Private equity firms to buy Duff & Phelps for $665 million

NEW YORK | Sun Dec 30, 2012 5:05pm EST

NEW YORK (Reuters) - A group of private equity firms, including the Carlyle Group (CG.O), struck a deal on Sunday to buy financial advisory and investment banking firm Duff & Phelps Corp for about $665.5 million.

Duff & Phelps (DUF.N) said the firms will pay $15.55 a share to stockholders. The other buyers in the consortium are Stone Point Capital, Pictet & Cie and Edmond de Rothschild Group.

The buyers are offering a premium of 19.2 percent for the company, which closed at $13.05 a share on Friday.

The deal allows Duff & Phelps Corp. a "go-shop" period starting immediately and ending on February 8, 2013, during which it will seek higher offers from other potential buyers.

Centerview Partners is advising Duff & Phelps on the deal, while Sandler O'Neill and Partners, Credit Suisse, Barclays, and RBC Capital Markets are advising the private equity firms.

The agreement includes a break-up fee of $6.65 million from Duff & Phelps if the company abandons the deal for a higher offer before March 8, 2013.

Duff and Phelps Corp. advises clients on areas such as valuation, transactions, financial restructuring, alternative assets, disputes and taxation. It employs more than 1,000 people and has offices in North America, Europe, and Asia.

(Reporting by Sam Forgione; Editing by Jan Paschal)

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Publisher Tribune to exit bankruptcy December 31: sources

By Ronald Grover and Liana B. Baker

Fri Dec 28, 2012 5:30pm EST

n">(Reuters) - The Tribune Co, owner of the Los Angeles Times and the Chicago Tribune, will emerge from bankruptcy on December 31, sources said on Friday, ending four years of Chapter 11 protection and setting the stage for the new company to sell off its newspapers to focus on the WGN cable channel and other TV assets.

The Chicago-based company expects to emerge with all of its assets, which include eight major daily newspapers and 23 TV stations, and to name former Fox TV and Discovery Communications executive Peter Liguori as chief executive, according to two people with knowledge of the company's plans but who are not authorized to speak to the press.

In early December, Tribune owners began interviewing investment bankers to sell some or all of its newspapers. Among those interested are San Diego Union-Tribune owner Doug Manchester and Orange County Register owner Aaron Kushner, according to people familiar with the situation.

On December 14, Warren Buffett hinted he would be interested in buying at least one Tribune newspaper, the Morning Call in Allentown, Pennsylvania.

Gary Weitman, a Tribune spokesman, had no comment.

Oaktree Capital Management, JPMorgan Chase & Co and Angelo, Gordon & Co, the controlling Tribune owners, made the decision to sell off its print business to focus instead on Tribune's television operations, which include stations in New York, Los Angeles, and Chicago.

In November, Tribune received regulatory approval from the Federal Communications Commission to transfer its broadcast licenses to the owners who will take over the company when it emerges from bankruptcy.

Tribune's WGN America is a national news feed of its Chicago station, which it repackages as a super-station and distributes via cable and satellite to more than 76 million homes, according to Nielsen Co data.

Liguori is expected to build Tribune's TV operations, including through acquisitions. Former Disney strategic planning chief Peter Murphy will be added as a board member and will advise Liguori.

Tribune's TV operations are estimated to account for $2.85 billion of the company's $7 billion valuation, while its publishing assets are estimated to represent $623 million, according to a report by its financial adviser, Lazard. The rest of its value is in other assets, including its stake in the Food Network and its cash balance.

Despite its low valuation relative to the rest of the company's assets, Tribune's newspaper unit is profitable.

Tribune's move to shed its newspaper assets was expected by industry observers, who have noted the twin challenges of declining readership and a plunge in advertising revenue wracking the newspaper industry.

The industry lost almost half of its advertising revenue in a five-year period and is now down to $24 billion, according to the Newspaper Association of America trade organization.

The declining fundamentals of newspapers, coupled with the large amount of debt Tribune carried, forced it into a long and complicated four-year bankruptcy case.

Real estate investor Sam Zell took control of Tribune in 2007 through a leveraged buyout that saddled it with $13 billion in debt just as the newspaper industry hit its downturn.

(Reporting by Ronald Grover and Liana Baker; Editing by Dan Grebler)

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ZTE to sell off stake in unit worth 1.3 billion yuan

ZTE company logos are seen at an international software and information services exhibition in Nanjing, Jiangsu province September 6, 2012.

Credit: Reuters/China Daily

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Pearson to buy stake in Nook, Barnes & Noble shares up

By Nivedita Bhattacharjee

Fri Dec 28, 2012 1:23pm EST

n">(Reuters) - British education and media publisher Pearson Plc has agreed to acquire a 5 percent stake in Barnes & Noble Inc's Nook Media unit for $89.5 million, sending shares of the bookstore operator up as much as 9.7 percent on Friday.

The Nook Media unit comprises Barnes & Noble's digital businesses — including the Nook e-reader and tablets and the Nook digital bookstore — and 674 college bookstores across the United States.

Pearson is the owner of the Financial Times newspaper and the Penguin Group publishing house.

The latest investment in Nook comes after Microsoft Corp agreed in April to invest $300 million in Barnes & Noble's digital and college businesses, a move that sent Barnes & Noble's shares up 79 percent at the time. Barnes & Noble and Microsoft completed that partnership in October.

After the Pearson deal, Barnes & Noble will own about 78.2 percent of Nook Media and Microsoft will own around 16.8 percent, the companies said.

"We always believed that Microsoft was as interested in Barnes & Noble's opportunity in education as it was in the digital consumer arena," said David Strasser, analyst with Janney Montgomery Scott.

"But after this investment from Pearson, it is more clear that Nook Media has its sight set on transforming the way education is administered in the US and around the world," he wrote in a note to clients.

Nook has been a revenue-driver since its launch in 2009 as readers buy more digital books, but product development and marketing costs to keep the devices competitive with Amazon Inc's Kindle have made it an expensive project.

Barnes & Noble said in November that the quarterly loss at the Nook division increased on higher spending on its e-readers and tablets to keep pace with larger rivals Amazon and Apple Inc.

Meanwhile, the top U.S. bookstore chain also said on Friday that sales in the crucial holiday season will come in below expectations, based on preliminary results and current sales trends.

Barnes & Noble said it would provide more details on its holiday sales on January 3. In November, it said that Nook device sales over the four-day Thanksgiving weekend - one of the busiest times of the year for U.S. retailers - doubled from last year, helped by promotions by Wal-Mart Stores Inc and Target Corp.

The 2012 holiday season may have been the worst for retailers since the 2008 financial crisis, with sales growth far below expectations, according to some early findings.

Shares of Barnes & Noble were up 6.1 percent at $15.23 on the New York Stock Exchange on Friday afternoon, off an earlier high at $15.74. They were the fourth-largest gainer in percentage terms on the NYSE.

Pearson shares ended 0.3 percent lower at 1,193 pence in London.

(Reporting by Nivedita Bhattacharjee and Jessica Wohl in Chicago and Abhishek Takle in Bangalore; editing by Joyjeet Das and Matthew Lewis)

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Monte dei Paschi completes sale of Biverbanca stake

MILAN | Fri Dec 28, 2012 1:23pm EST

MILAN (Reuters) - Banca Monte dei Paschi di Siena (BMPS.MI), Italy's third-biggest bank, has completed the sale of a 60 percent stake in regional bank Biverbanca to Cassa di Risparmio di Asti for 209 million euros ($276 million).

The bank is trying to sell off assets to help to strengthen its capital base. Other assets for sale include its leasing activities and consumer credit unit Consum.it.

Monte dei Paschi said on Friday it would earn 25 million euros net from the Biverbanca sale, which would help increase its capital ratio, a measure of a bank's financial strength.

It first announced the sale in June. Both Biverbanca and Cassa di Risparmio di Asti are based in northern Italy.

Monte dei Paschi was forced to ask for government aid in June after failing to meet tougher capital rules set by European regulators.

The government bailout scheme was approved last week by the European Commission and is currently before the Italian parliament. Under the scheme, the bank will issue 3.9 billion euros of bonds to the treasury.

($1 = 0.7564 euros)

(Reporting by Antonella Ciancio. Editing by Jane Merriman)

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Tower International sells Korean operations

n">(Reuters) - Automobile parts maker Tower International Inc (TOWR.N) sold its South Korean operations to Seco, a privately owned Korean auto parts supplier, for about $47 million in cash.

Livonia, Michigan-headquartered Tower said Seco will also assume debt of about $98 million, representing a deal enterprise value of about $145 million.

The operations being sold include five manufacturing plants, a tooling plant and a technical center.

Shares of Tower International closed at $7.44 on Thursday on the New York Stock Exchange. The company's stock has shed about a third of its value in the last one year.

(Reporting by Ritika Rai in Bangalore; Editing by Maju Samuel)

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Dubai's Arabtec, Lootah win Nakheel villa contracts

DUBAI | Sun Dec 30, 2012 2:54am EST

DUBAI (Reuters) - Dubai real estate contractor Arabtec ARTC.DU and another firm have been awarded a contract worth over half a billion dirhams ($136 million) to build villas for one of the emirate's flagship developers, Nakheel NAKHD.UL.

Arabtec will build 134 luxury villas at the Jumeirah Park development in Dubai, and family owned contractor SS Lootah Group is to build 247 villas at the same location.

Nakheel's chief executive Sanjay Manchanda told reporters on Sunday that the value of the joint contract was more than half a billion dirhams. Arabtec Construction's CEO Greg Christofides said his firm's contract was worth 159 million dirhams.

Nakheel said it had sold more than 1.2 billion dirhams worth of villas in the project so far. Construction of the new villas will begin in February and the project is expected to be completed in the fourth quarter of 2014.

(Reporting by Praveen Menon; Writing by Rachna Uppal; Editing by Andrew Torchia)

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Freeport-McMoRan cut bid on McMoRan after bad well test

NEW YORK | Fri Dec 28, 2012 9:34pm EST

NEW YORK (Reuters) - Freeport-McMoRan Copper & Gold Inc cut its cash bid for McMoRan Exploration Co days before announcing plans to buy the oil and gas company, prompted by poor test results at one of McMoRan's wells, according to a regulatory filing on Friday.

