U.S. Justice Department sues to stop AT&T merger with T-Mobile

 

 

 

 

 

 

 

 

 

 

 

The U.S. Justice Department is suing to block the $39-billion acquisition of cellular phone company T-Mobile by telecom giant AT&T.

Deputy Atty. Gen. James M. Cole said that the acquisition  "would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services."

The Obama administration called T-Mobile "an important source of competition among the national carriers." Currently, AT&T and T-Mobile now compete head to head in 97 of the nation's largest cellphone markets. That competition would be eliminated by the acquisition, which would create the nation's largest wireless communications company, the government said.

DOCUMENT: Read the antitrust lawsuit

AT&T currently is the second-biggest cellular provider, and T-Mobile is the fourth-biggest as measured by the number of subscribers, the Justice Department said.

AT&T did not immediately respond to the government's announcement.

Earlier in the day, AT&T announced that if the takeover of T-Mobile goes through, it would repatriate 5,000 call-center jobs -- which had been outsourced overseas -- to the United States.

"At a time when many Americans are struggling and our economy faces significant challenges, we're pleased that the T-Mobile merger allows us to bring 5,000 jobs back to the United States and significantly increase our investment here," said Randall Stephenson, AT&T chairman and chief executive.

Stephenson's statement was applauded by labor union leaders.

"Cuts in wages, benefits and jobs have become the new normal in America, so that when a company like AT&T takes action to bring back quality jobs, it's big news," said Larry Cohen, president of the Communications Workers of America union.

The proposed merger currently is being studied by the Federal Communications Commission. The California Public Utilities Commission also is investigating the pros and cons of the proposed deal.

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Credit: Associated Press

-- Marc Lifsher

CoreLogic to move headquarters to Irvine

 

Property and credit data provider CoreLogic, whose stock surged 29% Tuesday, will move its headquarters from Santa Ana to Irvine and said it is considering a sale of the company, which triggered the stock rise.

CoreLogic will move to 40 Pacifica in the Irvine Spectrum in late summer 2012, landlord Irvine Co. said. CoreLogic will occupy 170,000 square feet –- about seven and a half floors –- and have prominent signs on the building.

Financial terms of the lease were not disclosed, but the Irvine Co. is asking $2.15 a square foot per month at 40 Pacifica, one of the highest rates in the Irvine Spectrum, according to brokerage Cushman & Wakefield.

CoreLogic emerged as an independent company in 2010 as part of a separation of Santa Ana-based First American Corp. into two publicly traded companies.

“Our new Irvine Spectrum headquarters location is befitting a growing business in the technology and information services industry,” President Anand Nallathambi said.

Shares of CoreLogic jumped after it said it hired Greenhill & Co. to explore a possible sale of the company. The stock closed at $11.35, up 29%.

-- Roger Vincent

Photo: The Pacifica office complex in Irvine.  Credit: Irvine Co.

 

Consumer Confidential: Back-to-school prices, telecom tie-ups

Here's your don't-you-forget-about-me Friday roundup of consumer news from around the Web:

-- It's back-to-school time, and it's going to cost you. But many stores would rather you didn't notice. Some are using less fabric for the clothing and calling it the new look. Others are adding cheap stitching and trumpeting it as a redesign. And the buttons on that blouse? Chances are you're not going to think it's worth paying several dollars more for the shirt just to have them. Retailers are raising prices on merchandise an average of 10% across the board this fall in an effort to offset their rising costs for materials and labor. The new strategies come as merchants' production and labor costs are expected to rise as much as 20% in the second half of the year after having remained low during most of the last two decades.

-- More consolidation may be ahead for telecom companies. Sprint Nextel is reportedly in talks with cable companies over a new round of investment that may lead to a full takeover of 4G partner Clearwire. Sprint is said to be in discussions with investors Comcast, Time Warner Cable and Bright House Networks. According to Bloomberg, Sprint may use the investment to fund acquisition of the remaining stake in Clearwire that it doesn't own. Such a scenario could provide relief to cash-strapped Clearwire, which is seeking funding to stay alive and expand its network with faster technology. The company needs $600 million for its network upgrade and additional money to keep its operations going. Sprint, with a 54% stake in Clearwire, is both its largest shareholder and customer.

-- David Lazarus

 

California Pizza Kitchen hires new CEO from Texas Roadhouse

When choosing its new chief executive, California Pizza Kitchen went for a taste of Texas-style steak by way of Kentucky.

The new boss of the Los Angeles-based casual dining company will be G.J. Hart – recently CEO of western-themed and Louisville-based chain Texas Roadhouse.

