Business Blog Posts

If successful, the deal would be among the largest leveraged buyouts since the credit crisis.

Private equity firms have been sitting on mountains of cash to invest and have been waiting for credit markets and the economy to improve before striking large deals again.

U.S.-based Sara Lee, valued by analysts at about $12.5 billion, has been examining various options such as selling itself or splitting itself up into meat and beverage units.

Indications of interest in Sara Lee were due on Friday.

The private equity consortium of Apollo Global Management, Bain Capital and TPG Capital submitted a takeover offer for Sara Lee which values the company higher than its current $18.70 share price and up to $20, the source said.

It will likely face competition from Brazilian beef processor JBS, which along with a group of other companies, has arranged a financing package to bid for all or parts of Sara Lee, a source with direct knowledge of the situation told Reuters on Thursday.

Private equity giant Blackstone Group is involved in some capacity with JBS's pursuit of Sara Lee, a separate source familiar with the situation said on Sunday.

However, an expected rival offer has not as yet been made by JBS, the first source told Reuters.

Sara Lee is expected to have a board meeting on Thursday January 27 at which it will examine the bids, the source said.

The company had been expected to approve a plan to split the company at a board meeting by the end of January unless a compelling takeover bid emerges, a separate source familiar with the situation previously told Reuters.

Bloomberg earlier reported the price of the private equity consortium bid.

Analysts have said Sara Lee could fetch as much as $23 a share, or $14.7 billion, in a takeover. Shares of Sara Lee closed on Friday at $18.70 on the New York Stock Exchange.

(Reporting by Jessica Hall in Philadelphia and Megan Davies in New York; Editing by Dhara Ranasinghe)

This earnings season, if you're good, you're just OK. If you're just OK, you're bad. And if you're bad, you're quickly taken outside and put out of your misery. Only the truly great are lauded -- and even then not very much.

In an environment like that, and with a heavily extended market, disappointments are taken hard. The S&P 500 just ended its first down week in eight with underwhelming results from the likes of Goldman Sachs (GS.N) and Freeport McMoRan Copper & Gold (FCX.N) weighing on indexes.

Some big energy companies such as Chevron Corp (CVX.N) and ConocoPhillips (COP.N) are reporting results this week. Expectations have been running up in the sector, the third- largest in the S&P 500, providing plenty of room for disappointment.

"We have been climbing up a mountain, and we are on a ledge here, so there is definitely a bit of a pause as people are going to need some evidence of accelerated recovery -- not just baseline recovery," said Rick Meckler, president of investment firm LibertyView Capital Management, in New York.

Analysts have beefed up expectations as stocks rocketed late last year on signs of an improving economy. S&P 500 earnings estimates for the current quarter were revised up 1 percent over the last 60 days, according to data from StarMine.

Positive revisions were heavily concentrated in the technology, energy and materials sectors. Estimates in the materials sector were raised 5.7 percent; in energy, they rose 4.8 percent, and in technology, 2.3 percent, StarMine said.

Unsurprisingly, those three sectors, along with financials, took the brunt of selling last week. Materials shares .GSPM fell the most, losing 3.3 percent over the week.

On top of that, big-gaining "mo-mo" momentum stocks like F5 Networks (FFIV.O), Salesforce.com (CRM.N), Netflix Inc (NFLX.O) and Riverbed Technology (RVBD.O), are looking shaky after F5 Networks missed revenue estimates and forecast a weak second quarter. Its shares tumbled more than 20 percent.

Wall Street will tune in to President Barack Obama's State of the Union address on Tuesday night, when he is expected to make job creation the No. 1 issue.

The Federal Reserve's policy-making panel also will meet for the first time this year, convening on Tuesday and concluding on Wednesday afternoon, when the Federal Open Market Committee's statement will get Wall Street's attention. Some economists believe the FOMC may give a slight nod to signs of improvement in the U.S. economy, especially among consumers and factories.

The week's economic data includes consumer confidence, durable goods orders, a first look at January consumer sentiment from the Thomson Reuters/University of Michigan surveys, and the first look at fourth-quarter gross domestic product.

CALLING A PULLBACK

Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco, said declines in leading sectors are a clear sign of profit taking. He is calling what he terms "a healthy pullback" through the historically weak month of February.

"We're looking for a 5 percent to 7 percent pullback range, and I think we started it" on Wednesday, he said.

U.S. consumer confidence in the fourth quarter held steady from the third quarter but 45 percent of Americans see a weak economic environment this year, compared with 38 percent of Europeans and 19 percent of consumers in the Asia Pacific.