The bid was reduced by nearly 5 percent, from $15.50 to $14.75 per share, following delays at McMoRan's (MMR.N) Davy Jones deep gas prospect off Louisiana, Freeport-McMoRan (FCX.N) said in the filing with the U.S. Securities and Exchange Commission.

Freeport-McMoRan had set out to merge with McMoRan as well as Plains Exploration and Production Co (PXP.N) in deals totaling $20 billion earlier this year.

McMoRan confirmed problems with its well on November 26 following a production test, sending its stock down 22 percent that day.

Freeport-McMoRan cut its bid just days before making the plans for the deal public on December 5. Its stock fell 15 percent following the news as investors felt that merging with McMoRan and Plains would distract from its copper business.

(Reporting by Sam Forgione; Editing by Richard Chang)

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TJX buys off-price online retailer in e-commerce push

A TJ Maxx store is pictured in Dallas, Texas October 9, 2008.

Credit: Reuters/Jessica Rinaldi

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Expedia to acquire stake in German travel site

n">(Reuters) - Expedia Inc (EXPE.O) said on Friday it would acquire a 61.6 percent equity stake in trivago, a German travel search engine that focuses on hotels, for roughly $632 million in cash and common stock, a move that will expand Expedia's worldwide reach.

Expedia, whose brands include Hotwire and Hotels.com, said in a statement that trivago has doubled its revenue each year since 2008 and currently expects about 100 million euros (about $132 million) in net revenue for 2012. It added trivago features search results from more than 600,000 hotels over 140 booking sites in more than 30 countries.

The acquisition "probably gives them some additional marketing opportunities," said Michael Millman of Millman Research Associates.

He added the Expedia purchase was "consistent" with Priceline.com's (PCLN.O) move to expand its travel research and advertising capabilities by announcing an acquisition of Kayak Software (KYAK.O).

The Expedia deal is expected to close in the 2013 first half, subject to approval from competition authorities. Expedia said it expects the purchase to add to per-share profit excluding items next year.

The management team of trivago is expected to continue to operate independently from Dusseldorf, Germany, after the acquisition closes.

Shares of Expedia, which competes with Priceline and Orbitz Worldwide Inc (OWW.N), were down about 2 percent to $59.70 on Friday.

(Reporting by Karen Jacobs; Editing by Gerald E. McCormick and David Gregorio)

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ICE's NYSE swoop creates derivatives giant

Morning commuters walk pass the New York Stock Exchange in the rain, June 4, 2012.

Credit: Reuters/Brendan McDermid

By Luke Jeffs

LONDON | Fri Dec 21, 2012 11:34am EST

LONDON (Reuters) - IntercontinentalExchange's $8.2 billion takeover of NYSE Euronext sets the scene for a four-way battle over Europe's lucrative financial derivatives market.

ICE's audacious swoop, announced on Thursday, gives the upstart commodities and energy bourse control of NYSE Liffe, Europe's second-largest futures exchange, and a major advantage over U.S. rivals CME Group and Nasdaq OMX.

All three want to challenge Deutsche Boerse's European dominance as a shake-up in banking regulation is expected to increase demand sharply for clearing financial derivatives through such exchanges.

"The deal would place a bigger and more aggressive competitor on Deutsche Boerse's doorstep," said Richard Perrott, an analyst at Berenberg Bank.

Regulatory changes in the wake of the financial crisis are forcing banks to channel derivatives business through clearing houses and regulated exchanges to ensure their risk positions can be better monitored than they were when bank dealers were trading complex contracts directly among themselves.

The reforms are expected to be fully operational in Europe in 2014.

ICE's takeover of NYSE Liffe will give it an advantage of existing presence in Europe over Chicago-based CME, owner of the world's largest futures market, and New York's Nasdaq, both of which plan to open their own London-based exchanges next year.

JEWEL

While the New York Stock Exchange, an enduring symbol of American capitalism, is NYSE Euronext's prestige business, London's Liffe is the real jewel in the crown.

With profits from stock trading significantly eroded by new technology and the rise of other places for investors to trade, the stock market businesses like NYSE are less valuable to ICE.

Indeed, the company has said it will try to spin off NYSE's Euronext European stock market businesses in a public offering, generating speculation, denied by the company, that it may also have little interest in the NYSE trading floor on Wall Street.

NYSE made an operating income of $473 million from Liffe in 2011 on revenues of $861 million compared to an income of $533 million on revenues of $1.3 billion from its equities business.

ICE's Jeff Sprecher will be CEO of the combined organization and Duncan Niederauer, the NYSE Euronext CEO, will be president - a post he said he plans to remain in until at least 2014.

Friends for years, Sprecher and Niederauer stopped talking for a time in 2011 when ICE teamed up with Nasdaq OMX Group to bid for NYSE Euronext just as Niederauer was trying to arrange an agreed sale to Frankfurt's Deutsche Bourse. In the end, both deals were killed by concerns they would be anti-competitive.

Since it lacks the huge equity operations of Nasdaq or Deutsche Bourse, ICE has far less overlapping business with NYSE and so should win regulatory approval, antitrust lawyers said.

ICE started out as an online marketplace for energy trading before Sprecher initiated a string of acquisitions, from the London-based International Petroleum Exchange in 2001, to the New York Board of Trade and, most recently, a handful of smaller deals, including a climate products exchange and a stake in a Brazilian clearing house.

A combined ICE-NYSE Euronext would leapfrog Deutsche Boerse to become the world's third largest exchange group with a combined market value of $15.2 billion. CME Group has a market value of $17.5 billion, Thomson Reuters data shows.

Hong Kong Exchanges and Clearing is the world's largest exchange group, with a market cap of $19.5 billion.

(Additional reporting by New York bureau; Writing by Aaron Pressman and Carmel Crimmins; Editing by Philippa Fletcher and Alastair Macdonald)

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Pinnacle to add eight casino-resorts with $869 million Ameristar buy

By Aditi Shrivastava

Fri Dec 21, 2012 11:14am EST

n">(Reuters) - Casino operator Pinnacle Entertainment Inc (PNK.N) will acquire Ameristar Casinos Inc (ASCA.O) for about $869 million to expand mainly in the U.S. Midwest and South, sending Pinnacle's shares to their highest in more than three years.

Pinnacle said it would pay $26.50 per share in cash, representing a premium of 20 percent over Ameristar Casinos' closing price on Thursday. (r.reuters.com/tab84t)

Ameristar shares briefly traded above the offer price before easing back to $26.16 in morning trade on the Nasdaq on Friday.

Shares of Pinnacle, which will acquire eight casino-resorts in the deal, rose as much as 16.6 percent to $15.57 on the New York Stock Exchange.

Sterne, Agee & Leach analyst David Bain said another suitor could emerge.

"The amount that Pinnacle is paying is not overpriced by any means. There are others that may be interested in Ameristar...," he said, suggesting Penn National Gaming Inc (PENN.O) and MGM Resorts International (MGM.N) as possible rival suitors.

The total deal value is $2.8 billion, including debt of $1.9 billion and cash on hand of $116 million.

Pinnacle and Ameristar had combined revenue of $2.35 billion in 2011, just below Penn National with $2.74 billion. Las Vegas Sands Corp (LVS.N), the biggest U.S. casino operator, had revenue of $9.41 billion.

Pinnacle's biggest acquisition to date was in 2006 when it acquired the Sands Casino in Atlantic City for $250 million.

Pinnacle said earlier this year it would also buy Federated Sports + Gaming Inc and Retama Partners Ltd. Those smaller deals have not yet closed.

"The acquisition of Ameristar's properties will complement Pinnacle's existing portfolio by adding eight casino-resorts in some of the nation's best gaming markets," Pinnacle said.

Ameristar casinos are located in St. Louis, Missouri; Kansas City, Missouri; Council Bluffs, Iowa; Black Hawk, Colorado; Vicksburg, Mississippi; East Chicago, Indiana; and Jackpot, Nevada. Pinnacle owns and operates seven casinos, located in Louisiana, Missouri and Indiana, and a racetrack in Ohio.

Ameristar reported a 2 percent decline in revenue in the third quarter, missing Wall Street forecasts as it faced increased competition.

The company's largest shareholder is hedge fund Addison Clark Management LLC, with a 9.6 percent stake as of September 30.

The deal comes a little more than a month after Pinnacle said it could lose its investment of more than $100 million in a casino project in Vietnam as a result of problems with gaming licenses and funding by local banks.

Goldman Sachs & Co advised Pinnacle, while Ameristar was advised by Lazard and Centerview Partners LLC.

Pinnacle shares were trading at $15.35 in late morning trading on the New York Stock Exchange.

(Additional reporting by Siddharth Cavale and Arpita Mukherjee in Bangalore; Editing by Ted Kerr)

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Cogeco to buy Peer 1 for C$526 million to boost data hosting

n">(Reuters) - Cogeco Cable Inc, the main unit of media and telecom company Cogeco Inc, will buy Peer 1 Network Enterprises Inc for about C$526 million ($532 million) to expand its cloud computing and data hosting business.

Cogeco Cable, which provides cable-TV, high-speed internet and telephone services, has been looking to increase its presence in the fast-growing data-center business due to tough competition in signing up new television customers in Canada.

The Montreal-based company, which competes with Rogers Communications Inc and Telus Corp, bought cable operator Atlantic Broadband for $1.36 billion earlier this year to gain a foothold in the larger U.S. market.

Through the acquisition of Peer 1, Cogeco Cable will add 19 data centers to the six it operates as demand for web hosting services rises mainly from small and mid-sized businesses.

Data centers house large-capacity server computers and data-storage systems which are connected to the Internet via high-bandwidth links.

Cogeco Cable's data hosting business is expected to rise 10 percent per year organically, the company said in its annual report earlier this year.

Vancouver-based Peer 1 is an internet infrastructure provider and specializes in managed hosting, dedicated servers, cloud services and co-location. Its customers include Wordpress.com and Virgin Gaming.

Cogeco Cable offered C$3.85 for each Peer 1 share, which represents a premium of 30.5 percent to Peer 1 stock's closing price on Thursday.

