Andreessen Horowitz Taps Former D.C. Mayor as Special Adviser

The venture capital firm Andreessen Horowitz is adding another Washington insider to its team, reflecting Silicon Valley's growing focus on regulatory matters.

On Wednesday, the firm announced that it has tapped Adrian Fenty, a former D.C. mayor, as a special adviser. Last year, Larry Summers, the former Treasury secretary, came on board in the same role.

Mr. Fenty, who served as mayor from 2007 to 2011, is best known for aggressively pursuing education reform in the district. In his first year in office, he pushed for legislation that gave the mayor control of the public school system. With a broadened mandate, he instituted drastic reforms to cut expenses, shutter low enrollment schools and shore-up test scores.

While several initiatives were seen as effective, the changes were often considered controversial ones as well. According to Margit Wennmachers, a partner at Andreessen Horowitz, Mr. Fenty's willingness to tackle tough issues was seen as a posit ive.

“We admire someone with the courage and the stomach to take on the status quo, in particular on a topic as fundamental as the education system in this country,” she wrote in a company blog post on Wednesday.

After leaving his government post in 2011, Mr. Fenty, a graduate of Howard University Law School, joined Klores Perry Mitchell as a special counsel. He also became an adviser to education technology companies, such as Rosetta Stone, and recently became an angel investor.

As a special adviser for Andreessen Horowitz, he will spend more time on the West coast and will help the team analyze investment ideas and advise portfolio companies on business strategy and regulatory issues.

“I've been involved with several start-ups near D.C.,” Mr. Fenty said in a phone interview on Wednesday. “Through all of that, I caught the bug.”

For Andressen Horowitz, the appointment also signals increased interest in start-ups that are disrupting the education industry. So far, it has one investment in the space, Kno, a digital textbook software company. Ms. Wennmachers said the firm is currently actively looking for more.

 

Dean Foods Explores Sale of a Dairy Unit

Dean Foods announced Wednesday that it was exploring the sale of its Morningstar unit as the company takes steps to reduce its debt.

The Morningstar division sells milk and other dairy products under various regional brands, including Tuscan Dairy in New York and Berkeley Farms in Northern California.

“We have not yet identified a buyer for Morningstar, but we know this business possesses an attractive portfolio in a growing marketplace and a top-notch management team,” Dean Foods said in a statement.

Shares in Dean Foods were temporarily suspended Wednesday afternoon after Reuters reported that Dean had hired Evercore Partners for its sale, which may bring in more than $1 billion. The shares were up about 5 percent in late afternoon trading.

A company spokeswoman did not immediately respond to a call seeking comment.

Dean Foods' unit is not related to the MorningStar Farms line of meatless products, which is owned by Kellogg.

The au ction of Morningstar comes as Dean Foods tries to reduce debt.

In early August, Dean Foods said it had filed a registration with the Securities and Exchange Commission to sell 20 percent of stock in its WhiteWave-Alpro division. The WhiteWave unit â€" whose products include Silk soy milk, Horizon Organic dairy products and International Delight creamers â€" are not part of the Morningstar business that is up for sale.

Glencore\'s Sweetened Bid for Xstrata May Have an Unpalatable Condition

The $90 billion merger of Glencore and Xstrata is on shaky ground, as the two sides struggle to come to terms over the makeup of the combined management team.

The negotiations are going down to the wire. After getting an extension on the initial deadline, Xstrata now has until Oct. 1 to decide whether to accept Glencore's sweetened bid.

With large shareholders threatening to block the deal, Glencore increased its offer in September, proposing to exchange 3.05 of its shares for every Xstrata share. When the merger was announced in February, Glencore initially laid out a ratio of 2.8 to 1.

In lifting its bid, Glencore also altered the executive suite. Rather than handing over the reins of the combined entity to Xstrata executives, Glencore wants more control over management.

