Business News: The Colossus of Wall Street

Business News: The Colossus of Wall Street

The Colossus of Wall Street

Posted: 09 Dec 2010 02:00 PM PST

Top Stock Fund Managers Are Bullish

Posted: 09 Dec 2010 02:00 PM PST

Pimco Total Return Among Biggest Losers as Bond Rally Fizzles

Posted: 09 Dec 2010 09:15 PM PST

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By Sree Vidya Bhaktavatsalam and Charles Stein

Dec. 10 (Bloomberg) -- Bill Gross’s Pimco Total Return Fund, the world’s largest mutual fund, was the second-biggest decliner among the largest U.S. bond managers in the past month as clients pulled money for the first time in two years amid a selloff in Treasuries.

The $250 billion Pimco Total Return fell 3 percent in the 30 days through Dec. 8, trailing all but one of the 10 largest bond mutual funds, which lost an average of 2 percent, according to data compiled by Bloomberg. Only the $33 billion Vanguard Inflation-Protected Securities Fund declined more, falling 3.9 percent in the period.

Benchmark 10-year Treasuries had their biggest two-day slump since September 2008 this week after tax cuts, signs of an economic recovery and asset purchases by the Federal Reserve fueled expectations inflation will accelerate. The losses may surprise investors who poured $267 billion into fixed income funds this year through October, ignoring warnings by Gross that the 30-year bond rally may have run its course.

“This is a very violent move we had this week,” said Richard Saperstein, managing director at Treasury Partners in New York, which oversees $10 billion in assets. “I think we’re going to have a very volatile bond cycle here over the next two years.”

Assets in Pimco Total Return declined by $5.75 billion last month as the fund fell 1.4 percent. It has declined another 1.2 percent this month through yesterday, which would translate into a loss of $3 billion before any investor deposits or withdrawals. The assets are reported monthly.

The fund gained 8.1 percent per year in the five years through Dec. 8, better than 98 percent of peers, Bloomberg data show.

Raising Forecast

Pimco Total Return, which became the biggest mutual fund in history last year, had its first net withdrawals in two years in November as investors pulled $1.9 billion, Chicago-based Morningstar Inc. said yesterday.

Pacific Investment Management Co., which manages the fund, yesterday raised its forecast for U.S. economic growth next year as policy makers pump a “massive amount” of stimulus into the economy, Chief Executive Officer Mohamed El-Erian said.

Pimco sees the economy growing 3 percent to 3.5 percent in the fourth quarter of next year from the same period of this year. That compares with its previous estimate for 2 percent to 2.5 percent growth and the 2.2 percent gain forecast for this year by the International Monetary Fund.

“The U.S. is using fiscal and monetary policy to try to attain escape velocity for the economy,” El-Erian said in a telephone interview from his office in Newport Beach, California. “What we don’t know yet is whether that will be enough not just to change the economy’s trajectory for one year but to place it on a medium-term sustainable path.”

‘Lifeline’

Pimco, Vanguard Group Inc., and Franklin Resources Inc. attracted the most money into their bond funds this year through November, Morningstar data show. Pimco pulled $57 billion into its bond funds this year through Nov. 30. Vanguard, based in Valley Forge, Pennsylvania got $33.4 billion, and Franklin, based in San Mateo, California, received $23.7 billion.

“Fixed income has been the lifeline for a lot of these firms,” said Douglas Sipkin, an analyst with Ticonderoga Securities in New York, in a telephone interview.

A drop in deposits into bond funds in the past month doesn’t mean investor’s love affair with fixed-income is over, said Russel Kinnel, director of fund research at Morningstar.

“It takes more than one month to reverse a trend as big as this one has been,” he said in a telephone interview.

‘Tax Goodies’

Bonds have tumbled this week after President Barack Obama agreed on Dec. 6 to a two-year extension of Bush-era tax cuts in exchange for an additional 13 months of unemployment insurance and cutting the payroll tax by $120 billion for a year. The yield on the 10-year note was at 3.20 percent yesterday, after touching 3.33 percent on Dec. 8, the highest since June 4. Bond prices fall as interest rates rise.

Obama’s moves to extend tax cuts and “adding other tax goodies” will increase federal deficit levels, economist Edward Yardeni said by telephone in a Bloomberg Television “Inside Track” interview from London.

The federal deficit totaled $1.3 trillion in the fiscal year that ended Sept. 30, according to the Congressional Budget Office. The White House budget office projected the federal deficit this year will exceed $1.5 trillion, or 10.6 percent of gross domestic product.