CPK said Thursday that Hart would replace co-founders Rick Rosenfield and Larry Flax. The two former federal prosecutors launched the chain’s first restaurant in Beverly Hills in 1985.

Last month, CPK was acquired by San Francisco-based private equity firm Golden Gate Capital for $470 million. The company sells its food at more than 250 California Pizza Kitchen restaurants as well as in stadiums and the frozen food aisles of grocery stores.

Hart, who had been with Texas Roadhouse for a decade, will be replaced there by W. Kent Taylor. Taylor will remain chairman of the company as well.

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-- Tiffany Hsu

Photo: California Pizza Kitchen at the Simi Valley Town Center. Credit: Al Seib / Los Angeles Times

Capital One to buy HSBC’s U.S. credit card unit

Capital One Financial Corp. said Wednesday that it would buy the U.S. credit card division of London-based HSBC Holdings for $32.7 billion as it attempts to expand its own credit card franchise.

HSBC, as part of a strategic narrowing of its retail business, will pass off more than $30 billion of credit card loans and store-branded credit cards to Capital One for a $2.6 billion premium.

The deal is expected to close in the second quarter of 2012. At least in the near future, HSBC customers should be able to use their cards as usual without any service changes.

HSBC has been in a shedding phase, recently selling 195 of its U.S. bank branches and planning to cut 30,000 employees worldwide over the next few years.

Meanwhile, Capital One is on a buying tear, saying in June that it would spend $9 billion snapping up Dutch company ING Group’s American online banking operations.

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-- Tiffany Hsu

Photo: Mark Lennihan / Associated Press

Consumer Confidential: Pie chain goes bankrupt, Timberland bought, Arby's sold

Here's your make-my-day Monday roundup of consumer news from around the Web:

--Some bitter-tasting pie: Restaurant owner Perkins & Marie Callender's has filed for bankruptcy protection, brought down by tough competition, the weak economy and rising food costs. The owner of the Perkins Restaurant & Bakery and Marie Callender's chains says it plans to close 65 stores and cut 2,500 jobs, or about 20% of its work force of 12,350. The company cites the weak economic climate, particularly in California and Florida, where many of its restaurants are located, for the bankruptcy filing. Documents filed with the U.S. Bankruptcy Court in Delaware indicate the company can't afford to build new restaurants and upgrade existing ones, so it loses traffic to better-funded rivals. The two chains were "adversely affected by the languishing economy, including declines in consumer confidence and sluggish consumer spending and increased commodity costs," CEO J. Trungale said in a statement in November.

--Timberland has a new daddy. The purveyor of outdoorsy shoes and duds is being acquired by VF Corp., whose brands include Wrangler denim and Nautica apparel, for about $2 billion. Eric Wiseman, chairman and CEO of Greensboro, N.C.-based VF, calls the acquisition "transformative." VF's outdoor and action-sports businesses will now comprise 50% of total revenue and are expected to hit 60% by fiscal 2015, Wiseman says. The company's other brands include 7 For All Mankind premium denim, John Varvatos men's clothing and Reef surf gear. Its outdoor and active brands include Vans, Lee and North Face, and the company says Timberland will be complementary to, rather than competitive with, those names. I've always liked Timberland's gear. If only it weren't so darned expensive.

--Adios, Arby's. Wendy's/Arby's Group says it will sell a controlling stake in its Arby’s restaurant chain to Roark Capital Group for $130 million. Atlanta-based Roark will also assume $190 million in debt with the acquisition. Arby’s, which has has 3,600 outlets across the United States, will now focus on new menu items, new breakfast fare and new-look restaurants. Roark specializes in brand management of restaurant companies. The group also has stakes in Atkins Nutritionals, Auntie Anne’s, Cinnabon and Moe’s Southwest Grill. Last month, California Pizza Kitchen agreed to a $470-million buyout by Golden Gate Capital, and groups are reportedly circling Sbarro, the recently bankrupt pizza chain.

-- David Lazarus

Photo: Pie maker Marie Callender's has filed for bankruptcy protection. Credit: Allen J. Schaben / Los Angeles Times

 

NuVision Federal Credit Union to merge into Kinecta

Kinecta Federal Credit Union of Manhattan Beach and NuVision Federal Credit Union of Huntington Beach have asked formal permission from federal regulators to combine under Kinecta's name and charter.

If approved, the merger would make Kinecta -- already one of the nation's biggest credit unions -- larger still by a third, with $4.7 billion in assets. SchoolsFirst in Santa Ana, with $8 billion in assets, is California’s largest credit union; the world’s largest is Navy Federal Credit Union in Vienna, Va., with $44 billion in assets.