Under the new terms, Glencore's chief executive, Ivan Glasenberg, will take over six months after the merger is complete. The original deal called for Mick Davis, John Bond and Tr evor Reid â€" the chief executive, chairman and chief financial officer of Xstrata respectively â€" to hold the same positions at the new company.

This is where the tensions lie.

The issue of Glencore-Xstrata's management is about more than corporate pride and the egos of its chief executives. It's also about business expertise.

Xstrata is a powerhouse in mining, with large positions in copper, coal and zinc production. While Glencore has some mining operations, its main focus is trading. Glencore has unrivaled intelligence on the global supply and demand of materials like wheat, oil, and copper.

Those are fundamentally different businesses. Mining investments are long term, often taking a decade or more to generate a return. Trading relies on quick returns based on rapid, sometimes minute-by-minute decisions.

The mining business would dominate the new company, accounting for 84 percent of operating profits based on 2011 earnings. But Glencore's executives, who are now positioned to take over, are all commodities traders.

Since the beginning, Xstrata has emphasized the importance of management, particularly its own executives.

In May, the miner's independent directors noted that “the new business model resulting from the merger, and its ability to generate superior shareholder returns, is dependent on the retention of key Xstrata personnel.” They reiterated the stance again a few months later, saying that “retaining Xstrata's proven management team is essential for the success of the merger.”

The worry for Xstrata shareholders is that all the top mining executives may resign when Mr. Davis is forced to step down. He has been the only boss since the company went public in 2002. He also runs Xstrata with a distinct management style that grants divisional chiefs day-to-day autonomy.

An adviser close to Xstrata said he had the “strongest possible guidance” that Xstrata executives wou ld leave when Mr. Glasenberg took over. As a result, retention packages have become the leading issue in Xstrata's talks with shareholders ahead of its decision to recommend or reject Glencore's offer, according to an adviser close to the proceedings.

More than 60 Xstrata executives would receive bonuses worth more than $200 million if they stay at the new company for a specified period. Xstrata says it believes these are crucial safeguards for the performance of Glencore-Xstrata's mining-led business.

But it may be tough to extract richer bonuses.

In Britain, where both companies trade on the public markets, institutional investors have rebelled against outsize compensation this year. Xstrata adjusted its retention packages in August, after institutional shareholders complained. While the company did not change the value of the awards, they are now more linked to performance targets.

In the end, the deal will come down to Xstrata investors, which may want different things. Some are pushing for tamer pay packages. Others want seasoned miners to lead the company - not least because the executives have made shareholders a lot of money. Since the company went public in 2002, Xstrata's shares have more than doubled.

Qatar Holding, the sovereign wealth fund of the Persian Gulf nation, will be an important factor. The gas-rich country has spent over $5 billion this year amassing a 12 percent stake in the miner, making Qatar the second-largest shareholder in Xstrata behind Glencore. And Qatar's objections over the first deal prompted Glencore to raise its offer.

The country is not concerned about the size of Xstrata executives' pay packages, according to an adviser to Xstrata. Rather, Qatar's priority, the person added, is to retain Xstrata executives. Qatar backs Xstrata's management as well as the company's prospects as a stand-alone company, an adviser to Qatar said early in September, adding that it would not he sitate to block a deal that it saw as unfavorable.

So far, Qatar has remained silent on Glencore's latest proposal, waiting to comment until Xstrata makes its decision.

Beyond Wall Street, Curbs on High-Speed Trading Advance

Chris Young for The New York Times

Greg Mills, standing, head of stock trading at Royal Bank of Canada, in the bank's offices in Toronto. Trading desks in Canada are preparing for new rules that will curtail the growth of the trading venues known as dark pools.

After years of emulating the flashy United States stock markets, countries around the globe are now using America as a model for what they don't want to look like.

Industry leaders and regulators in several countries including Canada, Australia and Germany have adopted or proposed a wide range of limits on high-speed trading and other technological developments that have come to define United States markets.