‘Ponzi Scheme’

Gross, who reduced holdings of government debt in the Total Return Fund for a fourth month in October, has said that asset purchases by the Fed will probably signify the end of the 30- year rally in bonds.

“Check writing in the trillions is not a bondholder’s friend,” Gross wrote in monthly investment outlook on Pimco’s website on Oct. 27. “It is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. It raises bond prices to create the illusion of high annual returns, but ultimately it reaches a dead end where those prices can no longer go up.”

Pimco Total Return reduced its holdings in government debt to 28 percent in October from 33 percent the previous month, according to the firm’s website.

U.S. bond funds have taken in more money than stock funds every month since the end of 2007, data from the Washington- based Investment Company Institute show. For the first 10 months of this year, bond funds attracted an average of $27 billion per month. Over the past four weeks investors pulled a total of $1.7 billion from bond funds, led by $8 billion in withdrawals from municipal bond funds.

Muni Bond Selloff

Tax-exempt bonds had their worst monthly returns of 2010 in November as rising U.S. Treasury yields and record state and local fixed-rate debt sales sparked withdrawals from mutual funds investing in municipal securities. Taxable bond funds have continued to draw money, ICI data show.

“I think it is premature to say we have seen the peak in bond sales,” said Geoff Bobroff, a consultant based in East Greenwich, Rhode Island, in a telephone interview. The yield on the 10-year Treasury would probably have to reach 4 percent, he said, before investors are ready to change their behavior.

The yield on the 10-year will average 3.53 percent in 2011, according to economists surveyed by Bloomberg.

--With assistance from Margaret Collins in New York and Christopher Condon in Boston. Editors: Christian Baumgaertel, Josh Friedman.

To contact the reporters on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net; Charles Stein in Boston at cstein4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

B-School Alumni Giving Is Up—Sort Of

Posted: 09 Dec 2010 10:15 AM PST

Interactive Table: MBA Alumni Giving Slides

Posted: 10 Dec 2010 05:47 AM PST

How the U.S. Unfroze a Trade Deal with South Korea

Posted: 09 Dec 2010 02:00 PM PST

Home Buying for the Long Haul Pays Off

Posted: 09 Dec 2010 12:30 PM PST

Biggest Metros With the Best Long-Term Real Estate

Posted: 07 Dec 2010 01:26 PM PST

Honeymoon Murder Suspect Granted Bail by London Court

Posted: 10 Dec 2010 05:39 AM PST

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By James Lumley

(Adds details from the hearing from sixth paragraph.)

Dec. 10 (Bloomberg) -- Shrien Dewani, whose wife was murdered last month while the British couple was on a honeymoon in South Africa, was granted bail by a U.K. court.

The High Court in London refused a request by lawyers for the government of South Africa to keep Dewani in custody while they seek his extradition.

The 30 year old is accused by South African police of conspiring “with others to murder Anni Dewani” in Cape Town. Anni, 28, was killed on Nov. 13 after the taxi she and her husband were traveling in was carjacked in the township of Gugulethu, near Cape Town.

Taxi driver Zola Tongo was hired by Shrien to arrange the murder, the Western Cape Director of Public Prosecutions Rodney de Kock told the Cape High Court Dec. 7, the South African Press Association reported.

Shrien Dewani denies all wrongdoing. His publicist Max Clifford said this week that the allegations were “ludicrous” and “totally untrue.”

Tongo was sentenced on Dec. 7 to 18 years in jail for his role in the murder. He said in a plea bargain that Shrien Dewani offered him 15,000 rand ($2,160) to orchestrate a hit on his wife, according to Ben Watson, a lawyer for the South African government at today’s hearing in London.

Security Footage

Watson said that police have security footage filmed at Dewani’s hotel of him “surreptitiously” handing Tongo a white plastic package three days after the murder. Watson said the package contained a 1,000 rand-payment for Tongo’s part in the murder.

Clare Montgomery, Dewani’s lawyer, said that he gave Tongo the money to pay for taxi rides from the airport and on the day of the murder. She said it wasn’t handed over surreptitiously as it was caught on camera in a public place.

It was “improbable” that even an experienced criminal would come to a foreign country and almost immediately recruit a stranger to commit a murder, Montgomery said.

