Archive for July 3rd, 2009

FRANKFURT (Reuters) — Porsche’s squabbling owners are set to discuss an investment by Qatar in the next two weeks, a milestone which could change the dynamics of a Porsche/Volkswagen merger, people close to the talks said.A decision on Qatar’s entry may come even before key family members are set to gather at a Volkswagen supervisory board meeting on July 15, and a day later for the centenary celebrations at VW unit Audi, the people said.Spokesmen for Porsche and VW declined to comment.A successful investment from Qatar could strengthen Porsche Chief Executive Wendelin Wiedeking’s negotiating hand as he tries to strike a deal with VW.Without it Porsche will struggle to prop up its finances and may have little choice but to succumb to a reverse takeover from VW, Europe’s biggest carmaker.Porsche, which owns 51 percent in VW, is seeking an outside investor after amassing 9 billion euros (12.62 billion) in debt during a bungled attempt to dominate Volkswagen.Struggling under the debt, Porsche was forced to abandon efforts to raise its VW stake to 75 percent and is now seeking to bolster its finances before negotiating a deal to form an “integrated” company with VW.Porsche’s chances of setting the terms of any deal are looking slim. Wiedeking has so far failed to secure 1.75 billion euros in loans it wants from commercial banks or from KFW, a state-controlled bank in Germany.He is pinning his hopes on striking a deal with Qatar but his plans may be scotched by Porsche’s owners and by VW’s ability to set the terms of a deal.0:00
/2:53Trash ‘Cash for Clunkers’Qatar “could help Porsche avoid a bigger financial problem,” Credit Suisse analyst Arndt Ellinghorst said. “But ultimately any deal has to be supported by VW and Lower Saxony.”Lower Saxony, VW’s home state, is VW’s second-biggest shareholder with a blocking minority stake of around 20 percent.Porsche is heavily dependent on Volkswagen, making it hard for the Stuttgart-based auto maker to walk away from a deal.Volkswagen is one of Porsche’s most important suppliers, delivering or assembling components for a third of all Porsche cars, including the body and engine for the four-door Panamera and Cayenne offroader models.Porsche is also financially dependent on VW after receiving a 700 million euro loan to help pay down its debt.Porsche has said it is close to securing an investment from Qatar. But a deal hasn’t been signed, mainly due to uncertainty over whether the clans that own Porsche would for the first time cede voting rights to an outsider, one source said.Qatar’s ability to strike a deal depends in large part on Ferdinand Piech, a key member of Porsche’s owning families who has signaled his opposition toward any outside investor in Porsche.The Piech family controls a stake of just under half in Porsche Automobil Holding SE, but can veto significant decisions. Porsche’s owners need a 66.6 percent or even 75 percent consensus for approving important decisions, Ferdinand Piech said in an interview in Stern magazine in April 2008.This effectively gives the Piech family the ability to veto a deal between Qatar and Porsche. Piech and his brother Hans Michel together hold just over 26 percent of Porsche.Qatar has submitted a non-binding offer to invest in Porsche voting shares and in VW share options held by Porsche, but details are not yet fixed over pricing and exact stakes, according to one person close to the deal. Porsche owns share options which control a stake of at least 20 percent in VW.Qatar is approaching a potential investment in Porsche as a passive financial investor and is open to investing in either company, the person said.Ferdinand Piech, also the chairman of Volkswagen, has proposed that Porsche sell its sportscar business to Volkswagen, a move opposed by his cousin and Porsche Chairman Wolfgang Porsche.One way for Piech to pressure his cousin is to block cooperation deals between Porsche and VW, a factor which makes it difficult for Porsche to go it alone.

