EWS AT A GLANCE
The commodity’s future
The 19 commodities in the Reuters/Jefferies CRB index—including oil, gold, and copper—rose 29 percent this year, putting them on track for their best first half since 1973, and better than any second half in at least five decades. The high-flying commodities could fare worse in the second half, analysts say, as the high prices depress consumption and lead to increasing production. The dollar is also expected to strengthen 4.7 percent in the second half, according to an average of forecasts, which would reduce the incentive to abandon dollar-linked assets for commodities. (Bloomberg) Over the long term, says Avani Ramnani of Athena Wealth Advisors, “the expected return of a commodity is really zero percent.” (BusinessWeek.com)
France Telecom scraps $42 billion takeover
France Telecom said it had dropped its offer for Nordic telecom giant TeliaSonera AB, after the two sides could not reach agreement on a price. France Telecom’s cash-and-share offer, made June 5, was worth about $42 billion. France Telecom’s shares rose 7.5 percent in Paris early today; TeliaSonera’s stock dropped 13 percent in Stockholm. (MarketWatch) The deal would have created Europe’s largest phone company; France Telecom is currently No. 3. Analysts were skeptical that a merger would benefit either company. (Bloomberg) “In the short term, it’s positive for France Telecom,” said Frederic Hamm at Agilis Gestion. “It should allow them to refocus on their strategy of making acquisitions in emerging markets.” (Reuters)
Korean firm buys StarKist tuna brand
South Korea’s Dongwon Group agreed to buy Del Monte’s seafood business, including its StarKist canned-tuna brand, for $363 million, creating the world’s largest canned-tuna company. Dongwon already owns the top tuna fishing company, Dongwon Industries. StarKist represents 37 percent of the annual $1.8 billion U.S. processed tuna business, and the aquisition “will help Dongwon establish a strong foothold and penetration in the U.S. market,” said Dongwon vice chairman Park In-gu. (Reuters) Dongwon already controls three-quarters of South Korea’s $382 million canned tuna market. The StarKist deal is the largest overseas takeover by a Korean food firm. (Bloomberg)
A better milk jug, a potential mess
Costco and Wal-Mart have introduced a new milk container that has a number of advantages—it’s cheaper to ship, cheaper to sell, better for the environment, and the milk is fresher. The only problem is that people hate it. Sam’s Club asked for feedback, said executive Heather Mayo, “and they’re saying, ‘Why’s it in a square jug? Why’s it different? I want the same milk. What happened to my old milk?’” They’ll have to get used to it. The milk jugs are so much more efficient, Sam’s Club is sticking with them. Analysts say this is the future: As global demand swells and energy and raw material costs rise, retailers and wholesalers will be re-examining every aspect of the retail chain for new efficiencies. (The New York Times)
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