The planned merger of American Airlines and US Airways became all but certain on Tuesday after the airlines reached a deal with the Justice Department two weeks before a scheduled trial, Jad Mouawad and Christopher Drew report in The New York Times. The deal, coming after months of setbacks and delays, paves the way for the creation of a third major global airline that can compete with United Airlines and Delta Air Lines.
The combination “opens a chapter in the history of the airline industry’s deregulation, leaving a handful of airlines to control most domestic and international flights â€" American, Delta, United and the domestic giant Southwest Airlines. The Justice Department said the agreement would foster competition at busy markets like Washington and New York, opening opportunities for lower-cost carriers,†Mr. Mouawad and Mr. Drew write. “But analysts questioned how much competition would be created. George Hoffer, a transportation economics professor at the University of Richmond, said the merger effectively took one major competitor out of the market. That could result in subtle fare increases in many markets and fewer flights, he said.â€
Investors cheered the agreement, sending airline stocks higher. The settlement still needs to be approved by the Federal District Court in the District of Columbia and by the judge overseeing American’s bankruptcy proceeding. Still, the airlines are now confident they can close the deal by mid-December.
IN LEMONADE STAND, TRANSFORMATION OF THE CORPORATION  | A 9-year-old girl named Vivienne Harr, one of the three guests of honor who rang the opening bell at Twitter’s debut on the New York Stock Exchange last week, is a revolutionary “who may change the way nonprofits and perhaps even companies are run,†Steven M. Davidoff writes in the Deal Professor column. After her parents showed her a picture by the photographer Lisa Kristine of two young Nepalese boys hauling huge rocks on their heads down a mountain, she started a lemonade stand to raise money to end child slavery. Her father, Eric Harr, a social media expert, led a media-savvy Twitter campaign that attracted national attention for Vivienne’s cause.
“What makes this feel-good story really interesting is what happened next. Instead of moving on, or even forming a nonprofit to continue those goals, Mr. Harr and his wife, as well as Vivienne, formed a business around this cause. Mr. Harr raised $982,000 in financing and incorporated Make a Stand. He quit his job and is now the chief executive. Make a Stand sells fair-trade, organic lemonade,†Mr. Davidoff writes. “But this is not all about profit. The Harrs took advantage of new laws adopted by the State of Washington that created a type of corporate entity called a special purpose corporation, which is intended to earn a profit for shareholders, but can take into account other social constituencies, such as a charity.â€
“If you look at the company’s website or product, there is no doubt that the charitable mission is the sales pitch. Make a Stand may be selling delicious lemonade, but the hook to getting people to buy it and setting the company apart is the worthy cause. The lemonade sold online at the company’s website has no set price â€" customers are asked to pay what they want. This is pure marketing genius as it also builds on the premise of donating and generosity on which charities thrive. In the words of Mr. Harr, ‘no one ever pays less’ because of the cause. People don’t just want a product these days, they want a cause, and Make a Stand delivers.â€
ON THE AGENDA  | Shares of Extended Stay America are expected to begin trading on the New York Stock Exchange after being priced at $20 each in an initial public offering on Tuesday. Chegg, a start-up focused on textbook rentals and academic services, is also expected to have its trading debut on the N.Y.S.E., after pricing its shares at $12.50 each. Macy’s reports earnings before the market opens, while Cisco Systems and Re/Max Holdings report earnings this evening. Timothy J. Sloan, the chief financial officer of Wells Fargo, is on CNBC at 3:30 p.m.
BACK INJURY DELAYS FOOTBALL PLAYER I.P.O.  | Fantex, the start-up promoting initial public offerings of National Football League stars, said that it was putting off its stock offering of Arian Foster, the running back for the Houston Texans, DealBook’s Peter Lattman reports. Mr. Foster was placed on injured reserve and is expected to have surgery to repair a ruptured disc. The decision is a significant blow to Fantex, which introduced its novel business last month.
