Market Sense

This year wheat prices are apparent to soar all time high. Unfavorable weather has damaged crops in major producers including Australia, Europe, Russia and Ukraine and it’s expecting that output can fall almost 20% below than the last year.

Amidst the meager supply, prices are already augmenting and in the coming time when market will feel the supply crunch due to scanty production, consumers’ can face global food inflation, which will be very critical situation for any economy.

While trading at the Chicago Board of Trade, wheat prices rose to $325 dollars per tonne. Biggest consumers like China and India have already demanded huge cargoes of grain. India is planning to buy cargoes of 25,000 to 75,000 metric tons each for delivery from October to December, whereas Taiwan, which depends on foreign wheat supplies, issued a tender to import 92,000 tons of U.S. wheat.

Bakery related industries have already affected by the shortage as global inventories of the commodity used to make bread, pastries and biscuits are expected to fall to the lowest in 26 years.

All major economies are already under intense pressure of inflation and subprime crises and in the middle of all these hiccups in the coming time consumers are likely to hit hard.

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Via: ABC

China’s Shenhua Energy Co., the nation’s largest coal producer, is planning to issue shares on the Shanghai Stock Exchange to raise as much as $6.7 billion as demand for the fuel surges.

Shenhua Energy announced plans to sell as many as 1.8 billion Yuan-denominated shares in Shanghai. Collected money from the sale will be utilized to buy coal, power and transport operations in domestic and overseas acquisitions. Shenhua Energy also disclosed its intentions of buying Shendong Coal and Shendong Power from their parent company, which will boost its marketable reserves by 6.19 percent.

All Shenhua Energy shares will become tradable once listed in the market. At present, 81.2% of the 18.08 billion issued shares are non-tradable state shares.

Analysts are expecting that the Hong Kong listed company will be welcomed in its homeland and will get good response. Market analyzers also added that the company’s plan to list it in Shanghai Stock Exchange would help to cool the coal market as it has quadrupled in value since 2006.

China, which is the largest producer of coal and second largest consumer after U.S, imported a large amount of coal to resist country’s growing needs of energy. China gets its 78 percent of electricity from coal.

Growing demand for energy has forced the country to explore its all-possible sources as last week coal prices at Qinhuangdao, China’s largest port for the fuel, rose to a record high as increased use of air conditioners in the summer season boosts power demand.

The price of coal at Qinhuangdao has risen almost threefold in the past five years. The nation’s coal output rose 7.1 percent in the first half of this year.

Increasing demand has forced China to produce more coal. China Economic Information Network asserts that China’s 2007 coal production can mount by 8.6 percent to 2.52 billion tons and demand may gain 8.5 percent to 2.51 billion tons.

Market responds well over Shenhua Energy decision to list in Shanghai Stock Exchange, as its shares climbed by 6.6 percent.

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Chinese Foreign Exchange Trading System has announced that Yuan, the Chinese currency is hitting a new high against US dollar on Tuesday. RMB or the Renminbi is the yuan’s central parity rate. On Tuesday, it stood at 7.6427 yuan to one U.S. dollar. Thus, it recorded a profit of 95 basis points from the reference rate of Monday at7.6525 to dollar.

Value of yuan exceeded second time by 7.65. 7.65 mark was challenged to achieve 7.6488 on May 30. In the last trading day of the year 2006, Chinese currency climbed from 7.8087 yuan to one U.S. dollar, i.e. 1,660 basis points.

China halted peg of yuan for greenback from 21July, 2005. Since then accumulative appreciation has enhanced 7.5 percent. On May 18, the central bank or The People’s Bank of China made an announcement of widening the floating band of yuan against U.S. dollar. This would be mainly for the daily spot trading on the interbank market. It would be from 0.3 percent to 0.5 percent effective from May 21.

In the coming time, there will be a great rise in the value of currency of China, due to its fast growing economy with low inflation. In order to achieve central parity rate of 10.3165 yuan against one euro, 274 basis points were lost by yuan on Tuesday as compare to previous trading day. To attain 6.2781 yuan against 100 Japanese yen, it moved down 68 basis points.

Image:chinadaily
Via:english.people

The iron curtain of Chinese authoritarian communist regime is again trying to impinge on free flow of ideas. On the pretext of saving the youth from the harmful effect of online material, the Chinese authorities are denying license to open new Internet cafes this year.

The authoritarian government is already carrying out scrutiny of cyber cafes in China.Investigators are given the task of looking after whether the Internet cafes are offensively renting out their licenses or failing to record the identities of the users. A press release by the State Administration for Industry and Commerce dated May 30, said on its Web site,

Industry and commerce bureaus at all levels must not license any new Internet cafes in 2007.

