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Hermes’ minority shareholders move to weaken family’s control

Minority shareholders in Hermès have taken legal steps to weaken the control of the founder's descendants, who jointly own 73.4% of the company, the Financial Times reported. The move could potentially strengthen a takeover move by LVMH, which owns about 20% of Hermès, the article said.

Hermès responded by claiming it was being purposefully destabilized in a way that would favour LVMH, and said the legal challenges were without basis....
[Activist groups] argued in a commercial court that the creation of a new holding structure binding Hermès family members together breached stock market rules by failing to disclose the shareholding of the group.

In a separate action, an activist group is seeking to reverse French authorities' approval of a Hermès family holding structure, "arguing that it should have prompted an obligation for the Hermès family to launch a bid for the shares not controlled by the holding company," the FT article said.

In a statement, Hermès claimed that depriving the family of its voting rights would lead to the [May 30] shareholder meeting being effectively controlled by LVMH.

(Source: Financial Times, May 20, 2011.)

Family of Renault founder seeks to restore his reputation

Seven grandchildren of French automaker Louis Renault are going to court to restore his reputation, the New York Times reported. They are also seeking compensation for what they contend was the illegal confiscation of the car company by the state, the Times article said. Louis Renault, accused of collaborating with the Nazis, died in a French prison in 1944.

Family members, whose efforts at legal redress have been stymied since the de Gaulle provisional government nationalized Renault on Jan. 15, 1945, have seized on a new law that allows individuals to challenge the constitutionality of government actions in the courts. If they win, they could receive well over 100 million euros, or $143 million, from the state, their lawyer said.

The Times article noted that Renault, as well as French automakers Citroën and Peugeot and truck maker Berliet, made vehicles for the Third Reich. "Yet Citroën and Peugeot were not nationalized after the war; their owners were deemed to have been patriots, and Berliet eventually won back its private status," the article said.

Louis Renault and two brothers founded the car company in 1899. At the start of World War II, the company was the largest industrial group in France, the Times article said. Louis Renault owned 96% of the company; family members and top managers owned the remainder, the report noted.

While no one has produced evidence that he was sympathetic to the Third Reich's ideological goals, there is no evidence that he ever aided the resistance or de Gaulle's forces, either.... 
Mr. Renault also created ill will on the left in France, firing 2,000 union members in a 1938 labor dispute.
Several photos of Mr. Renault with Hitler, including one at the Berlin Auto Show before the war broke out, also helped to cement his image in France as a Nazi tool.

The Times article noted that Renault's family previously has tried to overturn the ruling. "In 1954, Mr. Renault's son and wife were told by a judge that he could not examine the validity of the ruling by the de Gaulle government," the article said. "The State Council, the country's highest administrative court, reached the same conclusion in a 1961 appeal."

A law enacted in March 2010 allows French citizens to challenge a law's conformity with the French Constitution, the Times report said.

A granddaughter of Renault, Hélène Renault-Dingli, 

said the family had no designs on the company but was saddened that her grandfather appeared to have been discredited by a "small but active minority" inside the company. Despite the confiscation of Mr. Renault's company, she said, the family has lived comfortably on its inheritance of Mr. Renault's personal fortune.

(Source: New York Times, May 19, 2011.)

Liberty Media bids for Barnes & Noble

Liberty Media Corp. has made an offer to acquire Barnes & Noble Inc. for $1.02 billion, according to news reports. Barnes & Noble put itself up for sale last summer, the Wall Street Journal noted.

Barnes & Noble said the proposal is contingent on the participation of the retailer's 70-year-old chairman, Leonard Riggio, "both in terms of his continuing equity ownership and his continuing role in management."
It's unlikely that a bid by Liberty would have been made without the approval of Mr. Riggio, who is also the retailer's largest investor.

(Source: Wall Street Journal, May 20, 2011.)

N.Y. Times CEO: Globe ‘not for sale’

Janet Robinson, CEO of the New York Times Co., said in an interview that the Boston Globe, owned by the Times Co., "is not for sale," the Globe reported.