The wound that killed Anni Dewani “does not appear to have been an execution-style wound,” Montgomery said. The bullet went through her hand, up her arm and into her neck, where it severed vital arteries, she said.

--With assistance from Garth Theunissen in Johannesburg. Editors: Christopher Scinta, Anthony Aarons

To contact the reporter on this story: James Lumley in London at jlumley1@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

Beckman Said to Explore Sale After Firms’ Approach

Posted: 10 Dec 2010 05:38 AM PST

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By Jeffrey McCracken, Cristina Alesci and David Olmos

(Updates with analyst comment in the fifth paragraph.)

Dec. 10 (Bloomberg) -- Beckman Coulter Inc., a maker of laboratory equipment, is exploring a sale after it was approached by buyout firms interested in taking the company private, said people with direct knowledge of the matter.

Beckman, with a market value of about $4 billion before today, hired Goldman Sachs Group Inc. to study whether to go private or search for a strategic buyer, said the people, who asked not to be named because the talks are private. Blackstone Group LP and Apollo Global Management LLC are among the firms that approached Beckman, said two of the people. The process is in early stages, and any deal for the Brea, California-based company would likely be months away, the people said.

General Electric Co., Danaher Corp. and 3M Co. are among industrial companies that have recently told financial advisers they are interested in acquiring makers of lab equipment or scientific instruments used in labs, said one of the people.

Beckman said in September that Chief Executive Officer Scott Garrett had resigned and appointed J. Robert Hurley as interim president and CEO while it searches for a successor. Beckman would likely seek at least $90 a share in a buyout, and might command as much as $160 a share, said Dan Leonard, an analyst with Leerink Swann & Co. in New York.

‘Lab Testing’

“Beckman Coulter should attract interest from both strategic and financial buyers,” Leonard said in a research report today. “Beckman’s diagnostic lab testing platforms stick well to customers and drive significant consumable revenues.”

Beckman jumped 26 percent to $71.65 as of 8:15 a.m. in early trading after closing at $57.09 on the New York Stock Exchange yesterday. The stock, down 13 percent this year before today, rebounded from a low of $44.58 on Sept. 7, the day Garrett’s resignation was disclosed.

Spokeswomen for Beckman and Goldman declined to comment, as did spokeswomen for Fairfield, Connecticut-based GE and 3M, based in St. Paul, Minnesota. A spokesman for Washington-based Danaher didn’t respond to messages.

Charles Zehren, a spokesman for Apollo, and Peter Rose of Blackstone also declined comment. There have been 104 acquisitions in the medical diagnostic equipment business in the past five years with an average disclosed price of $466 million and an average premium of 51 percent, according to data compiled by Bloomberg.

Deal Premiums

Buyers paid an average of 18.1 times earnings before interest, taxes, depreciation and amortization in the diagnostic-equipment industry deals. Beckman had ebitda of $205.9 million in the third quarter, according to data compiled by Bloomberg.

GE, which has been building its health-care business, in October agreed to buy cancer diagnostics company Clarient Inc. in a deal valued at about $580 million. Danaher said in September it would acquire Keithley Instruments Inc., a maker of equipment for engineers at electronics manufacturers and academic institutions, for about $300 million.

In July, Beckman received a warning letter from U.S. regulators saying the company marketed a test for heart problems without proper clearance.

The warning letter from the Food and Drug Administration involved a test called AccuTnI, which measures a protein called tropinin that is a marker for heart problems. The FDA letter said the company had made “significant modifications” to the product without getting the required regulatory clearance.

‘Quality Issues’

“Beckman’s product quality issues are clearly hindering new sales and customer retention,” Bruce Cranna, an analyst at Jefferies & Co. in Boston, said in an Oct. 27 note to investors.

While Beckman remains a “substantial player” in the laboratory business, “we have concerns about the macro backdrop and management’s ability to blunt the impact of troponin missteps and prevent the fire from spreading to allied clinical segments,” Cranna said in the note.

Beckman’s biggest business is making laboratory equipment used in scientific research and in hospitals. The company had revenue of $3.3 billion in 2009. The company had $285 million in cash and cash equivalents as of Sept. 10.

Beckman has more than 275,000 laboratory systems installed in about 160 countries, Paul Glyer, a company senior vice president, said at a Piper Jaffray Cos. health-care conference on Dec. 1.

