New G4S boss seeks over $900 million for turnaround drive

Members of G4S security and a police officer open a gate at the Alexander Stadium in Birmingham, central England, July 18, 2012.

Credit: Reuters/Darren Staples

By Neil Maidment

LONDON | Wed Aug 28, 2013 11:24am BST

LONDON (Reuters) - G4S, the world's largest security services firm, plans to raise about 600 million pounds ($932 million) by selling shares and assets as its new boss seeks to restore its battered reputation by cutting debt and focusing on emerging markets.

Chief Executive Ashley Almanza, a former executive at oil and gas firm BG Group, was promoted from finance chief in June after a string of blunders by his predecessor, including a failed takeover bid in 2011, a botched contract to staff the 2012 Olympic Games and a profit warning in May.

He said on Wednesday he would give a detailed plan in November, but that the initial measures he was putting in place should help to avoid a costly credit-rating downgrade, improve profit margins and start to deliver tangible benefits in 2014.

Panmure Gordon analyst Mike Allen welcomed Almanza's debut announcement as chief executive. "We applaud the quick work undertaken by management to re-structure the group and shore up the balance sheet," he said.

At 0905 GMT, G4S shares were up 3.7 percent at 255.14 pence, the biggest rise by a UK blue-chip company and reversing early losses. Shares often fall following the announcement of equity fundraisings, as these cut earnings per share for investors.

G4S, which runs services from managing prisons and transporting cash to guarding the Wimbledon tennis championships, aims to benefit from a trend among cash-strapped governments and businesses to outsource security work.

However, it has come under pressure as governments in developed markets in particular have cut back services.

The company said its first-half operating profit margin slipped to 5.5 percent from 5.9 percent in the same period last year, reflecting a lost prison contract in the Netherlands and squeezed pricing in Britain and elsewhere in Europe.

Net debt rose to 1.95 billion pounds as of June 30, some 3.2 times earnings before interest, tax, depreciation and amortisation compared with a target of 2-2.5 times.

However the group, which wants to grow revenue in developing markets in Asia, Africa and Latin America from a third to half of its total, said it had a global sales pipeline of 4 billion pounds. It did not provide details, but noted strong demand from financial services, mining and government sectors in Africa.

"G4S has excellent market positions, particularly in developing markets and as a result of which we have very material growth opportunities," Almanza said.

RAISING MONEY

G4S, which leads rival Sweden's Securitas by sales, said it would place 140.9 million new ordinary shares representing up to 9.99 percent of its existing share capital with new and existing investors via an accelerated bookbuild.

That equates to around 350 million pounds at current prices.

The company said its largest shareholder, Invesco, supported the placing and intended to participate in it. Citigroup, JP Morgan and Barclays are joint bookrunners for the share sale.

G4S also said it would sell a number of businesses, likely to be in developed markets, which could raise up to 250 million pounds in the next year, and would restructure other units in a group which spans 125 countries in order to improve margins.

On Wednesday - and included in the asset sale total - G4S said it had agreed to sell its Canadian cash security and Colombia Data solutions businesses for 100 million pounds. The sale of its U.S. business was ongoing, it added.

G4S said it had taken a one-off charge of 180 million pounds following a review of its assets and that it had started restructuring programmes - including cutting staff numbers and ending some lower-margin services - in Britain, Ireland and Europe at a cost of 30-35 million pounds over 2013 and 2014

Almanza declined to give an operating margin target.

First-half operating profit came in at 201 million pounds, little changed from a restated 202 million a year earlier, with turnover up 7.2 percent to 3.65 billion pounds.

The firm also named Misys's Himanshu Raja as its new chief financial officer on Tuesday.

(Editing by Mark Potter)

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New G4S boss seeks over $900 million for turnaround drive

A police Swat team member walks on the roof of G4S cash depot in Vastberga, Stockholm September 23, 2009.

Credit: Reuters/Pontus Lundahl/Scanpix

By Neil Maidment

LONDON | Wed Aug 28, 2013 6:32am EDT

LONDON (Reuters) - G4S (GFS.L), the world's largest security services firm, plans to raise about 600 million pounds ($932 million) by selling shares and assets as its new boss seeks to restore its battered reputation by cutting debt and focusing on emerging markets.

Chief Executive Ashley Almanza, a former executive at oil and gas firm BG Group (BG.L), was promoted from finance chief in June after a string of blunders by his predecessor, including a failed takeover bid in 2011, a botched contract to staff the 2012 Olympic Games and a profit warning in May.

He said on Wednesday he would give a detailed plan in November, but that the initial measures he was putting in place should help to avoid a costly credit-rating downgrade, improve profit margins and start to deliver tangible benefits in 2014.

Panmure Gordon analyst Mike Allen welcomed Almanza's debut announcement as chief executive. "We applaud the quick work undertaken by management to re-structure the group and shore up the balance sheet," he said.

At 0905 GMT, G4S shares were up 3.7 percent at 255.14 pence, the biggest rise by a UK blue-chip company and reversing early losses. Shares often fall following the announcement of equity fundraisings, as these cut earnings per share for investors.

G4S, which runs services from managing prisons and transporting cash to guarding the Wimbledon tennis championships, aims to benefit from a trend among cash-strapped governments and businesses to outsource security work.

However, it has come under pressure as governments in developed markets in particular have cut back services.

The company said its first-half operating profit margin slipped to 5.5 percent from 5.9 percent in the same period last year, reflecting a lost prison contract in the Netherlands and squeezed pricing in Britain and elsewhere in Europe.

Net debt rose to 1.95 billion pounds as of June 30, some 3.2 times earnings before interest, tax, depreciation and amortization compared with a target of 2-2.5 times.

However the group, which wants to grow revenue in developing markets in Asia, Africa and Latin America from a third to half of its total, said it had a global sales pipeline of 4 billion pounds. It did not provide details, but noted strong demand from financial services, mining and government sectors in Africa.