Robinson said "that the Globe's finances have improved after a series of cost-cutting and revenue measures, and it is expected to be a strong contributor to the parent company's financial performance," the article said.

Even so, businessman Aaron Kushner is reportedly preparing to offer more than $200 million for the Times Co.'s New England Media Group, the report noted. Kushner has said his advisers include members of the Taylor family, the former owners of the Globe.

Robinson acknowledged that the Times Co., as a publicly traded company, would have to entertain any offer made for the Globe.

(Source: Boston Globe, May 19, 2011.)

J.M. Smucker buys Miami-based family-owned coffee company

J.M. Smucker Co. has paid $360 million for Rowland Coffee Roasters, the South Florida Business Journal reported. Rowland, a family company based in Miami, makes Café Pilon, Café Bustelo, Café Oquendo, Medaglia d'Oro, El Pico and other brands.

Rowland's revenue for 2010 was more than $110 million; the journal cited a news release saying it is the largest U.S. coffee company marketing to Hispanics.

The report says Smucker plans to close Rowland's manufacturing, distribution and office facility in Miami and will consolidate manufacturing into a plant it already operates in New Orleans.

The journal's report noted:

The architect of Rowland's growth was Jose A. Souto, who restarted the family's coffee business in Miami after Fidel Castro came to power in Cuba. The company had roots going back to 1865 in the island nation.
Soto acquired Café Pilon in either 1967 or 1968, according to varying news accounts, from a family named Rowland. The company went on to acquire the Café Bustelo, Café Oquendo, Medaglio d'Oro and El Pico brands.

J.M. Smucker, also a family company, already markets the Folgers and Dunkin' Donuts coffee brands, the article said. It completed the deal with cash on hand and borrowings under its existing credit facility, according to the report. (Source: South Florida Business Journal, May 18, 2011.)

Benihana cancels plans to sell company

Benihana, the Miami-based chain of Japanese restaurants, announced that it is canceling plans to sell the company and instead will change its stock structure, the South Florida Business Journal reported.

Last July, the company said it would consider strategic options, including a possible sale of the company, the journal report noted. In the recent announcement, it cited long-term opportunities for the business as the reason it would not put itself up for sale.

Benihana said it would consolidate its two major classes of stock, pending shareholder approval. All Class A shares would be converted into common shares on a one-for-one basis after May 23, the business journal reported.

As of Jan. 28, Benihana had 9.86 million Class A shares outstanding and 5.61 million shares of common [stock] outstanding. Benihana of Tokyo, a family trust represented by Keiko Ono Aoki, the widow of Benihana founder Rocky Aoki, owns 2.15 million Class A shares.

Combining the two classes of stock will give the shareholders equal rights, the article noted. Holders of Class A stock received one tenth of a vote per share, vs. one vote per share for holders of common stock. Holders of Class A stock were entitled to elect a quarter of the company's directors. (Source: South Florida Business Journal, May 16, 2011.)

Family to move Pabst HQ to L.A.

Pabst Brewing Co. will move its headquarters from Chicago to Los Angeles this summer, the Los Angeles Times reported.

Billionaire investor C. Dean Metropoulos, who lives in Greenwich, Conn., bought the company last year for about $250 billion. He runs it with his two sons, Daren and Evan, who both live in Los Angeles, the article said.

Well-known in food circles, the elder Metropoulos has made a fortune reinvigorating household brands such as Bumble Bee Tuna, Chef Boyardee and Ghirardelli Chocolate. Earlier this decade, he helped build Pinnacle Goods, the parent company of brands such as Vlasic Pickles and Hungry Man frozen dinners. Blackstone Group bought Pinnacle four years ago for $2.2 billion. 
The Metropoulos family is expected to shake up the company and move aggressively to rebuild Pabst brands, said Eric Schmidt, an analyst with research firm Beverage Information Group.

