Breaking News & Stocks

JPMorgan completes takeover of Bear Stearns

New York, June 01: JPMorgan Chase & Co said on Saturday it completed its USD 1.4 billion Bear Stearns Cos takeover, capping the demise of a Wall Street firm that survived the Depression and numerous slumps in its 85 years but could not navigate the mortgage crisis.

Weakened by its massive exposure to mortgage markets and the embarrassing blow-up of two of its hedge funds, Bear was driven to the brink of bankruptcy in March by traders who drained about USD 17 billion of the firm`s cash in a matter of days.

Federal officials, worried a Bear bankruptcy would drag the rest of the markets down with it, strong-armed the bank to accept JPMorgan`s USD 2-a-share offer, backed by a Federal Reserve bailout of USD 30 billion in Bear assets.

A week later JPMorgan raised its offer five-fold to 0.21753 of a share for each Bear share. Based on JPMorgan`s current market price of USD 43, that bid valued Bear at USD 9.35 a share, well below the USD 57 those shares fetched before traders began their run on Bear.

In exchange for the higher price, Bear had to sell a 39.9 percent stake to JPMorgan. Combined with other purchases, JPMorgan amassed a controlling 49.5 percent stake and effectively locked up Bear for good.

Since then, JPMorgan, which under CEO Jamie Dimon largely steered clear of credit losses that hobbled its rivals last year, has been sorting through Bear`s people and assets.

For a fire-sale price, JPMorgan will gain a new headquarters tower in Midtown Manhattan, some of Wall Street`s largest clearing, prime brokerage and energy trading arms.

Bear`s name will survive on Wall Street through its retail brokerage business, which Morgan is keeping.

The deal dealt a crushing blow to Bear employees, who collectively held 33 percent of the firm`s stock and saw billions of dollars in their personal wealth wiped out.

Only 6,500 staffers were offered jobs, casting about 7,000 analysts, bankers and traders into the streets at a time when the rest of Wall Street is shrinking.

JPMorgan now faces many significant and some unknown risks. Dimon disclosed this month that the cost of shedding Bear assets, litigation expenses and other merger-related costs would soar to USD 9 billion from an earlier rough guess of USD 6 billion.

As a result, JPMorgan expected to record a second-quarter gain of USD 1 billion, though it is expanding during a period that Dimon worries could be a prolonged recession.

Arjun`s talk of price rise at CWC meet raises eyebrows

New Delhi, June 01: HRD Minister Arjun Singh`s plain talk at the Congress Working Committee (CWC) meeting that inflation cannot be wished away has raised many an eyebrow in party circles.

While several leaders said at the CWC meeting on Saturday night that price rise was not the main cause of the debacle in Karnataka and there were other factors, sources said Singh, in significant remarks, said inflation could not be wished away.

His remark was being seen in party circles as a veiled attack on the government`s handling of the price rise issue.

Prime Minister Manmohan Singh explained the situation caused by volatility in global crude oil prices and said all steps would be taken to ensure that the burden on people with regard to fuel prices was minimum.

The CWC also saw senior leader C K Jaffar Sharief`s strong plea for a brainstorming session like the one in Pachmarhi.

Jaffar Sharief circulated a note in which he called for a "thorough introspection to find out where we have slipped the ground and how to bring back credibility to the party and the leadership."

"We should also find credible instruments within the party who can ably address these problems and find solutions," he said in the note.

He said, "we need to sit seriously for two or three days for a thorough introspection."

The AICC has held two such brainstorming sessions since Sonia Gandhi became the party chief a decade back. The first was held in September 1998 at Pachmarhi in Madhya Pradesh while the other was held in 2003 at Shimla, a few months before the Lok Sabha polls.

ADAG looks for presence in Gulf

Dubai, June 01: Indian conglomerate Reliance ADAG, headed by billionaire Anil Ambani, is keen on having a presence in sectors ranging from power to finance in the Gulf region and is open to partnerships with regional players.

The group is looking at opportunities in sectors such as telecom, power, film entertainment and financial services, according to Group Managing Director Gautam Doshi.

"We are looking for opportunities. A general interest is there in the Gulf area," he was quoted as saying in Gulf News.

Reliance Capital, the group's financial services company, has applied for a licence to operate from the Dubai International Finance Centre.

The company hopes to tap the large Indian client base in the UAE for selling products like mutual funds and insurance policies.

Doshi said Reliance is also keen to develop power projects in the region. He said the group is willing to join hands with Arab investors and use Gulf money in its overseas acquisitions. "We can look at Gulf money whether it is equity, debt or a combination of both, or some other form in which we do a partnership," he said.