The Maoist state encourages the web use for business and education. But it is worried of rising democratic ideas and children’s access to violent games, sexually implicit material and gambling web sites. Even the Beijing Reformatory for Juvenile Delinquents said 33.5 percent of its detainees had committed crime under the influence of violent online games or erotic Web sites.

Chinese President Hu Jintao himself has ordered the authorities to dirt free Internet culture. An ever-ready government to block freedom has already launched an onslaught in April on online pornography, saying it was perverting young minds. In March, the administration launched a crackdown on the illegal transfer of Internet licenses by holders, including schools.

China boasts the world’s second-largest population of Internet users after the US. But its, with 137 million people online has only 120,000 Internet cafes. Internet cafes are immensely popular with customers who fritter hours playing online games that tie multiple competitors.

Last week, a Shanghai court asked a Internet cafe proprietor to pay 86,000 yuan (US$11,200) to the family of a 15-year-old boy who fainted and died after playing online games for two consecutive days.

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VIA:IHT

Digene Corp. has been sold to the Dutch maker of genetic testing equipment - Qiagen NV. Qiagen NV, a global player in molecular diagnostics technology has decided to acquire Digene, to expand into testing for cervical cancer and STDs (sexually transmitted diseases.)

The deal consists of cash and stock and is worth $1.6 billion. It values Digene at $61.25 per share. The price represents a 37 per cent premium over the closing share price of Digene on Friday. Under the terms of the deal - which were announced in a joint statement by the two companies on Friday - the acquisition is expected to be completed by September.

The transaction shall be effected as an exchange offer, followed by a merger of Digene into the U.S. subsidiary of Qiagen. The Digene shareholders may elect for $61.25 or 3.545 shares of Qiagen stock, subject to a condition that the total consideration paid comprises of 55% cash and 45% stock. Thereafter, Qiagen shareholders will own approximately 78 per cent of the combined company while Digene shareholders will hold the remaining 22 per cent.

The company’s United States headquarters will be in Maryland. Peter Schatz, Qiagen’s chief executive, will be the new company’s chief executive officer, while Daryl J. Faulkner, chief executive officer and president of Digene, will co-head the Integration Steering Committee.

Schatz told Reuters in an interview:

The strategic rationale for this transaction is compelling as it combines Qiagen’s leading technology portfolio and our breadth of molecular diagnostic tests with Digene’s leadership in what is seen as the fastest-growing segment of molecular diagnostics.

Qiagen expects the acquisition to enhance the earnings by 2-4 cents in 2008. The buyout will see Digene contribute revenue of $58 million to $60 million in the fourth quarter this fiscal and $260 million to $270 million over the entire next fiscal.

This strategic transaction will create a global leader in molecular diagnostics outside blood screening and viral load monitoring. It is anticipated that the combined company will have over US$350 million of molecular diagnostics revenues and more than US$800 million in revenues overall in 2008.

Although the geographical distance between the two companies’ headquarters may give the impression that this merger is a bit out of sync. The fact of the matter is that they have a long history of collaboration. Together, they have worked in various areas of research for more than a decade now.

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Trade unions across the world have gathered to fight to save the thousands of job cuts resulting from takeovers. Initiative has tightened by the spur of job cut in the takeover battle for Dutch bank ABN Amro.

The meeting has been called by UNI, an international confederation of unions, representing 14 million working men and women. The unions involved aim to increase transparency and to ensure that staff representatives from across the companies affected by the bids, can share information and develop strategies to safeguard jobs.

The objectives of the union’s conglomeration are:
• Avoid compulsory redundancies

• Preserve union negotiated agreements

• Preserve staff terms and conditions and observe core labour standards.

• Enter into negotiations with UNI on a global framework agreement on core labour standards and social dialogue.

To protect the workers rights, UNI has summon to the CEOs of ABN-Amro, Barclays, Royal Bank of Scotland, Santander and Fortis demands detail report of the deal, including financial, economic status and social backgrounds to the bids.

A union meeting is scheduled today at the office of Unite, the newly formed union created by the merger of T&G and Amicus. In the meeting unions from Belgium, Brazil, Greece, Italy, the Netherlands, Spain, Panama, Switzerland and the UK will assemble.

UNI came into action in the ABN Amro takeover fight, as the takeover battle poses the fear of possible job cut in ABN Amro’s home base of the Netherlands and in Britain and other locations around the world. Suitor bank Barclays said that if it would get ABN Amro than bank would possibly slash 23,600 jobs from the 216,000 combined workforces. The RBS-led consortium, also acknowledged the possible job cut.