In April, the Metropoulos brothers launched the controversial Blast by Colt 45 label, a fruit-flavored malt beverage that was criticized for its high alcohol content and ads that target young people, the report noted.

But the new products and slick advertising may be necessary, Schmidt said, to rejuvenate the company after a slide in market share. Pabst shipped about 5.8 million barrels of beer in 2009, down sharply from 25 million barrels in 1995, according to the Brewers Assn. trade group.

MillerCoors brews and bottles Pabst brands, the L.A. Times article noted. (Source: Los Angeles Times, May 14, 2011.)

Hartz Mountain makes two real estate deals

Hartz Mountain Industries sold twin office buildings in Jersey City, N.J. for $310 million in April and, shortly thereafter, bought a 52-story luxury apartment building in Chicago for more than $300 million, the Wall Street Journal reported.

The company, run by the Stern family, initially made its fortune in the pet-supply business.

The Journal report noted that the company was seeking to diversify. It began buying apartments last year and plans to build apartments on land it owns in New Jersey, the article said.

The company's portfolio includes roughly 30 million square feet of industrial, office and retail space, as well as such hotels as the Soho Grand Hotel and the Tribeca Grand Hotel in New York. Much of the property is within 10 miles of the company's Secaucus, N.J., headquarters.

Emanuel Stern, the 48-year-old president of Hartz, told the Journal, "We're morphing into a fully diversified real-estate operator and developer by finally getting into residential businesses in a substantial way."

The family sold its pet-supply business -- which was founded by Emanuel Stern's grandfather Max in the 1920s -- about 11 years ago, the article said.

In the late 1960s, Max Stern's son Leonard, now 73, started the company's real-estate division, focusing initially on industrial properties. He also purchased the Village Voice newspaper, which Hartz owned for about 15 years before selling it in 2000.

(Source: Wall Street Journal, May 11, 2011.)

Son learns hard lesson after joining family firm

Last fall, after joining Glickenhaus & Co., his family's New York asset-management company, Jesse Glickenhaus, made a $4 million investment in China Agritech, a Beijing producer of organic fertilizer listed on the Nasdaq. The firm ended up with a $1.8 million paper loss in March, when trading was halted for failure to file financial data, Bloomberg Businessweek reported.

For Glickenhaus, 29, who has a master's degree in global affairs from New York University, it was a quick education in reverse mergers by foreign companies, such as the one executed by China Agritech in 2005. The experience has vexed his grandfather, Seth Glickenhaus, 97, who founded his first company in 1936 and still comes to the office most days. The elder Glickenhaus says he has "certainly never run into a problem like this."

The Bloomberg Businessweek report noted that China Agritech was formed in 2005 when fertilizer maker China Tailong Holdings merged with Basic Empire, a shell company from Nevada that no longer had any business operations. "Companies that list on U.S. markets through reverse mergers aren't subject to the same scrutiny from regulators and investors as those that make initial public offerings," the report noted. "Glckenhaus says he didn't check how China Agritech obtained its U.S. listing and focused instead on the fundamentals of the company." A research firm published a report on its website calling China Agritech "a scam."

Trading in the shares has not resumed, the article said. Jesse's father, James Glickenhaus, 60, told Bloomberg Businessweek that for Jesse, the China Agritech fiasco has been "like sending him to business school."

(Source: Bloomberg Businessweek, May 5, 2011.)

Chicago family firm at center of TV ad controversy

Walter E. Smithe Furniture + Design, a Chicago family business known for its clever television commercials, is at the center of a controversy involving local TV news reporters' and anchors' participation in an ad paying tribute to outgoing Mayor Richard M. Daley.

Time Out Chicago blogger Robert Feder wrote:

... Walter E. Smithe is, by any measure, a major advertiser on Chicago television. The company has spent millions of dollars over the years marketing its brand and cleverly transforming owners/brothers Walter, Tim and Mark Smithe into local media icons. There's nothing wrong with that.
But make no mistake: While Daley may be the subject of these particular spots, Walter E. Smithe is the beneficiary....
Beyond that, the notion of journalists gushing about how much they'll miss Daley is just plain wrong. Expressing respect, I suppose, is one thing. But publicly heaping praise on a politician and professing gratitude to the guy? What part of "unbiased reporting" don't they understand?

