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Will Barclays Go Dutch?


The dealmaking in Europe just keeps getting hotter. On Mar. 20, ABN Amro (ABN), the Netherlands' No. 1 bank, said it's talking with Barclays (BCS) about a merger to create a $155 billion institution, the world's fifth-largest bank by market value. If the $80 billion deal goes through, it would mark Europe's biggest-ever cross-border banking tie-up. The new entity would be based in Amsterdam, with the Brits naming a CEO and the Dutch a chairman.

ABN is pining for a suitor to fend off hedge funds and other shareholders that have called for a breakup. The bank's stock has stagnated as it has struggled to wring profits from far-flung operations. But a marriage with Barclays is hardly a sure thing. Other global behemoths, such as Citigroup (C) or HSBC (HBC), might choose to make a run at ABN, or Dutch regulators might do their best to nudge it into the arms of local bank ING (ING).

No sooner had the rumor mill made a Motorola (MOT) buyout of Palm (PALM) look inevitable than bad news flowed from Schaumburg, Ill. Motorola on Mar. 21 cut its profit guidance from a consensus of 18 cents a share to 7 cents because of slowing revenue. To fix the biz, it named networks unit chief Greg Brown president and COO and Thomas Meredith, a Motorola director, CFO. It also will boost its share-buyback program, which may help fend off Carl Icahn.

See "Motorola's Zander: On Razr's Edge"

A lawsuit seeking billions in compensation for Enron shareholders has gone off the rails. On Mar. 19 a federal appeals court ruled that the case against Enron's banks and securities firms could not proceed as a class action. Defendants Credit Suisse Group (CS), Merrill Lynch (MER), and Barclays are no doubt elated at the decision, which concluded that as "secondary actors" they could not be sued by private investors for Enron's deceptions.

On Mar. 19, Beijing said it's laying plans to build its own 150-seat commercial jet by 2020. Ambitious? Sure. Realistic? Maybe. No one disputes China's ability to produce a credible airliner, but making it fly in the marketplace is another thing. It would find domestic buyers, no doubt, but in an industry that wants to slash the fuel and operating costs of commercial jets, innovative technologies trump a low-cost labor advantage.

See "Will China Join the Jet Set?"

Say what? Just when people were starting to believe private equity's paeans to the joys of going private, CNBC reported on Mar. 16 that Blackstone Group may soon list 10% of itself in an IPO that would value the firm built by CEO Steven Schwarzman and Chairman Peter Peterson at $30 billion. Blackstone wouldn't comment.

See "A Public Blackstone Could Do Ever-Larger Deals"

So much for the First National Bank of Wal-Mart. The retail colossus said on Mar. 16 that it had pulled its controversial application to operate an industrial-loan company. Wal-Mart said it wanted solely to cut credit-card transaction costs, but the effort inflamed community-banker groups and some congressional leaders who contended it was the first step to operating full-service banks within the company's 4,000 U.S stores.

Assorted auto news: On Mar. 13 the United Auto Workers said it will fight if DaimlerChrysler (DCX) tries to sell its Chrysler unit to a private equity firm that only wants pieces of it or intends to break it up. Meantime, as Nissan (NSANY) sales and profits have slowed in Japan and the U.S., Renault-Nissan CEO Carlos Ghosn on Mar. 16 gave up the job of personally managing Nissan North America. And General Motors (GM) on Mar. 15 said accounting "complexity" forced it to restate earnings back to 2000.

Move over, Merc. On Mar. 15, IntercontinentalExchange, the seven-year-old upstart energy-futures market in Atlanta, bid $9.9 billion in stock to buy the Chicago Board of Trade, trumping an $8 billion cash-and-stock offer by the Chicago Mercantile Exchange. The Merc insists its deal is superior but may have to sweeten it.

See "Why ICE May Win the CBOT"

Blockbuster (BBI) boss John Antioco lost his war of attrition with shareholder activist Carl Icahn, a board member and 15.8% owner of the video chain. On Mar. 20, Antioco said he'll leave at the end of 2007, a year before his contract expires. His parting gift? A $3.1 million 2006 bonus and nearly $5 million in severance pay, a deep discount from the $13.5 million his contract allowed in case of an early termination and the $7.65 million in 2006 bonuses under the company's existing policy.

See "No Blockbuster Deal for Antioco"

After three years, low-cost airline Virgin America is finally on the runway. On Mar. 21 the Transportation Dept. gave tentative approval to the startup's business plan. The brainchild of British billionaire Richard Branson, whose Virgin Group owns 25%, Virgin America has had to perform loop-the-loops to convince regulators and rivals that it's U.S.-owned and managed.

Shareholders of prescription-benefits manager Caremark Rx (CMX) on Mar. 16 voted for a $27.6 billion buyout by drugstore giant CVS (CVS), spurning a $28.4 billion offer from rival Express Scripts (ESRX). The vote ended a tussle that erupted after CVS' initial all-stock bid last November.

The hostility between Wal-Mart Stores and Julie Roehm, the high-profile marketing executive it fired in December, got even nastier on Mar. 19. Wal-Mart filed a counterclaim to Roehm's wrongful-dismissal lawsuit in which it bolstered its contention that it canned her for having an affair with a subordinate and violating the company's strict conflict-of-interest code with suppliers. The filing relies largely on e-mail exchanges between Roehm and her direct report, Sean Womack. The suit says Womack's wife discovered some exchanges on his home computer. Roehm says in one: "I think about us together all the time. Little moments like watching your face when you kiss me." Wal-Mart also alleges that Roehm and Womack, while reviewing advertising agencies for the company, held discussions with one of them, Draft FCB, about employment opportunities. Wal-Mart declined further comment, and Roehm and Womack couldn't be reached. Roehm's lawyer, John Schaefer, said in a statement that "Wal-Mart deliberately chose to take the e-mails out of context." He called the case "nothing more than a smear tactic."


American Apparel's Future
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