The flurry of international activity is particularly striking because regulators have been slow to act in the United States, where trading firms and investors have been hardest hit by a series of market disruptions, including the flash crash of 2010 and the runaway trading in August by Knight Capital that cost it $440 million in just hours. While the Securities and Exchange Commission is hosting a round table on the topic on Tuesday, the agency has not proposed any major new rules this year.

In contrast, the German government on Wednesday advanced legislation that would, among other things, force high-speed trading firms to register with the government and limit their ability to rapidly place and cancel orders, one of the central strategies used by the firms to take advantage of small changes in the price of stocks. A few hours later, a European Union committee agreed on similar but broader rules that would apply to the entire Continent if they win approval from the union's governing bodies.

In Australia, the top securities regulator recently stated its intention of bringing computer-driven trading firms under stricter supervision and forcing them to conduct stress testing, to protect the country's markets “against the type of disruption we have seen recently in other markets.”

The broadest and fastest reforms have come out of Canada, where this spring regulators began increasing the fees charged to firms that flood the market with orders. The research and trading firm ITG found that the change had already made trading more efficient by reducing the crush of data burdening the market's computer systems.

Now Canadian trading desks are preparing for rules that will come into effect on Oct. 15 and curtail the growth of the sophisticated trading venues known as dark pools that have proliferated in the United States. While the regulation has been hotly debated, many Canadian bankers and investors have said they don't want to go any further down the road that has taken the United States from having one major exchange a decade ago to having 13 official exchanges and dozens of dark pools today.

“We don't want to look like the U.S., but we have to do it better than we are now,” said Greg Mills, the head of stock trading at the nation's largest bank, Royal Bank of Canada.

Canadian executives traveled to Washington last week to speak about what the United States may soon be able to learn from Canada about how to rein in the new high-speed markets.

“Because the U.S. had moved ahead so fast, we had the opportunity to watch and decide in some cases that there were extremes we didn't want to go to,” Kevan Cowan, the president of the Toronto Stock Exchange, said at last week's conference.

American regulators have faced a growing demand at home for some sort of market reform from traders and exchange executives. At a Senate hearing on computerized trading last Thursday, one market analyst called for a moratorium on the new trading venues that have popped up in recent years, while traders on the panel recommended mandatory kill switches that could be flipped in case of technology malfunctions. The senator who called the hearing, Jack Reed, Democrat from Rhode Island, said “our marketplace has been evolving very quickly and it is not clear that our rules have kept up.”

There are many explanations for the slower pace of reform in the United States, including the crush of work the S.E.C. has had to deal with in completing regulations under the Dodd-Frank financial overhaul law. In addition, many of the largest American market participants, including the big banks, have built high-speed trading desks and dark pools and as a result have a vested interest in protecting them against new regulations.

The soft-touch approach of American regulators has won praise from many industry participants around the world who say that the rush elsewhere to impose new rules could jeopardize the lower trading costs that have come with the automation of the American markets. Michael Aitken, the chief scientist at the Capital Markets Cooperative Research Center in Australia, said the push for regulation in Australia and much of the rest of the world has been driven by “hysteria” rather than “evidence based policy.”

Business Day Live: Violence Erupts as Greeks Strike to Protest Austerity

Economic protests in Greece and Spain turn violent. | American Airlines vs. its pilots. | An I.M.F. report looks at fiscal stability. | Meg Whitman on her efforts to revive Hewlett-Packard.

Mexico Unit of Banco Santander Rises Slightly in Debut

The Mexican unit of Banco Santander had a tepid open on its first day of trading amid the choppy environment for I.P.O.'s

Shares of the unit, Grupo Financiero Santander México, rose 3.4 percent to $12.60 at the opening of New York Stock Exchange trading on Wednesday.

The financial firm, one of country's largest lenders, was the third largest initial public offering this year, after Facebook and Japan Airlines.

The bank held a dual listing in Mexico and the United States, raising about $4.2 billion. On Wednesday, it priced its United States listing at $12.18, near the middle of its expected range of $10.99 to $12.70 per share. Each American depositary share is worth 5 Mexican shares, which were priced on Wednesday at 31.25 Mexican pesos.