Chicago Tribune business blogger Phil Rosenthal noted that some of the news reporters and anchors requested that they be cut from the ads. Many of the tributes, Rosenthal wrote, were recorded at an April 14 party in Daley's honor hosted by Smithe, the Melman family of Lettuce Entertain You restaurants and the Elysian ads. Rosenthal wrote:

Some who appeared in the ad insisted they did not know the clips would be made public, let alone part of a Smithe ad. But that in no way mitigated the cringe-inducing fawning over Daley.

(Sources: Time Out Chicago, May 9, 2011; Chicago Tribune, May 10, 2011.)

Wal-Mart’s Walton family pledges $800 million to museum

The family of Wal-Mart founder Sam Walton has pledged to give $800 million to a new Arkansas art museum founded by Walton's daughter Alice, the Wall Street Journal reported. The gift is "the largest cash donation ever made to a U.S. art museum," the article said.

The Walton Family Foundation is making the gift, according to the report.

The gift reflects the outsized ambitions the retail-chain family has for the Crystal Bridges Museum of American Art, a complex of eight gallery pavilions it has helped build around a pair of ponds in the company's northwestern Arkansas hometown of Bentonville (population 35,301).

The Journal report said the 201,000-square-foot museum will open to the public on Nov. 1.

The guiding force behind the museum -- and the gift made [May 4] -- is Ms. Walton, 61 years old, a well-known player in the art world who conceived the museum six years ago and has spent lavishly to build up its collection from scratch.... 
Don Bacigalupi, the museum's executive director, said a majority of the 400 works to be displayed when the museum opens were purchased by Ms. Walton or her family's foundation. He said $325 million from the family's [$800 million] gift ... was earmarked to buy additional artworks. Another $350 million will go to cover the museum's operating expenses (around $16 million a year), and the rest, around $125 million, will be set aside for future upkeep of the complex.

(Source: Wall Street Journal, May 6, 2011.)

Ned Johnson relinquishes a title at Fidelity

Edward C. "Ned" Johnson III has relinquished one of his titles at Fidelity Investments: chairman of the board that oversees hundreds of the company's mutual funds, the Boston Globe reported. The Globe article noted:

The move will probably spark speculation that the 80-year-old Johnson is finally starting to let go of the company founded by his father in 1946. But Fidelity spokeswoman Anne Crowley said Johnson is not easing up or planning to retire anytime soon, but simply wanted to focus on his main job as chairman and chief executive of Fidelity.

In May 2009, Johnson turned over chairmanship of the board that oversees Fidelity's 190 fixed income and asset allocation funds to his daughter, Abigail, the Globe report noted.

James Curvey, who retired as a Fidelity president in 2002 but still serves on Fidelity's corporate board and on panels that oversee the mutual funds, replaced Ned Johnson as chairman of the board that oversees Fidelity's stock and high-yield mutual bonds in January, the Globe article said. An observer told the Globe that Curvey is "Ned's most trusted senior adviser and friend."

The observer also speculated that Ned Johnson "wants to spend his remaining time at Fidelity focusing on the big vision kinds of decisions and not get caught in the weeds of board meetings." The Globe article said:

Many outsiders have long expected Abigail Johnson, who is 49, to eventually succeed her father as chief executive. But Fidelity, which is privately held, has declined to comment on its succession plans.

(Source: Boston Globe, May 6, 2011.)

Quinn Group chair loses his company

Sean Quinn, the former chairman of Ireland's Quinn Group, is "the biggest loser of the financial crisis and one of the few who stand little to no chance of recovery," according to Forbes magazine.

In the 1970s, Quinn sold sand and gravel from a quarry on his father's farm and grew Quinn Group into an empire that had interests in cement, pubs, glass recycling and insurance, the Forbes article said. In 2008 Quinn was Ireland's richest person with a net worth of $6 billion.

