Monday PM August 31st, 2009
by: Ed Mayberry, August 31, 2009 11:08:32 pm
Oilfield services company Baker Hughes says it will buy BJ Services in a cash-and-stock deal valued at $5.5 billion. The acquisition is expected to produce $75 million in cost savings for Baker Hughes in 2010 and $150 million in 2011, and add to earnings per share in 2011. BJ stockholders will receive 0.40035 shares of Baker Hughes and $2.69 in cash for each share they own. The deal represents a 16.3 per cent premium to BJ's $15.43 Friday closing stock price. BJ's shareholders will have an approximately 27.5 per cent stake in Baker Hughes once the acquisition closes, and two BJ Services board members will join Baker's board. The acquisition, which has approval from both companies' boards, may close by year's end.
Houston pipeline transportation firm Kinder Morgan Energy Partners has purchased the natural gas treating business of Dallas-based Crosstex Energy in a $266 million deal, according to the Houston Business Journal. The deal includes 290 plans in Texas and Louisiana, as well as in Mississippi, Oklahoma, Arkansas and Kansas.
Chemical company Huntsman has offered to pay about $415 million for a chunk of titanium dioxide pigment maker Tronox's assets. The Woodlands-based Huntsman said it has signed a "stalking horse" agreement with Oklahoma City-based Tronox, which filed for bankruptcy protection in January. That means other companies may now submit competing bids for Tronox's assets before a bankruptcy court auction, which will likely take place in the fourth quarter of this year. The assets Huntsman would acquire include titanium dioxide facilities in The Netherlands and the U.S., a joint venture interest in an Australian operation and electrolytic production facilities in the U.S.
The latest Texas Petro Index indicates more than 32,000 Texans in the oil and gas industry were forced out of work this year so far, with thousands more job losses appearing inevitable. The Texas Alliance of Energy Producers says the industry's work force is shrinking to the level required to operate 300 to 350 rigs in Texas. Petroleum economist Karr Ingham says one of every ten Texans working in the industry have lost their jobs this year through July. After surging to 240,000 workers in December, total oil and gas employment in the state had declined to 207,700 by July, according to the Texas Workforce Commission.
The holding company for Guaranty Bank has filed for Chapter 11 bankruptcy protection. The Federal Deposit Insurance Corporation shut down the Austin company and its branches on August 21st. The FDIC sold the majority of Guaranty's $12 billion in assets to BBCA Compass. Guaranty had 27 branch offices in Houston. Guaranty says volatility in the credit and housing markets since 2007 resulted in impairment of its existing mortgage-backed securities.
Bell Helicopter has reached a new contract with the union representing security guards and firefighters at its Dallas-Fort Worth-area plants. Bell says members of the Security, Police and Fire Professionals of America local 256 ratified the three-year contract Sunday. The union represents about 60 workers at Bell's DFW plants. The deal was the fourth and last labor contract Bell negotiated this year. The others that went smoothly were with unions representing office workers and engineering workers. That wasn't the case for a union representing 2,500 manufacturing workers, which went on strike for nearly six weeks. United Auto Workers local 218 members finally ratified a four-year contract in July after several failed talks with Bell. Fort Worth-based Bell Helicopter is a wholly owned subsidiary of Textron,
Southwest Airlines faces a deadline Tuesday for settling a dispute with regulators over the use of unapproved parts on more than 80 planes. Southwest says it has replaced the unapproved parts in more than 25 planes but needs more time to find parts for the remaining jets. Without an extension, the Federal Aviation Administration could force the airline to ground some planes. The airline said it wants more time to continue replacing parts without disrupting service for customers. FAA officials said the unapproved parts--designed to push hot engine exhaust away from the wings--didn't pose an immediate safety hazard. On August 22nd, they gave Southwest ten days to fix the problem.
A British newspaper has tracked one of the so-called "NatWest Three" to a job at an investment group. The Daily Mirror says David Birmingham has landed a five-day-a-week job at an international investment trust called Yattendon Investment Group. He's allowed to keep his earnings, and was to report back each evening to Spring Hill Open Prison in Aylesbury, Buckinghamshire. Since the paper's story, Bermingham has been moved to a nearby closed prison in Grendon Underwood.
Along with Giles Darby and Gary Mulgrew, Bermingham was extradited to Houston to face trial two years ago for defrauding the Royal Bank of Scotland, NatWest's owner, in 2001. They persuaded it to sell its stake in an Enron subsidiary for £500,000 to a company in which they had a secret financial interest. That company then sold the stake to Enron days later for $10 million. They pocketed £3.5 million, sharing the rest with former Enron CFO Andy Fastow. The three were jailed for 37 months in February last year and ordered to pay back the funds.
Texas-based health insurer HealthMarkets and two subsidiaries have agreed to pay $17 million to settle allegations of unfair and deceptive marketing in Massachusetts. Attorney General Martha Coakley said that the firm and its units--Oklahoma-based Mega Life and Health Insurance and Tennessee-based Mid-West National Life Insurance--will be banned for at least five years from selling their products in Massachusetts. They're allowed to renew existing plans with individuals and small businesses through 2012. Coakley says the companies used deceptive marketing to convince self-employed people and small businesses to buy health plans with limited benefits, failed to provide benefits mandated by state law and denied health plan membership based on existing conditions. HealthMarkets said it is committed to ensuring that it complies with the agreements with Massachusetts authorities.
