial public offering, said the person, who asked not to be identified because the discussions are private. Goldman Sachs aims to win the mandate to handle a sale for Groupon, a two-year old company that rebuffed a $6 billion takeover offer from Google Inc. last month. The startup this week announced a round of funding said to value it at $4.75 billion and now is weighing an IPO that may give it a $15 billion valuation, people familiar with the matter have said. Julie Mossler, a spokeswoman for Groupon, and David Wells, a spokesman for Goldman Sachs, based in New York, declined to comment. Pen Pendleton, a spokesman for New York-based Morgan Stanley, also declined to comment.
3. BP Will Increase Holdings of Ex-Yukos Assets After Share Swap With Rosneft
BP Plc will boost its holdings in the former assets of Yukos Oil Co. through its share swap with Russia´s state-run oil producer, two weeks after ex-Yukos chief Mikhail Khodorkovsky´s sentence was extended by six years. BP agreed on Jan. 14 to exchange $7.8 billion of stock for 9.5 percent of OAO Rosneft, which became Russia´s largest oil producer after aquiring Yukos assets in 2007. The deal will also provide access to untapped Arctic offshore oil and gas resources as London-based BP sells assets to pay for last year´s oil spill in the Gulf of Mexico. Khodorkovsky, once Russia´s richest man, has called the charges against him retribution for political opposition to then-President Vladimir Putin. Putin, now prime minister, has denied involvement, saying that it was a matter for the courts and that "a thief should sit in prison." The U.S. and European governments said last month´s conviction heightened concerns about Russia´s commitment to the rule of law. "This is BP´s ticket to the Russian Arctic offshore," Yuri Kogtev, head of Moscow-based oil and gas research and consulting company RusEnergy, said by phone. The share swap may have been a condition imposed by the Russian government, he said. "I wouldn´t say BP was hunting for Yukos assets."
4. Wall Street Secret Society Kappa Beta Phi Inducts Members With Lehman Rite
A bald man in a tuxedo walked into Manhattan´s St. Regis Hotel, muttered to a uniformed attendant and was ushered to an elevator. A woman in a fur hat the size of a lampshade followed, then a man in a topcoat, who licked his lips as he walked under a ceiling painted with naked cherubs. Kappa Beta Phi, the banking fraternity founded before the 1929 stock-market crash that counts Wall Street´s most senior executives and regulators among its past members, held its annual induction dinner behind closed doors at the landmark New York hotel on Jan. 13. This year´s names included Josh Harris, senior managing director at Apollo Global Management LLC, the buyout firm led by Leon Black, according to two attendees, who spoke on the condition of anonymity because the society´s activities are secret. Harris, 46, was No. 655 on Forbes Magazine´s billionaires list last year. Joining Kappa Beta Phi alongside him was Paul Parker, the global head of mergers and acquisitions at Barclays Capital in New York, who previously led M&A in the U.S. for Lehman Brothers Holdings Inc. As always, the neophytes, as the group refers to new members, entertained the assembly, the attendees said. Parker, 47, stepped up by playing a video, filmed years earlier, of Lehman colleagues loading up a time capsule, they recounted. American International Group Inc. Chief Executive Officer Robert Benmosche, 66, a Kappa Beta Phi member who disclosed in October that he was undergoing treatment for cancer, was there. He looked energetic, the two attendees said.
5. European Stocks Increase for Second Week; Banks, Danisco, ARM Shares Gain
European stocks advanced for a second week as investors speculated that the European Union will increase its efforts to contain the region´s debt crisis. Banking shares posted their best weekly performance in six months. Danisco A/S jumped 25 percent as DuPont Co. agreed to buy the company. Provident Financial Plc surged 13 percent after saying 2010 earnings may exceed analysts´ projections. The benchmark Stoxx Europe 600 Index gained 1 percent this week as Portugal, Spain and Italy completed debt sales. The gauge rallied 8.6 percent in 2010 as the European Union bailed out Greece and Ireland, companies reported increased profits and the Federal Reserve unveiled $600 billion of additional bond purchases to support the economy. "The first test of the ability of the euro-area peripheral countries to secure financing on the market has been passed," a team of economists at Intesa Sanpaolo SpA, including Luca Mezzomo and Paolo Mameli, wrote in a report. "The fears over the outcome of the January auctions in Portugal, Spain and Italy proved unfounded."
6. Copper Market Deficit May Climb to 600,000 Tons This Year, JPMorgan Says
The world refined copper market is expected to have a 500,000-metric-ton to 600,000-ton deficit in 2011, even with a significantly weaker demand scenario, according to JPMorgan Securities Ltd. Disruptions last year seemed to have wiped out most of mine supply growth, metals strategist Michael Jansen told a conference in Shanghai. "As demand further recovers into 2011, supply-side issues will become more influential," he said. Copper for delivery in three months in London advanced to a record of $9,754 a metric ton on Jan. 4 after rising 30 percent last year as the improving global economy and rising investment demand for commodities prompted buying. The International Copper Study Group is expecting a 435,000-ton global deficit in the refined metal this year. While current prices are sufficient to encourage brownfield and greenfield developments, longstanding issues, including capital availability, relative merit of projects, resource nationalism, and geotechnical issues, remain key impediments for supply increase, said Jansen.