"G4S has excellent market positions, particularly in developing markets and as a result of which we have very material growth opportunities," Almanza said.

RAISING MONEY

G4S, which leads rival Sweden's Securitas (SECUb.ST) by sales, said it would place 140.9 million new ordinary shares representing up to 9.99 percent of its existing share capital with new and existing investors via an accelerated bookbuild.

That equates to around 350 million pounds at current prices.

The company said its largest shareholder, Invesco, supported the placing and intended to participate in it. Citigroup (C.N), JP Morgan (JPM.N) and Barclays (BARC.L) are joint bookrunners for the share sale.

G4S also said it would sell a number of businesses, likely to be in developed markets, which could raise up to 250 million pounds in the next year, and would restructure other units in a group which spans 125 countries in order to improve margins.

On Wednesday - and included in the asset sale total - G4S said it had agreed to sell its Canadian cash security and Colombia Data solutions businesses for 100 million pounds. The sale of its U.S. business was ongoing, it added.

G4S said it had taken a one-off charge of 180 million pounds following a review of its assets and that it had started restructuring programs - including cutting staff numbers and ending some lower-margin services - in Britain, Ireland and Europe at a cost of 30-35 million pounds over 2013 and 2014

Almanza declined to give an operating margin target.

First-half operating profit came in at 201 million pounds, little changed from a restated 202 million a year earlier, with turnover up 7.2 percent to 3.65 billion pounds.

The firm also named Misys's Himanshu Raja as its new chief financial officer on Tuesday.

($1 = 0.6435 British pounds)

(Editing by Mark Potter)

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Amgen seeks to bolster drug pipeline with $10.4 billion Onyx buy

By Soyoung Kim and Michael Erman

Mon Aug 26, 2013 10:13am BST

n">(Reuters) - Amgen Inc struck a deal to buy cancer drug maker Onyx Pharmaceuticals Inc for about $10.4 billion on Sunday, as it moves to restock its product pipeline in response to declining sales of its flagship anaemia drugs.

The acquisition - which ends a two-month-long auction of Onyx - represents the fifth-largest biotechnology deal in history. It gives Amgen full rights to Kyprolis, the new multiple myeloma drug that analysts expect to reach annual peak sales in excess of $2 billion.

The world's largest biotechnology company will also gain a revenue stream from the liver and kidney cancer drug Nexavar that Onyx shares with Bayer AG, as well as royalty payments on Bayer's much newer colon cancer drug, Stivarga, and potential future royalties on an experimental breast cancer drug being developed by Pfizer Inc.

Thousand Oaks, California-based Amgen has faced growing pressure to beef up its drug development pipeline as safety concerns have trimmed sales of its flagship anaemia drugs, Aranesp and Epogen. Also, patents on four of its five top-selling drugs are set to expire starting in 2015.

Cancer medicines are the holy grail for many drug makers because current products have limited effectiveness and the companies can charge steep prices for new biotech treatments.

Amgen said it will pay $125 per share for Onyx, a 4.2 percent increase from the $120 a share it offered in June. Onyx said that bid significantly undervalued the company and put itself up for sale.

The companies expect the deal to close in the beginning of the fourth quarter. Amgen expects it to add to adjusted net income in 2015.

Discussions between Amgen and Onyx hit a snag earlier this month after Amgen sought access to data from Onyx's ongoing clinical trials, people familiar with the matter told Reuters previously. A source familiar with the matter on Sunday said that Amgen believed it had done extensive due diligence and was comfortable with the purchase.

Onyx shares closed at $116.96 on Friday. They closed at $85.50 on June 28, before reports of Amgen's $120-a-share bid surfaced.

BIGGEST DEAL SINCE 2001

The Onyx deal is Amgen's biggest since its $16 billion acquisition of Immunex in 2001 which gave it the rheumatoid arthritis drug Enbrel, now one of Amgen's biggest-selling products.

It is also by far the biggest deal under CEO Bob Bradway, who assumed the top spot in May 2012. He has done a handful of much smaller deals, the biggest to date being a $1.16 billion acquisition of Micromet.

Large pharmaceutical companies have increasingly been looking to acquire smaller biotech firms to gain access to new drugs, as they face significant revenue losses stemming from expired patents.

This helped drive up the volume of healthcare M&A in the first six months of 2013 more than 30 percent compared with the same period last year.

Recent deals include generic drugmaker Actavis Inc's $8.5 billion acquisition of Warner Chilcott and Human Genome Sciences' $3 billion sale to GlaxoSmithKline Plc.

The Onyx deal is expected to give Amgen a much higher profile in oncology. Several of its current drugs offer supportive care for cancer patients, such as treating anaemia or decreases in white blood cells caused by chemotherapy.

Another of Amgen's newer medicines, Xgeva, helps prevent fractures in patients whose cancer has spread to the bone. It's one product that treats cancer, the colon cancer drug Vectibix, has been largely a disappointment.

Analysts expected Onyx revenue to reach $878 million in 2014, according to Thomson Reuters I/B/E/S.

Mark Schoenebaum, an analyst with ISI Group LLC, projected that an Onyx acquisition would increase Amgen non-GAAP earnings by 5 percent in 2015, and boost them as much as 15 to 20 percent in 2018.

Lazard was the lead financial adviser to Amgen, while Bank of America Merrill Lynch acted as co-adviser and lead arranger for the company's financing. Centerview Partners was Onyx's financial adviser

Law firms Sullivan & Cromwell and Goodwin Procter were legal counsel to Amgen and Onyx, respectively.

(Reporting by Michael Erman and Soyoung Kim in New York; Editing by Matthew Lewis and Stephen Coates)

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Analysis - Argentina plays for time in debt fight, seeks escape

Argentina's President Cristina Fernandez de Kirchner speaks after arriving at the Silvio Pettirossi airport in Asuncion August 14, 2013.

