American Airlines and US Airways announced on Thursday that they planned to merge in an $11 billion deal. Under the terms of the deal, US Airways shareholders would own 28 percent of the combined airline, with the remainder held by stakeholders, creditors, labor unions and employees of AMR, the parent company of American. The merger would create the nation’s biggest airline, in position to compete against United Airlines and Delta Air Lines, which have grown through mergers of their own.
On Wednesday, the boards of the companies met separately to approve the deal, Jad Mouawad reports in The New York Times. “The deal, which was completed in recent days, could be formalized as American leaves bankruptcy. W. Douglas Parker, the chairman and chief eecutive of US Airways, will take over as American’s chief executive. Thomas W. Horton, American’s current chairman and chief executive, will be chairman, though his tenure could be limited.â€
“The merger still needs to pass several steps. It must be approved by American’s bankruptcy judge in New York. US Airways shareholders will also have to approve the deal. In addition, it will be reviewed by the Justice Department’s antitrust division, though analysts expect regulators to clear the deal. If approved, the nation’s top four airlines â€" American, United, Delta and Southwest Airlines â€" would control nearly 70 percent of the domestic market.â€
TIME WARNER CONSIDERS SPINNING OFF MAGAZINES  | Time Warner is in early talks with the Meredith Corporation to shed much of Time Inc., a move that would put most of its magazines into a new joint venture, Amy Chozick and Michael J. de la Merced report in The New York Times. “The new company would then borrow money to pay a one-time dividend back to Time Warner, essentially turning what appears to be a corporate spinoff into a sale. The figure being discussed is $1.75 billion, according to the people involved in the negotiations, who requested anonymity to discuss private conversations publicly.â€
The possible deal is among several options Time Warner is considering to reduce its troubled publishing division, which was the foundation of the $49 billion media conglomerate. As part of the current proposal, Time Warner shareholders would likely receive about two-thirds of the new company and Meredith shareholders the remainder, DealBook writes. The transaction would be the most significant eal in Meredith’s roughly 111-year history.
The joint venture would be primarily a women’s magazine company, including Time Inc. magazines like People, InStyle and Real Simple, and Meredith titles like Better Homes and Gardens and Ladies’ Home Journal. Time Warner would continue to control Time, Fortune, Sports Illustrated and Money magazine.
SAC CAPITAL MANAGER AWAITS WORD ON CHARGES  | Federal prosecutors are closer to deciding whether to bring charges against Michael Steinberg, a longtime portfolio manager at SAC Capital Advisors, who would be the most senior employee charged in the government’s investigation of the hedge fund owned by Steven A. Cohen. DealBook’s Peter Lattman reports: “In recent months, a former SAC analyst who worked directly for Mr. Steinberg has met with authoritie! s and prov! ided them with information about his former boss, according to a person with direct knowledge of the investigation. The analyst, Jon Horvath, has been cooperating with the government since pleading guilty in September to insider trading charges.â€
Investors in SAC have until Thursday to tell the $14 billion hedge fund that they want their money back. The intensifying investigation into suspicious trading has put pressure on SAC, which has told employees it expects at least $1 billion in withdrawals.
The former SAC analyst, Mr. Horvath, “told federal criminal investigators that he was pressured by his manager to gather inside information on technology stocks, according to people familiar with the briefing,†The Wall Street Journal reports. Mr. Steinberg, who was put on leave from SAC last year, “did absolutely nothing wrong,†his lawyer said in statement.
REVISED TERMS IN BEER DEAL  | In an effort to persuade American antitrust authorities to let the deal go ahead, Anheuser-Busch InBev on Thursday revised its $20.1 billion bid for Grupo Modelo, the Mexican maker of Corona beer. DealBook’s Mark Scott reports: “Under the revised terms, the company offered to sell the rights to Corona and other Grupo Modelo brands in the United States to Constellation Brands, the world’s largest wine company, for $2.9 billion. A brewery close to the United States-Mexico border currently owned by Grupo Modelo would be sold to Constellation, as well as the perpetual licensing rights to Grupo Modelo’s brands in the United States.â€
ON THE AGENDA  | The Senate Banking ! Committee! holds a hearing titled “Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections†at 10:30 a.m. Elisse B. Walter, chairwoman of the Securities and Exchange Commission, and Gary Gensler, chairman of the Commodity Futures Trading Commission, are among the regulators scheduled to testify. General Motors and Vulcan Materials report earnings before the market opens. Banana Joe, the affenpinscher who was named Best in Show at the Westminster Kennel Club dog show, appears on CNBC at 9:40 a.m.
BEST BUY FOUNDER SAID TO CONSIDER PLAN B  | Richard Schulze, the founder of Best Buy, is not having the easiest time lining up financing for a bid to take the big retailer privat.. So he is “weighing whether to scrap†the plan and “instead line up investors to take a minority stake in the company,†The Wall Street Journal reported, citing unidentified people familiar with the matter. Best Buy’s stock fell on the news, to close the day down 2 percent. Mr. Schulze “hasn’t yet gotten enough support from banks to finance the deal,†the newspaper added. Still, there is an important caveat: “Any decision is still in the early stages, and Mr. Schulze could still go ahead with his initial strategy.†He has until the end of this month to make a bid.
