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Wooing Delta


You have to give Doug Parker credit: He doesn't give up easily. The US Airways (LCC) CEO on Nov. 15 offered $8 billion for bankrupt Delta Air Lines (DALR), a 25% premium over the company's market value. Parker proposed a merger last spring but was rejected by Delta CEO Gerald Grinstein. This time he's going directly to Delta's creditors. Grinstein said Delta would ponder the idea but in the meantime would proceed with its efforts to emerge from bankruptcy as a standalone airline.

Just as the New York Stock Exchange draws nearer to buying Euronext, the big European exchange, a fearsome rival is taking shape. On Nov. 15, Goldman Sachs (GS) and six other investment banks said they plan to build a pan-European "multilateral trading platform" that promises sharply lower trading costs by the end of 2007. Code-named Turquoise, it will be a computerized system, a bank source says. Such systems shook up trading in the U.S. in recent years but won't be legal in Europe until next year. Turquoise is bad news for established bourses such as Euronext and the London Stock Exchange, 25% owned by NASDAQ. They'll have to either lower costs to keep the new player at bay, a chore since big investment banks claim half the volume in European equities trading, or contemplate extinction. No wonder Deutsche B?rse dropped out of the fight for Euronext on Nov. 15.

See "Hot in Pursuit of Europe's Exchanges" The media buyout pot keeps bubbling. The New York Times reports that radio behemoth Clear Channel is mulling bids in the $18 billion range (plus $8 billion in assumed debt) from two private equity groups. Meanwhile, Tribune (TRB) Co.'s slow and semi-public weighing of its options won at least preliminary attention from Gannett (GCI), according to the Chicago Tribune, and from a seeming cast of a thousand local moguls and other companies coveting its individual papers from Los Angeles to Baltimore. The Tribune board is expected to unveil a winner, or winners, by yearend.

It's not even Thanksgiving, but Eddie Bauer (EBHI) is running a juicy sale. The 267-store Bauer clothing chain, a year removed from being spun off during Spiegel's bankruptcy, on Nov. 13 tried on and liked a $286 million cash offer from two private equity firms. That's nearly a 5% hike over its still struggling stock. Shrinking sales and too-tight margins also may prompt Timberland to sell itself, The Wall Street Journal reported on Nov. 14.

The world's biggest computer maker, which has been the subject of an informal SEC inquiry, announced on Nov. 15 that the investigation has been elevated to a formal one. Dell also said it would delay reporting third-quarter earnings because of "the level of complexity the company is facing in the preparation of its preliminary results." It hasn't yet given regulators second-quarter numbers, either.

It wasn't the PR bonanza Sony (SNE) hoped for. At the PlayStation 3's long-postponed Nov. 11 debut in Japan, a scarcity of the machines created chaos at retailers. Days later, Sony confirmed that not all games designed for previous Sony consoles are compatible with the new box, as had been promised. Sony blamed the PS3's more sophisticated software and said the glitches will plague machines sold in the U.S. Analysts say some developers may hold off the release of PS3 games until conditions improve.

See "Sony's PS3 Issues Threaten Revival" Citigroup (C) may have finally bagged its Chinese prey. The Wall Street Journal said on Nov. 15 that a Citi-led consortium would get the nod as the preferred bidder for Guangdong Development Bank, which Citi has been pursuing for more than a year. Also expected to be on the team: IBM (IBM), which would get a 5% stake in the troubled state lender. That would give Big Blue a leg up in snagging contracts to help the bank upgrade its IT network--and a shot at work for other banks in need of help as the sector opens up to foreign competition in December. If the deal goes through, Citi will pay $3.1 billion for 85% of Guangdong.

Boeing's (BA) big-jet fortunes fly ever higher. Company sources said on Nov. 15 that General Electric's Commercial Aviation Services leasing and finance unit, GECAS, plans to announce the purchase of 15 777 jetliners. The deal, valued at $3.5 billion at list prices, is likely to be the first wave of lucrative widebody orders that may fall to the planemaker in coming months, dropping an additional $10 billion into Boeing's cockpit as it capitalizes on the nosedive of European archrival Airbus. British Airways (BAB), Korean Air, Vietnam Airlines, Philippine Airlines, and Lufthansa (DLAKY) all want Boeing's big jets in the near future.

Deutsche Telekom (DT) on Nov. 12 ousted Chief Executive Kai-Uwe Ricke and the next day named a close prot?g?, T-Mobile chief Rene Obermann, to take over. New boss same as old boss? Not necessarily. Obermann co-created the strategy that has failed to stem the loss of German market share. But shareholders hope the aggressive 43-year-old, who quit college to start his own mobile-phone provider, can push change faster than Ricke. Obermann's biggest obstacle may be cutting costs. The German state, a 32% shareholder, won't countenance massive layoffs.

See "Deutsche Telekom: Oberman's Challenge" Welcome to the club. That's the message President George W. Bush will give Vladimir Putin on Nov. 18 when the two meet in Hanoi to sign an accord that opens the door to Russian membership in the World Trade Organization. Moscow started membership talks 13 years ago, and the deal with Washington removes the last remaining hurdle to entry, now expected within six months. Bush, however, was embarrassed on the eve of his departure by House Republican leaders, who yanked a bill liberalizing trade with Vietnam, thus clouding its prospects.

One of the highest-paid executives in homebuilding finds himself homeless. Bruce Karatz, longtime CEO of Los Angeles-based KB (KBH) Home, on Nov. 12 fell prey to the stock options scandal. An internal investigation found that Karatz and another exec handed out options backdated to days when the stock was cheap in order to make them more valuable. The moves cost the company up to $50 million in additional compensation over seven years ending in 2005. Karatz has agreed to pay back $13 million. He was replaced as CEO by Jeffrey Mezger, a 13-year KB veteran not involved in the backdating. The board is searching for an outsider to serve as chairman. Considered a creative marketer in an industry known for cookie-cutter homes, Karatz unveiled a successful design partnership with Martha Stewart earlier this year. He made more than $155 million in 2005, most of it from cashing in options.

See "KB Home Cleans House"


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