Credit: Reuters/Jorge Adorno

By Guido Nejamkis

BUENOS AIRES | Tue Aug 27, 2013 7:06pm BST

BUENOS AIRES (Reuters) - Argentina's efforts to avoid a debt default could drag on for another year or more as it fights "holdout" bondholders to the bitter end in U.S. courts and simultaneously looks to side-step any final ruling ordering it to pay up.

President Cristina Fernandez is pursuing a raft of new appeals to keep a technical default at bay, even as she readies a voluntary debt swap to take effect when other options run out.

The government last week lost its appeal of a New York court order requiring it to pay $1.33 billion (855.80 million pounds) to hedge funds that refused to restructure bonds after Argentina's record $100 billion default in 2002.

Fernandez insists her government will not pay the holdouts, but defeat in the courts could also block payments to bondholders who took part in the 2005 and 2010 restructurings. That would trigger a technical default on some $28 billion of foreign debt.

Seeking to avoid that, Fernandez is now proposing a new swap of foreign debt for bonds payable in Buenos Aires that would protect bondholders who accept the exchange by moving them beyond the reach of U.S. law.

A senior government source told Reuters the debt swap would only be pursued if Argentina's court appeals are unsuccessful.

Even then, it would only take a handful of bondholders unwilling to accept Argentine capital controls, or unable to invest in assets outside New York, to leave some restructured bonds vulnerable to another default.

That would mean the second debt crisis in a little more than a decade for South America's third biggest economy, which is struggling with high inflation and a poor business climate caused by heavy trade and foreign exchange controls.

Economy Minister Hernan Lorenzino says the government is pursuing three avenues to keep its legal fight alive. These include asking the three-member panel of the 2nd U.S. Circuit Court of Appeals in New York to reconsider its own decision; appealing the ruling to the full 13-judge appeals court; or appealing Friday's decision to the U.S. Supreme Court.

"We are going ahead with all necessary appeals," Lorenzino told local television on Sunday.

Whether or not the appeals are successful, they are also aimed at extending the stay order that protects payments on restructured bonds. Daniel Kerner of the Eurasia Group political risk consulting firm says they could delay resolution of the case for between six and 15 months.

Argentina has already asked the U.S. Supreme Court to review the original decision on which the appeals court based its ruling, and the top court as yet to decide whether or not to hear that case.

But the latest ruling might give Argentina another chance to appeal to the Supreme Court. First, Argentina has nearly three weeks to ask for a rehearing from the same judges who rendered Friday's ruling, as well as a new hearing "en banc" before all 13 judges on the 2nd Circuit Court of Appeals.

Both requests face long odds, but a rejection of Argentina's "en banc" appeal would give the country 90 days to make a second appeal to the Supreme Court. That could push a final decision deep into 2014.

"The Supreme Court will take a month or two to request an opinion from the Solicitor General, which would take two to six months to give one. Then it's usually resolved within 60 days (whether to hear the case)," said attorney Marcelo Etchebarne, a partner with Cabanellas Etchebarne Kelly in New York.

The chances are slim of a hearing before the Supreme Court, which usually hears fewer than 100 of the roughly 10,000 cases in which it is petitioned each year.

JUDGES' RESTRAINT

Argentina has so far avoided a final reckoning thanks to the restraint shown by judges. The appeals court surprised some observers last week with a stay order delaying implementation of its decision pending review by the Supreme Court.

But it is unclear how much longer U.S. courts will tolerate the defiance of the South American nation that 2nd Circuit Judge Barrington Parker called a "uniquely recalcitrant debtor."

"Argentina's officials have publicly and repeatedly announced their intention to defy any rulings of this Court and the district court with which they disagree," Parker wrote in the decision rebuking the country on Friday.

The country's attempt to move its sovereign debt beyond the reach of U.S. law is just the kind of maneuver courts have specifically warned against, lawyers said, raising the risk that judges could reconsider their stay order.

Were the Supreme Court to eventually take up the case, it could demand that Argentina set aside some $1.5 billion in escrow to ensure it obeys an eventual ruling. President Fernandez has so far refused any commitment that could satisfy the demands of the holdout creditors she calls "vulture funds."

If the Supreme Court turns down the case or Argentina refuses its conditions for a hearing, the lower court's decision would oblige the country to pay holdout creditors in full when they make their next bond payment.

The ruling is a vindication for dissident bondholders led by Aurelius Capital Management and NML Capital Ltd, a unit of Paul Singer's Elliott Management Corp, who are demanding full payment. They have argued that Argentina cannot deny them their due while paying investors who agreed to restructurings.

But the 93 percent of bondholders who renegotiated debts after Argentina's 2002 default, accepting less than 30 cents on the dollar, now worry that the refusal to pay holdouts in the face of court orders could freeze payments on restructured bonds as well.

Argentina has promised to keep paying obligations on its restructured debt. Lorenzino said on Sunday that the country would continue paying holders of those bonds "on the same terms, in the same currency, over the same period."

"We're going to keep paying as we have until now, on the same terms," Lorenzino told a state news agency on Saturday, calling the previous day's appeals court ruling "an attempt to bring the country back to 2001."

(Additional reporting by Alejandro Lifschitz; Writing by Hugh Bronstein and Brad Haynes; Editing by Kieran Murray and Andre Grenon)

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Liquidated Irish bank seeks U.S. creditor protection

Pedestrians are seen walking past a branch of the Anglo Irish Bank in Dublin in this September 30, 2010 file photograph.

Credit: Reuters/Cathal McNaughton/Files

DUBLIN | Tue Aug 27, 2013 6:57pm BST

DUBLIN (Reuters) - The liquidation vehicle for Ireland's failed Anglo Irish Bank has filed for bankruptcy protection in the United States, it said on Tuesday.