Newsstand sales of U.S. magazines are continuing to fall. An industry group says single-copy sales fell 12 per cent in the first half of this year compared with the same period in 2008. Total circulation, including subscriptions, edged down one per cent. The figures are being released by the Audit Bureau of Circulations, based on 521 magazines that gave circulation numbers for both years. The total circulation of those titles stands at roughly 340 million. About 36 million are sold at newsstands and other retailers but account for a disproportionate amount of publishers' revenue because subscriptions are discounted. Cosmopolitan is still the most popular magazine at newsstands, though sales fell nearly 8 percent to 1.6 million.
Walt Disney says it is acquiring Marvel Entertainment for $4 billion in cash and stock, bringing characters like Iron Man and Spider-Man into the Disney family. Under the deal, Disney will acquire ownership of 5,000 marvel characters. Disney said that Marvel shareholders will receive $30 per share in cash plus 0.745 Disney shares for every Marvel share they own. It said the boards of Disney and Marvel have both approved the transaction, but it requires an antitrust review and the approval of Marvel shareholders.
A senior Kuwaiti oil official says OPEC is unlikely to announce a new production cut during its meeting next week. The official, a member of Kuwait's Supreme Petroleum Council, told the newspaper Al-Seyassah that oil prices are stable. He said oil ministers from the 12-member Organization of the Petroleum Exporting Countries will instead focus on compliance with current output quotas. Oil prices have rebounded following their collapse from July 2008 highs of around $147, supported in part by OPEC's decision late last year to cut production by 4.2 million barrels from September 2008 levels. OPEC kingpin Saudi Arabia has said $75 per barrel is a fair price for both consumers and producers.
A new survey finds that economists are comfortable with the Federal Reserve's low interest-rate policy. At the same time, they worry about the government's ability to rein in spending, cut back greenhouse gases or overhaul health care. These findings are from a semiannual survey by the National Association for Business Economics. The survey indicates almost 70 percent of the 266 economists surveyed earlier this month think the fed's monetary policy is "about right." That's an improvement over the 63 per cent reported in March and 56 per cent of a year ago. The results come as indicators point to an improving economy, presenting policy makers with difficult decisions over how quickly to roll back measures taken to avert a financial collapse.
The city of Houston has begun testing LED street lights in some city streets. The Department of Public Works and Engineering and CenterPoint Energy want public input on the pilot program in the Bridgegate subdivision near the South Sam Houston Parkway and Fuqua. The Light Emitting Diodes are retrofitted on current light poles to reduce energy consumption and carbon footprint. The program will run for six months, and CenterPoint will calculate the energy savings to determine the best product. The streets include one block each of Malden Drive, as well as Fern Terrance Drive, Cayman Mist Drive, Linden Gate Drive, Bradford Way Drive and Lettie Drive. Residents may see a difference in the color and brightness of the lights. Houston pays about $3 million a year for the 177,000 street lights, with 60 per cent located in neighborhoods. Public input is welcome on a special Web site.
Walmart.com is adding about one million items to its Internet site by teaming up with a number of other vendors. The online division of Wal-Mart Stores launched the addition to its Web site. The new items will come from vendors that include ESPN Stores, Pro Team and eBags. The additional vendors will expand WalMart's offerings in the home, baby, apparel, sporting goods and toys categories. The company says it plans to add more vendors later. Customers ordering the goods will pay through Walmart.com's system but the other vendors will handle shipping and services.
Swedish furniture chain Ikea is dealing with an unexpected backlash after switching the typeface in its latest catalog. The company's decision to make its first font change in 50 years has provoked a worldwide reaction on the Internet. The switch from future to verdana has outraged some fans of the catalog, which the company advertises as the world's most printed book. A posting on the online forum Typophile ends with the words, "it's a sad day." One posting on Twitter said "words can't describe my disgust." A week ago, a Romanian design consultant started an online petition called "Ikea, Please Get Rid of Verdana". As of today, the campaign had more than 2,700 signatures. Verdana was invented by Microsoft for use on a computer screen, not on paper. Ikea says it wanted a font that works in both digital and print media to reach many people in different ways.
A salmonella scare is prompting a Beaumont-based coffee and spice packager into a red pepper recall. The Texas Coffee Company is recalling three- and eight-ounce packages of Texjoy red pepper because of potential contamination by salmonella bacteria. Infection can cause flulike symptoms in otherwise-healthy people and death in young children, frail or elderly people and those with compromised immune systems. The recalled spice was sold in retailers in southeastern Texas and southwestern Louisiana. The clear plastic packages bear lot numbers a29a07a2012, a28a07a2012 and a30a07a2012. A Texas coffee statement says it received word of the potential contamination from its supplier. The statement says no illnesses relating to the product have been reported so far. The company says consumers can return pepper covered by the recall to their retailer for a refund. Questions can be directed to 1-800-259-3400.
This week brings what tends the be the most important economic report of the month, the Labor Department's report on unemployment. That is due Friday. And economists expect it to show a slight rise in the unemployment rate to 9.5 per cent. Payrolls are seen falling by more than 200,000 jobs. Tomorrow, the Institute for Supply Management reports on the health of manufacturing. Automakers also release their monthly auto sales numbers. Wednesday, readings on productivity and factory orders are due.