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Volkswagen Unloads $4.37 Billion for Truck-Maker Scania; Brazil's Percolating Coffee Exports; More Foreign Defense Investments for India; Ford and Toyota Cruise Down Hill; Construction Spending Falls Apart; Bankruptcy Fears Gutter Thornburg Shares; Buffett's Bond Offer Off the Table; Assured Guaranty to Receive $1 Billion
- Volkswagen AG (OTC:VLKAY) bought a controlling stake in Swedish truck maker Scania AB (PINK:SVKFF) for $4.37 billion, clearing the way for a merger with MAN AG that could create Europe's largest car and truck maker. Scania was one of the three largest shareholders in MAN. Volkswagen was the first, but now has 68.6% of voting rights, Bloomberg reported.
- Brazil's coffee exports rose 17% in February from the previous month, shipping 1.73 million bags of coffee beans compared with 1.47 million bags in January, Bloomberg reported. One bag of coffee weighs 132 pounds. Brazil is the world's biggest coffee producer.
- India's Associated Chambers of Commerce and Industry (ASSOCHAM) has asked the government to raise the foreign direct investment (FDI) cap in India's Defense Industry from 26% to 49%. ASSOCHAM said that India's spending on arms imports has risen to $25 billion and is expected to reach $30 billion by 2012. "It is therefore necessary to move towards acquiring self-reliance in defense production, which could be possible if foreign equity in FDI's is raised to 49% which would help India acquire defense technology for its increased arms production and thus shed its imports dependence," the chamber said in a statement.
- Toyota Motor Corp.'s (TM) U.S. sales slipped 3% in February, while Ford Motor Co. (F) reported a 7% decline in sales, the . Toyota said its car sales fell 4%, a decline spearheaded by its flagship LS 460 sedan, which dropped 25% for the month. The company said truck sales were flat. Ford reported a 9% drop in car sales and a 5% drop in truck sales. Ford also said it would reduce shifts at three factories and cut production by 10% in the second quarter.
- Construction spending suffered its biggest decline in 14 years and manufacturing activity contracted, the Commerce Department reported yesterday (Monday). Construction spending plunged by 1.7% in January, as builders slashed spending on residential projects. Meanwhile, The Institute for Supply Management 's manufacturing index clocked in at 48.3 in February, the weakest reading in nearly five years.
- Shares of Thornburg Mortgage Inc. (TMA) dropped over 50% yesterday (Monday) after it was unable to cover $270 million in margin calls, causing a Citigroup Inc. (C) analyst to predict bankruptcy for the struggling lender. "Another downturn in the market could lead to significant risk to the company; a more dire turn in the market could lead to bankruptcy," Citigroup analyst Donald Fandetti wrote in a note to investors, Bloomberg News reported. The stock shed $4.58, a decline of 51.46% to close at $4.32.
- The offer from Berkshire Hathaway Inc. (BRK.A, BRK.B) Chairman Warren Buffett to reinsure $800 million worth of bonds has been withdrawn, he said yesterday (Monday), MarketWatch reported. Buffet had been prepared to reinsure assets secured by MBIA Inc. (MBI), Ambac Financial Group Inc. (ABK) and FGIC, however, at least one bond insurer rejected the offer and now Buffet has taken the deal off the table. "We tossed our hat into the ring and they tossed it right back," Buffet said.
- American billionaire investor Wilbur Ross has agreed to invest up to $1 billion in the fifth-largest U.S. bond insurer, Assured Guaranty Ltd. (AGO), Reuters reported. Ross feels Assured Guaranty is a good investment as it has largely managed to avoid the credit crisis that has put the triple-A ratings of its larger rivals MBIA Inc. (MBI) and Ambac Financial Group Inc. (ABK) in jeopardy. Ross, who is well known for orchestrating turnarounds in troubled industries, purchased $250 million in stock and is willing to purchase an additional $750 million at the company's discretion.