--With assistance from Rachel Layne in Boston and Thomas Black in Monterrey, Mexico. Editors: Lisa Rapaport, Angela Zimm

To contact the reporters on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Cristina Alesci in New York at calesci2@bloomberg.net; David Olmos in San Francisco at dolmos@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net

Trade Deficit in U.S. Drops as Exports Climb to Two-Year High

Posted: 10 Dec 2010 05:35 AM PST

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By Shobhana Chandra

Dec. 10 (Bloomberg) -- The trade deficit in the U.S. shrank more than forecast in October as a weaker dollar and growing economies overseas propelled exports to a two-year high.

The gap narrowed 13 percent to $38.7 billion, less than the lowest estimate of 78 economists surveyed by Bloomberg News and the smallest since January, Commerce Department figures showed today in Washington. Exports were the strongest since August 2008 as Mexico and China bought record amounts of U.S. products.

3M Co. and General Dynamics Corp. are among companies that will probably benefit from growing demand in markets like China, Brazil and South Korea, which this year are among the top-10 buyers of American-made goods. Imports stagnated in October as U.S. demand for crude oil plunged, an outcome that may prove to be temporary as the world’s largest economy picks up.

“Exports are likely to keep rising and imports will increase as the economy is turning around,” Zach Pandl, an economist at Nomura Securities International Inc. in New York, said before the report. “Exports are pulling up the manufacturing sector, which is more exposed to overseas growth than other parts of the economy.”

The trade gap was projected to be little-changed at $43.8 billion from an initially reported $44 billion in September, according to the median forecast of economists surveyed. Estimates ranged from deficits of $39.5 billion to $46.6 billion. The Commerce Department revised the September shortfall up to $44.6 billion.

Boost to Growth

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit fell to $45.2 billion, the lowest since April, from $50.3 billion. The figure was smaller than the third-quarter average, indicating trade will contribute to growth this quarter.

Exports increased 3.2 percent to $158.7 billion, boosted by sales of foods, automobiles, engines and industrial supplies like fuel oil and natural gas.

Since reaching a one-year high on June 7, the dollar has fallen 6.6 percent against a trade-weighted basket of currencies. The drop makes American goods cheaper to buyers abroad and will keep spurring manufacturing, which expanded for a 16th consecutive month in November.

Growing overseas economies are also contributing to demand for U.S. goods. China, set to become the world’s second-largest economy this year, had a 9.6 percent gain in third-quarter gross domestic product from a year ago. Singapore, in the running to be the world’s fastest-growing economy this year, expanded 10.6 percent while Brazil, South America’s biggest economy, grew 6.7 percent.

Manufacturers Benefit

General Dynamics, based in Falls Church, Virginia, is seeing “strong international order activity and interest, particularly in the emerging markets,” Chief Executive Officer Jay Johnson said in a Dec. 2 industry conference presentation.

St. Paul, Minnesota-based 3M, the maker of Scotch tape and films to brighten television screens, is expanding in emerging markets, which make up one-third of its sales and may climb to as much as 45 percent by 2015, according to company estimates.

“These opportunities continue to grow,” George W. Buckley, chief executive officer, said in a Dec. 7 conference call. Overseas sales will benefit from “India and Latin America, gathering momentum in sort of China-like style.”

President Barack Obama is seeking to double American exports over the next five years. The Commerce Department has asked industry groups to review its proposal to relax export controls for technology items with military uses, covering sales to 37 allies including Germany, Japan and Canada.

Less Crude Oil

Imports fell 0.5 percent to $197.4 billion from $198.4 billion in the prior month. The value of crude oil purchases fell to $18.9 billion from $21 billion in September as the lowest volume since February swamped an increase in the fuel’s cost.

The trade gap with China shrank to $25.5 billion from $27.8 billion.

China’s trade surplus with the U.S. remains a thorny issue as some members of Congress accuse the Asian nation of keeping its currency too low in order to boost sales overseas. The renminbi’s advance of 0.1 percent last month and 0.3 percent in October fell short of the 1.7 percent climb in September that Treasury Secretary Timothy F. Geithner signaled was appropriate.

China today reported a monthly trade surplus of $22.9 trillion for November, exceeding the median forecast in a Bloomberg News survey. The excess of exports to America over imports was about $16.7 billion, equivalent to about three quarters of the total.

Improving U.S. demand and the need to restock inventories led to gains in imports that swamped the rise in exports over the past two quarters. A widening deficit subtracted 1.76 percentage points from GDP in the third quarter as the economy expanded at a 2.5 percent annual rate.

