In commodity metals these days, it's eat or be eaten. On May 7, Alcoa (AA) bared its carnivorous side. The aluminum maker, itself a rumored takeover target, sprang a $26.9 billion bid for Alcan (AL) of Montreal. A deal would reestablish Alcoa as the No. 1 producer in the world, surpassing United Co. Rusal, a Russian giant that was formed in March through a three-way merger.
The U.S. smelter, which has grown through a series of purchases including the hostile takeover of Reynold Metals in 2000, had been negotiating an Alcan-Alcoa alloy for two years. Keeping pace with upstarts in Russia and China was one reason. Another: Alcan can tap cheap hydropower in Canada. To win, Alcoa will have to assuage antitrust watchdogs and Canadians wounded by Alcan's loss. While Alcoa is offering top dollar, investors are wagering it may get trumped by another bidder—or fall prey to a hungry mining outfit like Rio Tinto (RTP) or BHP Billiton (BHP).
See "Alcoa's No-Holds-Barred Takeover Bid"
The battle for ABN Amro (ABN) is snarled after the Dutch bank's board on May 7 expressed skepticism about a $95 billion offer from a consortium headed by Royal Bank of Scotland. The bid would top an agreed $88 billion deal with Barclays. The RBS group has also offered $24.5 billion for ABN's Chicago-based LaSalle subsidiary. That's higher than the $21 billion deal ABN struck with Bank of America (BAC)—which BofA is suing to enforce. A long wrangle looks likely.
Newspapers may be withering, but purveyors of news and financial data sure seem to be hot tickets. On the heels of Rupert Murdoch's bid for Dow Jones (DJ), news broke on May 5 that Toronto-based Thomson (TOC) may acquire Reuters (RTRSY). That sent shares of the venerable London company soaring. Thomson is offering $17.6 billion. The combo would edge Bloomberg as the top financial data seller.
Motorola (MOT) shareholders seem to have hung up on Carl Icahn. Despite his months of lobbying for a board seat, the struggling company declared after its May 7 annual meeting that an estimate of the votes cast shows the board has been reelected sans the activist billionaire. The official result isn't expected for a couple of weeks.
See "Motorola: Cut Icahn's Interference"
Conservative Nicolas Sarkozy trounced Socialist Ségolène Royal on May 6 to become the first French President ever elected on a platform of free-market reform. He'll probably win big in next month's parliamentary elections, too. But France's unions vow to fight his plans to ease the maximum 35-hour workweek and downsize the civil service.
See "Sarkozy Vows Reform: How Far Can He Go?"
The world is flat—even when it comes to alleged insider trading. On May 3 federal authorities collared Hafiz Naseem, an investment banker with Credit Suisse (CS) in New York. He's charged with providing nonpublic information about nine deals to a banker in Pakistan. Naseem's lawyer says he will contest the charges. Separately, the feds on May 8 froze the brokerage accounts of a Hong Kong couple, alleging in a civil suit "highly profitable and highly suspicious" trading in Dow Jones stock shortly before Rupert Murdoch's bid for the company became public.
Wall Street groaned when General Motors (GM) reported earnings on May 3, and not just because subprime mortgage problems whacked profits at financier GMAC (GM), of which GM owns 49%. No, GM's scant $62 million profit can be attributed also to an $85 million loss from its all-important North American business. Analysts had hoped that after taking out $7 billion in costs over the past two years, GM would be picking up speed by now.
HBO Chairman and CEO Chris Albrecht stepped down on May 9 in the wake of his May 6 arrest in Las Vegas for allegedly assaulting his girlfriend after attending a boxing match. Albrecht attributed his downfall to a return to drinking after years of sobriety. His departure is a blow to the Time Warner (TWX) unit, since he was a key player in developing such megahits as The Sopranos and Sex and the City. For now, he'll be succeeded by COO Bill Nelson.
It looked like a battle of titans last fall when IBM (IBM) and Amazon.com (AMZN) sued each other over e-commerce patent claims—but on May 8, Amazon threw in the towel. It has agreed to pay IBM for infringement on its patents—some of them extremely basic, such as selling online via an electronic catalog. The companies will also cross-license patents. The settlement gives Big Blue a big boost in claims against other e-commerce players.
The gasoline market caught a break on May 9 when Washington reported big gains in crude oil supplies and a small rise in gasoline inventories—the first increase in 13 weeks. Refining profit margins are huge because average pump prices, at $3.03 a gallon, are only pennies below their post-Katrina highs. Pricey gas has hurt growth while stoking inflation, leaving the Federal Reserve in a tough spot. On May 9 it left its key rate unchanged at 5.25%.
Dick Grasso may yet hang on to the $187.5 million pay package that cost him his job as head of the New York Stock Exchange (NYX) in 2003. A New York appeals court on May 8 tossed out four of six claims against him as being "not within the scope" of the New York Attorney General. Governor Eliot Spitzer, who as AG charged that Grasso's pay was excessive, expects the state to appeal, but that will be up to his successor, Andrew Cuomo.
Can Martha cook up a good thing with groceries? On May 3, Martha Stewart Living Omnimedia (MSO) announced the domestic diva's latest recipe: a partnership with wholesale retailer Costco (COST) to merchandise an exclusive line of fresh and frozen food. The meals, which will likely be sold under Costco's in-house Kirkland brand as Kirkland Signature by Martha Stewart, will mark MSLO's first move into the high-risk realm of food. Taste testing is under way, says CEO Susan Lyne, but she's not naming any specific dishes yet. Shoppers should expect a 2008 rollout. The deal comes as MSLO attempts to turn around its financial performance. It has undertaken several new partnerships in recent months, including a line of crafts at Michaels Stores and an endorsement deal for Singer sewing machines. On May 3 the company said losses had fattened to almost $12 million in the quarter ending Mar. 31. Shares have been trading roughly 6% lower than they were a year ago.
See "Martha Stewart Loves Costco. Now We Know Why"