 The transaction, expected to close early next year, would merge two institutions originally set up to serve aerospace workers. The credit unions said they had spent a year analyzing the combination and believe it would benefit their members.

Kinecta was founded in 1940 at Hughes Aircraft Co. It has 36 branches, including 12 located in offices of its Nix Check Cashing business. Its $3.5 billion in assets make it L.A. County's largest credit union. 

NuVision, founded in 1935 for Douglas Aircraft Co. workers, has 15 branches and $1.2 billion in assets.

Pending approval by the National Credit Union Administration, Roger D. Ballard, joint chief executive of both Kinecta and NuVision, would become CEO of the combined credit union. The deal requires a vote by NuVision members as well as regulatory approval.

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-- E. Scott Reckard

[Updated at 5:11 p.m.: For the record: An earlier version of this post implied SchoolsFirst Federal was the largest credit union in the nation. It is the largest in California.]

California Pizza Kitchen to be acquired by private equity firm for $470 million [Updated]

After more than a year of searching for a buyer, California Pizza Kitchen said Wednesday that it would be acquired by the private equity firm Golden Gate Capital for $470 million, or $18.50 a share.

But another investment group quickly stepped in to say it wanted to talk about the possibility of a leveraged buyout of CPK "at or above" $19.50 a share.

CPK shares jumped $1.76 to $18.47 by about 11:45 a.m.

The Los Angeles chain is one of several publicly traded restaurant companies to be taken private in recent months as the slow economy, high commodity prices and an onslaught of new competitors has battered older brands.

If the deal is approved by CPK’s shareholders, Golden Gate Capital will begin buying up California Pizza Kitchen shares next month. Golden Gate has also purchased stakes in On the Border Mexican Grill and Romano's Macaroni Grill. It owns a number of retail outlets, including Eddie Bauer, Express and J.Jill.

“We have great respect for the California Pizza Kitchen brand,” Josh Olshansky, a managing director with Golden Gate, said in a statement. “The business that the CPK team has built, with its great product offerings, makes it an ideal fit with our long-term oriented approach to investing.”

However, in a filing with the Securities and Exchange Commission on Wednesday, the Clinton Group investment firm said it believed "there may be other alternatives to maximize shareholder value," including the possibility of a $19.50-a-share or higher leveraged recapitalization of CPK. That would involve the company borrowing money to buy up its shares.

The Clinton Group said it represented investors who own 5.1% of CPK shares, or about 1.26 million shares.

California Pizza Kitchen was founded in Los Angeles in 1985 as part of a wave of upgrading and growth in the region’s restaurant business. It became famous for developing a line of gourmet pizzas that were unusual for those times, including such offerings as barbecued chicken pizza.

Positioned as a midpriced option and located in newly developing centers, including an early foray into downtown, the company thrived. Its founders, former lawyers Larry S. Flax and Richard L. Rosenfeld, sold the company to Pepsico in 1992, and for a time gave up control. But after a series of private equity owners and a public offering, they returned to the helm, reversing such decisions as a move to replace fresh vegetables in some recipes with frozen ones.

With 265 locations in the U.S. and abroad, CPK has suffered in recent months from slow restaurant sales. Profit dipped during the first quarter of this year, to $2.1 million from $2.5 million the year before.

The company has seen success, however from its line of frozen foods sold in grocery stores, and renewed emphasis on catering. The frozen food line was recently purchased by Nestle from Kraft, a shift in ownership that could lead to greater distribution.

Like many restaurant chains, CPK has been working to sell more franchises because franchises are less risky than company-owned stores. The chain currently owns 200 of its stores and franchises or licenses its name to the rest. In a franchise the owner must bear the risk when the price of food goes up, or when customers stay home.

The sale, if consummated, would mark the end of a long road for the company, which was put on the block by Rosenfeld and Flax in April of 2010. At the time they said they would seek to maximize shareholder value, but didn't commit specifically to selling the company. A merger with another restaurant firm also was seen as a possibility.

-- Sharon Bernstein

Photo credit: Al Seib / Los Angeles Times

Consumer Confidential: Better car labels, easier e-banking, CPK's new daddy

Here's your howlin'-wolf Wednesday roundup of consumer news from around the Web:

-- If you're shopping for a new car, you'll soon have better info for making a purchase. The Environmental Protection Agency and Department of Transportation have unveiled new fuel economy labels for cars and trucks -- the most significant update since 1975, when the feds first required fuel economy data. Designed to provide more detailed information about vehicles' fuel efficiency, estimated annual fuel cost and environmental effect, the new stickers will be rolled out with 2013 model year vehicles, although some manufacturers may voluntarily adopt the new labels for the 2012 model year. The labels will, for the first time, allow consumers to compare energy use and cost for new-technology cars such as plug-in electrics. They will include estimates on the amount of money consumers will save or spend on fuel for the next five years compared with an average new vehicle. And they will estimate how much fuel or electricity is required to drive 100 miles.