Investor Says Men’s Wearhouse Will Review Merger With Jos. A. Bank  | Men’s Wearhouse and its investment bankers plan to review a number of strategic options, including an unsolicited $2.3 billion takeover bid by rival Jos. A. Bank, a big investor in the retailer said on Tuesday. DealBook »
Live Nation in Talks to Buy Managers of Music Acts  | The New York Times reports: “Live Nation Entertainment, the giant concert company that includes Ticketmaster, is in advanced negotiations to buy the management companies behind U2 and Madonna, according to several people with direct knowledge of the talks.†NEW YORK TIMES
To Top JPMorgan Deal Maker, Mergers Still Look Strong  | James B. Lee Jr., JPMorgan Chase’s vice chairman and chief deal maker, argues that the number of big deals disclosed in 2013 is the largest it has been in years. DealBook »
Starbucks to Pay Kraft $2.75 Billion, Ending Dispute  | The New York Times reports: “Starbucks said on Tuesday that it would pay Kraft Foods $2.75 billion, ending a long-running spat over an agreement the two food titans had for distribution of Starbucks packaged coffee in grocery stores.†NEW YORK TIMES
Despite Bumps, Tire Deal Still Makes Sense  | While Cooper Tire and Rubber and Apollo Tyres are locked in a legal battle over a $35-a-share takeover offer, the deal still has justification, even at a lower price, Una Galani of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS
For Tumblr’s Young Founder, Education in Wall Street’s Ways  | David Karp said that being bought by Yahoo had given him an education in how public companies, and merger advisers, work. DealBook »
Regrets? Blankfein Has One  | Lloyd C. Blankfein, the chief executive of Goldman Sachs, said at an industry conference on Tuesday that he regretted the bank’s involvement in certain collateralized debt obligations before the financial crisis, Reuters reports. REUTERS
Goldman’s Bet on Hedge Funds  | The Financial Times reports: “Goldman Sachs is betting that the hedge fund industry can attract more investors despite its recent performance record - by raising money for a second incarnation of one of its highest-profile investment vehicles, Petershill.†FINANCIAL TIMES
Citadel’s Griffin Advocates Breaking Up Banks  | Kenneth C. Griffin, the founder and chief executive of Citadel, says the size of some of Wall Street’s largest institutions has created management challenges and regulatory difficulties. DealBook »
Fink Worries About Implications of Health Care Law  | Laurence D. Fink, the chief of BlackRock, said the financial effect of the Affordable Care Act was potentially more significant than the “noise about whether the website works or not.†DealBook »
Jarrett Promises Outreach to Business Leaders  | Valerie Jarrett, a senior adviser to President Obama, pointed out that “millions of Americans†have already benefited from the health care law. DealBook »
Diller on Banks, Snowden and His Broadcasting Start-Up  | Barry Diller, the IAC chief who was the leadoff speaker at DealBook’s Opportunities for Tomorrow Conference on Tuesday, touched on more than a few hot-button topics. DealBook »
Nomura to Add More Bankers to Its Americas Arm  | The Japanese firm has hired six more high-ranking investment bankers as it continues an expansion of its business in the Western Hemisphere. DealBook »
TPG Shakes Up Leadership in Asia  | Reuters reports: “One of the world’s biggest private equity firms, TPG Capital, is reshuffling its senior ranks in Asia as it battles to finish raising money for its latest regional fund and bridge the gap with rivals.†REUTERS
Rubenstein Not Planning a Retirement Party Just Yet  | David M. Rubenstein, the co-founder and co-chief executive of the Carlyle Group, and David Bonderman, founding partner at TPG Capital, discussed the future of private equity, not succession plans at their firms. DealBook »
Investors Aim to Take Over Much of Fannie and Freddie  | The Financial Times reports: “A group of hedge funds and private equity companies is preparing a proposal to take over large parts of Fannie Mae and Freddie Mac, in an attempt to end a bitter dispute with the Treasury, which has controlled the United States housing finance agencies for five years.†FINANCIAL TIMES
When Facing Activist Investors, Fight Has Gone 24/7  | During a panel on investor activism, corporate advisers noted that Twitter and modern technology have changed the nature of boardroom battles. DealBook »
Loeb Sees No Mistakes in His Strategy  | “I can’t think of a time in our experience where we misstepped,†Daniel S. Loeb, the manager of Third Point, said on Tuesday. DealBook »
Extended Stay America Prices I.P.O. at $20 a Share  | The hotel operator priced its initial public offering on Tuesday at $20 a share, in the middle of its expected range. At that price, the company will have raised $565 million and will be valued at $4 billion. DealBook »
Chegg Prices Its I.P.O. at $12.50 a Share  | At that price, the eight-year-old company, which focuses on textbook rentals and academic services, will have raised $187.5 million in its market debut. The I.P.O. will also value it at nearly $1.1 billion. DealBook »
Musk’s Next Blue-Sky Idea  | Elon Musk, the creator of the Tesla electric car, has set his sights on something higher: an electric airplane that can take off and land vertically. DealBook »
Federal Regulators Unveil Rules on Their Sometime Proxies, Bank Consultants  | The Office of the Comptroller of the Currency has adopted rules for how banks employ the groups sometimes called Wall Street’s “shadow regulators.†DealBook »
Bank Records Sought in Offshore Tax Inquiry  | A federal judge gave the government permission to seek data from five Wall Street banks on American clients suspected of hiding assets at an unrelated Caribbean bank. DealBook »
Yellen’s Challenge at Fed: Communicating With Investors  | On Thursday, when Janet L. Yellen appears before the Senate Banking Committee, she will face questions over whether “the Fed under her leadership can communicate more clearly than it has managed to do in recent months â€" and whether that is the best the Fed can do to lift the economy from its enduring malaise,†The New York Times writes. NEW YORK TIMES
S.E.C. Tries New Tack in Hedge Fund Fraud Case  | The Securities and Exchange Commission has agreed to defer the prosecution of a small hedge fund accused of fraud â€" a new tool to encourage people under investigation to cooperate. DealBook »
Bharara on His Wealth, Prosecutions and ‘Pulp Fiction’  | Preet Bharara dismissed any speculation that he would step down as United States attorney, and instead quoted a Samuel L. Jackson character when asked about his future. “I’m going to walk the earth,†he said. “Like Caine in ‘Kung Fu.’†DealBook »
Michigan Senator Critical of ‘Continuing Litany of Deception’ on Wall Street  | Senator Carl Levin, a member of the Senate Permanent Subcommittee on Investigations, pointed to what he saw as broad, deep-seated “cultural failures†on Wall Street. DealBook »
A Candid Discussion of Dodd-Frank  | The financial overhaul law still has issues of clarity and public perception, according to some business leaders. DealBook »
Obama Nominates Treasury Official as Top Derivatives Regulator  | President Obama nominated Timothy G. Massad, who oversaw the unwinding of the government’s bailout program, to succeed Gary Gensler at the Commodity Futures Trading Commission. DealBook »