Vijay Mallya in talks with European firm for business jets

Berlin, June 01: Vijay Mallya's UB Group, the spirits-to-airline major, has initiated talks with France-based EADS Socata, a leading aircraft manufacturer, to invest some USD 200 million to co-develop business jets for which India has now emerged as a hot market.

'We want to look at a global organisation that has service centres in place with tools to market in the country,' EADS Socata spokesman Phillipe de Segovia told IANS, confirming that the group was in talks with the UB Group and other Indian companies.

'We had earlier started talks with IndUS Aviation, an Indian-American aircraft maker with headquarters in Dallas, Texas, and Bangalore, three years ago,' de Segovia said, adding that the talks did not progress.

A phone inquiry to Vijay Mallya was replied with a monosyllabic 'no comment'.

At the US National Business Aviation Association's annual meeting and convention in Atlanta last September, Mallya had pledged a personal stake of USD 200 million to the US-based Epic Aircraft to develop its very light jets.

He said these jets would be would be manufactured and promoted for India and the Middle East markets. Now, however, the deal between Epic Aircraft and Mallya is believed to be over.

Airbus, chosen by Mallya to be the consultant for a review on Epic and also to help speed up the certification of its new aircraft, has now involved him in the new jet being developed by EADS Socata.

The company, which is not new to India, is a wholly owned subsidiary of the EADS Group, which also includes Airbus Industrie.

EADS Socata, which manufactures the single-engine turboprop TBM 850, would largely compete with the Epic Dynasty, slated for certification late this year. It has sold 14 aircraft to the Indira Gandhi Rashtriya Udan Academy.

India has 179 aircraft registered for private, corporate and charter purposes, which include business jets, turboprop aircraft and helicopters.

Under 10,000 lb in weight and costing under USD 2 million apiece, a very light jet such as the TBM 850 has fuel-efficient engines, is commanded by a single pilot and has a capacity of four-six passengers.

Smaller versions can take off from 3,000-ft runways and these aircraft cruise at an average of around 425 miles per hour using smaller airports to facilitate the business traveller to taxi them from point-to-point.

Socata is planning its latest product launch next year - a twin-engine business aircraft and larger than the six-seat TBM 850 turboprop , officials of the aircraft manufacturer said.

Kingfisher Airlines, which Mallya owns, is a diehard customer of Airbus and its entire fleet comprises aircraft manufactured by the French consortium with firm orders for 42 more, including five mammoth A-380s.

Airline industry officials, who were at the Berlin air show last week, said that the booming Indian economy and poor airport infrastructure made the market quite lucrative for private jets since these are also affordable in the long run.

In fact, that was also the main reason why IndUS Aviation founder Ram Pattisapu wanted to add business aircraft marketing to the group's activities and address the growing need for ground transportation system in India.

Inflation to remain high in India`

New Delhi, June 01: Anti-inflationary measures are unlikely to turn India into a slow growing economy, while other Asian nations could face the situation of rising prices and economic stagnation, a latest report says.

"We do not believe that India would be affected significantly in a stagflation scenario and growth would remain strong in relative terms...," global research firm Lehman Brothers said in a recent research report.

However, even as the economic growth is projected to remain strong, interest-rate sensitive stocks could be adversely impacted during stagflation situation in Asia.

Stagflation refers to a situation when inflation is rising and the economic growth is simultaneously slowing down.

The negative impact is likely to be felt by interest rate-sensitive stocks or by companies that are not in a position to pass on cost pressures to consumers, Lehman said.

Further, investment spending is unlikely to witness a substantial slowdown primarily on account of significant shortages in key sectors such as steel and power.

The report pointed out that risks out of a stagflation scenario would be high for the banking sector, infrastructure, automobile and cement firms.

"The risks are significant for part of the banking sector, companies with a high proportion of fixed-price contracts and companies with high energy usage without the ability to pass on increased costs," it said.

Lehman noted that in India inflation would remain on the higher side for some more time due to the base effect -- which relates to the inflation data of the corresponding week in the previous year.

Given particular prices in the current week, inflation would turn out to be higher, if it was a small number in the previous year, but would be less, if it was high a year ago.

In addition, the report said that inflationary headwinds would lead to increased fiscal deficit and negatively impact the country`s expansion plans.

"One of the major reasons for India`s premium expansion has been the reduction in fiscal deficit, a process which could be derailed in the short term due to inflationary headwinds," it added.