The Irish Bank Resolution Corporation's (IBRC) liquidators said they filed an application under Chapter 15 of the U.S. bankruptcy code in the district of Delaware on Monday.

Chapter 15 grants a foreign company protection from creditors looking to seize its assets in the country.

"These assets form part of the liquidation process currently underway," the liquidators said in a statement.

Anglo Irish Bank was wrecked in 2008 when a property bubble burst after years of reckless lending and sparked more public anger in June when a newspaper published phone conversations of executives laughing at being rescued by the government.

The bank eventually cost taxpayers some 30 billion euros in the financial crisis, almost one-fifth of the country's annual output, and three former executives will go on trial next year on fraud charges.

(Reporting by Sam Cage; editing by David Evans)

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Icahn seeks to fast-track his Dell lawsuit

By Dave Warner

Fri Aug 16, 2013 8:06am EDT

n">(Reuters) - Activist investor Carl Icahn will ask a Delaware court on Friday to fast-track his lawsuit against Dell Inc (DELL.O), a key thrust in his months-long effort to derail CEO Michael Dell's controversial $24.8 billion offer to buy and take private the No. 3 PC maker.

Icahn is trying to accelerate the timeframe on his lawsuit, hoping to head off a September 12 special shareholders' vote on a takeover proposal that the hedge fund billionaire and other major investors argue severely undervalues the company.

The conflict adds more uncertainty to a company that once ruled the global PC market, but is now trying to move into the relatively unfamiliar field of enterprise computing services as mobile devices pummel sales of computers and laptops.

Icahn, who wants to install his own directors on the board and oust the founding CEO, argues that Dell Inc and a special committee overseeing the takeover are short-changing investors.

Dell marks the latest board skirmish for the 77-year old New York investor, who specializes in buying stakes in companies in flux and agitating for change. He has recently had run-ins with management at Biogen (BIIB.O) and Transocean Ltd (RIG.N).

Icahn holds 8.9 percent of Dell Inc, making him the second-largest shareholder behind Michael Dell, with about 16 percent. He wants the company to convene an annual general meeting at the same time it convenes the special vote, since it guarantees a best and final offer from the CEO and his partner, Silver Lake.

That would also delay the special vote, buying Icahn time to nominate his own slate of board directors before a shareholder decision on the buyout offer is taken.

On its part, Dell argues its special committee has done everything it can to safeguard shareholders' interests, and has said the decision to hold the annual general meeting on October 17 means it will occur swiftly after the special vote.

Meanwhile, the company's fundamentals continue to deteriorate. On Thursday, it reported a 72 percent plunge in second-quarter earnings, reflecting the worsening plight of its PC business as well as the questions surrounding its future as a public company.

PLATONIC GUARDIANS?

Icahn's legal team said in court papers that the question before the court is "whether our law will allow these directors to act as Platonic guardians, repeatedly refusing to take 'no' for an answer on the merger, stacking the cards in its favor and deliberately postponing the annual meeting."

Icahn also wants Dell Inc to reverse its decision to nullify abstentions from the buyout offer's vote count, reverting to treating them as opposing votes. Such a move is negative for the CEO's camp, which estimates almost a quarter of eligible shares will abstain from voting.

Friday's courtroom drama is a facet of a months-long battle waged between Michael Dell, who wants to overhaul the company he created in college in 1984 away from the investor spotlight, and major shareholders like Southeastern Asset Management who want a higher price.

The CEO and Silver Lake have already sweetened their offer. On August 2, they delivered what they called their final offer, a special dividend of 13 cents a share on top of a 10-cent increase in the sale price to $13.75 per share, worth $24.8 billion in all.

Leo Strine, the judge on the case, has already considered requests to expedite class actions over the Dell buyout. In a hearing on June 19, he found the board had done enough to protect shareholders. But things have changed since, including the decision not to take abstentions into account.

Strine had cited that as a protection for shareholders.

Also, Dell has now gone 13 months without an annual meeting, which under Delaware law gives shareholders a right to sue to force a meeting. That gave Icahn the opening to ask Strine to move the two meetings to the same day.

(Editing by Edwin Chan, Bill Rigby and Bernard Orr)

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L'Oreal seeks more China glow with $840 million bid for skincare firm

1 of 5. People look at L'Oreal cosmetics in a shop in Riga April 13, 2012.

Credit: Reuters/Ints Kalnins

By Alexandre Boksenbaum-Granier and Donny Kwok

PARIS/HONG KONG | Fri Aug 16, 2013 7:27am EDT

PARIS/HONG KONG (Reuters) - L'Oreal SA (OREP.PA) has offered to buy Chinese facial mask maker Magic Holdings International Ltd (1633.HK), a move that would put the world's largest cosmetics group in the lead of the fastest growing sector in China's $15 billion skincare market.

China is the third biggest market for cosmetics in the world as well as for Paris-based L'Oreal's products.

Magic Holdings has the biggest market share in the facial mask market, a sector expected to grow more than 35 percent in the next two years, exceeding the 27 percent expansion in the overall skincare market, according to data from consumer research firm Euromonitor.

L'Oreal's HK$6.54 billion ($840 million) takeover offer for Magic Holdings, equivalent to HK$6.30-per-share, would be a small price to pay to expand in such a high-growth segment, said Summer Wang, Hong Kong-based analyst at BOCOM International investment bank.

The offer values Magic Holdings at 9.1 times its last fiscal year sales. L'Oreal trades at 7 times its 2012 sales.

"L'Oreal just needs to spend a small amount of money and can take over China's biggest facial mask player," Wang said. "Through this deal, it can fast-track its market share in this segment and the valuation is cheap."