In the biggest ever takeover battle for the any bank has entered in the very crucial face. Previously ABN AMRO has agreed for a £45bn takeover from Barclays, but later RBS led consortium increases its bid and gave another lucrative option for the shareholders. Deal is already in the under scrutiny of court as ABN AMRO has accepted the bank of America’s offer for its American arm LaSalle, but RBS drag deal to the court and Dutch court stipulate the deal. American bank also threaten for the compensation, if deal will not signed.

Image: harken

Via: guardian

Increasing threat of global warming and incessantly rising oil prices has forced America to think beyond oil and ponder over other energy sources. Escalating consumption of oil and combustion of coal for the energy has left the earth on the burning hearth; therefore, the desperate need for renewable energy resources has risen.

Receiving sarcasm from rest of the world, America is taking interest to increase its renewable energy sources. President Bush has announced that after ten year down the line United State will replace 20 percent of its gasoline with ethanol.

The U.S. government is now materializing its plan into action as the government has offered a tax credit of 51 cents a gallon or 13.47 cents a liter, to ethanol producers and maintains a tariff of 54 cents a gallon on ethanol imported from Brazil. Government has issued renewable portfolio standards for more than 20 U.S. states, which mandate that utilities derive a fixed percentage of their power from renewable sources.

The private sector is trying to get an upper hand on the future’s profitable business, and all set to mark their presence by constructing wind farms, solar arrays and ethanol plants. The Renewable Fuels Association, disclose that currently State have 85-ethanol under construction projects, which would double its existing capacity of six billion gallons by end of 2008.

Future energy source has been accelerated as president announces states vow for renewable energy source. The chairman of Cambridge Energy Research Associates in Cambridge, Massachusetts Daniel Yergin said

There’s a huge boom going on in alternative, renewable and new technologies, and it wouldn’t be happening without the bouillabaisse of incentives, mandates, subsidies and the related group of ingredients

State is not leaving any stone unturned to get maximum out of it. Government is giving subsidies generously and charging minor custom duty. Alluring with the subsidies and future possibilities of expanding business, investors are standing in a queue to get State’s permission to invest in alternative fuel sector and have turn booms into bubbles.

But some experts are analyzing subsidies as a clear-cut case of market distortion. They equate the resent boom in the alternative energy sector as an additional burden on the consumer’s pocket. Market gurus analyses that ethanol, other combustion free energy will be much, much costlier to the existing petroleum industry.

Although critics has very strong reason to push States effort to on back foot, but oil and coal is not long lasting. Different surveys suggest that majority of oil sources will shrink by the 2050; therefore, we have to take initiative to tackle the coming challenges. As renewable sources of energy on its niche, government has to support it and as it will establish itself firm, private sector will definitely take the challenges.

Image: sandia

Via: iht

Towergate, Britain’s largest private insurance company, is mulling a sale, which could lead to a huge windfall for its founder and chairman Peter Cullum. If a sale does happen, Peter will be on course for an overwhelming £2 billion profit over his investment.

It is learnt that Towergate has been approached by a number of private equity groups for a proposed takeover. The companies that are in line for a potential buyout of Towergate include Blackstone, Charterhouse, TA Associates and Candover. They have valued the company at £3 billion in its entirety.

Towergate is considering ‘all offers - for majority or minority stakes,’ according to Andy Homer, non executive director of the company. Towergate has instructed its adviser Lexicon Partners to arrange for any potential sale.

Peter Cullum has a 65 % stake in the company. He has insisted that he will not sell unless the offer price reaches at least £3 billion. This despite a £1 billion valuation which was made last year following a deal with two hedge funds as a part of refinancing.

Based in Maidstone, Kent, Towergate was formed in 2005 by the merger of two insurance businesses initiated by Peter Cullum. Since then, the company has grown on to become Europe’s largest in dependent insurance business by acquiring more than 100 of its small rivals. The company currently employs 3,500 employees in its 100 offices spread all-over Britain.

Towergate reported earnings of £94 million and sales worth £1.1 billion in 2006. It has grown so rapidly by targeting niche markets in the insurance sector. It is one of the very few companies that offer insurance of caravan parks and holiday homes.

Crowned Ernst & Young entrepreneur of the year in 2005, Peter Cullum is an avowed philanthropist. He owns a charitable trust that funds children’s charities. He is believed to have paid half of his £9.2m bonus into it last year. Any windfall for him and philanthropy would certainly move up on his list of priorities.

