New Subprime Write-Downs, New Merrill Chief
British bank Barclays becomes the newest member of the subprime-losses club. John Thain takes the reins at Merrill Lynch. And potato chips are getting easier on the earth, if not the waistline.
EWS AT A GLANCE
Barclays, too, takes write-down
Barclays, the No. 3 British bank, said it will write-down a smaller-than-expected $2.7 billion in securities tied to the U.S. subprime collapse. (MarketWatch) “They came in better than the market expected,” said MF Global Securities analyst Mamoun Tazi. “They have enough capital to weather the storm.” (Bloomberg) With the Barclays announcement, banks have now reported about $50 billion in subprime write-downs and losses in the past few months. (Reuters) Bear Stearns reported a $1.2 billion write-down yesterday, and The Wall Street Journal reported that UBS could take a charge of up to $7.1 billion in the fourth quarter. (CNNMoney.com)
NYSE’s Thain to take Merrill reins
Merrill Lynch said that NYSE Euronext chief executive John Thain will take over from ousted CEO Stan O’Neal on Dec. 1. Thain, a former president of Goldman Sachs, will be the first outsider to lead Merrill. (AP in Yahoo! Finance) Merrill landed on Thain in part because of his risk-management experience at Goldman, which has weathered the recent financial turmoil much better than its rival firms. But he faces a daunting task at Merrill, which is reeling from a record $7.9 billion mortgage write-down, with more expected to come. (Bloomberg) “You could have Stephen Hawking running Merrill and it wouldn’t matter,” says CIBC analyst Meredith Whitney. (BusinessWeek.com)
Kraft sells Post cereals for $2.6 billion
Kraft Foods agreed to sell its Post cereals unit to private-label cereal and baked-goods maker Ralcorp for $2.6 billion, including $950 million in Post debt. (Reuters) With brands like GrapeNuts, Honey Bunches of Oats, Shredded Wheat, and Post Raisin Bran, Post is the No. 3 cereal maker, after Kellog’s and General Mills. (MarketWatch) The sale, Kraft’s largest since it was partially spun off from Altria in 2001, will leave Kraft with coffee, dairy, biscuit, powered drinks, and chocolate brands. (Bloomberg) Ralcorp CEO David Skarie called the deal “a transforming event” for his company, which will see its sales rise by 50 percent. (AP in Yahoo! Finance)
Delta denies United merger talks
Shares of United Airlines and Delta rose yesterday on rumors of a merger between the second- and third-largest U.S. carriers. An unidentified official said the two airlines are in active talks about combining. But United called the report “wholly inaccurate,” and Delta CEO Richard Anderson said, “There have been no talks with United regarding any type of consolidation transaction.” (AP in Yahoo! Finance) On Tuesday, Pardus Capital Management, which owns 7 million Delta shares and 5.6 million United shares, urged Delta to consider a United merger. Delta responded yesterday by forming a committee to look at its strategic options, including “potential consolidated transactions.” (MarketWatch)
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