Reynolds Spurns Alcoa's Offer; BNP Gets Control of Paribas but Not SocGen

Plus, Warren Buffett's Berkshire profits decline and K-E-L-L-O-double-good spells layoffs.
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The weekend brought a range of M&A news, from a failed bid in the aluminum industry to a split result overseas that will reshape the French banking industry.

Spurning $4.2 billion in cash and stock,

Reynolds Metals

(RLM) - Get Report

announced Sunday that its board had rejected

Alcoa's

(AA) - Get Report

offer to buy the company.

Two days after Alcoa, the world's largest aluminum company, made the unsolicited offer, privately held Chicago investment firm

Michigan Avenue Partners

announced its own buyout bid. The firm did not disclose the amount of its all-cash offer but said Friday that it was more than Alcoa's proposed deal of $65 a share in cash and stock.

Overseas, French banking group

Banque Nationale de Paris

vows to complete a three-way merger with

Banque Paribas

and

Societe Generale

, even though it failed to win over a majority of SG's investors Friday. France's

Council of Financial Markets

said Saturday that BNP won control of 65.1% of Paribas and 36.8% of SG after a six-month hostile takeover campaign. If combined, the three would make up the world's first bank with more than $1 trillion (931.4 billion) in assets.

Amsted Industries

expects to complete its takeover of

Varlen

(VRLN)

Monday. Amsted, which makes parts for trains, truck and cars, announced Sunday that it had secured 93% of Varlen's shares under a tender offer of $42 a share. Varlen's shareholders will not have to vote to ratify the deal.

Buffett's Profits Slide (Cue World's Smallest Violin)

One of America's favorite multibillionaires got his profit report out of the way after Friday's close. Citing weak performance from its insurance units,

Warren Buffett's

holding company

Berkshire Hathaway

(BRK.A) - Get Report

reported a year-over-year decline in second-quarter profits. The company had net earnings of $376 a Class A share, down from $947 during the same period last year.

Mexico on Sunday posted a budget surplus of 7.866 billion pesos for the first half of its fiscal year, citing increases in industrial production and tax revenue. The Finance Ministry predicts a deficit of 1.25% of gross domestic product this year.

Elsewhere,

MCI WorldCom

(WCOM)

was trying to finish repairs to its high-speed data networks Sunday. A software glitch has plagued the system for more than a week, stalling the

Chicago Board of Trade's

electronic trading and disrupting service to 12,000 customers that use the company's high-speed networks.

Kellogg

(K) - Get Report

will slash about 550 jobs, or 8.6% of its North American workforce, in an attempt to boost flagging earnings. The company announced Saturday that it will close the southern plant in its hometown of Battle Creek, Mich. Kellogg has had to cope with cheaper store-brand cereals and Americans who prefer bagels and other quick snacks in the morning.

Contract talks at

Boeing

(BA) - Get Report

enter their final phase Monday with the company's largest union threatening a strike if both sides do not agree upon a new contract by Sept. 1. Sticking points between the

International Association of Machinists & Aerospace Workers

and Boeing include pension funds, health care, work schedules and the use of subcontractors.

In the first unofficial test of GOP presidential contenders, Texas Gov.

George W. Bush

won the Iowa Republican straw poll Saturday. Bush collected 31.3% of the votes in the nine-way race. Following him were

Steve Forbes

with 20.8% and

Elizabeth Dole

with 14.4%. (Offer your own thoughts on some of the presidential hopefuls in this weekend's version of

TSC's

weekly poll.)

The rally on Wall Street could continue another week, if Tuesday's

Consumer Price Index

inflation report is anything like last week's news. The counterpart

Producer Price Index

released Friday showed a small increase in wholesale inflation. Similar results for the CPI could quell fears of a continuing series of interest-rate hikes.

Wall Street enters the week awaiting earnings from technology giants

Dell

(DELL) - Get Report

and

Hewlett-Packard

(HWP)

. (See

TSC's

weekly

earnings calendar for more upcoming earnings.)

Utility

American Water Works

(AWK) - Get Report

is riding a tide of consolidation within the U.S. water industry,

Barron's

reports. The company, based in Voorhees, N.J., is eyeing 15 to 20 possible acquisitions, according to President and CEO James Barr. American Water Works also is entering the wastewater treatment business, according to

Barron's

.

Barron's

also reports that corporate America has done such a good job preparing for the Year 2000 computer bug that a New Jersey company helping them out hasn't been doing so well.

Computer Horizons

(CHRZ)

saw its second-quarter revenue from Y2K-related work drop 60%. The company, once valued at $1.6 billion, is now worth less than $400 million.

David Rheingold is a New York-based freelance journalist. At the time of publication, he had no positions in any of the securities mentioned, although holdings can change at any time.