The offer will be open for 35 days, and Cogeco Cable will receive a termination fee of C$18.5 million if the deal is not completed.

Cogeco Cable was advised by National Bank Financial.

Peer 1 shares closed at C$2.95 on the Toronto Stock Exchange on Thursday. Cogeco Cable's shares, which have lost 13 percent of their value over the last six months, closed at C$40.97.

(Reporting by Maneesha Tiwari; Editing by Don Sebastian)

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Insurer Aviva sells U.S. unit for $1.8 billion

A man walks past an AVIVA logo outside the company's head office in the city of London March 5, 2009.

Credit: Reuters/Stephen Hird

LONDON | Fri Dec 21, 2012 6:49am EST

LONDON (Reuters) - Aviva (AV.L), Britain's No. 2 insurer, has agreed to sell its U.S. business for $1.8 billion, far less than it paid for it and the biggest disposal so far in a reorganization aimed at boosting its underperforming share price.

Aviva USA Corporation, a provider of life insurance and annuities, is being bought by Athene Holding, a specialist life insurer majority-owned by U.S. private equity company Apollo, Aviva said on Friday.

The sale price is below the $2.9 billion that Aviva paid for the U.S. business in 2006, but the insurer said the deal would make it financially stronger by reducing capital requirements and cutting its exposure to volatile credit investments.

Aviva's economic capital surplus - the amount by which its capital reserves exceed its requirements - will rise by 1.1 billion pounds ($1.79 billion), the company said.

"The disposal of the U.S. business represents a successful end to the year and sets us up well for 2013," Aviva chairman John McFarlane said in a statement.

Aviva shares were down 0.5 percent by 5:55 a.m. ET, against a 0.8 percent fall in the STOXX 600 European insurance share index .SXIP. The stock has risen 27 percent since the start of the year, lagging a 33 percent gain for the sector.

The U.S. sale forms part of a plan launched by Aviva in July to sell or close 16 businesses that tie up over a third of the insurer's capital while contributing just 18 percent of operating profit.

Aviva has so far also jettisoned part of its stake in Dutch insurer Delta Lloyd (DLL.AS) as well as its entire share of Aseval, a Spanish joint venture with Bankia (BKIA.MC).

The reorganization, drawn up by McFarlane, came after investors forced out chief executive Andrew Moss, who had overseen a 60 percent fall in Aviva's share price during his five-year tenure.

Mark Wilson, formerly chief executive of Asian life insurer AIA, takes over the top job at Aviva on January 1, the insurer said last month.

Aviva USA accounted for about 9 percent of Aviva's total operating profit last year. Proceeds from the sale will be $1.55 billion once debt is repaid, Aviva said.

(Reporting by Myles Neligan; editing by Huw Jones and Keiron Henderson)

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BAE wins $4.1 billion Omani contract

A file photograph shows a member of staff working in the cockpit of an aircraft on the Eurofighter Typhoon production line at BAE systems Warton plant near Preston, northern England September 7, 2012.

Credit: Reuters/Phil Noble

By Sarah Young

LONDON | Fri Dec 21, 2012 11:59am EST

LONDON (Reuters) - Britain's BAE Systems Plc (BAES.L) signed a bigger than expected contract worth around 2.5 billion pounds ($4.1 billion) to supply aircraft to Oman, its first major deal since the collapse of a $45 billion merger plan.

Europe's largest defense contractor is hunting for growth as a standalone company after in October failing to complete a tie-up with EADS (EAD.PA), the Franco-German maker of Airbus civilian jets.

BAE said on Friday that the Omani contract, widely expected after talks regarding the deal were flagged earlier in the year, provided for the delivery of 12 Typhoon and eight Hawk aircraft to the country's armed forces starting in 2017.

The Omani order was larger than some had forecast. Analysts at brokerage Investec said they had expected BAE to chalk up a 2 billion pound deal, while David Reeths at specialist defense publisher IHS Jane's said the addition of the Hawk trainers was a surprise.

"This is a very important sale for Eurofighter as there is only a limited number of fighter competitions out there," Reeths said. "There is a bit of a price war going on and it is a buyer's market, but it is also an industry where success begets success."

However the deal comes days after BAE warned of a delay in reaching an agreement with Saudi Arabia over the pricing of an even bigger order, a contract for 72 aircraft worth around 4.5 billion pounds.

PRICING TALKS

BAE said on Wednesday its 2012 earnings could take a hit should it not reach an agreement with Saudi Arabia on pricing in the next two months, something it had expected to conclude in the second half of this year.

Like other defense firms, BAE faces tough times as the U.S. and other western governments cut defense spending as part of their broader quest for budget savings, pushing the company to chase orders more aggressively in other markets such as the Middle East.

The Typhoon, formally called the Eurofighter Typhoon, was developed by a consortium of BAE, Finmeccanica (SIFI.MI) of Italy and EADS, which represents Germany and Spain in the European project.

The plane, which competes against U.S. firm Lockheed Martin's (LMT.N) F35 Joint Strike Fighter (JSF), has to date been exported to Austria and Saudi Arabia and is looking for new customers.

The Omani deal follows a high-profile visit in November by British Prime Minister David Cameron to the Gulf and Middle East, during which selling the BAE-built Typhoon was high on the agenda.

Cameron's office said at the time that Saudi Arabia had signaled it was interested in placing a second "substantial" order of Typhoons, on top of the 72 jet order which is still subject to pricing discussions.

BAE officials also said the United Arab Emirates has shown interest in placing an order for up to 60 Typhoons.

Shares in BAE fell 1.7 percent in midday trading, having risen earlier this week to their highest in some three months.

(Additional reporting by Tim Hepher in Paris; Editing by James Davey and David Holmes)

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GE to buy aviation unit of Italy's Avio for $4.3 billion

A GE logo is seen in a store in Santa Monica, California, October 11, 2010.

Credit: Reuters/Lucy Nicholson

By Danilo Masoni

MILAN | Fri Dec 21, 2012 11:36am EST

MILAN (Reuters) - General Electric Co (GE.N) has agreed to buy the aviation business of Italy's Avio for $4.3 billion, in a sign of confidence about the country's underlying strength despite its deep recession.

The deal comes as Europe's fourth-biggest economy labors to become more competitive under a reform agenda set by technocrat prime minister Mario Monti, who is due to step down on Friday before general elections seen in February.

"We are convinced that Italy will exit the crisis," Nani Beccalli, president and chief executive of GE Europe, told reporters on Friday. "There are undoubtedly hurdles linked to red tape. But the strategic value of the deal is so big (it would offset other issues)", Beccalli said.

GE agreed to buy Avio from private equity fund Cinven and Italian state-controlled defense group Finmeccanica (SIFI.MI). The move frustrated the aspirations of France's Safran (SAF.PA) and Italy's state-backed Strategic Fund, which had been trying over the last few months to take over Avio.

GE, whose businesses range from infrastructure technology to financial services, said Avio would boost its global supply chain capabilities as its engine production rates rise to meet growing customer demand.

Avio, which makes components for the GE Dreamliner engine used by Boeing Co (BA.N), ranks among Italy's industrial jewels and is one of the most technologically advanced companies in its field.

William Blair & Co analyst Nick Heymann said the move, which amounts to GE buying a supplier to its jet engine program, was intended in part to protect new technologies.

"They're trying to get more vertically integrated and have more control over critical aspects of the manufacturing process," he said.

GE is developing composite ceramics for jet engines, a technology it also plans to use in other products such as electric turbines and equipment used in oil and gas production.

"Rather than developing (composite ceramics) and trust someone not to give it away, you want to keep it in-house," Heymann said.

The move could be a sign that GE in coming years might be ready to consider larger acquisitions outside of the $1 billion to $3 billion range that GE's CEO, Jeff Immelt, has described as the company's sweet spot over the past few years.

"We're slowly inching our way back into larger capital redeployment," Heymann said.

GE shares were down 0.6 percent at $20.92 on Friday morning on the New York Stock Exchange.

STRATEGIC ASSET

GE said the purchase price values the aviation business of Avio, which also supplies Rolls Royce Holdings (RR.L), at 8.5 times its expected 2012 core earnings before interest, taxes, depreciation and amortization.

"No nitpicks here. This is an excellent deal," said Brian Langenberg, of independent research firm Langenberg & Co.

Debt-laden Finmeccanica, which owned 14 pct of Avio, will use the 260 million euros it is earning from its stake sale to lower debt. The sale is the first of a number of disposals the company needs to carry out to keep its investment-grade credit rating.

The U.S. group will not be buying Avio's space unit, which the Italian government considers strategic. The unit, which is expected to make sales of between 280 million euros and 285 million in 2012, will remain for the time being under the control of Cinven and Finmeccanica.

Avio's revenue in the aviation sector was 1.7 billion euros ($2.25 billion) in 2011, with more than 50 percent derived from components for GE and GE joint-venture engines.

Cinven had bought Avio in 2006 for some 2.6 billion euros.

Under GE's ownership, Avio will invest 1.1 billion euros over the next 10 years, company executives said.

GE said it planned to pursue new opportunities for Avio in the power generation, oil and marine products industries.

The GE deal comes after a planned initial public offering for Avio was scrapped earlier in 2012 because of weak market conditions.

(Additional reporting by Krishna Das in Bangalore, Massimo Gaia in Milan and Scott Malone in Boston; writing by Lisa Jucca; editing by David Holmes and Matthew Lewis)

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Risanamento gives U.S. fund more time in Sky Italia talks

MILAN | Fri Dec 21, 2012 1:46pm EST

MILAN (Reuters) - Italian real estate company Risanamento (RN.MI) said talks with U.S. private equity fund Global Asset Capital which wants to buy the Milan headquarters housing pay-television operator Sky Italia, are now set to run into the new year.

The heavily indebted real estate company said on Friday talks would continue on an exclusive basis until February 15 to allow the California-based fund to talk to banks and define the financial structure of the proposed deal.

Initially talks were due to be completed by December 31, it said. Global Asset Capital made a non binding offer for the building back in September.

Sky Italia, a wholly owned unit of Rupert Murdoch's News Corp (NWSA.O), rents the building from a unit of Risanamento.