Since the beginning of this year, 141 companies have priced their offerings, about a half fewer than last year, according to data from Renaissance Capital, an I.P.O. advisory firm. In the United States, 97 have pri ced so far, a slight gain from last year, but the market has been bogged down by Facebook's botched May offering and its subsequent weak stock performance.

Amid increased uncertainty, many American companies have held back. So far this year, 112 companies have filed for an initial public offering in the United States, according to Renaissance Capital, down 47.7 percent from last year. On Wednesday, ViSalus, a health and wellness consumer unit of Blythe, said it was shelving its I.P.O. plans, citing market conditions. Last week, Cortina Systems, a semiconductor company, also withdrew plans for a $100 million offering.

Santander México's debut on Wednesday indicates that investors are moving cautiously. While many new shareholders were likely drawn to the stock because of its ties to the growing Mexican economy, there was also concerns about its Spanish parent company, Banco Santander, which has been dragged down by Spain's credit woes.

“The bank has co ntinued to be well positioned in Mexico's banking system,” said Arturo Sanchez, a Standard & Poor's analyst. “But we're closely monitoring that relationshipâ€" not only for Banco Santander but for the other Spanish-owned banks.”

The company, which is trading under the symbol “BSMX,” was led in its offering by Santander, UBS, Deutsche Bank and Bank of America Merrill Lynch.

Libor\'s New Masters

Libor's New Masters  |  The British banking group that controls a crucial lending rate is preparing to give up that responsibility, a person with direct knowledge of the matter tells DealBook's Mark Scott.

On Friday, Martin Wheatley, managing director of Britain's Financial Services Authority, is expected to unveil the results of an investigation into the London interbank overnight rate, or Libor, after Barclays employees were accused of trying to manipulate the rate. That scandal showed the vulnerability of the rate, which affects more than $360 trillion of financial products. Going forward, tampering with Libor may be a criminal offense.

Mr. Wheatley is also expected to recommend changes in how the rate is overseen. He has hinted at possible changes to the Libor process, saying this summer that “reform may include amendments to the technical definitions used for Libor, the associated governance framework and the role of official regulation.” Another prominent regulator, Gary Gensler, chairman of the Commodity Futures Trading Commission in the United States, said this week that “it is time for a new or revised benchmark.”

Tesla Brought to Earth  |  On Monday, it was all about lasers and smoke. But on Tuesday, Tesla Motors conceded it would be turning to investors and taxpayers for help.

The electric car company plans to sell five million shares to raise cash, it said in regulatory filings, adding that the federal government agreed to waive some conditions of a $465 million loan. The moves raised questions about the company's long-term viability, DealBook's Peter Eavis reports. The company is run by Elon Musk, the mogul described as “Steve Jobs, John D. Rockefeller, and Howard Hughes rolled into on e.” Yet for all the hype, Tesla is four to five months behind delivering its Model S sedans to customers.

Tesla's chief financial officer, Deepak Ahuja, said the changes to the government loan were “normal” because the company's business model had evolved. But Tesla's shares fell almost 10 percent on Tuesday, at one point triggering Nasdaq's circuit breakers, according to MarketWatch.

For a look at other young companies, The Wall Street Journal plans to release a ranking of how 50 venture capital-backed start-ups have fared over the past year.

Santander Prices Mexican I.P.O. Within Expected Range  |  The Mexican arm of Banco Santander staged one of the year's biggest initial public offerings on Tuesday, pricing the American portion of its I.P.O. at $12.18 a share, in the middle of the expected range, a person briefed on the matter told DealBook. Shares are set to beg in trading on the New York Stock Exchange on Wednesday under the ticker symbol BSMX.

Investors didn't appear too concerned by the size of the deal, or by the high degree of control that Santander will have over its Mexican subsidiary. Profit at the Mexican lender has outstripped that of its parent, rising 14.4 percent in the first half of he year.