-- E-banking is getting easier. Three of the four largest banks are launching a system that lets customers transfer money from their checking accounts using only a mobile number or e-mail address. The banks say the service, called clearXchange, will make payments easier than traditional money transfers, which require a bank routing number and move through a system controlled by Federal Reserve banks. The service is a joint venture between Bank of America, Chase and Wells Fargo. The banks expect to add other financial institutions, eventually creating an industry-wide utility for moving money. ClearXchange is an attempt by the banks to retain fee-weary customers who have embraced alternatives such as prepaid debit cards and EBay's PayPal money-transfer service.

-- CPK has a new daddy. Golden Gate Capital is buying California Pizza Kitchen for about $470 million in cash, ending a sales process that had gone on for more than a year. Under the terms of the deal, Golden Gate will pay $18.50 a share, or almost 11% more than CPK’s closing share price on Tuesday. "We have great respect for the California Pizza Kitchen brand," says Josh Olshansky, a Golden Gate managing director. "The business that the CPK team has built, with its great product offerings, makes it an ideal fit with our long-term oriented approach to investing." California Pizza Kitchen put itself up for sale in April 2010 after receiving interest from several buyout firms.

-- David Lazarus

Photo: New cars will soon have more informative stickers. Credit: Stephen Morton / Bloomberg News

 

Consumer Confidential: Gas prices take toll, Barnes & Noble buyout offer, Honda recalls Civics

Here's your feel-the-burn Friday roundup of consumer news from around the Web:

-- From the you're-not-alone file: About 40% of Americans say high gas prices are having a significant effect on their bottom lines. A poll by the Associated Press finds that 71% of drivers say rising prices will cause some hardship for them and their families, including 41% who called it a "serious" hardship. On the other side, 29% said rising prices are not having a negative effect on their finances. Things are especially tough for senior citizens. The share of seniors with financial hardship over gas prices hit 76%. That number is up from 68% in March. Some say they're even giving up expensive medicine to stay on budget. Of drivers making changes to deal with the rising gas prices, 72% say they're cutting back on expenses, 66% say they're driving less and 48% say they've changed their vacation plans. Southern California gas prices top $4 a gallon in all counties.

-- Wall Street is happy about a buyout offer for bookseller Barnes & Noble. Shares in the company jumped sharply higher after John Malone's Liberty Media offered to buy it for about $1 billion. Being part of a bigger conglomerate could boost Barnes & Noble's ability to invest in remaking itself for the age of electronic books, analysts say. The offer values Barnes & Noble shares 21% higher than their Thursday closing price of $14.11. Barnes & Noble has 705 stores nationwide and 636 bookstores run by its Barnes & Noble College Booksellers subsidiary. The company put itself up for sale in August in response to pressure from billionaire activist shareholder Ron Burkle.

-- Heads up: Honda is recalling about 1,150 Civics from the 2012 model year due to a potential problem with the fuel line, which could potentially spring a leak. "During manufacture of the fuel line assembly, an O-ring may have been displaced, which could potentially lead to a fuel leak at a joint where two segments of pipe attach to each other," Honda says. Most of the cars affected by the problem have not been sold yet and dealers will repair them before they leave the lot. Honda says there have been no reports of injuries or fires related to the fuel feed line problem.

-- David Lazarus

Photo: High gas prices are hitting people in the pocketbook. Credit: Bruce Halmo / Associated Press

 

Tech mergers on strongest pace since 2000 as big players pay up for growth

Microsoft Corp.’s agreement Tuesday to buy Internet telecom firm Skype for $8.5 billion is another sign of the prominence of big deals in this year's wave of merger activity, as megacompanies spend aggressively to buy growth.

The Microsoft-Skype deal lifted the total value of announced merger transactions in the tech sector worldwide to $85.5 billion since Jan. 1, making this the strongest start for any year since 2000 for tech transactions, according to Thomson Reuters data.

The year 2000, of course, marked the zenith of the tech-stock mania. Announced merger deals involving tech firms totaled a stunning $502 billion from Jan. 1 to May 10 of that year.

The ill-fated $164-billion purchase of Time Warner by AOL, announced in January 2000, was one of the bells sounding the end of that era, though many investors at the time refused to believe that the party was over.

This year’s $85.5 billion in tech deals pale compared with the merger rush in 2000. Still, the total is almost double the $43 billion in tech mergers announced in the same period of last year. . . .