Risanamento was the biggest Italian real estate victim of a financial crunch in 2009 when falling property prices and the end of easy lending made its large debt hard to sustain.

It is also in talks until mid-February to sell its huge Santa Giulia development area on the outskirts of Milan.

(Reporting By Danilo Masoni; Editing by Elaine Hardcastle)

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Shaw shareholders approve takeover by CB&I

n">(Reuters) - Shaw Group Inc (SHAW.N) shareholders on Friday approved Chicago Bridge and Iron Co NV's (CBI.N) proposed takeover of the U.S. engineering company.

The $3 billion deal won the approval of 83 percent of Shaw's outstanding shares, the company said after a special shareholders meeting in Louisiana, above the 75 percent approval that was required.

On Wednesday, CB&I shareholders approved the deal that is expected to close in the first quarter.

When it was announced in July, some investors were concerned about its provisions and the motivation of Shaw founder and Chief Executive James Bernhard. One fund, Denali Investors, accuses Bernhard of conflict of interest.

Shares of Shaw rose 3 cents to $46.36 and shares of CB&I fell 49 cents to $45 in early afternoon New York Stock Exchange trading.

(Reporting by Anna Driver; Editing by Phil Berlowitz)

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Mohawk Industries to buy Italy's Marazzi Group for $1.5 billion

n">(Reuters) - Mohawk Industries Inc (MHK.N), a U.S. ceramic tile maker, will buy Italian ceramics manufacturer Marazzi Group for about $1.5 billion to boost its position in the United States, Russia and Europe.

The worldwide consumption of ceramic tiles is estimated to be more than 110 billion square feet, growing at 5 percent to 6 percent annually, Mohawk said.

The Marazzi Group, which distributes ceramic tile in more than 100 countries, had revenue of about $1.16 billion in 2011, Mohawk said in a statement on Thursday.

Italy's Marazzi family owns 51 percent of the group, while the rest is held by private equity funds Permira and Private Equity Partners.

Mohawk said the acquisition is expected to add to its earnings in 2013.

Mohawk's international presence includes operations in Australia, Brazil, China, Europe, Malaysia, Mexico and Russia.

Barclays advised Mohawk on the deal, which is expected to close during the first quarter of next year.

Reuters reported about a possible deal between Mohawk and Marazzi Group on November 23.

(Reporting by Krishna N. Das; Editing by Sreejiraj Eluvangal)

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Panasonic to sell Sanyo digital camera business to private equity fund

A man browses a Panasonic camera at an electronics shop in Tokyo May 10, 2012.

Credit: Reuters/Kim Kyung-Hoon

TOKYO | Fri Dec 21, 2012 1:49am EST

TOKYO (Reuters) - Panasonic Corp (6752.T) said on Friday that it would sell its Sanyo digital and digital movie camera business to Japanese private equity fund Advantage Partners for an undisclosed sum.

Panasonic aims to sell 110 billion yen ($1.30 billion) of assets, including buildings and land, by the end of March to boost free cash flow to 200 billion yen for the business year.

Panasonic acquired rival Sanyo, a leading maker of lithium ion batteries and solar panels, in 2010. Sales of compact digital cameras are under pressure from increasingly powerful smartphones.

($1 = 84.39 Japanese yen)

(Reporting by Tokyo Newsroom; Editing by Ron Popeski)

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JPMorgan Chase buys Silicon Valley firm to expand card marketing

The entrance to JPMorgan Chase's international headquarters on Park Avenue is seen in New York October 2, 2012.

Credit: Reuters/Shannon Stapleton

By David Henry

NEW YORK | Thu Dec 20, 2012 5:54pm EST

NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N), one of the biggest card issuers and transaction processors, said it has bought Silicon Valley firm Bloomspot Inc to expand its consumer marketing programs for merchants.

The deal, terms of which were not disclosed, will let the bank deliver a range of targeted advertisements, coupons and other discounts to cardholders on behalf of stores that are also customers of the bank, said Jeff Kinder, president of Chase Offers.

Chase may deliver the ads on its customer websites and use systems to deduct personalized discounts when customers pay merchants with their cards. Chase.com ranks among the 30-most visited websites, Kinder said.

Other financial companies with card businesses, such as Bank of America Corp (BAC.N) and American Express Co (AXP.N), have also added digital tools as the industry builds on a marketing history that goes back to stuffing promotions into envelopes with monthly bills to customers.

Chase expects the new tools to bring in revenue by encouraging customers to make card purchases, for which it receives processing fees, and by being paid by merchants for marketing services, Kinder said.

Gerard du Toit, a banking industry consultant at Bain & Co, said big card companies can win loyalty from consumers if they make it easier to use discounts, and attract additional business from merchants if they make come-ons more successful.

The specter of coupon companies, such as Groupon Inc (GRPN.O), trying to develop successful business models has also spurred the banks to act.

"The ultimate place they are all trying to go is location-based offers" tied to how close customers are to stores, du Toit said. "If the banks don't get there, some start-up will."

(Reporting by David Henry in New York; Editing by Jan Paschal)

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Olympus, Sony say medical business merger delayed

Logos of Olympus and Sony are pictured at an electronic store in Tokyo September 28, 2012.

Credit: Reuters/Kim Kyung-Hoon

TOKYO | Fri Dec 21, 2012 12:43am EST

TOKYO (Reuters) - Japan's Olympus Corp (7733.T) and Sony Corp (6758.T) said on Friday that a planned merger of the two firms' medical business will take longer than expected due to delays in obtaining regulatory approval abroad.

Shares in Olympus fell 1.8 percent on the news after it traded in positive territory, against a 0.3 percent decline on Tokyo's benchmark Nikkei .N225. Sony shares were off 0.1 percent.

Sony spokeswoman Saori Takahashi said the companies are working to establish the venture by April 2013, but did not specify the countries where the firms were facing delays in regulatory approval.

Sony said in September that it would pay 50 billion yen ($590 million) to become the biggest shareholder in Olympus and planned to establish a company by the end of the year with the cash-strapped camera and endoscope maker to develop medical equipment.

The deal, which was supposed to be completed by the end of December, gave a much needed boost to Olympus, which booked a net loss of 49 billion yen last fiscal year after a decade-long $1.7 billion accounting scandal was exposed in October 2011.

A Taiwanese banker was arrested in Los Angeles earlier on Friday, accused of helping to "liquidate" hundreds of millions of dollars for Olympus and having a direct role in the company's investments.

($1 = 84.39 Japanese yen)

(Reporting by Tokyo Newsroom; Editing by John Mair and Matt Driskill)

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Crane to buy privately held MEI Conlux for $820 million

By Sakthi Prasad

Thu Dec 20, 2012 11:19pm EST

n">(Reuters) - U.S. diversified manufacturer Crane Co (CR.N) said it will buy MEI Conlux Holdings and its Japanese affiliate for about $820 million from private equity firms Bain Capital and Advantage Partners to widen its base in making machines that can handle money through automated mechanisms.

Crane has invested over $220 million to grow its payment solutions business in recent years and MEI Conlux is the company's third deal since 2006 in a business segment that caters to a range of automated money handling solutions, aimed at the gaming, retail, transportation and vending markets.

In 2006 Crane bought Cash Code, which specializes in bill validation and dispensing devices, and Telequip, which provides coin dispensing equipment.

Crane acquired NRI, a European coin validation and dispensing business, in 1985 as part of the acquisition of UniDynamics Corporation.

Crane expects the MEI deal to add to earnings within the first year of acquisition by about 25 cents per share, including 5 cents in synergies.

"We expect synergies to grow to $25 million annually on a pre-tax basis, or 30 cents per share in 2015," Crane Chief Executive Eric Fast said in a statement.

MEI is a manufacturer of electronic bill acceptors, coin mechanisms and other unattended transaction systems. The company provides products for the vending, gaming, amusement, transportation, retail and kiosk markets.

"This acquisition is consistent with our strategy of niche market leadership," Fast said.

Fast also said the MEI deal would materially strengthen the company's existing payment solutions business, which has grown through three acquisitions beginning in 2006.

Crane said that it intends to finance the deal through a combination of cash on hand and additional debt.

MEI Conlux had sales of about $400 million in 2012, and employs 820 people worldwide. Crane's payment solutions business had annual sales of $175 million. On a pro forma basis, the combined sales of MEI and Crane Payment Solutions would be about $575 million in 2012.

The company said it continues to expect 2012 earnings in the lower half of the previously communicated outlook range of $3.75 to $3.85 per share.

Analysts, on average, were expecting 2012 earnings of $3.75 per share, excluding special items, according to Thomson Reuters I/B/E/S.

Also, the company's preliminary outlook for 2013 includes core sales growth of between 2-4 percent, excluding acquisition and foreign exchange impacts, and earnings per share in a range of $4.05 to $4.20. Analysts are expecting the company to earn $4.13.

Bain Capital is one of the world's biggest private equity firms with about $67 billion in assets under management.

Advantage Partners is a private equity firm based in Japan, which established the first buyout fund in the country in 1997, according to its website.

(Reporting by Sakthi Prasad in Bangalore; Editing by Muralikumar Anantharaman and Chris Gallagher)

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Greenbrier rejects Icahn offer again, says it is "unacceptable"

n">(Reuters) - U.S. railcar maker Greenbrier Companies Inc (GBX.N) has yet again rejected a bid from American Railcar Industries Inc (ARII.O), controlled by activist investor Carl Icahn, saying the sweetened offer still undervalued the company.

Greenbrier's latest snubbing intensifies a takeover battle that was revived by Icahn after nearly five years. Icahn tried to merge the companies in 2008 but dropped the bid later that year, saying a combination was not possible due to "unresolved issues." (r.reuters.com/pud93t)

On Wednesday, American Railcar increased its offer by 10 percent to $22 per share, valuing Greenbrier at $597 million, after Greenbrier rejected an earlier $20 per-share bid.

"American Railcar's conditional proposal to acquire the company for $22 per share is unacceptable and not in the best interests of Greenbrier stockholders," Greenbrier said in a statement late on Thursday.