"The U.S. jobless rate remains at the heart of the issue for Americans," said James Russo, vice president of The Nielsen Company. "It has topped 9 percent for 20 months straight, which is the longest streak on record."

Consumer confidence was positive at the end of last year in only 14 out of 52 countries surveyed worldwide. The Nielsen Global Consumer Confidence Index's average score, however, was unchanged from the third quarter at 90, helped by sharp jumps in confidence in Norway, Turkey and Switzerland as well as the Philippines.

A reading below 100 signals pessimism about the outlook.

India came top, improving on its third quarter reading. Still, India's index reading of 129 was well below the country's record 137 index reading in the second half of 2006, the highest reading for any country since the Nielsen consumer confidence index was launched in 2005.

Confidence was lowest in Croatia followed by Portugal, which has imposed austerity measures as it struggles to slash high debt.

Consumer confidence in Greece slumped from the third quarter as the country continued to grapple with its debt burden while Ireland, which was forced to follow Greece and seek an international bailout late last year was also in the 10 least optimistic markets.

"Global consumers -- especially in the West, are bracing themselves for another year of flat to sluggish growth in 2011," said Venkatesh Bala, chief economist at The Cambridge Group, a unit of The Nielsen Company.

"Job creation and employment numbers have fallen below expectation and even though many countries are officially out of recession, many consumers are still living - and expect to continue living - a cautious recessionary lifestyle which is restricting domestic spending and demand."

Rising inflation threatened consumer confidence in previously bullish emerging markets, he said.

"Going forward, rising prices in several emerging markets such as China and India have potential to dent consumer confidence and spending, especially if their governments decide to expand policy actions to combat higher inflation," Bala said.

China's index reading dipped 4 points to the 100 level whereas Brazil was in the top 10 most confident markets and its score rose 5 points from the third quarter to 108.

The survey was taken in mid-November, covering 26,000 consumers in 52 countries. The survey is based on consumers' confidence in the job market, status of their personal finances and readiness to spend.

Nielsen Global Consumer Confidence Index in the fourth quarter, 2010 (Change from Q3 survey in brackets):

This earnings season, if you're good, you're just OK. If you're just OK, you're bad. And if you're bad, you're quickly taken outside and put out of your misery. Only the truly great are lauded -- and even then not very much.

In an environment like that, and with a heavily extended market, disappointments are taken hard. The S&P 500 just ended

its first down week in eight with underwhelming results from the likes of Goldman Sachs (GS.N) and Freeport McMoRan Copper & Gold (FCX.N) weighing on indexes.

Some big energy companies such as Chevron Corp (CVX.N) and ConocoPhillips (COP.N) are reporting results next week. Expectations have been running up in the sector, the third largest in the S&P 500, providing plenty of room for disappointment.

"We have been climbing up a mountain, and we are on a ledge here, so there is definitely a bit of a pause as people are going to need some evidence of accelerated recovery -- not just baseline recovery," said Rick Meckler, president of investment firm LibertyView Capital Management, in New York.

Analysts have beefed up expectations as stocks rocketed late last year on signs of an improving economy. S&P 500 earnings estimates for the current quarter were revised up 1 percent over the last 60 days, according to data from StarMine.

Positive revisions were heavily concentrated in the technology, energy and materials sectors. Estimates in the materials sector were raised 5.7 percent; in energy, they rose 4.8 percent, and in technology, 2.3 percent, StarMine said.

Unsurprisingly, those three sectors, along with financials, took the brunt of selling during the week. Materials shares .GSPM fell the most, losing 3.3 percent over the week.

On top of that, big-gaining "mo-mo" momentum stocks like F5 Networks (FFIV.O), Salesforce.com (CRM.N), Netflix Inc (NFLX.O) and Riverbed Technology (RVBD.O) , are looking shaky after F5 Networks missed revenue estimates and forecast a weak second quarter. Its shares tumbled more than 20 percent.

Wall Street also will note the statement on Wednesday afternoon from the Federal Open Market Committee, which some economists believe may give a slight nod to signs of improvement in the U.S. economy, especially among consumers and factories. Economic data in the coming week includes consumer confidence, durable goods orders, a first look at January consumer sentiment from the Thomson Reuters/University of Michigan surveys, and the first look at fourth-quarter gross domestic product.

CALLING A PULLBACK

Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco, said declines in leading sectors are a clear sign of profit taking. He is calling what he terms "a healthy pullback" through the historically weak month of February.

"We're looking for a 5 percent to 7 percent pullback range, and I think we started it" on Wednesday, he said.

A pullback of that magnitude would take the S&P 500 down to around 1,204, based on Tuesday's closing price. That is still within its uptrend channel from the March 2009 lows, which many technical analysts see as strong support for the market.