On the Agenda  |  The head of Santander's Mexican unit, Marcos Martinez, is on CNBC at 9:50 a.m. Roger C. Altman, the former deputy Treasury secretary and current executive chairman of Evercore Partners, is on Bloomberg TV at 7:48 a.m. Phil Angelides, who was the chairman of the Financial Crisis Inquiry Commission, is on CNBC at 4:40 p.m.

Data on new home sales for August is out at 10 a.m., after Tuesday's home price data gave encouraging signs of a recovery. The Business Roundtable releases its quarterly CEO Economic Outlook Survey at 11 a.m., with the heads of companies giving their expectations for sales and hiring.

Wednesday is the four-year anniversary of the bankruptcy filing of Washington Mutual, the biggest bank failure in the nation's history.

The Squid and the Whale  |  A well-known diorama at New York's American Museum of Natural History became laden with irony during a charity gala this week that included employees of Goldman Sachs (derided as the vampire squid) and JPMorgan Chase (which employed a trader nicknamed the London Whale).

“I've had to sit here all night staring at a whale,” said Jes Staley, JPMorgan's investment banking chairman, according to Bloomberg News. Mr. Staley, Bloomberg reports, “then suggested the whale could be replaced with the squid in the room, which, he clarified afterward, meant Goldman Sachs.”

Goldman's president, G ary D. Cohn, who presided over the gala for the NYU Langone Medical Center's Hospital for Joint Diseases and Center for Musculoskeletal Care, replied in kind. “The only squid in the room is over there,” he said, according to the report. “I've never been so comfortable in a roomful of JPMorgan people in my life.”

Outsmarting a Hedge Fund, Canadian Style  |  It seemed like a clever trade when the American hedge fund Mason Capital Management bet against a proposed share conversion by the Telus Corporation, a Canadian telecommunications company, the Deal Professor writes. But things haven't turned out so well for Mason, which has found a shrewd opponent in Telus. Though the trade is said to be currently profitable, the hedge fund now faces the prospect of potentially losing millions.

Protests in Greece and Spain  |  The New York Times reports: “Clear signs of the political and social cost of the euro zone crisis sent financial markets tumbling Wednesday as debt-laden Greece faced a crippling 24-hour strike and Spain cleaned up after violent protests Tuesday near the country's Parliament. Spanish bond yields approached 6 percent for the first time in months, while European shares and the euro fell sharply, as developments in Greece and Spain sent a new wave of anxiety through the ranks of international investors.”

Mergers & Acquisitions '

Yahoo Seen Putting a Focus on Deals  |  Yahoo replaced its chief financial officer, who was known for cost-cutting, in a move that analysts said signaled the company was ready to expand through investments and acquisitions, The New York Times reports. The chief executive, Ma rissa Mayer, has told employees to expect “acqui-hires,” or acquisitions made for talent, The Times says.
NEW YORK TIMES

BP's Russian Partners Said to Plan to Bid for Stake in Venture  |  The Russian billionaires that own half of TNK-BP plan to make an all-cash offer by mid-October for BP's 50 percent stake, Reuters reports, citing an unidentified person familiar with the matter.
REUTERS

Ameriprise Said to Approach Deal for ING Unit  |  Ameriprise Financial is in advanced talks to buy most of ING's asset management business in Asia, Bloomberg News reports, citing two unidentified people with knowledge of the matter.
BLOOMBERG NEWS

Woolworths Sells Dick Smith Electronics Unit  |  The sale, to Anchorage Capital Partners, was said to be worth about $5 million, The Wall Street Journal reports.
WALL STREET JOURNAL

INVESTMENT BANKING '

Attempts to Rig Libor, Shown Through Instant Messages  |  “Nice Libor,” reads one instant message from the former Royal Bank of Scotland trader Tan Chi Min that was included in a recent affidavit, Bloomberg News reports. “Our six-month fixing moved the entire fixing, hahahah.”
BLOOMBERG NEWS