Imports will probably grow at a slower pace as inventories are now better aligned with sales, indicating the deficit will stabilize and trade may no longer be an obstacle to GDP.

--Editor: Carlos Torres

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Companies Tap Loans for M&As, Payouts as Economy Gets Fed Boost

Posted: 10 Dec 2010 05:18 AM PST

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By Emre Peker and Krista Giovacco

Dec. 10 (Bloomberg) -- Leveraged loans for acquisitions and dividends are outpacing the amount raised to repay debt as companies take advantage of a rally to triple issuance.

The S&P/LSTA US Leveraged Loan 100 Index gained 8.37 percent this year, extending the record returns of 52.2 percent in 2009. High-risk, high-yield loan sales rose to $229.3 billion from $76.6 billion in all of last year, with companies using 53 percent for M&As and payouts, up from 25 percent last year, according to Standard & Poor’s Leveraged Commentary and Data.

Walter Energy Inc., the steelmaking coal producer that’s raising $2.73 billion in loans for a takeover, and Novelis Inc., which is planning a $1.7 billion dividend, are among companies shifting their focus to shareholder distributions and growth from refinancings as economists and investors say the U.S. economy will expand more than previous forecasts. The Federal Reserve’s additional monetary easing and President Barack Obama’s tax-cut extensions come as default rates drop and borrowers chip away at a $324.5 billion maturity wall.

“Corporate balance sheets are healing and we’re starting to see M&A and buybacks pick up again,” said Mark Okada, co- founder and chief investment officer of Highland Capital Management LP with $18 billion in loan investments. “There really was a resurgence in activity and recovery across U.S. capital markets, and certainly there is a lot more to be worried about, but I don’t hear a whole lot of people talking about a double-dip anymore.”

Tax-Cut Extensions

Obama’s agreement with Republican lawmakers to prolong income-tax cuts enacted in 2001 and 2003 by the George W. Bush administration may help raise gross domestic product by as much as half a percentage point to 3.1 percent, according to Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. Tom Porcelli, a senior economist at Royal Bank of Canada, is raising his growth forecast for 2011 by one point, also to 3.1 percent.

The economic boost may also reduce pressure on the central bank to expand its $600 billion bond-purchase program. Fed Chairman Ben S. Bernanke said in an interview broadcast Dec. 5 on CBS Corp.’s “60 Minutes” that the economy is barely expanding and buying more bonds than planned is “certainly possible.”

Pacific Investment Management Co.’s Chief Executive Officer Mohamed El-Erian said the company is raising its U.S. growth forecast on “massive amount” of stimulus by policy makers. Pimco, which manages the world’s biggest bond fund, sees the economy expanding 3 percent to 3.5 percent in the last quarter of 2011, up from a previous estimate of 2 percent to 2.5 percent.

‘Manageable’ Maturity Wall

Since the beginning of 2009, companies tapping lender appetite refinanced 37 percent of leveraged loans maturing through 2014, when the maturity wall peaks at $204.1 billion, according to Bank of America Merrill Lynch. Speculative-grade issuers owe $60.7 billion in loans in 2015 and $80.9 billion the following year.

“The refinancing cliff will be manageable for the next few years,” said Mark Gold, chief investment officer of Hillmark Capital LLC, which has $1 billion of assets under management. “In 2015 we may have to start dealing with it again.”

Leveraged loan default rates dropped to 3.3 percent in November from 3.6 percent in October and 12 percent last year, Moody’s Investors Service said this week in a report. Speculative-grade default rate in the U.S. will drop to 3.1 percent in December from 3.5 percent last month, and to 2.1 percent in a year.

High-yield, high-risk debt is rated below Baa3 by Moody’s and BBB- by Standard & Poor’s.

Walter Energy Acquisition

The share of refinancing transactions in the loan market dropped to 38 percent this year from 49 percent in 2009 as acquisitions picked up, dividend deals jumped to $37 billion from $880 million and leveraged buyouts increased by 2.5 times to $176.7 billion, according to S&P LCD and data compiled by Bloomberg.

Walter Energy agreed to buy Canada’s Western Coal Corp. for C$3.3 billion ($3.3 billion) to add reserves and boost production of the commodity as prices rise.

Morgan Stanley, Credit Agricole SA and Bank of Nova Scotia agreed to arrange a $600 million term loan A and $375 million revolving credit line, both due in five years, as well as a $1.75 billion term loan B maturing in seven years, Tampa, Florida-based Walter Energy said in a Dec. 2 regulatory filing.

