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HONG KONG — Nomura Holdings Inc., Japan’s largest brokerage, said Monday that it has agreed to buy the Asian operations of bankrupt U.S. investment bank Lehman Brothers Holdings Inc. The deal includes Lehman’s businesses in Japan and Australia.

Nomura called the deal "a once-in-a-generation opportunity" for the Japanese brokerage house. The deal includes Leh-

man’s 3,000 employees in Asia, including its biggest regional offices in Japan and Hong Kong.

"It will significantly extend our reach in Asia. We see immediate strategic benefits, delivering the scale and scope to realize our vision to be a world-class investment bank," Kenichi Watanabe, Nomura’s chief executive, said in a statement.

The deal was valued at around $225 million, one person familiar with the matter told The Associated Press payday advance. Nomura did not give the value of the acquisition.

Meanwhile, Nomura also was close to clinching a deal for Lehman’s Europe businesses, another person familiar with the matter said. Nomura’s statement made no mention of the European operations.

THE ASSOCIATED PRESS

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Will the tightening of the global credit markets throw InBev’s takeover of Anheuser-Busch Cos. off track? Not if you ask the Belgian brewer. But the mood on Wall Street is a little less certain.

In the wake of meltdowns at Bear Stearns and Lehman Bros., there may be traces of skepticism floating around one of the biggest buyouts in history.

Shares of Anheuser-Busch Cos. dropped nearly 3 percent to $66.20 on Monday in the midst of a market-wide slide, and closed at $66.05 Tuesday.

Anheuser-Busch’s stock has never risen above $68.43, even after Anheuser-Busch’s board agreed to the $70 per share. Is that an indication that investors are not quite sure that InBev will be able to secure credit and complete its $70-per-share, $52 billion buyout?
InBev said it is still on track to close the transaction by the end of the year. But Edward Jones analyst Jack Russo lowered his rating on Anheuser-Busch’s stock from ‘hold’ to ’sell’ on Tuesday, citing risks to InBev’s financing package.

"While we still see it as probable that the deal closes as planned at $70 in an all-cash offer, fragile credit markets increase the risk that financing falls through, gets delayed, or gets restructured," he wrote in a research note. He said the risk/reward ratio for owner Anheuser-Busch stock is poor, since there is "substantial downside" if the transaction does not go through.

Morningstar analyst Ann Gilpin likewise urged caution.

"Given the recent deterioration in the credit markets and general uncertainty in financial institutions worldwide, we feel it is prudent to raise our uncertainty rating for Anheuser-Busch," she wrote in a note to clients payday loans. "While we think the deal will likely go through, the state of the credit markets adds some uncertainty around our ($70) fair value estimate, which is based on the transaction price agreed to with InBev."

InBev said it has "fully committed financing" in place, with signed credit facilities from a group of leading financial institutions. It has already completed the primary syndication phase of lining up financing, spokeswoman Marianne Amssoms said in an e-mail.

The aligned banks represent "a very diversified group of strong banks, giving InBev access to all significant capital markets," she said.

jmcwilliams@post-dispatch.com | 314-340-8372

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The future of Wall Street is up for grabs — and changing by the minute.

In the course of a few hours Sunday, Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz), the fourth-largest investment bank hobbled by toxic real estate assets, was left for dead and may file for bankruptcy before Monday.

Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz), the No. 3 investment bank and weakest remaining firm after $40 billion of write downs, rushed into the arms of Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) for $29 a share — less than half its 52-week high but almost $12 higher than its closing price Friday.

These moves, coming after the U.S. government’s takeover of Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) and six months after the meltdown of Bear Stearns and its shotgun marriage to JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), renew questions of what Wall Street will look like in an environment of lower leverage and reduce appetite for risk.

Now there are questions whether any of the independent firms will still be around pay day loans. Certainly, for those that survive the current 100-year storm, Wall Street will look a lot different.

“It seems perfectly clear leverage is going down, that banks will be more careful who they do business with, and that there is a desire to be more of an agent than a principal,” said Donald Marron, head of private equity firm Lightyear Capital and former CEO of PaineWebber Group.

“There will be a trend toward specialization. It’s hard to be in too many different places. Firms will concentrate on their strengths.”

After more than 13 months of a global credit crunch, the rules of the marketplace have changed. 

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Hundreds of union members and their families milled around Kiener Plaza in downtown St. Louis last month under a blazing blue Saturday sky. Some clutched placards — "InBev — Don’t forget who makes this Bud!" At exactly 1 p.m., drivers of parked tractor-trailers leaned on their horns. A blaring crescendo signaled the Teamsters were in town, ready to roll.

It remains to be seen whether the International Brotherhood of Teamsters will be so rowdy in an upcoming round of national contract negotiations with St. Louis-based Anheuser-Busch Cos.

Events are moving fast and furious: InBev of Belgium expects to finalize a $52 billion takeover of Anheuser-Busch — the biggest buyout in the history of beer — by the end of the year. A five-year contract between the Teamsters and Anheuser-Busch is set to expire Feb. 28; negotiators will go behind closed doors the week of Sept. 29 try to draw up a new contract.

For now, signs point tentatively toward a peaceful, swift and smooth labor negotiation.

"The Teamsters don’t want the uncertainty" from a long or strident standoff, said Gary Chaison, professor of industrial relations at Clark University. "InBev doesn’t want the uncertainty, and Anheuser-Busch knows it’s more valuable without uncertainty."

