Why Eric Cantor’s loss is bad for big business

June 14

With House Majority Leader Eric Cantor’s shocking defeat Tuesday night by David Brat, a tea party-backed candidate, things for the U.S. Chamber of Commerce and the Business Roundtable grew worse. ¶ They lost a major defender of their favored policies — from the beneficial tax treatment of private-equity income to immigration reforms favored by the country’s biggest tech companies. ¶ Even worse for their prospects, Cantor lost to a challenger who attacked him for his close ties to big business — going so far as to single out the BRT and the Chamber. ¶ Cantor, a seven-term Republican from Virginia, who had emerged as the heir apparent to House Speaker John A. Boehner (R-Ohio), was considered the linchpin in any major fiscal and tax reform.

Business

Citigroup reportedly has been asked by the Justice Department for more than $10 billion to settle a probe into the lender’s sale of mortgage-backed bonds in the run-up to the 2008 financial crisis. Prosecutors broke off talks with Citigroup on June 9 and are preparing to sue the bank after the lender offered less than $4 billion to resolve the matter.

Facebook infringed on patents held by a Dutch computer programmer who tried to launch a similar site called “Surfbook” more than a decade ago, according to a lawsuit heard by a federal jury. The suit, brought by holding company Rembrandt Social Media, alleges that a Dutch computer whiz, Joannes Van Der Meer, filed for patents in 1998, claiming methods for running a Web-based personal diary. The patents were issued in 2001 and 2002, before Facebook debuted in 2003. Van Der Meer’s Web site, Surfbook, never got off the ground. He died in 2004.

Ford Motor Co. is lowering the fuel economy ratings on six of its models, including a number of hybrids, and will reimburse owners for the difference. It said the ratings will be cut on its 2013 and 2014 model year hybrid and plug-in hybrid vehicles as well as most 2014 Fiesta cars. “We apologize to our customers and will provide goodwill payments to affected owners,” said Alan Mulally, Ford’s chief executive.

Mickey Drexler has amassed more than $350 million from the leveraged buyout of J. Crew Group even as he struggles to revive sales and restore the apparel chain’s fashion cachet. Three years after taking the retailer private with private-equity firms TPG Capital and Leonard Green & Partners LP, J. Crew’s chief executive officer is up against slowing sales as shoppers decamp to more affordable, trendier rivals.

GoPro, a camera maker, said its upcoming initial public offering will be priced between $21 and $24 a share. The IPO could value the company at about $3 billion, analysts said. Its devices, conceived by chief executive Nick Woodman to be used for surfers, are popular with active people who want to share their adventures.

The U.S. Supreme Court denied a request from former Goldman Sachs director Rajat Gupta to delay the June 17 start of his two-year prison term while he pursues an appeal of his insider-trading conviction.

Apple has taken measures to stop the practice that lets stores track shoppers using a code generated by a phone’s wireless Internet connection.

TweetDeck, the popular social media management tool, was temporarily shut down because of a security vulnerability.

Expedia, the travel-booking company, is accepting online payment in bitcoin currency for hotel stays.

A former BP senior engineer found guilty last year of destroying evidence related to the 2010 Gulf of Mexico oil spill was granted a new trial based on his claim of juror misconduct during deliberations. Prosecutors said Kurt Mix deleted from his mobile phone text messages and voice mails related to BP’s effort to estimate the size of what turned out to be largest U.S. offshore oil spill.

Lockheed Martin, the Pentagon’s largest defense contractor, is looking to expand its international sales and boost funding for internal research and development, chief executive Marillyn Hewson said. She has recently traveled to the United Arab Emirates, Israel, Poland, Germany, Singapore and Japan.

Amazon.com will start managing subscription payments for start-ups and other companies. The service allows the company’s more than 240 million active users to use credit card details stored on Amazon to pay for services such as a monthly phone bill or a digital music subscription. Amazon charges a fee on each transaction. Chief executive Jeffrey P. Bezos owns The Washington Post.

Amazon Prime will add a streaming music service as part of its premium membership package.

Target named Brad Maiorino as chief information security officer as it overhauls its security department in the wake of a massive data breach.

Deals

Tyson Foods won the bidding war for Hillshire Brands with an all-cash offer of $63 per share that values the maker of Jimmy Dean sausages at $8.55 billion. The sale would be the biggest deal ever for the global meat business. Tyson, the largest U.S. meat processor, outbid Pilgrim’s Pride, which is majority owned by Brazilian meatpacking giant JBS.

Priceline is acquiring OpenTable in a $2.6 billion deal that would put Priceline into a new business doing for restaurant reservations much what it does for hotel bookings.

Merck will spend about $3.85 billion for Idenix Pharmaceuticals, a small company developing hepatitis C medicines that, together with Merck’s experimental drugs, could produce lucrative combination therapies that quickly cure most patients with the blood-borne virus.

Google is acquiring satellite company Skybox Imaging for $500 million in cash. Its satellites will provide images for Google’s online mapping service. Google and rival Facebook are racing to snap up satellite and drone companies in an expensive effort to expand the reach of their businesses.●

Economy

The World Bank cut its global growth forecast amid weaker outlooks for the U.S., Russia and China, while calling on emerging markets to strengthen their economies before the Federal Reserve raises interest rates. The lender predicts that the world economy will expand 2.8 percent this year, compared with a January projection of 3.2 percent.

Washington

Labor Secretary Thomas E. Perez issued a rule to raise the minimum wage from $7.25 an hour to $10.10 for federal workers and contractors.

The Food and Drug Administration launched open FDA, an Internet-cloud-based project that is meant to aid information sharing about side effects, product quality and other drug issues.

Transitions

American International Group named Peter Hancock as its chief executive. Hancock, head of the insurer’s global property-casualty business, succeeds Robert Benmosche, who will retire in September.

David Marcus, who has led eBay’s fast-growing payments unit PayPal, will resign from the Internet commerce company to run Facebook’s messaging products.

Richard Rockefeller, a son of philanthropist David Rockefeller Sr. and former chairman of the Rockefeller Brothers Fund, died at age 65 when his plane crashed after takeoff from the airport in Westchester County, N.Y. He was a great-grandson of John D. Rockefeller, who amassed a fortune after co-founding Standard Oil Co. in 1870.

The Center for Strategic and International Studies estimates the annual cost of cybercrime and economic espionage to the world economy at more than $45 billion. That’s almost 1 percent of global income.

What’s the world’s most popular beer? Bud Light? Budweiser? A decade ago, those answers would be right on the money. Although the United States still chugs more beer per person, China reigns when it comes to total consumption. Chinese drink about 110 billion pints a year, roughly twice as much as Americans. And they mostly drink Snow, produced by the CR Snow joint venture between SAB Miller and China Resources. More than twice as many pints of Snow were downed last year than Bud Light, which fell to No. 3 after Tsingtao.

— From news services and staff reports

35,000
Museums in the United States

Starbucks has about 11,000 U.S. locations. And McDonald’s has 14,000. But combined, the two don’t come close to the number of U.S. museums, the Institute of Museum and Library Services says. Most are small, mom-and-pop affairs. Of the roughly 25,000 museums with income data in the file, 15,000 reported income of less than $10,000 on their latest IRS returns.

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