Filed under: Deals, Management, Marketing and advertising, Entrepreneurs, Eastern Europe

This post is one of several on business heirs apparent. Let us know in the comments whether you think Charlene de Carvalho-Heineken’s heir should take up the reigns of Heineken, and be sure to check out the other heir apparent posts.

It was Charlene de Carvalho-Heineken’s dad, Alfred “Freddie” Heineken, who built the family business from a small Dutch brewer into Europe’s largest brewing empire. A well-known bon vivant, he was friendly with the Dutch royal family, and his sense of humor didn’t abandon him even after a three-week kidnapping ordeal in 1983: he claimed that his kidnappers tortured him by making him drink Carlsburg.

On Freddie’s death in 2003, his heir apparent and only child, Charlene, became the wealthiest woman in the Netherlands, now worth more than $7 billion. She lives a more low-key life in London with her five children and stock broker, and former Olympic skier, husband. She continues to hold the controlling stake in Heineken, though she hasn’t been as involved in the company day-to-day as her dad was. She told a family biographer that she intends to keep the business together until her heir apparent, her eldest son, is old enough to take on the mantle.

Heineken hasn’t been running on cruise control, however. It just announced a plan to build a brewery in South Africa and has continued its expansion into central and eastern Europe by acquiring Romanian Brewer Bere Mures. But the biggest news recently is Heineken’s joint venture with Carlsberg to buy up and break apart British brewer Scottish & Newcastle, a deal which was just approved by EU regulators. Under the terms of the deal, Heineken will take control of S&N’s British, Belgian, and Indian operations, while Carlsburg gets those in Russia, Greece, and China.

Unless something unexpected happens, when Charlene de Carvalho-Heineken passes the reins to her son, he’ll be taking over a brewing company bigger than Anheuser-Busch Cos. (NYSE: BUD). In the meantime, the Heineken company retains a sense of humor, at least as far as its advertising goes:

Also be sure to check out the other heir apparent posts.

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Filed under: Deals, Citigroup Inc. (C), Advanced Micro Dev (AMD), Merrill Lynch (MER), Morgan Stanley (MS), Politics

Sovereign funds from the Middle East, China, and Singapore have invested tens of billions of dollars in U.S. companies, especially banks and brokerage firms. But, as stocks of those companies have continued to fall, the funds have taken big losses. No wonder they seem to have stopped investing in America.

On example is Morgan Stanley (NYSE: MS). According to The Guardian, “China Investment Corporation’s investment in Morgan Stanley, made just before Christmas, is also facing a significant loss. The securities it picked up for $5bn will convert to stock at $48 to $57 a share in two years’ time. At present, however, Morgan Stanley’s share price is closer to $42.”

Sovereign funds have now also lost money, at least on paper, on Citigroup (NYSE: C), Merrill Lynch (NYSE: MER), Advanced Micro Devices (NYSE: AMD), and several multi-national money center banks based in Europe.

The U.S. government and EU have asked sovereign funds to sign covenants that state they’ll only make investments for financial reasons, that they have no political agenda when they put money into banks and huge companies. Even if these funds agree, their losses are prone to keep them out of the U.S. for a long time. That means the government is pushing to restrict the nature of their investments when Wall Street needs their money the most

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Deals, Rumors

On Thursday, I expressed skepticism about Borders Group Inc.’s (NYSE: BGP) efforts to sell itself in the face of deteriorating fundamentals and a problematic balance sheet.

The New York Times reports on Wall Street speculation over the past year that Borders might sell itself to its bigger rival, Barnes & Noble (NYSE: BKS). “A combination of the biggest and second-biggest booksellers has long been believed to be an invitation for regulatory scrutiny.”

On a conference call, Barnes & Noble COO Mitchell S. Klipper said that, if approached by Borders, he would “certainly take a good look at the company and put it under review.” The company’s chairman, Leonard Riggio, told the Wall Street Journal (subscription required), “I think it would be the height of irresponsibility for us not to look at something presented to us. If they want us to take a look, we would be pleased to do so. We also feel we would be obliged to do so.”

Well of course they would. Why wouldn’t they take a good look at the company? But ultimately, I think that the better-run Barnes & Noble will take one look at Borders and decide it doesn’t want anything to do with it. The brick-and-mortar book industry is in serious trouble — there’s no real antidote to competition from lower-cost providers like Amazon.com (NASDAQ: AMZN) and even Wal-Mart (NYSE: WMT). Borders is looking to set up its own e-commerce site, but I can’t even imagine what competitive advantage it will have going up against an established rival like Amazon.

Barnes & Noble is faring reasonably well and, given the long-term problems facing the industry, I just can’t see any reason for the company to double down on brick-and-mortar book selling, taking on debt to acquire an ailing brand that would need more money to be pumped into it.