The government has initiated fiscal and monetary measures to lessen the effects of inflation on consumers. However, according to the report, some of these measures do not reflect the "true market economics."

"If the inflation period is prolonged, we expect the government to start passing on some of the suppressed price increases (especially those relating to crude oil and fertilisers) in small doses.”

However, we do not expect this anytime soon, given the proximity of the elections, the report pointed out.

Sachin in starry company
Mumbai Indians could not make to the semi finals of the Indian Premier League, but the iconic leader of the team Sachin Tendulkar still has a reason to celebrate. Read on to know more


Mumbai: Sachin Tendulkar is on the verge of fulfilling his life's dream of owning a house in Bandra, the queen of Mumbai suburbs and one of the most sought after places in the country's financial capital.

Cracking a deal to buy an old, abandoned bungalow "Dorab Villa" reportedly for Rs.350 million on Perry Cross Road, the master blaster has ventured into an area which is normally the abode of Bollywood stars. Speculation is rife that he may construct a multi-storeyed building there at a cost of another Rs.300 million.

It is at the southern hub of Mumbai's so-called "Glamour Crescent", which starts from Bandra and ends at Oshiwara, and is home to the who's who of India's entertainment and glamour industry.

"Now, Tendulkar will be in the neighbourhood of the Bollywood star Naseeruddin Shah," said one of the residents who has been living in the neighbourhood for the last 52 years.

This is the place where once Sahir Ludhianvi, Majrooh Sultanpuri, Sunil Dutt, Sanjay Dutt, Priya Dutt, the late Naushad Ali, Dilip Kumar, Rajesh Khanna, Rekha and many others have stayed on and off, the to-be neighbour added.

Abhishek and Aishwarya Rai-Bachchhan will move in soon. Their bungalow is being built a kilometre away at Carter Road.

Barely a stone's throw away are the homes of film stars Shah Rukh Khan, Salman Khan and his clan, Preity Zinta, Urmila Matondkar and many others.

"Dorab Villa" was constructed in 1920 by Fali Warden, according to sources in the know of the deal.

The bungalow was lying vacant for the last five years and has been frequently inspected by various property dealers, builders and other moneybags interested in exploiting its value, both locational and commercial. Tendulkar and his family checked out the place a few times before zeroing in on it, sources added.

The bungalow was bought by Kishore Bajaj who later sold it to a developer, Praful Satra of Satra group. Tendulkar bought the property from Satra group last December, sources in the group said.

The location of the place makes it special, said a local estate agent. It is next to Carter Road. Nearby are the Jogger's Park and the Otter's Club that has produced some of the country's top swimmers, Anita Sood and her sister Kavita.

The estate agent said besides, the greenery and the infrastructure around, new malls, multiplexes, some of the best eateries and shopping plazas also make it one of the special places in north-west Mumbai.

Locals are eagerly awaiting their new neighbour.

"I am very excited to know that Sachin has bought the place. Let him build the bungalow and come here soon," said a 45-year-old homemaker who lives in the next building "Geeta Villa", once part of the "Dorab Villa" complex.

"I will definitely make friends with Anjali," she said enthusiastically.

Source: Indo-Asian News Service

Mittal buys world's costliest house for son
The property on Palace Green - one of the most expensive houses in the world - is close to Kensington Palace Gardens, where steel tycoon Mittal lives

London: A London mansion that is about to be sold for a record 117 million pounds ($230 million) may go to the son of Indian billionaire Lakshmi Niwas Mittal, newspapers here said.

The property on Palace Green - one of the most expensive houses in the world - is close to Kensington Palace Gardens, where steel tycoon Mittal lives.

His son Aditya, 32, has been searching for a London property near Mittal's house, which the steel maker bought for 57 million pounds from Formula One chief Bernie Eccleston in 2004.

Now the search may be finally over: Noam Gottesman, an American-born hedge fund mogul, is close to exchanging contracts on the house, the Times newspaper reported.

The price works out at more than 8,000 pounds per square foot and smashes the previous record of 80 million pounds for a London home, set only three months ago for a property in nearby Upper Phillimore Gardens.

The newspaper quoted "property sources" as saying the family of L.N. Mittal, Britain's richest man, had made an approach for the house, which is next door to the Israeli Embassy.

Another paper said the house was being bought by Mittal for his son.

Stephen Holmes of the London property agents Savills said: "That address is very exclusive and I'm not surprised by the figure. There are only about 20 properties with that view of Kensington Palace, and people queue up to get their hands on one."