Greenbrier said that at no point during the discussions with Icahn did the company or its advisers invite or encourage American Railcar to make an offer to acquire Greenbrier for a price in the range of $20-$22 per share.

"Greenbrier has made clear to Icahn and his representatives that a price range of $20-$22 per share would not be acceptable to the company," it said.

Greenbrier, however, said it continues to believe that a combination with American Railcar could be beneficial to both companies and their stockholders, and remains ready and willing to continue discussions.

While rejecting American Railcar's initial offer of $20 per share, Greenbrier had earlier said it had repeatedly told Icahn that the company would in turn be interested in buying American Railcar for a "modest premium.

Icahn Enterprises LP (IEP.O) controls 55.6 percent of American Railcar, according to its most recent filing.

Shares of Greenbrier have risen 30 percent since Icahn reported a 9.99 percent stake in the company last month that made him its largest shareholder. Greenbrier shares closed down 12 percent at $18.16 on Thursday.

The offer price is still at a discount to the $30-range the Greenbrier stock was trading at when Icahn attempted to merge the companies in 2008.

American Railcar's offer is also below Greenbrier's intrinsic value of $28.67 as measured by Thomson Reuters StarMine. The StarMine model is a measure of how much a stock should be worth currently when considering expected growth rates over the next 15 years adjusting for analysts' systematic biases.

The Lake Oswego, Oregon-based Greenbrier grew rapidly in 2011 as strong demand for railcars to transport crude oil and sand for hydraulic fracturing enabled it to ramp up production and raise prices.

But the company has been struggling with moderating demand this year from oil companies.

(Reporting by Sakthi Prasad in Bangalore; Editing by Jacqueline Wong and Chris Gallagher)

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Air Force revamps Raytheon missile contract

By Andrea Shalal-Esa

WASHINGTON | Thu Dec 20, 2012 4:45pm EST

WASHINGTON (Reuters) - The Air Force said on Thursday it has restructured a troubled air-to-air missile program run by Raytheon Co, freeing $104 million in immediate funding for the company and putting the program on track to return to its original schedule by mid-2014.

Lieutenant General Charles Davis, the top Air Force official in charge of acquisition issues, said the two sides reached agreement last week on new contract terms that will pay Raytheon for delivery of actual missile rounds rather than the "performance-based" milestones used in the past.

"That gets us back to where we would have been ... roughly in the middle of 2014," Davis told Reuters in an interview at his Pentagon office.

He said the Air Force would continue to keep close tabs on Raytheon's AIM-120 Advanced Medium-Range Air-to-Air Missile (AMRAAM), which is used by Air Force fighter jets and Navy planes that fly off carriers.

"At this point right now the only thing that's important ... is the delivery of the missiles," Davis said, describing the Air Force's decision to withhold funds from Raytheon "very prudent" after repeated failures of the missile's rocket motors.

After years of delays in missile deliveries to the United States and foreign militaries, the Air Force announced in March that it was withholding $621 million in payments from Raytheon until the company accelerated deliveries of the advanced missiles.

On Thursday, the Air Force said it was resuming payments to Raytheon after a 10-month pause from February to December 2012. Spokesman Ed Gulick said no additional funding was being withheld from Raytheon at this point.

The delays were caused by problems with solid rocket motors supplied by Alliant Techsystems Inc (ATK) that power the missiles, prompting Raytheon to switch to Norwegian ammunition supplier, Nammo.

Raytheon welcomed the restructuring and said the program was "a top priority" for the company, noting that its investments in developing a second source of rocket motors were paying off.

"This fall, Raytheon delivered more than 120 AMRAAM missiles, and this month we are delivering the first missiles with rocket motors produced by our second source along with rocket motor cases provided to them by our U.S. source," said Raytheon spokesman Jonathan Kasle.

Raytheon Chief Executive William Swanson told an investor conference at the end of November that the program should return to "business as usual" and recover its production schedule by mid-2013. He said the company had already received 125 rocket motors from Nammo and production was expected to reach 100 motors per month in the first quarter.

Davis said Nammo's rocket motors had performed well in tests, and the Norwegian company was now working to increase its production rate to the level needed for the program.

He said ATK's future role on the program was unclear, given that it could take the company around 18 months to reformulate its rocket fuel and get it certified. The issue had developed over time due to changes in the formulation of the fuel.

He said the problems with the AMRAAM contract underscored the danger of relying on a sole producer of critical equipment, and the Air Force viewed it as important to maintain more than one supplier in the future.

But he said the projected purchase rates could raise concerns in the future.

"It'll be something that we'll have to pay attention to in the future," Davis said. "It's important that we try to keep more than one (supplier), but sometimes at the rate we're buying or the rate we're building it's not viable for two companies to stay actively involved. It'll be something that we'll have to pay attention to in the future."

Gulick said the revamped contract also called for Raytheon to compensate the U.S. government and foreign militaries between $27 million to $33 million for late rocket motor deliveries.

That compensation included no-cost labor to install a variety of software upgrades for foreign countries harmed by the late deliveries, warranty coverage and free repairs, Gulick said.

He said the Air Force also got warranty coverage for 325 AIM-120D missiles, and 40 no-cost repairs.

(Reporting By Andrea Shalal-Esa; Editing by Tim Dobbyn)

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IntercontinentalExchange buys NYSE Euronext for $8 billion

1 of 2. Traders work the floor at the New York Stock Exchange in New York December 20, 2012. IntercontinentalExchange agreed a $8 billion deal to buy New York Stock Exchange owner NYSE Euronext on Thursday, propelling the commodities player into the big league of European derivatives and helping it to take on arch rival CME Group.

Credit: Reuters/Andrew Kelly

By John McCrank and Sophie Sassard

NEW YORK/LONDON | Thu Dec 20, 2012 10:59am EST

NEW YORK/LONDON (Reuters) - IntercontinentalExchange agreed an $8 billion deal to buy New York Stock Exchange owner NYSE Euronext on Thursday, propelling the commodities player into European financial futures and helping it to take on arch rival CME Group.

Atlanta-based ICE will look at selling Euronext, NYSE's European stock market businesses, in an initial public offering after the deal closes in the second half of next year.

The deal gives a 12-year old start-up ownership of the New York Stock Exchange, an iconic symbol of U.S. capitalism for over 200 years which has been hit by new technology and the rise of private trading venues run by Wall Street banks and brokers.

"Our transaction is responsive to the evolution of market infrastructure today and offers a range of growth opportunities," ICE Chairman and CEO Jeff Sprecher, who will be chairman and ceo of the combined group, said in a statement.

Under the terms of the deal, ICE will pay $33.12 per NYSE share, a 28 percent premium to their closing price on Wednesday. The $8.2 billion deal will be paid one third in cash with the remainder in ICE shares.

NYSE Euronext stock rose nearly 32 percent after the deal was announced, while ICE's shares fell four percent before clawing back some of the losses to trade down 1.7 percent at 10:10 a.m. ET.

"The Board of NYSE Euronext carefully considered a range of strategic alternatives and concluded that ICE is the ideal partner for NYSE Euronext in an evolving market landscape," said Jan-Michiel Hessels, chairman of NYSE Euronext.

Analysts said the deal will give ICE a strategic boost with control of Liffe, Europe's second-largest derivatives market, helping it compete against U.S.-based CME Group Inc, owner of the Chicago Board of Trade.

"ICE is after Liffe, that is the crown jewel of NYSE Euronext," said Peter Lenardos, analyst at RBC Capital Markets. NYSE bought Euronext, including Liffe, for 8 billion euros in 2007.

"Strategically it makes sense for ICE to enter the European derivatives space in a meaningful way."

Sprecher said the deal had been "well received" by regulators after he and NYSE CEO Duncan Niederaur completed a "whirlwind tour" in the United States and Europe ahead of Thursday's announcement.

SWEET FOR SUGAR

ICE, founded in 2000, has its roots in electronic commodity trading and a tie-up with Liffe will boost trade in soft commodities such as sugar, buoying its profits.

"I would imagine that, having the softs contracts under one roof, would provide for easier arbitrage, financing and development of trading opportunities behind the contracts, via swaps and options," said Jonathan Kingsman, a sugar trade veteran who heads agriculture at information provider Platts.

"If you have clearing membership of ICE, you could trade London contracts under the same membership."

An ICE-NYSE Euronext tie-up would leap-frog Deutsche Boerse to become the world's third-largest exchange group with a combined market value of $15.2 billion. CME Group, ICE's largest U.S.-based rival, has a market value of $17.5 billion, Thomson Reuters data shows.

Hong Kong Exchanges and Clearing is the world's largest exchange group with a market cap of $19.5 billion.

ICE's main operations are in energy futures trading and unlike NYSE Euronext, it has steered clear of stocks and stock-options trading, so there is not much business overlap between the two groups, making it more likely competition authorities would approve a tie-up, analysts said.

Last year, the U.S. Justice Department blocked a $11 billion joint hostile bid by ICE and Nasdaq OMX Group for NYSE Euronext on concerns the tie-up would dominate U.S. stock listings.

A rival $9.3 billion bid by German exchange operator Deutsche Boerse also fell foul of regulators.

"I doubt the competition authorities will have a problem with it, there's only a modest overlap between the businesses," said Richard Perrott, an analyst at Berenberg Bank.

"The rationale for the deal will be the same as that with Deutsche Boerse - migrate the clearing of Liffe derivatives to ICE's services in London and scale up to attract OTC (Over The Counter) derivatives clearing."

ICE said it expected to achieve $450 million in cost savings from the takeover. In the first year after the deal closes, additional earnings of 15 percent are expected.

Before the latest ICE offer emerged, NYSE Euronext's shares had fallen by nearly a third since ICE and Nasdaq launched their thwarted joint bid.

ICE, which started out as an online marketplace for energy trading, is the product of a string of acquisitions from the London-based International Petroleum Exchange in 2001, to the New York Board of Trade and, most recently, a handful of smaller deals, including a climate exchange and a stake in a Brazilian clearing house.

NYSE Euronext shareholders will have the option of either accepting $33.12 in cash per share plus 0.2581 ICE shares or a mix of $11.27 in cash plus 0.1703 ICE shares, subject to a maximum cash consideration of $2.7 billion.

