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BUSINESS BRIEFING

Saturday, November 18, 2006

LEGAL

Court to Hear Tobacco Appeal

The U.S. Court of Appeals for the 2nd Circuit agreed to hear an appeal by the major tobacco companies that has the potential to reverse the class certification in a nationwide case involving light cigarettes. Defendants in the case include Altria Group's Philip Morris USA, Reynolds American, Loews's Carolina Group and British American Tobacco, which have been accused of misleading smokers into believing that light cigarettes were safer than regular ones. The case was certified in September as a class action, opening the door to possible damages totaling $200 billion.

ACCOUNTING

Ford Loss Rises in Restatement

Ford Motor said it lost more money in the first half of the year than previously reported because of corrections in the company's accounting of derivatives transactions. Ford's loss for the first quarter of this year was revised to $1.42 billion, from $1.19 billion, while the second-quarter loss was revised to $317 million, from $254 million. The second-biggest U.S. automaker also said it received an informal inquiry from the Securities and Exchange Commission about its accounting and is cooperating with the investigation.

TRADE

Protests at G-20 Meeting

Protesters charged barriers guarding a meeting of some top financial officials and pelted police with stones and garbage bins but were turned back by club-wielding police and mounted officers. About 3,000 people marched from a rallying point to the downtown Australian hotel where the Group of 20 was meeting. Energy security, climate change and the state of the global economy are on the agenda for the two-day meeting of the G-20, which includes the Group of Seven advanced industrial countries and the European Union as well as China, Brazil, India, Russia, South Korea and other major economies.

MERGERS & ACQUISITIONS

Bush Approves Lucent Takeover

President Bush approved the proposed $13.4 billion takeover of Lucent Technologies by French-owned Alcatel, saying the merger of the two telecommunications equipment companies does not present any major national security concerns. The Committee on Foreign Investment in the United States had recommended allowing the deal to go through. The acquisition required the committee's approval because of Lucent's work on sensitive government contracts. The companies said they expect to complete the deal on Nov. 30.

Wheeling-Pitt Vote Backs Esmark

Wheeling-Pittsburgh shareholders ousted its board of directors, rejecting a proposed deal with Brazilian steelmaker CSN and supporting the hostile takeover by Illinois steel distributor Esmark. An independent inspector still must certify the results, Wheeling-Pitt chief executive James G. Bradley said. Esmark plans to make the twice-bankrupt company, based in West Virginia, a more diverse production and distribution company.

Separately, Brazilian steelmaker CSN jumped into the bidding for Britain's Corus Group, offering about $8 billion to trump a $7.7 billion offer from India's Tata Steel.

FINANCE

Fannie, Freddie Rules Tightened

The Treasury Department is requiring Fannie Mae and Freddie Mac to obtain its approval each quarter before selling debt, a senior Treasury official said. The changes, slated to be implemented in January, follow a six-month review by department staff of the implications of $15.8 billion in accounting errors at the two firms. Treasury Secretary Henry M. Paulson Jr. has argued that they could provoke financial market turmoil should they fail to hedge their assets against interest rate shifts and other risks.

AIRLINES

Delta CFO Doesn't Want Merger

Delta Air Lines' stand-alone plan is "far superior" to US Airways' bid to buy the company and create the nation's biggest carrier, Chief Financial Officer Ed Bastian said. Bastian told the Associated Press that he and chief executive Gerald Grinstein are telling creditors that while the company will review US Airways' $8 billion bid, they don't think it's right for Delta.

Flyi to Put Plan to Creditor Vote

A federal judge gave permission to Flyi of Dulles, owner of bankrupt carrier Independence Air, to put its liquidation plan to a creditor vote.

INVESTING

Municipal Bond Probe Widens

American International Group, the world's biggest insurer, and Richmond-based Genworth Financial were subpoenaed as part of a U.S. criminal investigation of whether banks and financial firms conspired to rig bids for local government investment deals. Genworth said one of its business units has received subpoenas from the Securities and Exchange Commission and Department of Justice. The company said they were related to "an investigation of bid-rigging involving guaranteed investment contracts sold to municipalities." The company said it will cooperate fully.

Nymex Share Price Doubles

New York Mercantile Exchange's stock more than doubled in value in its first day of public trading, closing at $132.99 a share after being sold at $59 late Thursday. The stock opened yesterday at $120 on the New York Stock Exchange and rose as high as $152. Nymex raised $293.1 million after underwriting discounts and commissions, but before expenses.

LABOR

Goodyear, Union End Talks Again

Goodyear Tire & Rubber and the United Steelworkers union have broken off talks again after little progress. Negotiations had resumed Tuesday. More than 12,000 union workers in the United States and Canada have been on strike since Oct. 5. Goodyear said that talks broke down over the fate of a Texas factory and retiree benefits and that it didn't know when they would resume.

Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.

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