7. Marchionne's Italy Factory Revamp Approved, Clearing Way for Chrysler Plan
Fiat SpA workers approved a 1 billion-euro ($1.3 billion) revamp of the carmaker´s oldest factory in Italy, clearing the way for Chief Executive Officer Sergio Marchionne to implement a venture with Chrysler Group LLC. About 54 percent of employees, or 2,735 workers, voted for the investment in the Mirafiori plant in Turin in exchange for measures to limit strikes and curtail absenteeism, according to a statement by the UILM labor union on its website today. About 94 percent of the workers took part in the ballot that ended late yesterday. "We´re happy the majority of workers at Mirafiori has understood Fiat´s commitment to transform it into a plant with an international reach," Marchionne, 58, said in an e-mailed statement today. "We´re happy because workers with their vote showed they have confidence in their future. Our plan for this plant is very ambitious." Marchionne needs a majority of the 5,500 employees at the factory to sign off a Dec. 23 accord approved by most unions as he seeks to turn around Fiat´s unprofitable Italian operations and revitalize an alliance with Chrysler by sharing production for Jeep sports-utility vehicles and Alfa Romeo cars. The vote also marks a milestone in Italian labor relations, which are based on national deals that often make it difficult for companies to reorganize to boost productivity.
8. Kraft Says It Faces `Irreparable Harm' If Starbucks Ends Distribution Deal
Kraft Foods Inc., the world´s second-largest food company, said it faces "irreparable harm" if Starbucks Corp. is allowed to terminate an agreement that allows it to distribute Starbucks products to grocery stores. With the agreement, Kraft built a business worth $500 million a year, it said in a filing yesterday in federal court in White Plains, New York. Kraft asked the court to reject Starbucks´ arguments that it won´t suffer irreparable harm if the agreement is ended by March 1, as Starbucks seeks to do. Starbucks responded the same day that Kraft breached the contract, causing a loss of $100 million in potential sales. "Rather than deny Kraft´s motion based on myths about the nature of irreparable harm, the court should contrast the consequences of denying Kraft´s motion with the consequences of granting it," Northfield, Illinois-based Kraft said. "That contrast reveals that the court faces a straightforward choice between allowing irremediable harm and preventing it." Kraft sued in December for an order to prevent Starbucks from ending the agreement before the companies resolved their dispute. Seattle-based Starbucks, the world´s largest coffee- shop operator, plans to buy companies to build up its grocery business, Chief Executive Officer Howard Schultz said Dec. 1.
9. Summers Projects U.S. Economy Will Grow Between 3% and 4% in Coming Years
The U.S. economy probably will grow between 3 and 4 percent annually over the next several years, said Lawrence Summers, the former Treasury secretary and director of the National Economic Council. "I would expect growth to be comfortably above 3 percent over the next several years," Summers said in an interview that will air tomorrow on "CNN´s Fareed Zakaria GPS," according to a transcript provided by the network. "And I think we´ll start to see, before long, growth getting closer to 4 than to 3." Summers, who stepped down as NEC director at the end of the year to return to Harvard University, also said that cutting the federal budget deficit should be a priority for President Barack Obama. The president has laid "the right foundation for deficit reduction going forward," Summers said. "And there´s no question that that´s got to be a priority over the next several years."
10.Lehman Lacks Creditor Support to Exit Bankruptcy, Paulson Fund Lawyer Says
Lehman Brothers Holdings Inc. "has no creditor support" that will enable it to exit bankruptcy, said a lawyer for hedge fund Paulson & Co. and other dissenting creditors. Lehman, due to publish a plan to raise $60 billion to help pay its debt, has "not used any of the past two years to facilitate inter-creditor negotiations that are going to be essential to moving this process forward," Christopher Shore, a lawyer for the group holding $20 billion in Lehman claims, told a U.S. Bankruptcy Court judge in Manhattan on Jan. 13. "The debtors have a `hope´ plan which is based upon the hope that creditors accept what the debtors propose." The defunct investment bank, which has spent more than $1 billion on advisers during 28 months in bankruptcy, is due to file a new payment plan after twice missing the target date. Lehman´s "hope" is that it will be "a consensual plan," with creditors working together, Harvey Miller, a lawyer for Lehman, told Judge James Peck. While Lehman works closely with an official committee of creditors, it hasn´t called any meetings of different creditor groups, Shore said. Nor has it tried to foster diverse groups of claimholders, a process that might have helped it build support for its proposals, he said.
11.Asian Currencies Gain on Easing Concern About Europe Debt, Interest Rates
Asian currencies gained this week as easing concern about Europe´s debt crisis and the prospect of more interest-rate increases boosted investor appetite for emerging-market assets. South Korea´s won had its fourth weekly advance and China´s yuan appreciated ahead of President Hu Jintao´s visit to Washington. German Finance Minister Wolfgang Schaeuble said Jan. 13 that European Union member states will assemble a "comprehensive package" by March to tackle the sovereign debt crisis. The statement came a day after Chancellor Angela Merkel said Germany will stand by the euro. Korea and Thailand raised their benchmark interest rates this week. "We have seen interest-rate hikes by Korea and Thailand and we may see rate moves by most Asian countries," said Thio Chin Loo, a senior currency analyst at BNP Paribas SA in Singapore. "The key driver for the Asian currencies has also been the dollar´s volatility against the major currencies in view of what´s happening in Europe." The won rose 0.7 percent for the week to 1,114.30 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. The yuan strengthened 0.53 percent to 6.5931 and Malaysia´s ringgit gained 0.4 percent to 3.0573, touching a 13-year high of 3.0475. India´s rupee was little changed this week at 45.36 and fell 0.3 percent yesterday after China told banks to set aside more deposits as reserves for the fourth time in two months.
-0- Jan/16/2011 00:35 GMT