Quinn bought shares of Anglo Irish Bank "with risky financial instruments that allowed him to amass an apparent 25% stake in the bank, using borrowed money from Anglo," Forbes reported. The stock became worthless when Anglo was nationalized in 2009.

According to the report, Quinn and his family owe Anglo $4 billion, and Quinn Group owes $1.85 billion.

The bank got approval in mid-April to take over the businesses and strip Quinn and his children of any role in owning or running them.

(Source: Forbes, May 9, 2011.)

Puig to acquire controlling stake in Gaultier fashion house

The Puig Beauty and Fashion Group, a family firm based in Barcelona, Spain, will acquire a controlling 60% stake in Jean Paul Gaultier, a French fashion house, the New York Times reported.

Gaultier has had a partnership with Hermès since 1999, the report noted. Hermès has agreed to sell its 45% stake in Gaultier to Puig for 16 million euros, or about $24 million. Puig will also assume 14 million euros in debt, the Times article said. French designer Jean Paul Gaultier, who had owned 55% of his eponymous fashion house, will sell a 15% stake to Puig.

Hermès is repositioning itself after the unwelcome intrusion into its capital by LVMH Moët Hennessy Louis Vuitton, the luxury conglomerate run by Bernard Arnaut. LVMH now holds more than 20 percent of the equity in Hermès, though the ownership structure of the family-controlled luxury company gives Hermès effective control of its destiny now.

The Times article noted that Puig was founded as a cosmetics company in 1914 by Antonio Puig. Last year it had a net profit of 130 million euros on revenue of 1.2 billion euros. Marc Puig is the company's chairman and CEO. (Source: New York Times, May 3, 2011.)

Family firm puts D.C.’s Constitution Center on the block

David Nassif Associates has put Constitution Center one of Washington, D.C.'s largest buildings, on the block, the Wall Street Journal reported. The family-owned company hopes to receive up to $900 million for the 1.4 million-square-foot building, according to the report.

The move comes as federal agencies are under a mandate to cut real estate expenses, the article said. A congressional subcommittee is reviewing leasing practices by the General Services Administration, including a newly signed lease for 342,000 square feet in Constitution Center for the Securities and Exchange Commission through 2021.

While the Constitution Center is fully leased, "all the leases are with government agencies, and they begin expiring in 10 years," which could affect the prices investors are willing to pay, the Journal article said.

The building was built in the 1960s by the father and grandfather of David W. Nassif and served as the Department of Transportation headquarters until the agency moved out in 2007. At the height of the market, the owners spent about $300 million to redevelop toe building without a tenant in hand. But the building has remained empty since it was completed at the end of 2009.

(Source: Wall Street Journal, May 4, 2011.)

Ambani brothers to compete in financial services sector

Plans for Mukesh Ambani's entry into India's financial services sector, a joint venture with U.S. hedge fund DE Shaw, are still unclear, a Financial Times report noted. "Rumours abound that the billionaire aims to found the first bank owned by an Indian conglomerate," the article said.

Observers speculated to the FT that Ambani plans to build from scratch a bank that would compete with ICICI Bank, India's largest private-sector lender and retail bank. Most people in India do not have access to formal banking services, the FT report noted. The Reserve Bank of India would have to rule in favor of banks owned by conglomerates, the article said. The central bank had been expected to make a determination by the end of March but has postponed its decision.

If the bank does not rule in favor of Mukesh Ambani, he would launch a private equity business, energy trading a mutual fund and an infrastructure unit, the FT article said.

Mukesh's brother Anil Ambani's company, Reliance Capital, "is a significant operator in the financial services sector and a likely competitor for a banking licence," the FT report noted.

The two brothers could be setting the scene for another battle, given the prevailing view that even if the central bank does give conglomerate ownership the green light, it is unlikely to allow both Ambani brothers to have fully fledged retail banking institutions.

(Source: Financial Times, May 4, 2011.)




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