LITTLE ROCK — QUOTE OF THE DAY
“First-time homebuyers are slowly making their way back.”
Jennifer Lee,
an economist at BMO Capital Markets Article, 1D
Facebook fizzle puts heat on bank
Facebook Inc. shares had another bad day Tuesday, falling 8.9 percent, or $3.03, to close at $31. The shares lost 11 percent Monday, after closing at $38.23 on Friday, the company’s first day of trading.
After one of the most anticipated initial public offerings in history, Facebook’s nearly 20 percent drop so far this week prompted investors to fault everything from Morgan Stanley’s role as lead underwriter to the company’s greed and the Nasdaq stock market.
“It was like the gang that couldn’t shoot straight,” said Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston. He said he placed Facebook orders for clients. “The underwriters mis-estimated what actual demand was, and there was pure execution failure coming out of the Nasdaq.”
Taking the most heat is Morgan Stanley, Mullaney said. The bank was lead underwriter among the 33 firms Facebook hired to manage the initial public offering of stock.
The bank decided with Facebook executives to boost the size and price days before Thursday’s IPO.
“They overplayed the enthusiasm and probably just misread the atmosphere of the marketplace,” said Keith Wirtz, who oversees $15 billion as chief investment officer at Fifth Third Asset Management in Cincinnati and bought some stock in the IPO.
Fitch cuts Japanese credit to A-plus TOKYO - Fitch has downgraded Japan’s credit rating to A-plus with a negative outlook, reflecting risks from its ballooning government debt.
Fitch Ratings said Tuesday that the downgrade and negative outlook underline growing risks for Japan from high and rising public debt.
Japan’s gross government debt is projected to hit 239 percent of its economy by the end of this year, by far the highest of any Fitch-rated country.
But Fitch said Japan’s low interest rates mean the government can afford its borrowing while high foreign currency reserves are also a positive factor for the country.
General Mills shedding 850 jobs
MINNEAPOLIS - Food maker General Mills Inc.
said Tuesday it will cut about 850 jobs as part of a plan to lower costs and boost efficiency.
The Minneapolis-based maker of Cheerios cereal, Nature Valley granola bars and Hamburger Helper said the moves will make it more effective and allow it to focus on key growth strategies.
General Mills said it expects the plan to result in total pretax charges of about $109 million, which will cover costs related to workers whose jobs are terminated and equipment.
The company said about $94 million of those charges will come in the fiscal fourth quarter, which ends Sunday.
The rest will be recorded in fiscal 2013. It plans to use the savings from the cuts on future growth strategies and to speed up global development.
General Mills said it still hopes to post an adjusted fiscal 2012 profit of $2.53 to $2.55 per share. Analysts expect a profit of $2.54 per share.
The company employed about 35,000 people across the world in fiscal 2011, according to its annual report.
General Mills shares rose cents to $38.58 in Tuesday trading.
Hilton owner buying Motel 6 chain
LOS ANGELES - Motel 6 and Studio 6, the no-frills budget hotel chains that once offered rooms for $6 a night, are being sold by French parent Accor for $1.9 billion.
Their new owner, an affiliate of private equity firm Blackstone Group, already owns Hilton Worldwide.
Blackstone’s Real Estate Partners VII fund said it plans to “accelerate the expansion of the franchise base” for Motel 6 and Studio 6.
Accor said it will use proceeds from the sale to slash its debt and grow its luxury Sofitel and Novotel hotels in expanding markets such as Asia, Latin America and Europe.
Motel 6 has struggled recently, trying to revamp its aesthetics and amenities but still failing to perform as well as Accor’s other brands.
Benihana OKs $296 million deal
MIAMI - Restaurant chain Benihana Inc. has agreed to be taken private in a deal worth about $296 million.
Benihana, which serves Japanese food and sushi and has 95 restaurants, had announced in March that it was exploring strategic options, including a potential sale.
The company said Tuesday that buyer is Angelo, Gordon & Co.’s Private Equity Group.
Under terms of the deal, Benihana stockholders will get $16.30 per share, a 23 percent premium to its Monday closing price of $13.30.
Benihana’s board has approved the transaction, but it needs the approval of a majority of the Miami company’s shareholders. The company and its advisers are allowed to actively seek out and consider other proposals from third parties during the next 40 days, through July 1.
Benihana outlets include 62 namesake restaurants, including one in North Little Rock, as well as eight Haru sushi restaurants and 25 RA Sushi restaurants.
Shares of Benihana jumped $2.82, or 21.2 percent, to $16.12 in Tuesday trading. The stock hit a 52-week high of $16.59 per share in early May. It traded as low $6.76 per share last August.
Spain ends tax probe of banker, kin
MADRID - Spain’s National Court said Tuesday it had dropped its investigation into the country’s top banker - Banco Santander Chairman Emilio Botin - and 11 of his relatives over possible income and wealth tax evasion.
The case focused on tax returns filed between 2005 and 2009 on accounts the family held in Switzerland’s HSBC Private Bank (Suisse).
The court said the probe showed the Botin family had normalized its tax situation before the investigation was opened last year.
The family said it had paid around $255 million in back taxes to normalize the situation, befoer the case was reopened in June, 2001.
The family said the accounts stemmed from assets that Botin’s father held outside Spain at the time of his death in 1993.
Spanish tax authorities had learned of the accounts from French authorities, following a leak of the account details of 24,000 HSBC Private Bank (Suisse) clients from around the world.
Banco Santander S.A. is Spain’s largest bank and the eurozone’s biggest by market capitalization.
Business, Pages 32 on 05/23/2012