In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t. A term loan A is sold primarily to banks, while so-called B loans are mainly bought by non-bank lenders such as collateralized loan obligations, mutual funds and hedge funds.

Novelis Loan Pricing

Novelis, the U.S. aluminum unit of India’s Hindalco Industries Ltd., reduced pricing yesterday on a $1.5 billion term loan it’s seeking to refinance debt and fund a dividend.

Moody’s cut the company’s credit rating by one step to B1, citing the $4 billion restructuring of Atlanta-based Novelis’s balance sheet and the increase in leverage to 4 times from 2.9 times. Leverage is the measure of debt to earnings before interest, taxes, depreciation and amortization.

KKR & Co., Vestar Capital Partners and Centerview Partners, which agreed to buy Del Monte Foods Co. for $5.3 billion, may raise as much as $4.6 billion of debt to help pay for the LBO.

JPMorgan, Barclays Plc, Morgan Stanley, Bank of America Corp. and the lending arm of New York-based KKR will provide the financing, San Francisco-based Del Monte said in a Nov. 30 regulatory filing.

The lenders committed to arrange senior secured loans consisting of $2.5 billion term debt and a $500 million revolving credit line, as well as $1.6 billion in senior unsecured increasing rate bridge financing, the filing shows.

“Next year we’ll see more M&A deals and more LBOs,” said George Goudelias, who manages $4.3 billion of high-yield loans and bonds at Seix Investment Advisors LLC. “Refinancings probably won’t be as active.”

--With assistance from Joshua Zumbrun, Ian Katz and Rich Miller in Washington. Editors: Faris Khan, Chapin Wright

To contact the reporters on this story: Emre Peker in New York at epeker2@bloomberg.net; Krista Giovacco in New York at kgiovacco1@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.

Charles’s Armed Police Showed ‘Restraint’ Under Attack

Posted: 10 Dec 2010 05:17 AM PST

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By Thomas Penny

(Updates with report Camilla was hit in fifth paragraph.)

Dec. 10 (Bloomberg) -- Armed officers protecting Prince Charles showed “enormous restraint” when his car was attacked by “thugs” in central London during student protests last night, Metropolitan Police Commissioner Paul Stephenson said.

Responding to questions raised by Prime Minister David Cameron and others, Stephenson said the route taken by the Rolls-Royce limousine carrying the heir to the throne and his wife Camilla to the theater had been checked minutes before and had been clear. An inquiry will be held into the incident, which followed a day of clashes between police and protesters demonstrating against increased student tuition fees, he said.

“The officers who were protecting their royal highnesses showed very real restraint. Some of those officers were armed,” Stephenson told BBC Radio 4’s “Today” program. “It was a hugely shocking incident and there will be a full criminal investigation into it.”

Charles and his wife, known as the Duchess of Cornwall, were unharmed and continued with their West End theater visit. The limousine, bearing the royal coat of arms, had paint thrown at it. A window was cracked, and photographs showed the royal couple in the car looking shocked.

London’s Evening Standard newspaper reported today, citing police sources, that Camilla was hit by a protester through an open window of the car. A protester managed to push a stick through the window and jab her in the ribs, the Standard said. The rear windows were opened by mistake, according to the newspaper.

Not Hurt

A spokesman for Prince Charles’s household said the duchess was not hurt in last night’s incident and declined to discuss any details.

The attack took place after thousands of students staged demonstrations around Parliament against a vote to let colleges triple tuition fees. Cameron’s Conservative-led government won by 323 to 302 in the 650-member House of Commons, heading off a revolt by some members of the Liberal Democrats, the junior coalition partners, who had pledged to oppose any rise.

“We must learn the lessons from a very regrettable lapse of security,” Cameron told reporters in London today. “But in the end let’s remember that this was not the fault of the police, this was the fault of the people who tried to smash up that car.”

‘Arrested and Punished’

The prime minister said that “responsibility for smashing property, for violence, lies with the people that perpetrate that violence and I want to see them arrested and punished in the correct way.”

Cameron retains his confidence in Stephenson and Home Secretary Theresa May after yesterday’s incidents, the prime minister’s spokesman, Steve Field, told reporters in London later. Neither the police chief nor May have offered to resign.

“It wouldn’t be appropriate,” Field said.