Credit Suisse Said to Consider Combining Units  |  Bloomberg News reports that the Swiss bank “is considering combinin g its asset-management unit with the private and investment banking divisions, a person familiar with the matter said.”
BLOOMBERG NEWS

Bank of America Said to Plan 40 Job Cuts in Asia  | 
BLOOMBERG NEWS

The Return of Neuberger Berman  |  The asset management firm, which once was owned by Lehman Brothers, is now “pursuing the bold expansion strategy once undertaken by Lehman itself,” Fortune writes.
FORTUNE

Advice for Women on Wall Street  |  Heidi Miller, a longtime lieutenant of Jamie Dimon who retired from JPMorgan Chase in January, told The Wall Street Journal that women in finance should ask for more.
WALL STREET JOURNAL

PRIVATE EQUITY '

Time Running Out for Private Equity to Invest  |  The industry's “dry powder” that it raised at the peak of the boom typically has a five-year life span, The Wall Street Journal writes.
WALL STREET JOURNAL

Onex of Canada Said to Be Near Deal for German Company  |  Onex, the Canadian buyout firm, is eyeing the purchase of KraussMaffei, a German company that makes machinery for processing plastics, from Madison Capital Partners, Bloomberg News reports, citing two unidentified people familiar with the matter.
BLOOMBERG NEWS

HEDGE FUNDS '

SAC Manager Said to Have a Role in Insider Scheme  |  Michael Steinberg, a hedge fund manager at SAC Capital Advisors, “is an unindicted co-conspirator in a $62 million insider trading scheme tied to technology stocks, two people familiar with the matter said,” according to Bloomberg News.
BLOOMBERG NEWS

Morgan Stanley Veteran to Join a New Hedge Fund  |  The former European head of Morgan Stanley Investment Management is set to become the chief executive of a hedge fund being spun out of Citigroup, Financial News reports.
FINANCIAL NEWS

Hedge Funds Express Skepticism Over Fed's Plan  | 
FINANCIAL TIMES

I.P.O./OFFERINGS '

Insiders at Michael Kors Sell Shares  |  The company priced the offering at $53 a share, a discount of 2.8 percent to the shares on the market.
WALL STREET JOURNAL

The Venture-Backed I.P.O. Rankings  |  The blog peHUB uses data from Thomson Reuters to determine that Sequoia Capital was behind four companies that either went public or planned to go public since mid-May, leading its rivals.
PEHUB

Marketing Official at Hong Kong Exchange Loses Job  |  A slowdown in I.P.O.'s in Hong Kong has prompted the Hong K ong stock exchange to reorganize, The Wall Street Journal reports.
WALL STREET JOURNAL

VENTURE CAPITAL '

In Chicago, Tech Companies Flock to an Old Building  |  The New York Times writes that Chicago's Merchandise Mart, “a Depression-era behemoth of limestone, concrete and steel that has long been synonymous with fabric bolts and furniture,” is now attracting major technology companies as tenants, as the surrounding area becomes a hub for start-ups.
NEW YORK TIMES

JPMorgan Invests in Dubai E-Commerce Company  |  JPMorgan Chase and the London-based fund Blakeney Management have invested more than $20 million in Namshi, a clothing retailer in Dubai, Reuters re ports.
REUTERS

French Start-Up Valued at $800 Million  |  Criteo, a display advertising company based in Paris, raised about $40 million, AllThingsD reports.
ALLTHINGSD

LEGAL/REGULATORY '

Former Programmer Demands That Goldman Cover His Legal Fees  |  A former Goldman Sachs programmer who faces new charges of stealing computer code is demanding that the investment bank cover his mounting legal fees.
DealBook '

Germany Is Expected to Act to Curb High-Speed Trading  |  On Wednesday, Germany is expected to approve draft legislation that wo uld put additional controls on high-frequency trading, The New York Times reports.
NEW YORK TIMES

Brokerage Firm Accused of Allowing High-Speed Manipulation  |  Hold Brothers On-Line Investment Services agreed to pay $4 million in fines to the Securities and Exchange Commission.
BLOOMBERG NEWS