ICE said it would pay an annual dividend of $300 million once the deal closes.

(Additional reporting by Luke Jeffs and David Brough in London; writing by Carmel Crimmins; editing by Philippa Fletcher)

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Three small Canadian oil companies agree to merge

By Jeffrey Jones

CALGARY, Alberta | Thu Dec 20, 2012 1:12pm EST

CALGARY, Alberta (Reuters) - A trio of small oil and gas companies said on Thursday they have agreed to combine to form a mid-sized Canadian producer, hoping a focus on light crude and monthly dividend policy will generate more value for investors than they were garnering individually.

Pace Oil and Gas Ltd (PCE.TO), AvenEx Energy Corp (AVF.TO) and Charger Energy Corp (CHX.V) said they would offer new shares in a combined operation known as Spyglass Resources Corp that will produce about 18,000 barrels of oil equivalent a day in various regions of Alberta.

Based on the values of the companies' shares as spelled out in the agreement, the combined operation would have a market capitalization of about C$425 million ($430 million).

It will be led by former Provident Energy executives, Tom Buchanan as chief executive and Dan O'Byrne as president, the companies said.

Buchanan said each of the companies has been undervalued despite having assets in many of the regions currently producing light crude, a grade that is not getting slapped with the deep discounts that Canadian heavy oil is currently fetching.

Pace, the largest of the three, was having trouble funding its growth plans; AvenEx was a diversified company with a marketing arm that will now be put up for sale; and Charger was over-indebted for the current market conditions, Buchanan said.

"So when you put all three companies together, while we all had our warts, we sort of take care of each other's challenges," he said in a conference call. "By putting the three companies together, we create a platform that we think is very strong."

A big draw is that the combined firm will have low rates of production decline, which lends itself to paying a healthy dividend, Buchanan said.

Spyglass will initially set a monthly dividend of 3 Canadian cents a share, equaling 35 percent to 45 percent of cash flow, the companies said. Buchanan said that will be reviewed monthly and will be based on factors such as commodity prices, hedging polices and operational performance.

The properties are in Alberta geological zones such as Halkirk-Provost Viking, Randell Slave Point and Gilwood and the Pembina Cardium, where companies are using horizontal drilling and hydraulic fracturing techniques to unlock light oil reserves from tight rock formations.

Under the deal, 1.3 Spyglass shares would be exchanged for each Pace share, one Spyglass share for each AvenEx share, and 0.18 Spyglass shares for each Charger share.

The transaction values Pace shares at C$4.32 each, AvenEx shares at C$3.32 each, and Charger shares at 60 Canadian cents each, the firms said.

AvenEx investors were less certain. Its shares sank 44 Canadian cents, or 13 percent, to C$2.88 on the Toronto Stock Exchange.

Pace was up 17 Canadian cents, or 5 percent, at C$3.57, and Charger's shares on the TSX Venture Exchange surged 43 percent to 48.5 Canadian cents.

Along with the amalgamation, AvenEx agreed to sell its Elbow River Marketing business for C$80 million.

Capital spending for 2013 is budgeted at C$80 million to C$90 million.

The companies said they would hold meetings for their shareholders in February to vote on the transaction. Two-thirds of each company's shareholders must approve the deal for it to proceed, they said.

The deal is expected to close in February.

(Editing by Jeffrey Benkoe and Leslie Gevirtz)

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Foxconn buys minority stake in GoPro for $200 million

Shovels are seen at a ground breaking ceremony for Foxconn's new China headquarters building at the Lujiazui financial district of Pudong in Shanghai May 10, 2012.

Credit: Reuters/Aly Song

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HSBC no longer bookrunner on Iraq's Asiacell float

By Matt Smith

DUBAI | Thu Dec 20, 2012 10:03am EST

DUBAI (Reuters) - HSBC Holdings (HSBA.L) has ceased to be a bookrunner on Asiacell's planned share sale, raising new questions about the Iraqi telecom operator's ability float 25 percent of the company to mainly local investors.

The London-listed bank's exit follows that of Morgan Stanley Inc (MS.N) in September, and a statement from Asiacell on Thursday showed Baghdad-based broker Rabee Securities as "sole distributor and selling agent" for its initial public offering (IPO) of shares.

Asiacell, a unit of Qatar Telecommunications QTEL.QA (Qtel), declined to comment further, and HSBC also declined to comment.

Asiacell and its two rivals in the market, Zain Iraq (ZAIN.KW) and Korek, have to raise funds through IPOs as a condition of their $1.25 billion operating licenses.

All three companies missed an earlier deadline of August 2011. Asiacell is to be first to float on the Iraqi bourse.

"The absence of global and regional banks providing custody and brokerage services/access products make it difficult to pitch the IPO to international investors, so it will be mainly targeted at local investors," said Marc Hammoud, Deutsche Bank telecoms analyst.

Such a reliance on domestic demand could mean Asiacell fails to offload the full 25 percent of its shares for sale, with the Iraqi bourse seen to be ill-equipped to absorb Asiacell's listing.

QTEL ROLE

Asiacell, which claims to have a 43 percent revenue market share and 9.9 million subscribers, said the company's founding shareholders would offer the shares for sale in the IPO, but has yet to reveal the pricing or whether it will be done on a pro rata basis.

Those will be crucial factors for Qtel, which in June agreed to pay $1.47 billion to up its stake in Asiacell to 54 percent from 30 percent, with the deal including a further increase to 60 percent pending Iraqi government and regulatory approval.

"The IPO might be an opportunity for local shareholders to cash out, but it doesn't make sense for Qtel to dilute its holding," said Deutsche's Hammoud.

Qtel's June deal valued Asiacell at about $5 billion.

"That's a good benchmark valuation for the IPO - Qtel wouldn't buy at that valuation and then sell shares in the IPO at a lower price," said Hammoud.

Asiacell expects to start trading on the Iraq Stock Exchange (ISX) on February 3, its statement said, confirming earlier comments from a company spokesman.

The telecom listings will be the first major IPO on the ISX since the U.S.-led invasion that toppled Saddam Hussein in 2003.

The bourse's market capitalization is about $4 billion and it trades around $3.3 million daily, while in 2011 Nomura estimated Zain Iraq's enterprise value (equity plus debt) at $4.9 billion.

"Local investors are flush with cash in Iraq," said Hammoud, though he questioned whether that situation is enough to support the Asiacell share sale.

"I wonder whether local investors will put their money in an equity issue that would value Asiacell as much as the entire market," he said. "It will be a big change for the local stock market, and big changes generally imply bigger risks ... or opportunities."

(Additional reporting by David French; Editing by Dinesh Nair and Hans-Juergen Peters)

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Carlyle Group buys stake in NGP Energy Capital for $424 million

A general view of the lobby outside of the Carlyle Group offices in Washington, May 3, 2012.

Credit: Reuters/Jonathan Ernst

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Oracle buys web firm Eloqua to boost cloud presence

By Sayantani Ghosh

Thu Dec 20, 2012 12:10pm EST

n">(Reuters) - Oracle Corp agreed to buy Eloqua Inc, a maker of web-based marketing automation software that listed in August, for about $810 million as it seeks to expand its cloud-computing services.

Eloqua makes software to help businesses predict and grow revenue by monitoring marketing and sales initiatives. Its customers include AON Plc, Dow Jones, Automatic Data Processing Inc, Polycom Inc and National Instruments Corp.

Oracle, which came late to cloud computing, is trying to be a one-stop shop for operating systems, databases, computer programs and infrastructure over the Web.

"The acquisition of Eloqua will add a leading market automation solution to Oracle's strong salesforce automation products and the recently acquired RightNow call center automation solution," Nomura Equity Research analysts said in a research note.

Oracle bought RightNow Technologies last year for $1.5 billion, sparking several more acquisitions in the cloud-computing market including IBM Inc's acquisition of Kenexa and SAP AG's purchase of SuccessFactors.

Oracle, which has traditionally offered installed software products, then bought Taleo, a cloud-based HR software firm.

"We would expect Oracle to continue to make acquisitions in this space, to bolster its Fusion Applications suite and respond to competitive pressure in the applications market from SAP and Salesforce.co," Nomura said.

Oracle priced the deal at $871 million, net of Eloqua's cash. Based on the 34.5 million Eloqua shares outstanding as of October 31, the equity portion of the deal came to $810 million.

Cloud computing, a broad term referring to the delivery of services via the Internet from remote data centers, is a favorite with corporate technology buyers because it is faster to implement and has lower upfront costs than traditional software.

Oracle Chief Executive Larry Ellison mocked cloud computing in 2008 as "complete gibberish". He described it as a fad, comparing the computer industry to the fashion world.

But Oracle has since introduced its own web products and acquired several firms selling internet-based software as its corporate customers embraced web services offered by Salesforce.com Inc, Amazon.com Inc and Google Inc.

"Although Oracle already had strong marketing functionality, this gives it a cloud offering to deliver and an additional base of midmarket customers providing a recurring license maintenance stream," Nucleus Research analyst Rebecca Wettemann said.

The company's $23.50 per share offer for Eloqua represents a 31 percent premium to Eloqua's Nasdaq close on Wednesday.

Eloqua shares jumped to match the offer price while Oracle's shares were flat at $34.05 on the Nasdaq.

"Eloqua's leading marketing automation cloud will become the centerpiece of the Oracle Marketing Cloud," said Thomas Kurian, Executive Vice President of Oracle Development.

Eloqua's board has unanimously approved the deal, which is expected to close in the first half of 2013.

Oracle said on Tuesday that software sales growth will stay strong into the new year despite fears that there could be big tax hikes and U.S. government spending cuts that could cause a slump in spending by customers.

(Editing by Don Sebastian and Rodney Joyce)

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Norway's wealth fund buys $1.6 billion real estate stake

OSLO | Thu Dec 20, 2012 10:48am EST

OSLO (Reuters) - Norway's sovereign wealth fund has bought a 1.2-billion-euro ($1.6 billion) stake in a portfolio of industrial real estate from warehouse owner Prologis (PLD.N), as it ramps up it's still small property investments.