A potential sale would certainly benefit Towergate’s employees. Many of them could then expect windfalls of £45,000 through an employee share plan.

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The biggest takeover battle in the banking history, expected to take interesting turn, as a consortium of banks led by Royal Bank of Scotland PLC have to revive its bid for the Dutch bank ABN AMRO as they previously asserted that they would reconsider its fresh offer on 27th may.

But on the preset period, announcement will not appear as due date is felling on the holiday, therefore the decision to raise bid or not, will make public on Tuesday. Previously, the banks had declared that conglomerate is planning to make a mostly cash offer worth around 38.40 euros per ABN Amro share, or $94.1 billion.

The acquisition battle, started in April and deal stalled when ABN Amro agree to sell its US arm LaSalle Bank Corp to Bank of America for $21 billion, That was widely seen as a poison pill measure to ward off the hostile bid from RBS, which also wants LaSalle.

Now, for the RBS-led consortium, have to comfy with the Dutch law to proceed ahead as conglomerate have to clear its position. Some analysts expect that the group have three options in the deal as they can leave the bid, or group can ask for more time to make a decision or it can put a new offer for ABN AMRO on the table.

The seeker group has indicates that it would top Barclays offer with $94.1 billion, but a consortium bid is contingent on ABN AMRO reversing the $21 billion sale of LaSalle to Bank of America.

Now, ABN AMRO is finding them on the crossroad as Bank of America has threatened, if bank will back out, they will claim for compensation. Dutch court has blocked the signed deal of LaSalle to Bank of America because deal could not get the shareholders approval. ABN AMRO appealed against the ruling, which is pending in the court.

ABN AMRO’s shareholders will ultimately end the months long fuss over the whole deal includes LaSalle sale. Shareholders will vote on it, in an extraordinary shareholder meeting for which a date has to be decided.

Image: socalsail

Via: Chicago tribune

Nasdaq Stock Market Inc. agreed to buy Nordic stock exchange operator OMX AB for $3.67 billion (£1.87bn) on Friday. This deal signifies first major acquisition by Nasdaq in the European markets. Its earlier bid to cross the Atlantic had failed when its offer to but out London Stock Exchange was rejected.

The acquisition of OMX AB, which is the operator of seven Nordic and Baltic exchanges, was made at 25.1 billion Swedish kronor. OMX has varying stakes in the share markets in Stockholm, Helsinki, Copenhagen, Iceland and the Baltic States.

Nasdaq, the largest electronic stock market in America, paid a share price which went at 16 per cent premium to OMX’s closing share price in Stockholm on Thursday. Nasdaq offered 208.1 kronor a share in cash and stock.

Robert Greifeld, Chief Executive Officer of Nasdaq, said:

Our organizations bring together very complementary businesses, and we see many new opportunities for growth in an era of unprecedented change and development for exchanges.

OMX said the boards of both the companies had recommended the deal and that their shareholders supported the merger. Both exchanges have agreed to form a new group to be called NASDAQ OMX Group with headquarters located in New York. Nasdaq’s Robert Greifeld will be the CEO of the new group and Magnus Bocker, the CEO of OMX, will be the president. Its board will have 15 members — nine from Nasdaq and five from OMX, as well as Greifeld.

Shares of the new group will be listed on both Nasdzq in the USA and on the OMX Nordic Stock exchange. With a combined market capitalization of $7.1 billion, the new group expects cost and revenue synergies of around $150 million in three years.

The deal closely follows NYSE’s acquisition of Euronext for $14 billion, last month. NYSE Euronext marked not only the very first trans-Atlantic stock market, but also the world’s largest.

On the face of it, Nasdaq seems to have paid too much, considering that it is heavily indebted in the States. There is, however, more to the purchase than meets the eye. Both the companies have one thing in common; they’ve failed in their respective efforts to buy London Stock Exchange in the past.

Nasdaq’s hostile takeover bid for LSE was rejected by the London Stock Exchange’s shareholders, earlier this year. OMX, similarly, had a failed attempt to buy London bourse in 2001. The deal could see Nasdaq push to increase its share in the London exchange; it currently holds a 30 per cent stake in the London market. The increased influence of Nasdaq-OMX group might see them up the ante in this pursuit.

Already, the agreement is being hailed for crating the largest exchange going by the sheer number of the listed companies. The new group will host companies like Swedish carmaker Volvo, Microsoft and Finland’s Nokia.

The deal may also see the new group target other markets, primarily in Asia.

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