A Tax Shelter Mitt Romney Could Love  |  Gov. Mitt Romney's 2011 tax return highlights the use of a tax planning technique that may have allowed him to avoid Medicare tax liability derived from his employment at Bain Capital, Victor Fleischer writes in the Standard Deduction column.
DealBook '

Adding Up the Government's Legal Bills for Fannie and Freddie  |  The government faces years of legal bills to defend Fannie Mae and Freddie Mac executives accused of misleading investors about subprime mortgages, writes Peter J. Henning in the White Collar Watch column.
DealBook '

Lehman Brothers to Pay Creditors $10.5 Billion  |  The payment represents the second leg of a plan to pay out more than $65 billion, Reuters reports.
REUTERS

Olympus and Former Executives Plead Guilty in Accounting Fraud  | 
REUTERS

Regulator Says Credit Scores Are Flawed  |  The Consumer Financial Protection Bureau said credi t scores purchased from reporting firms don't always give an accurate portrait of creditworthiness, The Wall Street Journal reports.
WALL STREET JOURNAL

The King of Good Times Readies to Dismantle His Empire

September 26, 2012, 8:16 am

By HEATHER TIMMONS and NEHA THIRANI

NEW DELHI - Suddenly, everything that was once part of the sprawling empire of Indian businessman Vijay Mallya seems to be up for sale.

Mr. Mallya once took over a sleepy family business at age 27 and reinvented it in his own image into a jet-setting, luxury-loving consumer-friendly group of companies called U.B. Group. Yet in a period of a few days, he seems ready to sell it off piece by piece.

On Wednesday, before the company's annual meeting, Mr. Mallya told reporters that Kingfisher Airlines was “in talks” with foreign carriers about a stake sale.  He declined to be more specific.

The airline has not made a profit since it started in 2005, is late on payments for about 70 billion rupees ($1.3 billion) in bank loans, and has not paid most of its staff for months.

Just a day earlier, Mr. Mallya's liquor company, United Spirits, said it was in talks with the beverage giant Diageo about a stake sale. Any deal is expected to dilute Mr. Mallya's 28 percent stake in United Spirits substantially, to the point where he has little to no control over the business.

“This is a difficult thing to digest,” said Sharan Lillaney, an analyst at Angel Broking. “Mr. Mallya will have to relinquish his crown jewel,” he said.

His company's  less-glamorous businesses - fertilizers and engineering - are also looking for potential investors or acquirers, analysts and bankers said. Those deals, too, are expected to leave Mr. Mallya without control.

The airline has been the biggest burden on the company's operations as its executives seemed willing to practically gamble away the health o f the group's other businesses, which were used as collateral for bank loans to the airline. Now Mr. Mallya needs to raise cash to pay off those debts.

Losing control of the businesses he carefully shaped could will be a sharp change for a man who was regularly featured on Forbes “billionaires list,” who collected expensive cars, as well as sponsored a Formula One team, and whose parties, in Mumbai and at his Goa seaside home were regularly attended by top-shelf Bollywood stars and some of India's most powerful politicians.

Mr. Mallya's airline, which seemed to be modeled loosely on Richard Branson's Virgin Airways, features red-suited stewardesses, a generous frequent flyer program and, at least when it started, high quality food.

He wowed the Paris Air Show in 2007, ordering 50 Airbus planes, and promising an overseas expansion to the United States and Europe.

But by 2009, he was forced to take on bank loans to fund the airline, and post-pone de liveries of new planes. Instead of flying to Paris or San Francisco, the airline's new international destination was Dhaka, Bangladesh. Now the company no longer flies international, lists just 12 planes on its corporate website, down from more than 70, and has cut its domestic flights drastically.

Even back in 2009, Mr. Mallya was looking for a deal. “We are in discussion with private equity investors,” Mr. Mallya told The New York Times in June of 2009. “Certain airlines have shown keen interest as well, subject to the government policy allowing them to invest.”

