Morning Agenda: Carlyle Takes Stake in Beats

CARLYLE INVESTS IN BEATS  |  Beats Electronics, which has drawn in many fans of its colorful, expensive headphones, has now attracted the support of the Carlyle Group, a top private equity firm, DealBook’s Michael J. de la Merced reports.

Beats, which was founded by the music impresarios Dr. Dre and Jimmy Iovine, said on Friday that it secured a minority investment from Carlyle to help finance growth. Carlyle is paying $500 million, according to a person briefed on the matter, valuing the music company at more than $1 billion, Mr. de la Merced reports. The firm will also take two of six seats on Beats’ board. In addition, the audio company will buy back the 25 percent stake in itself held by HTC, the Taiwanese smartphone company.

JPMORGAN IS URGED TO PAY MORE IN MORTGAGE DEAL  |  JPMorgan Chase is moving closer to reaching a multibillion-dollar settlement with the Justice Department over questionable mortgage practices, after authorities urged the bank to raise its offer and the bank’s chief executive took the unusual step of meeting with Attorney General Eric H. Holder Jr. in Washington, Ben Protess and Jessica Silver-Greenberg report in DealBook.

“Mr. Holder’s nearly hourlong meeting on Thursday with the chief executive, Jamie Dimon, followed days of intense negotiations during which JPMorgan ultimately offered to pay a roughly $7 billion fine and provide $4 billion in relief for struggling homeowners, according to people briefed on the talks,” DealBook reports. “While the Justice Department has largely agreed to the $4 billion in relief, which requires the bank to reduce the size of certain mortgages and refinance others, it seeks more than the proposed $7 billion in penalties and is now waiting for JPMorgan to prepare a new, larger settlement offer, the people said.

“The latest push on the size of the penalties indicates that the talks are entering their final stages. After JPMorgan raised its total offer to $11 billion earlier in the week, the disparity in negotiating positions narrowed significantly. And the size of the fine is not the central negotiating point for the bank: JPMorgan is instead focused on using the wide-ranging pact to resolve many of the mortgage-related investigations it faces. Most important, the bank is asking that prosecutors in California drop a criminal investigation into the bank’s mortgage practices â€" a request that the Justice Department has yet to meet.”

J.C. PENNEY TO RAISE CASH IN SHARE OFFERING  |  Amid mounting concerns over its business, J.C. Penney said Thursday evening that it planned to sell 84 million shares in a stock offering to raise cash. The underwriters will have a 30-day option to buy up to 12.6 million additional shares, to bring the total to 96.6 million shares. Goldman Sachs is handling the offering.

The retailer’s shares fell about 5 percent in after-hours trading on Thursday. The stock had already taken a beating after Goldman Sachs and Citigroup released negative reports on the company this week, arguing that its financial situation was deteriorating after a long period of disappointing sales. But before announcing its plans to raise money on Thursday, Penney itself struck an upbeat tone, saying it was “pleased with its progress” in its “turnaround efforts.”

ON THE AGENDA  |  Robert E. Diamond Jr., the former chief executive of Barclays, is on CNBC at 7 a.m. Stephen A. Schwarzman, chief executive of the Blackstone Group, is on Bloomberg TV at 8:15 a.m. Data on personal income and spending in August is released at 8:30 a.m. The Reuters/University of Michigan consumer sentiment index for September is released at 9:55 a.m.

CHRYSLER’S UNUSUAL I.P.O.  |  “What do you call the man who is trying to sabotage Chrysler’s initial public offering by threatening to harm the company, perhaps fatally, if the offering is completed? You call him Chrysler’s chief executive,” Floyd Norris writes in the High & Low Finance column in The New York Times. “There has never been a proposed I.P.O. like Chrysler’s.”

In a typical I.P.O. prospectus, the writers, within the bounds of securities laws, try to attract investors. “Chrysler’s, within the same bounds, is clearly aimed at alienating investors,” Mr. Norris writes. “As such, it may become something of a collector’s item. A game of chicken between Chrysler’s two owners â€" Fiat, the Italian automaker, and a trust that provides benefits to Chrysler’s retirees â€" has burst into the open.”

Mergers & Acquisitions »

K.K.R. to Buy Panasonic Healthcare for $1.67 Billion  |  Kohlberg Kravis Roberts has agreed to buy the health care unit of Panasonic for 165 billion yen, or $1.67 billion, as the Japanese company attempts to streamline its operations after two years of losses.
DealBook »

K.K.R. Said to Pull Out of Auction for Jones Group  |  The private equity firm, in partnership with Sycamore Partners, had been the only party looking to buy the entirety of the Jones Group, a fashion and footwear company, Reuters reports, citing two unidentified people familiar with the matter.
REUTERS

Despite Big Verizon Deal, M.&A. Is Essentially Flat This Year  |  “Between increased rates, and, at times, unpredictable deal-approval regulatory framework, and continued debt ceiling issues, we’re back in the annual dance of uncertainty,” Paul Parker, head of global corporate finance and mergers and acquisitions at Barclays, told Reuters.
REUTERS

Nestle Said to Consider Sale of PowerBar  |  Nestle “is looking to divest its PowerBar energy bars, a pioneer of sports nutrition products, according to four people familiar with the matter,” Reuters reports, adding that a sale “could fetch several hundred million dollars.”
REUTERS