China's cosmetics market is expected to grow 63 percent for the five years ending 2015 compared to flat growth for second-ranked Japan, according to consumer research firm Euromonitor.

In a joint statement, Magic Holdings Chairman Stephen Tang welcomed the L'Oreal offer. Magic shares surged as much as 21 percent to an all-time high of HK6.10 on Friday, beating a flat broader market .HSI.

"Six key shareholders, representing 62.3 percent of the company's equity, are already committed to supporting L'Oreal's proposal," the French company said in the statement. The deal is subject to approval from the Chinese Ministry of Commerce.

Magic Holdings, which has a market value of $676 million, had 288 distributors at the end of December, up from 261 in June last year. Its sales outlets stood at 12,471 at the end of December, up from 10,184 in June.

The company also expanded into e-commerce this year after buying an online distributor in May, which would give L'Oreal greater access to China's booming online retail market.

DEAL TERMS

L'Oreal's offer represents a 25 percent premium to Magic Holding's last closing price before trading in the shares was suspended on August 12 to prevent speculation.

The deal is expected to be financed through L'Oreal's internal resources and a 650 million euro credit facility from BNP Paribas (BNPP.PA), the two companies said in a joint statement. On completion, Magic Holdings shares are expected to be withdrawn from the Hong Kong stock exchange.

L'Oreal, which makes Garnier shampoo and Yves Saint Laurent perfume among other products, posted a 5.2 percent rise in quarterly sales last month, boosted by higher growth in newer markets such as the Asia-Pacific region.

The French company said Magic Holdings achieved sales worth 150 million euros in 2012, up 29 percent on the previous year.

Magic Holdings has two factories in southern China, with annual capacity of about 260 million pieces of peel-off masks and 12 million bottles of wash-off masks.

A new production facility which will go into operation by mid-2015, is expected to raise total capacity to about 400 million pieces of peel-off masks per year.

(Additional reporting by Alexandria Sage in PARIS and Alexandra Hoegberg in HONG KONG; Editing by Anne Marie Roantree and Miral Fahmy)

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Icahn seeks to fast-track his Dell lawsuit

By Dave Warner

Fri Aug 16, 2013 8:06am EDT

n">(Reuters) - Activist investor Carl Icahn will ask a Delaware court on Friday to fast-track his lawsuit against Dell Inc (DELL.O), a key thrust in his months-long effort to derail CEO Michael Dell's controversial $24.8 billion offer to buy and take private the No. 3 PC maker.

Icahn is trying to accelerate the timeframe on his lawsuit, hoping to head off a September 12 special shareholders' vote on a takeover proposal that the hedge fund billionaire and other major investors argue severely undervalues the company.

The conflict adds more uncertainty to a company that once ruled the global PC market, but is now trying to move into the relatively unfamiliar field of enterprise computing services as mobile devices pummel sales of computers and laptops.

Icahn, who wants to install his own directors on the board and oust the founding CEO, argues that Dell Inc and a special committee overseeing the takeover are short-changing investors.

Dell marks the latest board skirmish for the 77-year old New York investor, who specializes in buying stakes in companies in flux and agitating for change. He has recently had run-ins with management at Biogen (BIIB.O) and Transocean Ltd (RIG.N).

Icahn holds 8.9 percent of Dell Inc, making him the second-largest shareholder behind Michael Dell, with about 16 percent. He wants the company to convene an annual general meeting at the same time it convenes the special vote, since it guarantees a best and final offer from the CEO and his partner, Silver Lake.

That would also delay the special vote, buying Icahn time to nominate his own slate of board directors before a shareholder decision on the buyout offer is taken.

On its part, Dell argues its special committee has done everything it can to safeguard shareholders' interests, and has said the decision to hold the annual general meeting on October 17 means it will occur swiftly after the special vote.

Meanwhile, the company's fundamentals continue to deteriorate. On Thursday, it reported a 72 percent plunge in second-quarter earnings, reflecting the worsening plight of its PC business as well as the questions surrounding its future as a public company.

PLATONIC GUARDIANS?

Icahn's legal team said in court papers that the question before the court is "whether our law will allow these directors to act as Platonic guardians, repeatedly refusing to take 'no' for an answer on the merger, stacking the cards in its favor and deliberately postponing the annual meeting."

Icahn also wants Dell Inc to reverse its decision to nullify abstentions from the buyout offer's vote count, reverting to treating them as opposing votes. Such a move is negative for the CEO's camp, which estimates almost a quarter of eligible shares will abstain from voting.

Friday's courtroom drama is a facet of a months-long battle waged between Michael Dell, who wants to overhaul the company he created in college in 1984 away from the investor spotlight, and major shareholders like Southeastern Asset Management who want a higher price.

The CEO and Silver Lake have already sweetened their offer. On August 2, they delivered what they called their final offer, a special dividend of 13 cents a share on top of a 10-cent increase in the sale price to $13.75 per share, worth $24.8 billion in all.

Leo Strine, the judge on the case, has already considered requests to expedite class actions over the Dell buyout. In a hearing on June 19, he found the board had done enough to protect shareholders. But things have changed since, including the decision not to take abstentions into account.

Strine had cited that as a protection for shareholders.

Also, Dell has now gone 13 months without an annual meeting, which under Delaware law gives shareholders a right to sue to force a meeting. That gave Icahn the opening to ask Strine to move the two meetings to the same day.

(Editing by Edwin Chan, Bill Rigby and Bernard Orr)

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L'Oreal seeks more China glow with $840 million bid for skincare firm

1 of 5. People look at L'Oreal cosmetics in a shop in Riga April 13, 2012.

Credit: Reuters/Ints Kalnins

By Alexandre Boksenbaum-Granier and Donny Kwok

PARIS/HONG KONG | Fri Aug 16, 2013 7:27am EDT

PARIS/HONG KONG (Reuters) - L'Oreal SA (OREP.PA) has offered to buy Chinese facial mask maker Magic Holdings International Ltd (1633.HK), a move that would put the world's largest cosmetics group in the lead of the fastest growing sector in China's $15 billion skincare market.