Most mergers and acquisitions don’t create value, and I doubt that this one would be any exception. Given the strong track record of Barnes & Noble’s management, I don’t think they’ll make that mistake.

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Filed under: Deals, XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI)

The FCC states it is getting closer to announcing its view of the Sirius (NASDAQ:SIRI) merger with XM Satellite (NASDAQ:XMSR). That may not be good news. The commission might turn the deal down.

According to The Wall Street Journal, “FCC boss Kevin Martin said “he had asked his staff to draft a document incorporating a variety of possible outcomes for the merger proposal.”

In the case of the merger, no news is bad news. Aside from the likelihood that a long review may be a result of the FCC and Justice Department building a case again the deal, over the last year the finances of both companies have gotten worse.

In the last quarter, the subscriber growth at XM and Sirius slowed. Both lost money and face tremendous debt service. Each company has more than $1 billion in long-term debt on its balance sheet.

If the merger gets killed, one of the companies might not make it. The balance sheet and P&L problems are just that tight.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Deals, Competitive strategy, Coca-Cola (KO), PepsiCo (PEP)

PepsiCo (NYSE: PEP) did a little buying in the marketplace this day. No, I’m not talking about share buybacks — I’m speaking about an acquisition in Russia.

PepsiCo teamed up with Pepsi Bottling Group (NYSE: PBG) to take on a majority position in Russia’s largest juice business, JSC Lebedyansky. The price tag was significant — $1.4 billion (890 million euro). This AP news item indicates that it is the largest transaction for the beverage maker since its buy of Quaker Oats.

Coca-Cola (NYSE: KO), watch out, because this is all about being competitive in the world marketplace, which means it’s all about being competitive against you! It’s also about hedging against the challenging growth rates in case volumes seen in the domestic marketplace, as well as taking on international exposure to gain the benefit of a weaker dollar. Consumer companies know that it’s smart to think globally these days, so acquisitions like these take on major importance. Plus, PepsiCo cannot live on carbonated sodas alone, so any opportunity to broaden its portfolio base beyond its flagship brand is a welcome strategy (Coke knows this to be true, too).

It’s difficult to argue that this is anything but a cool move — I’d like to argue, since I own shares of Coca-Cola, but alas, I can’t find a proper contrarian angle. So, nice move, Pepsi, you did good today, you got a decent asset in a growing international territory, and the price tag won’t break the bank. But don’t worry, my bubbly friend — I’m sure Coke is taking note of this, seeing what it needs to do to remain competitive against you (at least, I hope that’s what the brains in Atlanta are doing).

Disclosure: I own shares of Coca-Cola; positions can change at any time.

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Filed under: Deals, Wal-Mart (WMT)

The world’s largest retailer, Wal-Mart Stores, Inc. (NYSE: WMT), has received shareholder approval from Japan’s Seiyu Ltd. to go ahead and complete the buy of the Japanese grocery retailer. Wal-Mart already owned a majority of Seiyu and now will buy the rest of what it doesn’t already own.

Wal-Mart must believe in the future potential of the company since it had a disastrous 2007 and what could be considered to be a murky past and a potentially shaky future. Ever since it bought a stake in Seiyu back in 2002, the Japanese company has not turned a profit (interestingly enough), and Wal-Mart’s attempt to turn around Seiyu’s fortunes won’t be easy given its past history of ownership in the company.

Analysts believe that Wal-Mart’s “low prices” approach culturally won’t work in Japan, where consumers equate low prices with low quality. Wal-Mart’s inability to misunderstand the German and South Korean consumer culture led to the retailer’s exit in both those countries in 2006, so why does it believe it can succeed in Japan?

Wal-Mart executives think the low price model could solidify a fragmented consumer marketplace in Japan, saying “Japan is quite different from Germany or South Korea. We realize they aren’t going to sacrifice quality, and our goal is to provide the ideal value combined with the quality they expect.” That’s much easier said than done, so this might yet end up being just another international experiment for the world’s largest retailer — more than anything.

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Filed under: Before the bell, Analyst upgrades and downgrades, Deals, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), General Electric (GE), PepsiCo (PEP), Walt Disney (DIS), MasterCard Inc’A’ (MA)

Before the bell: Futures point to higher open — BGP, NKE, C, FDX

General Electric Co. (NYSE: GE) was raised to Purchase from Neutral’ at Merrill Lynch, due to its defensive positioning in the current economic climate. GE shares are up 1.7% in premarket trading following the upgrade.

Visa Inc. (NYSE: V) shares soared over 28% in their stock market debut Wednesday. Already priced above expectations at $44 per share in the biggest IPO in U.S. history that raised almost $18 billion, Visa shares closed at $56.50. Many assume that given the successful MasterCard (NYSE: MA) IPO and given Visa’s leading position, the shares are worth a shot, especially in today’s market conditions.

