Oilfield services provider Smith International said it'll buy WH Energy Services in a deal valued atroughly $3.2 billion. The combination will broaden Smith's offerings in key drilling services markets. It'll pay $56.10 cash and 0.48 Smith shares for each WH Energy share outstanding. Based on Smith's closing price Monday, the deal values WH at about a 9.4 percent premium. The deal requires regulatory approval but is expected to be completed in the third quarter. The coupling gives Smith an important entry into the directional drilling market, a growing arena as oil and gas companies find themselves extracting fossil fuels in increasingly complex fields. Oil companies hire service providers for a variety of well-site jobs that can include seismic tests, directional drilling and reservoir management. Two of the biggest players are Schlumberger and Halliburton. Companies in the sector have benefited in recent quarters from frenetic oilfield activity spurred by record crude and high natural gas prices.
Billionaire financier George Soros says that the growth of funds tied to the price of crude oil and other energy futures is reminiscent of a similar craze that preceded the 1987 stock market crash. He tells a Senate panel that the rush to invest in commodity index funds is "intellectually unsound." He adds that it's "distinctly harmful in its economic consequences." He likens the situation to the rush to invest in portfolio insurance more than 20 years ago. When those investors tried to exit the market at the same time, stock markets around the world crashed. Acknowledging he is not an expert on oil markets, Soros says he sees no imminent crash in oil prices. He predicts that a decline in consumption will not occur unless the U.S. and other developed nations' economies are in recession. Crude prices have risen more than 42 percent since early December.
Energy executives in Houston say renewal of federal tax credits expiring at the end of the year is critical to U.S. investment in the wind energy industry. Congress is debating whether to renew--and how to pay for--production tax credits that help subsidize the growing industry. The existing subsidy of two cents per kilowatt hour for wind developers is set to expire in December. Industry executive say the uncertainty has prompted some to delay investments beyond 2008. The tax credits were a hot topic at the American Wind Energy Association's Windpower 2008, a four-day gathering of more than 10,000 policymakers and energy professionals that began Sunday.>
The U.N. Secretary-General says world food production must rise by 50 percent by 2030 to meet increasing demand. Ban Ki-Moon told world leaders at a food summit in Rome that nations must minimize export restrictions and import tariffs during the crisis that has caused hunger and riots across the globe. Participants at the U.N. summit are trying to figure out how to head off skyrocketing food prices before millions more join the multitudes across the globe who already lack enough to eat.
The rising cost of fuel has prompted demonstrations in France and England. French truckers and taxi drivers slowed traffic around the Paris business district to a crawl to protest high fuel prices. Dozens of drivers slowly circled around the headquarters of Total in the city's main financial district to show opposition to a new tax on heavily polluting vehicles. Elsewhere, French farmers blocked ports and oil terminals to press demands for fuel aid from the government. In London, hundreds of fishermen gathered outside the headquarters of the government agency responsible for food. They are seeking financial support in dealing with increasing fuel costs.
A government official says starting next year, there will be an extra step for some travelers heading to the U.S. that European businesses worry could make business travel tricky. People from countries that don't need visas to enter the states will be required to register online with the U.S. government at least three days before they visit, according to Homeland Security Secretary Michael Chertoff. The rule was first reported in the Financial Times. The online registration will be valid for a two-year period. The 27 countries whose citizens don't need to get a visa are mostly in Western Europe.
Continental Airlines reports revenue per available seat mile in May increased by as much as seven percent, compared to last year.
As it works to focus on smaller vehicles, General Motors is closing four truck and SUV plants in North America in response to surging fuel prices. Ahead of the automaker's annual shareholders meeting, CEO Rick Wagoner said the plants to be idled are in Oshawa, Ontario; Moraine, Ohio; Janesville, Wisconsin; and Toluca, Mexico. He also said the gas-guzzling Hummer brand could be sold or revamped. Wagoner said the GM board has approved production of a new small Chevrolet car at a plant in Lordstown, Ohio, in 2010 and production of the Chevrolet Volt electric vehicle in Detroit. Wagoner announced the moves in response to slumping sales of pickups and SUVs brought on by high oil prices. He said a market shift to smaller vehicles is permanent. The moves are intended to save GM a billion dollars a year starting in 2010.
Toyota's Camry and Corolla each outsold the traditionally top-selling Ford F-series truck last month. Consumer preferences have quickly shifted from trucks and SUVs to small cars, forcing painful production cuts and plant closures for General Motors and Ford. GM says its U.S. sales fell 28 percent in May compared with a year earlier. Ford's sales fell 16 percent. Toyota sales slipped four percent. GM's decline was in part because of strikes at its own plants as well as those owned by supplier American Axle and Manufacturing Holdings. GM's truck and SUV sales fell 37 percent, while car sales fell 14 percent.
Fedex says it will drop the name Kinko's from its copy and office service stores. The decision means an end to what remains of the identity of the chain that was purchased in February 2004. It will also book an $891 million charge for the quarter that ended Saturday. The charge relates to a decision about the use of the Kinko's name and a write-down of the value of its acquisition of the brand. The charge, which works out to $2.22 a share, was not part of Fedex's earnings forecast. The company reports its financial results for the fiscal fourth quarter June 18th. Fedex will change the name of its Fedex Kinko's stores to Fedex Office. The Memphis, Tennessee, company says the new name "better describes the wide range of services available...and takes full advantage of the Fedex brand."