China is the third biggest market for cosmetics in the world as well as for Paris-based L'Oreal's products.

Magic Holdings has the biggest market share in the facial mask market, a sector expected to grow more than 35 percent in the next two years, exceeding the 27 percent expansion in the overall skincare market, according to data from consumer research firm Euromonitor.

L'Oreal's HK$6.54 billion ($840 million) takeover offer for Magic Holdings, equivalent to HK$6.30-per-share, would be a small price to pay to expand in such a high-growth segment, said Summer Wang, Hong Kong-based analyst at BOCOM International investment bank.

The offer values Magic Holdings at 9.1 times its last fiscal year sales. L'Oreal trades at 7 times its 2012 sales.

"L'Oreal just needs to spend a small amount of money and can take over China's biggest facial mask player," Wang said. "Through this deal, it can fast-track its market share in this segment and the valuation is cheap."

China's cosmetics market is expected to grow 63 percent for the five years ending 2015 compared to flat growth for second-ranked Japan, according to consumer research firm Euromonitor.

In a joint statement, Magic Holdings Chairman Stephen Tang welcomed the L'Oreal offer. Magic shares surged as much as 21 percent to an all-time high of HK6.10 on Friday, beating a flat broader market .HSI.

"Six key shareholders, representing 62.3 percent of the company's equity, are already committed to supporting L'Oreal's proposal," the French company said in the statement. The deal is subject to approval from the Chinese Ministry of Commerce.

Magic Holdings, which has a market value of $676 million, had 288 distributors at the end of December, up from 261 in June last year. Its sales outlets stood at 12,471 at the end of December, up from 10,184 in June.

The company also expanded into e-commerce this year after buying an online distributor in May, which would give L'Oreal greater access to China's booming online retail market.

DEAL TERMS

L'Oreal's offer represents a 25 percent premium to Magic Holding's last closing price before trading in the shares was suspended on August 12 to prevent speculation.

The deal is expected to be financed through L'Oreal's internal resources and a 650 million euro credit facility from BNP Paribas (BNPP.PA), the two companies said in a joint statement. On completion, Magic Holdings shares are expected to be withdrawn from the Hong Kong stock exchange.

L'Oreal, which makes Garnier shampoo and Yves Saint Laurent perfume among other products, posted a 5.2 percent rise in quarterly sales last month, boosted by higher growth in newer markets such as the Asia-Pacific region.

The French company said Magic Holdings achieved sales worth 150 million euros in 2012, up 29 percent on the previous year.

Magic Holdings has two factories in southern China, with annual capacity of about 260 million pieces of peel-off masks and 12 million bottles of wash-off masks.

A new production facility which will go into operation by mid-2015, is expected to raise total capacity to about 400 million pieces of peel-off masks per year.

(Additional reporting by Alexandria Sage in PARIS and Alexandra Hoegberg in HONG KONG; Editing by Anne Marie Roantree and Miral Fahmy)

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Perrigo to buy Elan for $8.6B, seeks tax savings

DUBLIN (AP) — U.S. drugmaker Perrigo agreed Monday to buy Ireland's Elan for $8.6 billion in a deal that should allow the rapidly growing company to reduce its tax bill and boost its royalty stream.

Perrigo Co. said it would pay Elan Corp.'s investors $6.25 per share in cash and $10.25 in Perrigo stock, an 11 percent premium over Elan's closing price Friday. Elan shares in Dublin surged 13 percent higher to 12.58 euros ($16.71), above Perrigo's offer price, following news of the takeover.

After spending four months defeating a series of hostile, lower-priced takeover bids by Royal Pharma, Elan earlier in July said it was open to better offers. Several potential U.S. suitors sought to acquire Elan's flow of royalties from drugs it helped develop, particularly the multiple sclerosis fighter Tysabri.

Perrigo, which has been headquartered in the small western Michigan town of Allegan since 1887, said it would move its tax residence to Ireland and hopes to cut its tax liabilities nearly in half as it grows non-U.S. sales.

Perrigo is already the largest maker of generic drugs for major retail chains in the United States, including Walgreens and Wal-Mart. It has rapidly expanded overseas since 2005 with acquisitions in Israel, Britain, Mexico and Australia.

A new Irish base would allow Perrigo's non-U.S. sales to be taxed at a much lower rate. Ireland imposes 12.5 percent tax on corporate profits, one of the lowest rates in Europe, whereas the United States levies 35 percent.

Perrigo and Elan said a transitional company called New Perrigo would be registered in Ireland and traded on the New York and Israeli stock exchanges. They said the merger meant existing Perrigo investors would own 71 percent of the company, Elan investors the rest.

Perrigo's chief executive and chairman, Joe Papa, said the move to Ireland should produce more than $150 million in increased net profits annually because of lower taxes and efficiencies from combined operations.

"This strategic transaction aligns with Perrigo's acquisition strategy and our previously stated intentions to grow our international business. We expect New Perrigo to create tremendous value for our shareholders," Papa said in a statement.

Elan is one of the great boom-bust-and-recovery stories of Ireland. In the late 1990s, its shares soared as the company positioned itself as a pioneer of biotechnology and, in particular, a leader in efforts to find a treatment or cure for Alzheimer's disease.

But Elan faced ruin in 2002 after its Alzheimer's trials failed and the company was caught hiding losses in Enron-style accounting tricks.

A new management team led by former Merrill Lynch banker Kelly Martin drastically pared down Elan and focused on developing Tysabri. The intravenously delivered drug was designed to slow or halt the paralyzing effects of MS, an incurable disease of the central nervous system that afflicts millions worldwide.