Gottesman has a fortune of 460 million pounds, according to The Sunday Times Rich List, while Mittal, who owns the world's biggest steel company ArcelorMittal, is worth about 27.7 billion pounds.

Satyam leases out office space

Chennai, May 31: As part of expanding its services, information technology service provider Satyam Computer Services Ltd on Saturday said it has leased 400,000 sq ft of office space in Shriram-The Gateway, the Special Economic Zone (SEZ), being developed by Shriram Properties at Perungalathur near here.

"We are pleased to establish Satyam's presence in the gateway, which accommodates Satyam's needs for high-quality infrastructure" Satyam Computer Services managing director B Rama Raju said.

The facility is scheduled for completion in November 2008 and is expected to accommodate 4,000 Satyam consultants, who work on technology applications, industries and regions.

Satyam development and delivery centres are in the US, Canada, UK, Brazil, Hungary, Egypt, UAE, India, China. It serves 654 clients, including more than one third of the Fortune 500 companies, the release added

Complete waiver scheme by June 30: FM to bankers

New Delhi, May 31: Finance Minister P Chidamabaram Saturday asked heads of public sector banks to complete implementation of the farm loan waiver scheme by June 30 to make debt-ridden farmers eligible for fresh loans.

"He (FM) wanted us to be transparent and to execute the scheme (farm loan waiver programme) by June 30," Bank of Baroda's chairman and managing director M D Mallya said here after attending a meeting convened by Chidambaram here.

Chidambaram also wanted banks to appoint a senior bank official to oversee implementation of the waiver scheme to avoid any discrepancy.

Besides, he also asked the bank heads to put up the scheme in bank branches after translating it into the regional languages for the benefit of local farmers.

The government had recently enhanced the farm-loan waiver scheme to around Rs 71,000 crore from the earlier announced Rs 60,000 crore.

The new package is expected to benefit around 4.3 crore farmers and would be fully financed through cash in 36 months between July 2008 and June 2011.

The meeting, which was held at the Reserve Bank headquarters today, was attended by bank chiefs such as State Bank chairman O P Bhatt, Bank of India chairman and managing director T S Narayanasami, Bank of Baroda's CMD M D Mallya, Union Bank of India CMD M V Nair, Indian Overseas Bank CMD S A Bhatt among others.

dead, 30 injured as suicide blast rocks Danish embassy in Pakistan

Islamabad, June 02: A suicide car bombing outside the Danish embassy in the Pakistani capital Islamabad killed at least eight people and wounded nearly 30 others, state television and officials said Monday.

The blast left a huge crater outside the embassy, damaging the building and a nearby development agency. Several cars were destroyed by the force of the explosion and some were on fire, a reporter said.

Denmark had downgraded the embassy and moved out most foreign staff in recent months due to threats linked to a row over the reproduction in February of cartoons of the Prophet Mohammed in Danish media, diplomatic sources said.

"It was a suicide attack carried out in a vehicle, apparently targeting the Denmark embassy," a senior Pakistani security official said on condition of anonymity.

Government-run Pakistan television said at least eight people were killed in the blast and several more injured. Other channels showed smoke rising above the scene.

Another security official said at least five had been killed, including two policemen stationed outside the embassy, and 28 others wounded.

There was no immediate comment from Danish officials. Officials from the nearby Netherlands embassy said their staff were unhurt and the building was not affected.

Ambulances rushed away carrying casualties including a security guard covered in blood, and police sealed off the area. Several trees near the scene were also ablaze.

"I was in my room and there was a huge blast and the windows smashed. I was hit by a sharp object and am bleeding from my leg," said Mohammad Dilshad, who lives near the embassy.

A worker at the development agency, the UN-backed Devolution Trust for Community Development, said he arrived at his office seconds after the explosion.

"I saw blood and smoke and the trees were burning and debris was in the air settling down. Our building looked like it had been destroyed," Mohammad Salim said.

"I heard cries for help. I saw five people on the street lying on the ground in a pool of blood. I got to the first injured and thought he was dead but he was still breathing. We put him in a car and sent him to hospital," he added.

There was no immediate claim of responsibility for the blast.

The attack was the first in Islamabad since a bomb blast at an Italian restaurant frequented by foreigners on March 15 killed a Turkish woman and wounded 10 foreigners, including four US FBI staff.

Pakistan has experienced a lull in suicide attacks since a new government came to power in March and began peace talks with Taliban militants based in Pakistan`s tribal region bordering Afghanistan.