In India, where heavily-subsidized state carrier Air India skews the playing field and competition was stiff for new passengers from the country's growing upper middle class, profitability has eluded most private carriers.

The Indian government said this month that it would allow foreign airlines to purchase 49 percent of Indian carriers, but the change may have come too late. A few years ago, airlines from the Middle East, Asia and Europe were considered likely acquirers in the Indian market, but Kingfisher won't attract them now because of its financial issues, analysts said Wednesday.

“I don't think any clear deal will go through for Kingfisher because the airline is in very bad shape and the aviation business globally is in bad shape,” said A. K. Prabhakar, the senior vice president of equity research at Anand Rathi Financial Services in Mumbai.

Neha Thirani reported from Mumbai.

Executive Change at Yahoo Suggests Thirst for Acquisitions

SAN FRANCISCO - As 's newly installed chief executive, Marissa Mayer has given employees free cafeteria food, replaced their BlackBerry phones with and smartphones and closed a long-awaited deal with Alibaba that gives Yahoo $625 million.

But two months in, she has yet to do the one thing that shareholders, analysts and advertisers so desperately seek: articulate a clear vision for the flailing Internet company, whose revenue has flattened and stock price has dropped by half over the last five years. She spoke to employees on Tuesday, roughly outlining her plans. The company, however, did not disclose any details.

An executive hiring, announced Tuesday, may offer a hint to her thinking: Ms. Mayer announced that she would replace Tim Morse, Yahoo's chief financial officer, with Ken Goldman, the current chief financial officer of Fortinet, a public computer security company.

Analysts said the ouster of Mr. Morse, who had a history of cost-cutting, suggests Yahoo is ready to expand through renewed investments and acquisitions.

“Tim Morse was ‘Mr. Margin Expansion,' ” said Colin Gillis, an Internet analyst at BGC Partners. “To turn the company around and compete with the big boys, Yahoo will need to spend, spend, spend.”

With 700 million users each month, Yahoo remains one of the most visited sites on the Web, but it has been ceding its share of the online display ad market to rivals like Facebook and Google.

To lure back advertisers, Ms. Mayer said she would focus on user experience and on mobile, where Yahoo has yet to dip a toe. She told employees to expect “acqui-hires” - Silicon Valley-speak for acquisitions made for talent rather than technology.

Ms. Mayer is expected to have a baby in the next few weeks, but has said she expects to return to work quickly. Previous chiefs - four in the last five years, plus two interim chiefs - have failed to carry out their own long-term plans, largely because they have been unable to articulate what it is that Yahoo actually does.

Yahoo made its name in search but lost that market to Google and then proceeded to miss the boat on every big Internet trend since. It was too focused on reinventing itself as a multimedia company to notice people were migrating to social networks and mobile devices as gateways for information and entertainment. Yahoo's home page remains cluttered and sorely lacking a brand of its own.

Board members hope Ms. Mayer will restore some life to the moribund brand. She came from Google, where she was hired as one of its first engineers. She recently closed a $7.6 billion deal with Alibaba that gives Yahoo, after taxes and paybacks to shareholders, $625 million. She indicated Tuesday that employees should expect acquisitions, said one Yahoo employee who spoke on the condition of anonymity.

But Yahoo has had a difficult time persuading entrepreneurs to join. In 2009, Google's bid to acquire Yelp fell apart at the last minute after Yahoo offered to pay 50 percent more than Google. According to one person close to the talks, both deals fell apart because Yelp's management team refused to work at Yahoo and Yelp's board refused Google's terms.

More recently, the founder of a start-up, who refused to be named for fear it would jeopardize a business relationship with Yahoo, said Yahoo recently inquired about a potential acquisition.

The person, who has also been courted by Facebook and Google, agreed to a meeting but said the company was turned off by Yahoo executives' failure to do basic due diligence.

“At Facebook and Google, they know your underwear size before you walk in the door,” this person said. “At Yahoo, it was clear they hadn't even Googled me.”