Tysabri, a joint venture with the Massachusetts-based drugmaker Biogen Idec, faced disaster after its launch in 2005 when it was linked to development of a rare, often fatal brain-inflammation disease. But Elan and Biogen Idec persuaded U.S. and European regulators to put Tysabri back on the market in 2006 and the drug, prescribed under restricted rules reflecting its risks, has steadily grown to become a world-leading treatment for MS patients.

Elan sold much of its ownership share of Tysabri to Biogen Idec in February for $3.25 billion in cash and a minority share in future royalties. That deal opened up a behind-the-scenes scramble among several U.S.-based companies to acquire Elan for its healthy cash flow and Irish tax base.

The agreement with Biogen Idec means New Perrigo would collect up to 25 percent of future royalties from Tysabri, which had global sales of $1.6 billion last year.

Perrigo's proposed takeover of Elan, subject to regulatory approval in the United States and Ireland, is expected to be completed by the end of 2013.

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SAC Capital seeks protective order on operations after charges

NEW YORK (Reuters) - Steven A. Cohen's $15 billion hedge fund SAC Capital Advisors is working on an agreement with U.S. prosecutors for an order to "reasonably protect all parties legitimate interests" as the firm faces criminal insider trading charges.

SAC spokesman Jonathan Gasthalter said in statement on Thursday that a prosecution by the U.S. Attorney in Manhattan "is not intended to affect the ongoing operations of SAC's business, prevent investor redemptions, or impact the interests of any of SAC's counterparties."

He said it was not an attempt to freeze any of the hedge fund's assets.

"We anticipate that we and the U.S. Attorney's Office will agree to a protective order intended to reasonably protect all parties' legitimate interests, but will expressly permit SAC to continue its operations in the ordinary course."

(Reporting By Emily Flitter; Editing by Grant McCool)

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FAA seeks $2.75 million quality control penalty for Boeing unit

By Alwyn Scott and Doug Palmer

WASHINGTON (Reuters) - The Federal Aviation Administration on Friday said it proposed penalizing Boeing's commercial airplane unit $2.75 million for taking nearly two years to fix a problem with fasteners on its 777 widebody airplanes.

The penalty was unusual in its size and for the fact that it comes nearly three years after Boeing said it addressed the FAA's concerns, which stem from 2008. The FAA regularly imposes smaller penalties for rule violations, but multimillion-dollar amounts are far less frequent.

The action came as Boeing's 787 Dreamliner aircraft has suffered a series of mishaps in recent weeks, including a spontaneous fire on an Ethiopian Airlines-owned 787 that was parked at a remote stand at London's Heathrow Airport.

"Safety is our top priority and a robust quality control system is a vital part of maintaining the world's safest air transportation system," U.S. Transportation Secretary Anthony Foxx said in a statement announcing the action.

"Airplane manufacturers must take prompt and thorough steps to correct safety and compliance problems once they become aware of them," Foxx said.

Boeing said it took corrective action and closed the matter in November 2010 and is working with the FAA to "understand and address any remaining concerns."

Boeing said its actions included greater management oversight, a database for tracking issues and regular meetings with the FAA to ensure any open cases were closed on time.

STEMS FROM 2008

The FAA said Boeing discovered in September 2008 it had been installing non-conforming fasteners on its 777 airplanes, but then took more than two years to implement a plan to correct the problem, which violated regulations by failing to maintain its quality control system.

Boeing stopped using the bad fasteners after the problem was discovered, but some manufacturing issues continued until after the corrective action plan was in place, the FAA said.

"Manufacturers must make it a priority to identify and correct quality problems in a timely manner," FAA Administrator Michael Huerta said in the statement.

The violation carries a penalty of $25,000 a day, but the FAA said it would be willing to settle for $2.75 million and gave Boeing 30 days to respond.

Industry experts said the proposed penalty appeared unusual, not least because it came years after Boeing came into compliance. Some suggested that the FAA may be toughening its stance after being criticized for lax oversight of the 787 by the National Transportation Safety Board earlier this year.

"The headline is so out of sync with the size of the penalty, I'm inclined to view this as muscle flexing by the FAA," said Carter Leake, an investment banker with BB&T Capital Markets/Windsor Group.

The NTSB raised concerns after lithium-ion batteries burned on two 787 jets within two weeks in January. The FAA and other regulators grounded the global fleet of 50 Dreamliners for 3-1/2 months while Boeing redesigned the battery system.

"That's a pretty big fine for the FAA," said Mary Schiavo, a former Department of Transportation Inspector General. She said fasteners were a concern when she was inspector general in the 1990s, and were difficult to police because the parts don't have serial numbers.

"In this case, Boeing was cited for quality control, which suggests bad fasteners were coming in and they didn't have a system in place to catch them," she said.

The FAA's most recent large proposed penalty was a $4 million civil penalty against United Parcel Service for alleged improper maintenance of four cargo aircraft. That case stemmed from 2008 and 2009. In 2012, it proposed a $1 million penalty against Horizon Air for allegedly operating planes that were not in compliance with regulations. The violations spanned 2007 to 2011.

(Reporting by Alwyn Scott and Doug Palmer; Editing by Bill Trott, Carol Bishopric and Bernard Orr)

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SAC Capital seeks protective order on operations after charges

NEW YORK (Reuters) - Steven A. Cohen's $15 billion hedge fund SAC Capital Advisors is working on an agreement with U.S. prosecutors for an order to "reasonably protect all parties legitimate interests" as the firm faces criminal insider trading charges.

SAC spokesman Jonathan Gasthalter said in statement on Thursday that a prosecution by the U.S. Attorney in Manhattan "is not intended to affect the ongoing operations of SAC's business, prevent investor redemptions, or impact the interests of any of SAC's counterparties."