In First Disclosure, Getco Reports Years ! of Saggin! g Profit  | Getco, the privately held high-frequency trading firm, released its financial results for the first time as part of its impending purchase of Knight Capital Group. DealBook Â'
General Electric to Return Cash to Shareholders  | Reuters reports: “General Electric Co. expects to return about $18 billion to investors this year in share buybacks and dividends as it sells its remaining stake in NBCUniversal.†REUTERS
Standard Life Said to Be in Talks to Buy Unit of Newton Investment Management  | Standar Life of Britain is in “exclusive discussions†to buy the wealth management division of Newton Investment Management for up to roughly $140 million, according to The Telegraph. TELEGRAPH
An Expensive but Logical Cable Deal  | The revelation that Vodafone of Britain is looking at Germany’s biggest cable operator has understandably unnerved its shareholders, Quentin Webb of Reuters Breakingviews writes. DealBook Â'
Rio Tinto Reports Loss for 2012 Â |Â
WALL STREET JOURNAL
BNP Paribas Earnings Fall on Write-Downs  | France’s largest bank, BNP Paribas, reported a 33 percent decline in fourth-quarter profit, to $688 million, as it wrote down the value of its Italian unit and booked an accounting charge on its own debt. DealBook Â'
Meet the Morgan Stanley C.F.O. Candidates  | Among the leading internal candidates are said to be Paul Wirth, Jonathan Pruzan, Dan Simkowitz and James A. Rosenthal. DealBook Â'
Bank of America’s Continuing Legal Troubles  | The Wall Street Journal’s Heard on the Street column writes: “Bank of America’s stock is on a tear, but one trend hasn’t been its friend: legal decisions in disputes over mortgages guaranteed by bond insurers or sold to investors.†WALL STREET JOURNAL
Asahi Sues 2 Private Equity Firms Over $1.3 Billion Deal  | Asahi has accused two Asia-Pacific buyout firms of falsifying financial data when they sold New Zeal! and’s I! ndependent Liquor to the Japanese brewer in 2011. DealBook Â'
Rubenstein of Carlyle Likens Congress to Panda Bears  |Â
WALL STREET JOURNAL
Hedge Funds Said to Profit on Bets Against the Yen  | The Wall Street Journal reports: “George Soros, who made a fortune shorting the British pound in the 1990s, has scored gains of almost $1 billion on the trade since November, according to people ith knowledge of the firm’s positions. Others reaping big trading profits by riding the yen down include David Einhorn’s Greenlight Capital, Daniel Loeb’s Third Point LLC and Kyle Bass’s Hayman Capital Management LP, investors say.†WALL STREET JOURNAL
Omega Advisors Sold Apple Stake in 4th Quarter  |Â
REUTERS
Investors Said to Pull $1 Billion From Winton Capital  |Â
REUTERS
London Exchange Eases Rules for Fast-Growing Companies  | The Wall Street Journal reports: “The London Stock Exchange is launching a new niche market targeting high-growth companies and allowing them to float.†WALL STREET JOURNAL
Real Estate Trust Rises in Japan Debut  | A real estate investment trust run by Prologis, an owner of industrial buildings based in San Francisco, jumped 24 percent in trading in Tokyo after raising about $1 billion, Bloomberg News reports. BLOOMBERG NEWS
Online Lender Attracts $42 Million  | On Deck Capital, which offers loans to small businesses online, raised a round of financing led by Institutional Venture Partners. TECHCRUNCH
Partner at Google Ventures Discusses V.C. Market  |Â
WALL STREET JOURNAL
Repercussions of an Italian Bank Scandal  | The emergence of a scandal at Monte dei Paschi di Siena “raises persistent questions about transparency in Italian business and why Italy’s third-largest bank by assets was allowed to rack up risk for so long so that it became a systemic threat in the heat of the sovereign crisis,†The Financial Times writes. FINANCIAL TIMES
Regulator Explains Decision to End Flawed Foreclosure Review  | Thomas J. Curry, the comptroller of the currenc, shed light on the recent decision to scuttle an independent review of bank foreclosures, portraying the flawed process as a boon to outside consultants and a barren maze for homeowners. DealBook Â'
Nominee for Treasury Secretary Fields Questions From Senators  | The New York Times reports: “Jacob J. Lew, President Obama’s nominee for Treasury secretary, faced some fierce questioning on Wednesday from the Senate Finance Committee on his tenure at the bailed-out Citigroup and on an investment based in the Cayman Islands. But the even-tempered, bookish Mr. Lew parried the blows and appeared likely to win the committee’s approval and Senate confirmation.†NEW YORK TIMES
Keeping the Libor Process Intact  | “Several banks planned to withdraw from the panel that sets a key benchmark interest rate but scrapped the idea after the U.K.’s financial regulator strongly warned them against doing so, according to people familiar with the matter,†The Wall Street Journal reports. WALL STREET JOURNAL
Madoff Trustee Looks to Distribute $505 Million to Victims  |Â
WALL STREET JOURNAL