Source:CNN

TOKYO (Reuters) — Major countries should support the dollar as the key international currency, although emerging nations may discuss a new global reserve currency on the sidelines of the G8 summit next week, a Japanese official said on Friday.China has asked for debate on a new global reserve currency when leaders from the Group of Eight (G8) meet with the G5 emerging economies next week in Italy, G8 sources told Reuters. News of the Chinese request pushed the dollar down to a three-week low on Wednesday.But Japan thinks it would be difficult for another currency to replace the dollar as the world’s reserve currency and it is against any move that would unnecessarily weaken the status of the dollar, said Yoichi Suzuki, director-general of the Japanese foreign ministry’s economic affairs bureau.”Japan’s stance is that major countries should support the dollar,” Suzuki, one of the country’s main coordinators for the G8 summit, told Reuters in an interview.”It won’t benefit any country to talk about ideas for a new global key currency, which would weaken the dollar,” said Suzuki.An idea, which China’s central bank has floated, that the International Monetary Fund’s Special Drawing Right (SDR) could eventually displace the dollar as the principal reserve currency was unrealistic, he added.Japan is interested in a stable dollar for its trade with other countries and because most of its 1 trillion foreign reserves, the world’s second largest, are in dollar assets.Suzuki said he would not be surprised if the G5 discussed the role of the dollar when they meet on the sidelines of the G8 summit in L’Aquila.On Thursday, Chinese Deputy Foreign Minister He Yafei said it would be “normal” if diversification of the currency system were discussed at next week’s summit.But Suzuki played down the idea, saying Tokyo does not expect the topic to be discussed at the meeting of G8 plus G5 emerging nations, including China, Brazil and India.Talks at the July 8-10 summit are expected to focus on the state of the world economy, financial regulation, climate change and trade and development.Tokyo will propose establishing principles and citing best practice to promote responsible investment in agriculture to cope with farmland acquisition or “land grabs” in developing countries, Suzuki said.”Agriculture investment in developing countries should not be done because of trying to avoid tough environmental standards in industrial nations,” Suzuki said, noting that Japan has been getting support for this initiative from G8 counterparts.By taking the lead on this proposal, Japan — the world’s largest net food importer — also hopes to gain support from developing countries that may have been hurt by irresponsible investment by foreign countries and companies, for Japanese firms’ overseas investment in agriculture, he said.On a call by French President Nicolas Sarkozy for the G8 to discuss regulating oil prices to prevent the wild swings of recent years, Suzuki said G8 officials have not been discussing it for the summit’s agenda.”Realistically, it would be hard to maintain oil prices at certain levels by intervening in the market. Japan thinks the most important thing would be to boost transparency of the market to avoid speculative moves,” he said.

Source:CNN

(Fortune Small Business) — Tired of hearing that everything tastes like chicken? So are Seattle entrepreneurs Justin Esch and Dave Lefkow. They want it all to taste like bacon.Two years ago the former software engineers invented a zero-calorie, vegetarian, kosher, bacon-flavored salt in Esch’s garage. The guys used grassroots tactics to develop a cult following for J&D’s Bacon Salt, creating Facebook and Twitter profiles and dressing up as bacon strips at sporting events. In 2008 they reaped 1.4 million in revenues. The “bacontrepreneurs” expect to do twice as well this year. They’re expanding to offer products ranging from bacon-flavored lip balm to bacon-scented sunscreen and soaps. “There isn’t any limit to what bacon can do,” Lefkow says. Not everyone is ready to push the limits, however. “The idea makes my spine tingle,” says celebrity chef Rocco DiSpirito, “but bacon without the fat is like diamonds without the sparkle.”

Source:CNN

LONDON (Reuters) — Oil traded below 67 a barrel on Friday, after a fall of nearly 4 percent in the previous session, pressured by a stronger dollar and investor concern about the economic outlook and energy demand.In the latest sign the economy of the world’s top consumer was still struggling, data on Thursday showed U.S. employers cut 467,000 jobs in June and the jobless rate rose to a 26-year high. Euro zone unemployment climbed to a 10-year high.”All the data was bad yesterday,” Rob Montefusco, a trader at Sucden Financial. “Technically, it looks pretty weak at the moment.”U.S. crude for August delivery was down 2 cents to 66.71 a barrel by 1123 GMT. London Brent crude fell 14 cents to 66.51.NYMEX floor trading will be closed on Friday for the U.S. Independence Day holiday. Electronic trading will be open. Volume may be lighter than normal, leading to volatile trading, analysts said.The dollar edged higher against a basket of other major currencies, limiting the appeal of oil and commodities as an inflation hedge. European stocks reversed an earlier gain.Oil prices have doubled from a low of 32.40 a barrel in December last year and surged over 42 percent in the last quarter — the largest quarterly gain since 1990 — partly on hopes of economic recovery.But the latest economic data is suggesting that a global recovery will be choppy this year, if it occurs at all. Economists have warned that surging unemployment would be one of the key threats to a sustainable recovery.JP Morgan said in a report on Friday that it expects oil prices to correct from the recent rally to about 60 a barrel or lower, amid demand weakness.Analysts who use past price moves to predict price direction see a similar prospect.”Risks are shifting for a downside correction toward 60 in the weeks ahead before the larger bull trend resumes,” Barclays Capital technical analysts said.