In 1982, Home Secretary Willie Whitelaw offered to resign after an intruder broke into Buckingham Palace and sat on Queen Elizabeth II’s bed while she was in it. Prime Minister Margaret Thatcher persuaded him not to step down.

Field said there was no need for an independent inquiry and the police should conduct the review themselves.

“The police are looking into what happened and they will learn the lessons,” he said. “We have full confidence in the police and the job they are doing. Clearly there was a specific issue around what happened to the Prince of Wales and the Duchess of Cornwall and we’re not going to prejudge that investigation.”

‘First Time for Everything’

The Press Association news agency cited Camilla last night as saying she was “fine” following the attack. She joked about the incident as she left the theater after the annual Royal Variety Performance, saying, “first time for everything,” PA reported. The couple were driven away in a police van, the agency said.

London Mayor Boris Johnson praised the “great fortitude of spirit” of the couple for carrying on with their engagement and blamed the violence on a large group of “agitators determined to cause the maximum possible trouble and provocation.” He questioned the choice of route the car took, while defending the police, who he said were trying to strike a balance between freedom to protest and maintaining order.

“It is very regrettable that in the heart of London the heir to the throne can be surrounded by agitators and his wife can be put in a position where she’s plainly alarmed,” Johnson told BBC radio. “There are questions to be asked about why exactly they were on that route.”

‘Operational Decision’

Tory lawmaker Matthew Offord said he was “concerned about the operational decision to escort the Prince of Wales near to the known scene of a demonstration and will be taking the matter up with the home secretary.”

Thirty-four people were arrested for violent disorder, criminal damage, arson, burglary, assault on police and being drunk and disorderly in the capital during yesterday’s protests, the police said. At one point, protesters attempted to break into the building housing the Treasury near Parliament.

At least 43 protesters were injured, while 12 police officers were hurt, six of them requiring hospital treatment, the police said.

Windows were boarded up in the Treasury building today and staff worked to clean up Whitehall and Parliament Square, removing graffiti with high-pressure hoses. Police forensics officers in hooded coveralls scoured the grass in the middle of the square looking for evidence.

Joana Pinto, a spokeswoman for the National Campaign Against Fees and Cuts, the umbrella group that organized the demonstration, said the police had been “incredibly violent” in their handling of the protest. The group tried to hold a peaceful rally and had no involvement in the attacks on people and property, she said.

“We would like to disassociate ourselves from those sorts of actions,” Pinto said in a telephone interview. “It’s like a football match: How can cheerleaders be liable for drunk and disorderly people going and smashing windows afterwards?”

--With assistance from Kitty Donaldson and Robert Hutton in London. Editors: Eddie Buckle, Andrew Atkinson.

To contact the reporter on this story: Thomas Penny in London at tpenny@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net.

Iran Denies Condemned Woman Freed, Says Photos Were for TV Show

Posted: 10 Dec 2010 05:11 AM PST

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By Caroline Alexander

Dec. 10 (Bloomberg) -- Iran today denied it freed a woman sentenced to death by stoning after photos were released yesterday that showed her at home with her son during the making of a program about her case by state-run Press TV.

“Some Western media outlets claimed Sakineh Mohammadi- Ashtiani had been released from prison,” Press TV said today on its English-language website. The reports are part of a “vast publicity campaign by Western media,” it said.

A team of Press TV journalists arranged with judicial authorities to accompany Mohammadi-Ashtiani to her house “to produce a visual recount of the crime at the murder scene,” where her husband was killed, the broadcaster said. Her son and lawyer were interviewed as part of the program, which is scheduled to air in Iran starting this evening.

Mohammadi-Ashtiani was convicted in 2006 of adultery and her husband’s murder. The sentence of stoning has drawn international outrage. Iran has condemned the media attention and the “politicization” of her case.

Mohammadi-Ashtiani’s son and lawyer were arrested in a raid in the northwestern city of Tabriz on Oct. 10 along with two Germans who are accused of trying to interview them to create "negative propaganda."

--Editors: Heather Langan, Andrew Atkinson

To contact the reporter on this story: Caroline Alexander in London at calexander1@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net.

Community Health’s Bid for Tenet May Prompt Rivals

Posted: 10 Dec 2010 05:10 AM PST

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By David Olmos

(Adds shares in the fifth and seventh paragraphs.)

Dec. 10 (Bloomberg) -- Community Health Systems Inc.’s unsolicited $7.3 billion offer for Tenet Healthcare Corp. may prompt rival suitors as it seeks to become the largest U.S. hospital operator.