The $685 billion fund, built up from surplus oil and gas revenue, bought a 50 percent stake in the portfolio, which includes 195 properties, primarily distribution facilities, in 11 European countries.

Prologis will retain the remaining 50 percent stake and will manage the units, the two investors said on Thursday.

"The venture may grow through acquiring strategic portfolios in target markets and, where appropriate, properties that complement the existing asset base," Prologis said.

"This joint venture is a significant milestone for Prologis, as it completes our European recapitalization ahead of schedule," Prologis co-chief executive Hamid R. Moghadam added.

As part of the deal, the wealth fund will receive a warrant to acquire 6 million shares of Prologis common stock based on the closing price of $35.64 per share on Wednesday, the two said.

The wealth fund, which holds over $135,000 for each of Norway's 5 million residents, has been cautiously building its real estate portfolio and so far focused on posh shopping and office properties in large urban centers.

At the end of the third quarter it held less than 1 percent of its assets in real estate, below a 5 percent goal, and predicted it would take years before it would reach the planned level.

The fund is forecast to grow to $1.1 trillion by 2020, indicating it could hold $55 billion in real estate by then.

It has been buying property in Europe only, but said it hoped to receive a government mandate to start buying in the United States as well.

Its newly purchased portfolio will include properties in France, Britain, Spain, Poland, Italy, Czech Republic, Hungary, the Netherlands, Germany, Sweden and Belgium.

(Reporting by Balazs Koranyi; Editing by Mark Potter)

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China the frontrunner to buy Exxon out of Iraq oil

Iraqi workers walk in West Qurna oilfield in Iraq's southern province of Basra November 28, 2010.

Credit: Reuters/Atef Hassan

By Charlie Zhu and Peg Mackey

BEIJING/LONDON | Thu Dec 20, 2012 12:14pm EST

BEIJING/LONDON (Reuters) - China National Petroleum Corp (CNPC) has emerged as the frontrunner to take over Iraq's West Qurna-1 oilfield from Exxon Mobil, a move that would diminish Western oil influence in Iraq a decade after the U.S.-led invasion.

U.S. oil major Exxon (XOM.N) is giving up its stake in the giant southern oilfield after clashing with the central government in Baghdad over exploration contracts it had signed with the autonomous Kurdistan region in the north.

Iraqi and Chinese sources said CNPC unit Petrochina (0857.HK) (601857.SS) is negotiating for Exxon's 60 percent in the $50 billion West Qurna-1 project and that there are rival bidders. Royal Dutch Shell is a minority partner.

"CNPC has shown interest; they are there. And from our side, there is no problem with them taking on a bigger position. We are not sensitive about this," a senior Iraqi official said.

"These are service contracts, not production-sharing contracts (which give companies an ownership stake), so it doesn't matter if they have 10 fields or one."

For energy-hungry China, a major buyer of Iraqi crude, access to reserves is a strategic imperative, and Beijing is prepared to accept tougher terms and lower profits than Western oil majors and even Russian firms such as Lukoil (LKOH.MM), which have to answer to shareholders.

Iraq has the world's fourth-largest oil reserves and wants to at least double its production in the next few years and ultimately challenge Russia and Saudi Arabia as the world's biggest oil nation.

China's stealthy advance in Iraq, supported by piles of cash, has already given it a formidable position in prized southern oilfields, and through Chinese oil company Sinopec (0386.HK), its reach has extended into the northern Kurdish region.

By taking on West Qurna-1, Chinese companies would come to dominate Iraq's oilfields with roughly 32 percent of the reserves found in service contracts awarded to foreign companies, up from 21 percent now.

"PetroChina is in talks to buy the stake from ExxonMobil. There are rival bidders," a source familiar with the Chinese company said. "A decision is expected from ExxonMobil soon."

Iraq has already signaled it would favor bids by CNPC and Lukoil if they decided to buy Exxon's stake and that it had received "positive signals" from both companies they would consider making an offer.

But Russia's Lukoil (LKOH.MM) has made no commitment so far. Russia's second-largest crude producer is already developing West Qurna-2.

FEAR OF WAR

Control of oil resources is at the heart of a dispute between Iraq's Arab-led central government and the autonomous region run by ethnic Kurds in the north, which Baghdad accuses of usurping its constitutional right over oil.

Kurdistan has upset Baghdad by signing deals directly with oil majors such as Exxon and Chevron (CVX.N), providing lucrative service contracts and better operating conditions than in Iraq's south.

By turning its focus to Chinese and Russian companies, Baghdad would be extending a push for a more independent foreign policy, which Prime Minister Nuri al-Maliki initiated after the last U.S. troops left the country a year ago.

Exxon's departure would all but wipe out the American presence in Iraq's southern oilfields. Occidental Petroleum (OXY.N) has a small stake in the Zubair oilfield development project.

With oil majors now shifting their focus northward to sign deals with Kurdistan and away from Iraq's southern oilfields, leaders on both sides are warning of the risks that the dispute could slide into an ethnic war.

As tensions rise, industry sources suggest Exxon might have a change of heart and decide to stay in southern Iraq. Earlier this year, Baghdad said it had called on U.S. President Barack Obama to persuade Exxon not to invest in Kurdistan.

"I would be surprised if Exxon actually exits. I'm betting on some twists and turns ahead," said a Western oil executive, who works for a rival. "They might get nervous in the north."

At the heart of the dispute is the oil wealth under the swathe of land know as the "Disputed Territories" along the vague internal border that includes the ethnically mixed city of Kirkuk, known to some as the "Jerusalem of the Kurds".

Baghdad has warned Exxon and other companies that deals struck with Kurdistan are illegal. The Kurds say the constitution's federalism guarantees their right to develop their region's oil resources.

"The government will take all necessary measures to stop Exxon working, especially in the disputed areas. They should know this is a red line they can't cross," one Iraqi oil official said.

"If they think they can do that, then they will face dire consequences. They should expect everything including confiscation of their equipment and face the results of violating the constitution," he added.

U.S. officials and Iraqi President Jalal Talabani have mediated to prevent a confrontation across the line dividing the two regions. Neither Baghdad nor Kurdistan appear to have the appetite for an open conflict that would risk oil exports.

"Fortunately cooler heads have prevailed for now," said a senior oil industry source. "Unfortunately President Talabani may not be around to mediate in the future."

Talabani suffered a stroke earlier this week, and may be unable to return to work for a prolonged period, at a time when tensions between Baghdad and Kurdistan are rising.

(additional reporting and writing by Patrick Markey; Editing by Jane Baird and Alison Birrane)

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Unipol, Fondiaria group approve terms of merger

MILAN | Thu Dec 20, 2012 1:08pm EST

MILAN (Reuters) - Italy's Unipol (UNPI.MI) and the Fondiaria-SAI (FOSA.MI) group have approved terms of a four-way merger that will create the country's second-largest insurer behind Generali (GASI.MI), they said on Thursday.

In a joint statement, the two groups said their boards had approved the share swap ratios of a four-way merger which also involves Premafin (PRAI.MI) and Milano Assicurazioni (ADMI.MI), as well as a business plan for the newly created UnipolSai entity.

Under the terms of the deal, 0.050 ordinary Fondiaria shares will be offered for each Premafin share, 1.497 ordinary Fondiaria shares for each Unipol share, and 0.339 ordinary Fondiaria shares for each Milano Assicurazioni share.

UnipolSai is targeting a 2015 net profit of 815 million euros and a solvency margin of about 180 percent.

The complex deal, brokered by Mediobanca (MDBI.MI), was agreed back in January to rescue troubled insurer Fondiaria.

(Reporting By Danilo Masoni)

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Sumitomo Life to buy HSBC's 18 percent stake in Vietnam insurer for $340 million

The head office of Japanese life insurer Sumitomo Life Insurance Company is seen in Tokyo August 3, 2009. The sign reads ''Sumitomo Life''.

Credit: Reuters/Stringer

TOKYO | Thu Dec 20, 2012 6:08am EST

TOKYO (Reuters) - Sumitomo Life Insurance Co SMTLI.UL said on Thursday it is buying HSBC Holding's (HSBA.L) (0005.HK) 18 percent stake in Vietnamese insurer Baoviet Holdings BVH.HM for about $340 million, the latest in a spate of acquisitions by Japanese financial firms in Southeast Asia.

Faced with weak growth prospects at home and a strong yen, Japanese banks and life insurers have stepped up their overseas expansion efforts. For life insurers, Southeast Asia's low insurance penetration rates and growing middle-class are a big draw.

Under the deal, Sumitomo Life, one of Japan's top four life insurers, will acquire the stake for about 7.1 trillion Vietnam dong ($340.3 million). The transaction is subject to regulators' approval.

(Reporting by Taiga Uranaka; Editing by Muralikumar Anantharaman)

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American Railcar sweetens offer for Greenbrier

By Sagarika Jaisinghani

Thu Dec 20, 2012 4:47am EST

n">(Reuters) - American Railcar Industries Inc (ARII.O), controlled by activist investor Carl Icahn, said it was willing to raise its offer for Greenbrier Cos Inc (GBX.N) after being snubbed by the smaller railcar maker.

American Railcar said it could increase its offer by 10 percent to $22 per share, valuing Greenbrier at $597 million.

But a deal at that price is unlikely as Greenbrier has already deemed such an offer inadequate in its response to American Railcar's first bid, which revived Icahn's five-year old plan to merge the companies.

"The Greenbrier board of directors believes a price range of $20-$22 per share is inadequate, grossly undervalues the company and is not in the best interests of Greenbrier stockholders," the company said in a statement late on Tuesday.

American Railcar's shares were down 5 percent, while Greenbrier was quoted at $20.61 in after-market trading, indicating that investors were skeptical of a deal going through.

An offer price of between $23 and $26 per share would still add meaningfully to American Railcar's earnings, Longbow Research analyst Matthew Brooklier wrote in a client note.

American Railcar's offer, however, is at a discount to the $30-range Greenbrier shares were trading at when Icahn attempted to merge the companies in 2008. He dropped the bid later that year, saying a combination was not possible due to "unresolved issues". (r.reuters.com/pud93t)

A REVERSE BUY

While rejecting American Railcar's initial offer of $20 per share, Greenbrier said it had repeatedly told Icahn that it would be interested in buying American Railcar for a "modest premium.

