Business news in brief
In the Region
Koninklijke Philips expected to sell MedQuist
Mount Laurel medical-transcription service MedQuist Inc. said that Koninklijke Philips Electronics NV, MedQuist's majority shareholder, had reached an agreement to sell its approximately 69.5 percent ownership interest to CBaySystems Holdings Ltd. for about $285 million, or $11 a share. CBaySystems Holdings, a company with a portfolio of investments in medical transcription, health-care technology, and health-care financial services, has headquarters in Annapolis, Md., and Atlanta. The sale of Philips' stake in MedQuist is expected to close during the third quarter of 2008.
- Roslyn Rudolph
Central European Distribution buys into alcohol firm
Central European Distribution Corp., Bala Cynwyd, said it had signed a binding commitment for a strategic investment in the Russian Alcohol Group, the leading vodka producer in Russia. CEDC's planned equity investment of $156.5 million in Russian Alcohol will provide the company with an initial stake of about 40 percent in the Russian Alcohol business, the company said in a news release. The company distributes about 700 brands of alcoholic beverages, as well as nonalcoholic beverages. This transaction is in connection with London investment firm Lion Capital's acquisition of a controlling stake in Russian Alcohol. CEDC also will buy $103.5 million worth of exchangeable notes, which bear interest from 8.3 percent to 10.5 percent and can be fully exchanged into additional shares of Russian Alcohol starting in 2010. CEDC shares closed up $1.55 at $67.95.
- Roslyn Rudolph
Willow Financial discloses $40 million write-off
Willow Financial Bancorp Inc. said it wrote off $40 million of the $93.7 million in goodwill it recorded when it bought Chester Valley Bancorp Inc. for $145.3 million in 2005. The disclosure came in the Wayne bank's delayed quarterly financial report with the Securities and Exchange Commission for the three months ended Dec. 31. Harleysville National Corp. said Wednesday that it would buy Willow Financial for $162 million in an all-stock deal. The purchase of Chester Valley brought with it accounting woes that led to a separate $8.3 million write-down this month. Goodwill comes from the premium paid for a company above the value of its assets.
- Harold Brubaker
Teva gets approval for generic premenstrual drug
Teva Pharmaceutical Industries Ltd., a maker of generic drugs, said it had received final Food and Drug Administration approval to market fluoxetine for treatment of a premenstrual disorder. The drug is the generic equivalent of Eli Lilly & Co.'s Sarafem Pulvules, used to treat premenstrual dysphoric disorder, a condition affecting 3 percent to 8 percent of women of reproductive age in the United States. The disorder, a severe form of premenstrual syndrome, is characterized by intense emotional symptoms, including irritability and depressed mood. The brand-name Lilly product had annual sales of about $39 million in the United States for the 12 months that ended March 31, the company said, citing data from market research company IMS Health Inc. Teva, which is based in Israel, has North American headquarters in North Wales.
- Roslyn Rudolph
Peco rate increase delayed until December
The Pennsylvania Public Utility Commission has put off Peco's requested 11.2 percent increase in natural gas rates until Dec. 30. The Philadelphia utility had sought an effective date for the rate increase of May 30, but the commission voted to review the request to determine whether the increase was necessary. A PUC administrative law judge will make a recommendation to the commission. Peco filed the rate proposal March 31. The change would boost the monthly bill for a typical customer, using eight million cubic feet of natural gas a month, by $12.79, to $130.82.
- Paul Schweizer
Bad news from Bon-Ton
The Bon-Ton Stores Inc., the York, Pa., department store chain, posted a wider first-quarter loss and said full-year earnings would trail its forecast as cash-strapped consumers put a dent in sales. The net loss of $34.1 million, or $2.03 a share, compared with a loss of $29.3 million, or $1.78 a share, a year earlier, Bon-Ton said in a statement. Revenue fell 5.1 percent to $700.2 million, while comparable-store sales dropped 4.6 percent. Bon-Ton predicted full-year per-share profit of breakeven to as much as 30 cents, and earnings before interest, taxes, depreciation and amortization of $224 million to $232 million. It had forecast 20 to 45 cents and EBITDA of $230 million to $237 million. Comparable-store sales will decrease 2.5 percent to 3.5 percent for the year, Bon-Ton said. Bon-Ton shares sank 29 cents, or 3.90 percent, to $7.15. The shares have lost 25 percent this year.
- Bloomberg News
Yahoo delays shareholder meeting again
Yahoo Inc. is postponing its shareholder meeting for a second time, now that billionaire investor Carl Icahn has nominated alternative candidates to Yahoo's board of directors. Yahoo, based in Sunnyvale, Calif., put off the meeting once to buy time to consider an unsolicited buyout offer from Microsoft Corp. Yahoo disclosed in a Securities and Exchange Commission filing yesterday that its July 3 meeting would be delayed and that it expects to set a date that is closer to the end of July. In a second filing, Yahoo said Edward Kozel, a board member, is resigning. Kozel had planned to step down in February, but stayed on after Microsoft made its offer in January.
Wall Street investors slowing borrowing from Fed
Wall Street investment companies are reducing their borrowing from the Federal Reserve's emergency-lending program. The Federal Reserve said in a report yesterday that those companies averaged $14.2 billion in daily borrowing over the last week. That compares with $16.6 billion in the previous week. The program began March 17.
Unemployment filings down last week
The number of newly laid-off workers filing for unemployment benefits unexpectedly fell last week to the lowest level in a month. The Labor Department reported that applications for jobless benefits totaled 365,000, down by 9,000 from last week. Economists had expected claims to rise slightly. Even with the unexpected decline, claims remain at a level that indicates the labor market is under stress from the sluggish economy. The four-week average for claims rose slightly to 372,250, up significantly from a year ago when the four-week average was around the 300,000 mark.
Home Depot CEO criticized over customer service
Home Depot chief executive officer Frank Blake was grilled by investors, who also shop in his company's stores, on the retailer's commitment to customer service. Several shareholders spoke at the Atlanta company's annual meeting about poor experiences in Home Depot stores. They said some employees did not seem well-trained in the store's products, and they also were critical of the performance of the people who do home installations for the company. Blake said Home Depot was aware of customer-service complaints at some of its stores, and he vowed, as he has in the past, to fix the problem.