Community Health’s bid of $6 a share, including $5 a share in cash and $1 per share in its common stock, was rejected as “not remotely fair value” by Dallas-based Tenet. The equity offer of $3.3 billion would represent about a 40 percent premium over Tenet’s $4.29 closing price yesterday. Community Health also would take on about $4 billion of net debt, the Franklin, Tennessee-based company said in a statement.

Community Health has been an aggressive buyer, making eight acquisitions in the past two years. Mergers have increased in the industry as hospital patient admissions slowed in the struggling economy and U.S. regulations have prompted operators to seek partnerships, said Sheryl Skolnick, an analyst at CRT Capital Group in Stamford, Connecticut.

“Six dollars a share may get a deal done due to the stock component in the offer, but it remains to be seen if Community is the only bidder because Tenet is now in play,” Skolnick said yesterday in a telephone interview.

Shares rose to $6.57, or 57 cents higher than Community Health’s bid, at 7:59 a.m., in trading before the open of the New York Stock Exchange. That indicates investors think there may be another bid. The hospital operator’s shares have declined 20 percent this year.

There have been 315 acquisitions in the U.S. hospital industry in the past five years with an average purchase price of $589 million and an average premium of 8 percent, according to data compiled by Bloomberg. Community Health, with 15 acquisitions, has made the most purchases of any company during that time.

Shares Fall

Community Health fell 6.2 percent in early trading after closing yesterday at $31.64 in New York Stock Exchange composite trading. The company’s shares have dropped 11 percent this year.

Community Health, the largest publicly traded U.S. hospital company, owns, operates or leases 126 hospitals in 29 states. It made the purchase offer to Tenet’s directors on Nov. 12, the company said in its statement. After Tenet rejected the bid on Dec. 6, Community Health Chief Executive Officer Wayne Smith sent a follow-up letter to Trevor Fetter, Tenet’s chief executive, and the company’s board.

“We were surprised and disappointed by your flat rejection of the transaction,” Smith wrote in the letter. “We are committed to completing this transaction and will consider all alternatives necessary to do so.”

Largest Company

The combined companies would have revenue of $21.9 billion, according to Community Health. It would become the nation’s largest hospital operator, surpassing closely held HCA, which operates 163 hospitals and 105 outpatient surgery centers in the U.S. and England. HCA, based in Nashville, Tennessee, was purchased four years ago in a $33 billion leveraged buyout led by KKR & Co. and Bain Capital LLC.

Tenet said the offer undervalued its business and it had little faith that Community Health could manage the deal.

“Community Health’s opportunistic proposal would transfer the growth potential inherent in Tenet to Community Health without adequately compensating Tenet shareholders,” Tenet said yesterday in a statement. Tenet’s board “has serious concerns about Community Health’s ability to integrate and operate a business like Tenet.”

The proposal would create a company with more than $15 billion in debt, Tenet said in the statement. Community Health had $567 million in cash and $10.3 billion in debt as of the end of the third-quarter, according to Bloomberg data.

More Debt

“Community Health’s leverage following your proposed transaction would be higher than all but a handful of companies in the Standard & Poor’s 500,” Tenet said in its statement.

Tenet spokesman Rick Black didn’t immediately return telephone calls seeking comment.

Tenet, which operates 50 hospitals in 12 states, had a market capitalization of $2.1 billion as of the close of trading. Community Health had a market value of $2.9 billion.

Tenet had strengthened its balance sheet the past few years, upgrading its hospitals and improving the quality of its patient care while trimming costs, Skolnick said in Nov. 30 interview. The share price hasn’t reflected those improvements, she said.

“A lot of the heavy lifting has been done,” Skolnick said.

Community Health’s biggest acquisition of the past five years was its $6.37 billion purchase of Triad Healthcare Corp. 2007. The company has paid an average premium of 9.8 percent on the 15 acquisitions during the period.

Credit Suisse is Community Health’s financial adviser and Kirkland & Ellis LLP is providing legal advice. Barclays Capital is financial adviser to Tenet.

(Click {EVTS <GO>} to listen to Community Health’s conference call scheduled today at 10:30 a.m. New York time.)

--Editors: Andrew Pollack, Donna Alvarado

To contact the reporter on this story: David Olmos in San Francisco at dolmos@bloomberg.net

To contact the editor responsible for this story: Reg Gale at Rgale5@bloomberg.net

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