As Apple (NASDAQ: AAPL) enhances the the security of the iPhone and adds more enterprise-friendly version of firmware by June 2008, IT advisory and consulting firm Gartner Inc, originally concerned about about some security issues, may then raise its recommendation to “appliance-level” support status for the device, permitting it to be used for PIM, e-mail, telephony and browsing applications and more.

PepsiCo (NYSE: PEP) and Pepsi Bottling Group Inc. (NYSE: PBG) announced their second Russian deal this week, as they agreed to buy 75.53% of the country’s largest juice maker, JSC Lebedyansky, for $1.4 billion and could buy the rest.

The Walt Disney Co. (NYSE: DIS) confirmed that it is in advanced speaks with The Children’s Place Retail Stores, Inc. (NASDAQ: PLCE) concerning the Disney Store retail chain where Disney might acquire ownership of a portion of the Disney Store chain in North America. PLCE shares are climbing 6.4% in premarket trading.

comScore released February search engine rankings. While there were no surprises in the ranking themselves, with Google Inc. (NASDAQ: GOOG), in the No.1 spot, as usual increasing its market share, while Microsoft (NASDAQ: MSFT) and Yahoo (NASDAQ: YHOO) in second and third place respectively losing some share, the number of queries data held some surprises as it declined across the board from the previous month. Citigroup’s Mark Mahaney notes that “GOOG’s U.S. query growth of 26% marked a deceleration vs. 37% growth in January and 40% growth in Q4.”

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Filed under: Deals, Consumer experience, Apple Inc (AAPL), Adobe Systems (ADBE)

Adobe (NASDAQ: ADBE)’s Flash player is used for most videos available on the web. Nearly all Computers use it for content play-back. Now, Adobe will use Apple (NASDAQ: AAPL)’s software development kit to develop the product for the iPhone.

According to The Wall Street Journal, “In comments widely reported last month, Apple Chief Executive Steve Jobs stated the company’s iPhone hadn’t adopted Adobe’s mobile version of its Flash program because of technical and performance concerns.”

Adobe obviously think Jobs is full of beans. It means to prove that by getting its Flash player on Apple hardware so that customers can watch video from tens of thousand of websites. The Flash player is on about 700 million PCs worldwide, which is why content companies use it.

What’s curious is that Jobs would resist allowing iPhone customers the capability to watch a wide variety of content. It would seem that would make the iPhone an even more popular item.

Maybe Apple wanted some cash from Adobe for the privilege of being on the hot handset product, and the media player company said “no.”

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Deals, Management, Law, JPMorgan Chase (JPM), Bear Stearns Cos (BSC)

New York City holds Bear Stearns (NYSE:BSC) stock in some of its pension funds, and along with almost all other investors in the brokerage, lost a lot of money.

According to Reuters, the NYSE controller stated “I think a lot of people are going to be taking a look. … Was there some deception in there or was this just a miscalculation?” A lot of people will ask the same question, which could lead to a lot of lawsuits.

Could a rash of lawsuits kill the Bear Stearns buyout by JP Morgan (NYSE:JPM)? Stranger things have happened.

At the heart of the argument is whether management knew that the company was falling apart when it said that it felt it would weather the storm of client withdrawals. The other possibility is that the catastrophe happened so fast that executives at Bear Stearns believed that they were OK one day and on the brink of disaster the next. Customers may have pulled money out that fast.

It will all come out in the depositions.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Deals, Industry, Competitive strategy, Boeing Co (BA), Politics, Northrop Grumman (NOC)

Boeing (NYSE: BA) is thumping its chest about the likelihood that it can get Congress to reverse a deal giving a $35 billion military tanker contract to Northrop Grumman (NYSE:NOC) and EADS, the parent of Airbus.

According to Reuters Mark McGraw, a company vice president, stated he was “as confident as I can be” that congressional auditors would find fault with the U.S. Air Force’s February 29 choice of the rival team. Brave words, especially when the Air Force claims that the Boeing proposal lost on each key metric for building the tanker.

Boeing is counting on members of Congress who don’t want American jobs to go overseas to push back on a contract which includes Europe-based EADS. But, it might not be that easy.

The Wall Street Journal reports that “Government contracting documents show that the U.S. Air Force preferred the size and ability of aerial refueling tankers” being offered by EADS and Northrop. The EADS Airbus 330 can carry more fuel that its Boeing competition.

Boeing is almost certainly wasting its time. No matter how much some Congressmen would like to save jobs for their districts, they can’t be seen as favoring a deal which is probably substantially inferior.

Douglas A. McIntyre is an editor at 247wallst.com.

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