The news at a glance
The economy: Retail sales perk up; Deep-water drilling: GE gets into the game; Groceries: A&P files for Chapter 11; Health care: Merger would create hospital giant; Deals: Thermo Fisher targets Asia
The economy: Retail sales perk up
The nation’s retailers enjoyed a busier than expected November, adding to signs that the economy is finally emerging from the doldrums, said the Associated Press. Retail sales rose 0.8 percent in November compared with the previous month, powered by a 2.8 percent gain at department stores, “the biggest jump in department-store sales in two years.” Analysts were expecting a 0.6 percent overall rise. Retail activity has grown for five consecutive months, prompting many economists to revise their 2011 growth forecasts upward.
The economy appears to be gaining momentum heading into the new year, said Shobhana Chandra and Alex Kowalski in Bloomberg.com. But several worries remain. Sales fell 0.6 percent at electronics and appliance stores, and category leader Best Buy reported a 4.4 percent drop in its third-quarter profits “as U.S. sales dropped more than expected.” In addition, wholesale-price inflation in November grew at a modest 1.2 percent annual rate, excluding food and energy costs, which is lower than the Federal Reserve’s 2 percent target. That report likely bolstered the Fed’s decision this week to continue its purchases of $600 billion in Treasury bonds “to keep inflation from slowing further.”
Deep-water drilling: GE gets into the game
General Electric this week made a big bet on the future of deep-water drilling, paying $1.3 billion to acquire Wellstream, a British maker of flexible drilling pipes, said Agustino Fontevecchia in Forbes.com. Despite the catastrophic blowout of BP’s Deepwater Horizon drilling rig last April, deep-water drilling is likely to play an increasingly prominent role in the search for new sources of oil. One of the most promising deposits of subsea oil is in the Tupi field off the coast of Brazil, where Wellstream operates a manufacturing plant.
Groceries: A&P files for Chapter 11
Burdened by heavy debt and fighting mounting competition from wholesale clubs, Great Atlantic & Pacific Tea Co., one of the grocery business’ most venerable names, filed for bankruptcy protection this week, said Tiffany Kary in Bloomberg.com. The 151-year-old company, which operates Waldbaum’s, Food Emporium, and Pathmark stores, as well as the A&P brand, listed debts of $3.2 billion and assets of $2.5 billion in its bankruptcy filing. It was facing default on a $13.4 million interest payment due Dec. 15.
Health care: Merger would create hospital giant
“In a sign of how the health-care overhaul is reshaping the economics of medicine,” Community Health Systems this week offered $3.3 billion for its smaller rival, Tenet Healthcare, said Gina Chon in The Wall Street Journal. The deal, if completed, would create the country’s largest hospital operator, with 176 facilities in 30 states. Tenet’s management dismissed Community Health’s offer as “opportunistic.” Passage of the Affordable Care Act in March accelerated “a wave of consolidation within the hospital industry.”
Deals: Thermo Fisher targets Asia
Eyeing the fast-growing Asia-Pacific region, Thermo Fisher agreed this week to buy laboratory-equipment maker Dionex for $2.1 billion, said the Associated Press. Thermo Fisher said the acquisition would “help it do more business in industries such as environmental analysis, water testing, and food safety,” and expand its Asia-Pacific operations. It is Thermo Fisher’s second recent deal targeting the region. In late November it paid an undisclosed sum for Lomb Scientific, which sells chemicals and lab instruments in Australia and New Zealand.