EBay to Acquire Payments Start-Up  |  EBay is acquiring Braintree, a Chicago payments start-up whose clients include Rovio, Uber, OpenTable, Fab and Airbnb, for $800 million in cash, Jenna Wortham reports on the Bits blog. EBay plans to merge the business with PayPal.
NEW YORK TIMES BITS

INVESTMENT BANKING »

A Computer Error Hits BATS Exchange  |  The BYX Exchange of BATS Global Markets was able to reopen using a backup site after a computer problem forced it to close for three hours on Thursday, Bloomberg News reports.
BLOOMBERG NEWS

S.E.C. Said to Be Near Settlement Over Knight Capital Glitch  |  KCG Holdings, the successor company to the Knight Capital Group, “is near a settlement of around $12 million with the U.S. Securities and Exchange Commission related to last year’s trading glitch,” Reuters reports, citing two unidentified people.
REUTERS

Goldman Sachs Weighs In on Youth Shopping  |  Goldman issued a research report called “Millennials: Coming of Age in Retail,” which described the young generation’s “strikingly unique economic, technological, and behavioral characteristics,” according to BuzzFeed.
BUZZFEED

Create a Caption: Mr. Dimon Goes to Washington  |  What did Jamie Dimon and a Justice Department security guard discuss ahead of settlement talks between JPMorgan Chase and federal agencies? We turned to Twitter for the answer.
DealBook »

Strauss-Kahn Joins Investment Firm  |  Dominique Strauss-Kahn, the former head of the International Monetary Fund whose career was damaged by a series of sexual scandals, will join an investment banking boutique based in Luxembourg.
DealBook »

PRIVATE EQUITY »

First-Round Bidding to Begin in Auction of IMG Talent Agency  |  First round bids for IMG, which represents athletes and entertainers including Peyton Manning and Justin Timberlake, are due on Monday, according to people familiar with the matter.
DealBook »

HEDGE FUNDS »

In This Battle Arena, Warriors Are Armed With Algorithms  |  BattleFin, a recruitment firm for hedge funds, stages tournaments to find math whizzes who can apply their knowledge of other fields to the financial world.
DealBook »

Under Pressure From Ackman, Air Products Shakes Up Board  |  Air Products and Chemicals, a producer of industrial gases, is adding three new directors to its board and beginning a search for a new chief executive, changes supported by the activist investor William A. Ackman.
DealBook »

A Promising Start at Air Products  |  William A. Ackman has dislodged the company’s underperforming boss. For bigger, more lasting success, however, a painstaking transformation of Air Products and Chemicals is now needed, Christopher Swann of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS

I.P.O./OFFERINGS »

British Postal Service Valued at $5.3 Billion in I.P.O.  |  Royal Mail, Britain’s 360-year-old postal service, is to be valued as much as $5.3 billion in its initial public share sale scheduled for next month, the government said on Friday.
DealBook »

VENTURE CAPITAL »

Jack Ma to Join Tech Moguls in Backing Medical Research Prize  |  Jack Ma, the executive chairman of the Internet giant Alibaba, and his wife, Cathy Zhang, are joining some of Silicon Valley’s biggest names as sponsors of the world’s richest prize for medicine and biology.
DealBook »

Partner at Andreessen Horowitz Said to Depart  |  Ronny Conway, the son of the prominent investor Ron Conway, is leaving his role as a partner at the venture capital firm Andreessen Horowitz to begin raising his own fund for early-stage investments, Fortune reports.
FORTUNE

LEGAL/REGULATORY »

A $300 Million Aid Package for Detroit, but No Bailout  |  Obama administration officials will be in Detroit on Friday to propose nearly $300 million in combined federal and private aid toward a comeback of the city, which filed for bankruptcy two months ago. The amount is only a fraction of the billions the city owes, The New York Times writes.
NEW YORK TIMES

Detroit Manager Seeks to Freeze Pension Plan  |  Detroit’s emergency manager wants to freeze the city’s pension system for public workers, in light of evidence it was operated in an unsound manner for many years, contributing to the city’s financial downfall.
DealBook » | DealBook: Detroit Spent Billions Extra on Pensions

Poll Finds Disapproval of Wall Street Bailout  |  Nearly 6 in 10 Americans express disapproval of the 2008 bailout, and only about a third approve, according to the latest New York Times/CBS News poll, the Economix blog reports.
NEW YORK TIMES ECONOMIX

Accountant Who Worked With Madoff for Years Is Indicted in Pyramid Scheme  |  The arrest of Paul J. Konigsberg, a longtime accountant in Bernard L. Madoff’s inner circle, represents a deepening of the federal criminal investigation of Mr. Madoff’s multibillion-dollar Ponzi scheme.
DealBook »

S.E.C. Sues Former Chairman in Looting of Educational Company  |  The Securities and Exchange Commission has accused the former chairman and chief executive of the ChinaCast Education Corporation of stealing $41 million in company funds.
DealBook »

Companies Admit to Fixing Prices of Car Parts  |  The New York Times reports: “In an expanding global antitrust investigation, nine Japanese automotive suppliers, along with two former executives, have agreed to plead guilty to conspiracy and pay more than $740 million in criminal fines for fixing the price of auto parts sold in the United States and abroad, the Justice Department said Thursday.”
NEW YORK TIMES