The company said it was willing to continue talks with Icahn, and that combining the two rivals would offer substantial synergies and benefit shareholders.

Greenbrier did not say what it would consider a fair price for the company. The company did not respond to calls seeking a comment.

American Railcar's second-largest shareholder, Advisory Research, said it would be interested in selling its shares to Greenbrier if it got a "compelling" offer.

"With the appropriate acquisition premium you'd have to get (an offer) above the mid $40's," said Matthew Swaim, the managing director of the firm, which has an 8.6 percent stake in American Railcar.

American Railcar's intrinsic value is $54.47 as measured by Thomson Reuters StarMine. The StarMine model is a measure of how much a stock should be worth currently when considering expected growth rates over the next 15 years adjusting for analysts' systematic biases.

Icahn Enterprises LP (IEP.O) controls around 55.6 percent of American Railcar, according to its most recent filing. The company has a market capitalization of about $734 million.

Greenbrier grew rapidly in 2011 when strong demand in the energy sector increased deliveries nearly fourfold. But energy demand has since moderated and the company's growth has slowed.

It reported in November a quarterly profit that was less than half of what analysts had expected.

Icahn reported a 9.99 percent stake in Greenbrier last month, making him its largest shareholder, and Greenbrier shares have risen more than 30 percent since then.

American Railcar said on Wednesday it would terminate its offer if Greenbrier did not respond by 2 pm Eastern Time on December 21.

(Reporting by Tej Sapru and Sagarika Jaisinghani in Bangalore; Editing by Muralikumar Anantharaman, Chris Gallagher and Saumyadeb Chakrabarty)

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Italy's Pirelli in Rosneft deal to sell tires in Russia

Tyres from the new tyre provider Pirelli are seen behind the pits ahead of this weekend's Australian Grand Prix in Melbourne March 24, 2011.

Credit: Reuters/Scott Wensley

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Benckiser, aiming for coffee empire, buys Caribou, Peet's

By Olivia Oran and Martinne Geller

NEW YORK | Wed Dec 19, 2012 3:10pm EST

NEW YORK (Reuters) - A relatively unknown German holding company this week made its third move on a coffee company as it tries to assemble a juggernaut that can challenge chains like Starbucks Corp (SBUX.O) and Dunkin' Brands Group Inc (DNKN.O).

Monday's announcement by the tight-lipped private investment firm Joh. A. Benckiser that it would buy Caribou Coffee Company Inc (CBOU.O) for $340 million came less than two months after it bought Peet's Coffee & Tea for $1 billion and raised its stake in D.E. Master Blenders 1753 (DEMB.AS) to 15 percent from about 12 percent.

Controlled by Germany's billionaire Reimann family, the firm's holdings already include fragrance company Coty and luxury brands Bally and Jimmy Choo. It is run by three consumer products veterans with ties to giants such as Reckitt Benckiser Group (RB.L), candy giant Mars and Anheuser-Busch InBev (ABI.BR).

Bankers say the group is angling to become a powerhouse in the global coffee business, which is being fueled by innovations like single-serve brewers, new kinds of drinks and emerging middle classes in developing markets.

"They're not trying to build a $5 billion business," said one banker who has worked with JAB. "They're trying to build a $25 billion business. These guys are empire builders."

In a nod to the world's largest brewer, formed by InBev's $52 billion takeover of Anheuser-Busch in 2008, another banker said the group "wants to be the InBev of coffee."

Of JAB's three partners -- Peter Harf, Bart Becht and Olivier Goudet -- Harf and Goudet have served on the board of AB InBev, maker of Budweiser and Stella Artois.

Harf, the chief executive, joined the firm in 1981. A former colleague who knew Harf when he worked at Boston Consulting Group described him as "decisive, hard charging, inventive and bold."

"I'm not afraid of taking risks," Harf said in a profile on the website of Harvard Business School where he studied after earning a PhD from the University of Cologne. "I'm not afraid of losing. I'm not afraid of buying something."

Harf is considered the senior statesman and spokesman of the group, while Becht focuses on operations and Goudet on strategy, according to a person who has worked with the three.

Becht, former CEO of household goods maker Reckitt Benckiser, is from the Netherlands and known for being "extremely smart, demanding and impatient," while Frenchman Goudet, ex-finance chief of candy maker Mars, was "the driving force" behind that company's $23 billion merger with Wrigley in 2008, said a person who has worked with many consumer goods makers including those.

JAB also has a relationship with Chicago-based BDT Capital Partners, founded by Byron Trott, a former senior Goldman Sachs banker and long-time confidant of billionaire investor Warren Buffett. Trott helped advise the Mars family during the Wrigley deal where he worked closely with Goudet.

Trott's firm later advised JAB on Coty's $10.7 takeover bid for U.S. cosmetics maker Avon Products (AVP.N) earlier this year. It was a minority investor in the Caribou and Peet's deals.

HIGH MULTIPLES, GROWING FOOTPRINT

The company paid an earnings before interest, tax, depreciation and amortization (EBITDA) multiple of roughly 21 times for Peet's, which is high compared to other consumer deals. The median multiple for recent transactions in the food and beverage space is roughly 10 times, according to Harris Williams & Co.

Bankers who have worked with them say the partners don't shy away from lofty price tags as they tend to view deals from a long-term strategic perspective rather than a quick flip.

"They have big egos and big aspirations," said another dealmaker who has worked with the group. "Price has never been an object."

With the acquisitions of Peet's and Caribou, JAB is consolidating the heavily fragmented $40 billion U.S. coffee market dominated by Starbucks, McDonald's Corp (MCD.N) and Dunkin' and without other large or mid-size players.

JAB will soon have around 800 U.S. stores, which still pales in comparison with more than 11,000 for Starbucks.

Coffee is a staple for U.S. consumers, with over 76 percent reporting they have purchased the beverage in some form in the last month, according to market research firm Mintel.

The moves also give the firm bagged coffee it can sell at U.S. supermarkets and warehouse clubs, where margins tend to be fatter. That pits it against other giants like Folgers, owned by JM Smucker Co (SJM.N) and Maxwell House, owned by Kraft Foods Group (KRFT.O).

"Coffee is viewed as an attractive market but it is incredibly competitive at this point," said Morningstar analyst Erin Lash. "There are tough competitors there that are focused on growing their position."

But so is JAB. Bankers say it could look to merge with D.E. Master Blenders, the coffee arm of the former Sara Lee, or Green Mountain Coffee Roasters Inc (GMCR.O), though they say the recent rise of that company's stock price makes that move less likely.

Green Mountain and D.E. Master Blenders declined to comment.

Industry sources see the group as a consolidator rather than a brand-builder, so don't expect it to buy anything too small.

"We believe the coffee market is an attractive industry with favorable long-term fundamentals, which is why we are in it," said Tom Johnson, speaking on behalf of JAB. None of the partners were available for an interview.

(Reporting By Olivia Oran and Martinne Geller in New York; additional reporting by Victoria Bryan in Frankfurt; Editing by David Gregorio)

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Exclusive: American Railcar sweetens offer for Greenbrier

By Sagarika Jaisinghani

Wed Dec 19, 2012 6:09pm EST

n">(Reuters) - American Railcar Industries Inc (ARII.O), controlled by activist investor Carl Icahn, said it was willing to raise its offer for Greenbrier Cos Inc (GBX.N) after being snubbed by the smaller railcar maker.

American Railcar said it could increase its offer by 10 percent to $22 per share, valuing Greenbrier at $597 million.

But a deal at that price is unlikely as Greenbrier has already deemed such an offer inadequate in its response to American Railcar's first bid, which revived Icahn's five-year old plan to merge the companies.

"The Greenbrier board of directors believes a price range of $20-$22 per share is inadequate, grossly undervalues the company and is not in the best interests of Greenbrier stockholders," the company said in a statement late on Tuesday.

American Railcar's shares were down 5 percent, while Greenbrier was quoted at $20.61 in after-market trading, indicating that investors were skeptical of a deal going through.

An offer price of between $23 and $26 per share would still add meaningfully to American Railcar's earnings, Longbow Research analyst Matthew Brooklier wrote in a client note.

American Railcar's offer, however, is at a discount to the $30-range Greenbrier shares were trading at when Icahn attempted to merge the companies in 2008. He dropped the bid later that year, saying a combination was not possible due to "unresolved issues". (r.reuters.com/pud93t)

A REVERSE BUY

While rejecting American Railcar's initial offer of $20 per share, Greenbrier said it had repeatedly told Icahn that it would be interested in buying American Railcar for a "modest premium.

The company said it was willing to continue talks with Icahn, and that combining the two rivals would offer substantial synergies and benefit shareholders.

Greenbrier did not say what it would consider a fair price for the company. The company did not respond to calls seeking a comment.

American Railcar's second-largest shareholder, Advisory Research, said it would be interested in selling its shares to Greenbrier if it got a "compelling" offer.

"With the appropriate acquisition premium you'd have to get (an offer) above the mid $40's," said Matthew Swaim, the managing director of the firm, which has an 8.6 percent stake in American Railcar.

American Railcar's intrinsic value is $54.47 as measured by Thomson Reuters StarMine. The StarMine model is a measure of how much a stock should be worth currently when considering expected growth rates over the next 15 years adjusting for analysts' systematic biases.

Icahn Enterprises LP (IEP.O) controls around 55.6 percent of American Railcar, according to its most recent filing. The company has a market capitalization of about $734 million.

Greenbrier grew rapidly in 2011 when strong demand in the energy sector increased deliveries nearly fourfold. But energy demand has since moderated and the company's growth has slowed.

It reported in November a quarterly profit that was less than half of what analysts had expected.

Icahn reported a 9.99 percent stake in Greenbrier last month, making him its largest shareholder, and Greenbrier shares have risen more than 30 percent since then.

American Railcar said on Wednesday it would terminate its offer if Greenbrier did not respond by 2 pm Eastern Time on December 21.

(Reporting by Tej Sapru and Sagarika Jaisinghani in Bangalore; Editing by Muralikumar Anantharaman, Chris Gallagher and Saumyadeb Chakrabarty)

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