He said it was not an attempt to freeze any of the hedge fund's assets.

"We anticipate that we and the U.S. Attorney's Office will agree to a protective order intended to reasonably protect all parties' legitimate interests, but will expressly permit SAC to continue its operations in the ordinary course."

(Reporting By Emily Flitter; Editing by Grant McCool)

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Stocks suffer as China seeks to overhaul industry

LONDON (AP) — Stocks mostly dropped Friday on concerns that a brusque overhaul of China's industry could slow down the world's second-largest economy and after retailer Amazon.com reported a surprise loss.

Beijing has ordered companies to close factories in 19 industries where overproduction has led to price-cutting wars, affirming its determination to push ahead with a painful makeover of the economy. That move followed weak manufacturing data on Wednesday.

Communist leaders are trying to reduce reliance on investment and trade. But a slowdown that pushed China's economic growth to a two-decade low of 7.5 percent last quarter had earlier prompted suggestions they might have to reverse course and stimulate the economy with more investment to reduce the threat of job losses and unrest.

China's Shanghai Composite dropped 0.5 percent to 2,010.85.

In Europe, Britain's FTSE 100 index was down 0.5 percent to 6,557.49 while Germany's DAX fell 0.7 percent to 8,243.24.

France's CAC-40 bucked the trend, rising 0.3 percent to 3,969.76. It was boosted by a 4.1 percent rise in the shares of LVMH, the luxury goods maker, after it reported higher earnings. Meanwhile, shares in French media company Vivendi were up 2.6 percent after it agreed to sell most of its majority stake in video games maker Activision.

Wall Street opened lower as shares in Amazon.com fell 1.6 percent after the company reported a loss for the second quarter. The Nasdaq, on which the company is listed, fell 0.3 percent, while the broader S&P 500 was down 0.4 percent at 1,683.88. The Dow was 0.5 percent lower at 15,482.90.

Overall, trading has been quiet in recent days as a lot of people wait for next week's meeting of the Federal Open Market Committee in the U.S. for guidance on when the central bank will start reducing its monetary stimulus.

Since late last year, the Fed has been buying $85 billion in Treasury and mortgage bonds a month — a move that has kept long-term rates near record lows and supported economic recovery.

In Asia, Japan's Nikkei 225 index fared worst on Friday, closing 3 percent lower at 14,129.98, due to a big rise in the yen, which risks making the country's exports less competitive on international markets.

Japan on Friday said consumer prices rose in June for the first time in more than a year, an early sign that the government's stimulus policies are working. While that is a promising sign in the long-term, the signs of inflation suggest interest rates could eventually increase — higher rates tend to strengthen a national currency. The dollar was down 0.9 percent against the yen, at 98.34 yen.

Elsewhere in the region, Hong Kong's Hang Seng gained 0.3 percent and Australia's S&P/ASX 200 rose 0.1 percent.

In energy trading, benchmark crude was down 54 cents at $104.95 a barrel in electronic trading on the New York Mercantile Exchange.

The euro was little changed at $1.3273 from $1.3277 late Thursday.

___

Teresa Cerojano in Manila, Philippines, contributed to this report.

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Stocks suffer as China seeks to reform industry

LONDON (AP) — Stocks mostly dropped on Friday on concerns that a brusque overhaul of China's industrial sector could cause a sharp slowdown in the world's second-largest economy.

Beijing has ordered companies to close factories in 19 industries where overproduction has led to price-cutting wars, affirming its determination to push ahead with a painful makeover of the economy. That move followed weak manufacturing data on Wednesday.

Communist leaders are trying to reduce reliance on investment and trade. But a slowdown that pushed China's economic growth to a two-decade low of 7.5 percent last quarter had earlier prompted suggestions they might have to reverse course and stimulate the economy with more investment to reduce the threat of job losses and unrest.

China's Shanghai Composite dropped 0.5 percent to 2,010.85.

Japan's Nikkei 225 index fell even further, closing 3 percent lower at 14,129.98, due to a big rise in the yen, which risks making the country's exports less competitive on international markets.

Japan on Friday said consumer prices rose in June for the first time in more than a year, an early sign Prime Minister Shinzo Abe's stimulus policies are working. While that is a promising sign in the long-term, the signs of inflation suggest interest rates could eventually also increase — higher rates tend to strengthen a national currency. The dollar was down 0.6 percent against the yen, at 98.67 yen.

In Europe, Britain's FTSE 100 index was down 0.3 percent to 6,571.71 while Germany's DAX was 0.5 percent lower at 8,258.18. France's CAC-40 bucked the trend, rising 0.4 percent to 3,973.45, thanks to a 5.7 percent rise in the shares of LVMH, the luxury goods maker, after it reported higher earnings.

Wall Street was expected to drop slightly on the open, with S&P 500 futures down 0.3 percent and Dow futures 0.2 percent lower.

Overall, trading has been quiet in recent days as a lot of people wait for next week's meeting of the Federal Open Market Committee in the U.S. for guidance on the tapering of U.S. government bond purchases, he said.

Since late last year, the U.S. Federal Reserve has been buying $85 billion in Treasury and mortgage bonds a month — a move that has kept long-term rates near record lows and supported economic recovery.

Elsewhere in the region, Australia's S&P/ASX 200 rose 0.1 percent to 5,042. Stocks in South Korea and New Zealand finished slightly higher while benchmarks in the Philippines, Malaysia, Indonesia and Taiwan fell. Hong Kong's Hang Seng was up 0.3 percent to 21,968.95

In energy trading, benchmark crude was down 75 cents at $104.74 a barrel in electronic trading on the New York Mercantile Exchange. It rose 10 cents to close at $105.49 on Thursday.

The euro was little changed at $1.3275 from $1.3277 late Thursday.

___

Teresa Cerojano in Manila, Philippines, contributed to this report.

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