The Teamsters, one of the country’s biggest unions, faces an odd dynamic as InBev comes to town. The incoming owner of Anheuser-Busch is known for a tough approach toward unions in Belgium, Canada and Brazil. No one knows exactly how InBev will behave toward the Teamsters, which represent about 8,000 Anheuser-Busch employees in the U.S. — about a quarter of the company’s overall work force.

"With Anheuser-Busch, I knew where I stood to a certain degree," said Ray Wilkinson of House Springs, a fourth-generation brewery worker. "I’m concerned for my family. … Right now, I don’t know where I stand."

InBev has tried to assuage concerns about its planned acquisition. The giant Belgian brewer says it will keep all 12 of Anheuser-Busch’s U.S. breweries open, and says it expects the takeover of A-B to have little or no impact on union jobs.

But the Teamsters remain skeptical, arguing that InBev will be under pressure to make good on $45 billion of debt it shouldered to finance the purchase of Anheuser-Busch. The Teamsters wanted to know how that amount of debt — and the need to cut costs — squared with InBev’s assurances. The highly leveraged nature of the transaction raises "major credibility issues," the Teamsters said earlier this summer.

For their part, InBev and Anheuser-Busch have said the combined company will trim $1.5 billion in costs by 2011 — but mostly through economics of scale, overlapping corporate functions and cuts in the salaried, nonunion work force.

Meanwhile, the Teamsters union says its top priorities in the negotiations with Anheuser-Busch are protecting jobs, pension benefits and health care — demands that reflect the fact that many brewery workers’ dads and grandfathers also worked at Anheuser-Busch.

OPPORTUNITY

Relations between A-B and the union haven’t always been tranquil.

Ten years ago, contract negotiations between the Teamsters and Anheuser-Busch temporarily ground to a halt as things turned nasty. The union twice voted down a proposed contract before a deal was struck, narrowly avoiding a strike.

But by December 2003, the chill had thawed. Anheuser-Busch wrapped up quick negotiations with the Teamsters and emerged with a contract that has helped smooth labor relations.

By ratifying early, about 7,500 Anheuser-Busch employees covered by the contract got early wage and benefit increases and a $1,000 ratification bonus. Anheuser-Busch committed to keep all 12 U.S. breweries open during the term of the agreement and provided wage raises in all five years as well as bigger pensions.

Will the contract negotiations be swift, smooth and painless this time around? A few factors say yes.

First, rather than salivating over the opportunity to squeeze the union, InBev may want to stay in the background. If Anheuser-Busch hammers out a new union contract quickly, the Belgian company would get valuable, precise information about the labor issues and financial costs it is inheriting at America’s biggest brewer.

At the same time, the Teamsters want to demonstrate they are pragmatic employees that InBev can live with. A constructive approach to negotiations would go a long way in that direction.

"Make no mistake — we’re committed to the success of Anheuser-Busch and InBev," said Jack Cipriani, director of the Teamsters brewery and soft drink conference.

The Teamsters could benefit from negotiating with Anheuser-Busch — with whom it has had a stable relationship in recent years — rather than with InBev no fax payday advances. Lurking in the background is the possibility that, if the union drags its feet and throws up roadblocks to a new contract, InBev could close its buyout of Anheuser-Busch, swoop in and start to throw its weight around.

The next three to four months are "the window of opportunity," Paul Garver, brewery worker coordinator for the International Union of Food Workers, said at the Aug. 16 rally in downtown St. Louis. "Once this merger goes through, the promises that have been made through the media will be meaningless," said Garver, whose group is an international federation of trade unions.

If the new contract is in place before InBev takes control of the biggest U.S. brewer, InBev has to live with it. But if InBev takes over while the Teamsters and Anheuser-Busch are still negotiating, previous progress could conceivably come to naught. InBev would have the opportunity to bargain hard, and could take a very different stance toward the union than did Anheuser-Busch. If the company — or the union, for that matter — dug in its heels over unresolved issues, talks could break down.

Several observers said InBev would likely not want to rock the boat by stirring up labor trouble, even if it did have to mop up the union negotiations.

Despite the arguments for urgency, the Teamsters want to flex their muscles and demonstrate the ability to secure a solid contract. The Teamsters "can’t sell out to Anheuser-Busch just to get a deal," said Neil Martin, a Houston labor lawyer with the law firm Gardere Wynne Sewell. "They’ve got to live with the deal."

The Teamsters would put themselves at a disadvantage in negotiations by appearing too eager to get a new contract with Anheuser-Busch. Chaison said the Teamster’s current message to Anheuser-Busch is, "’We’d like to get a quick agreement with you, but it’s not the end of our world if we don’t.’"

Things are going smoothly this time in preliminary talks. Anheuser-Busch and the Teamsters recently wrapped up a few days of "professional and productive" negotiating sessions in Cincinnati, focused on local issues such as work rules at each brewery.

The upcoming national negotiations over issues such as wages and health care promise to be more difficult. Still, some Teamsters and labor analysts expect this round of contract negotiations to be uneventful, given the encouraging start. "We’re going to get a contact," said Dan McKay, president of the Teamsters Joint Council 13. "We’re going to get a good contract."

NEW REALITY

Where will the future balance of power lie between the Teamsters and Anheuser-Busch InBev? Like many unions, the Teamsters have suffered from the slippage of union membership in the U.S. The days may be gone when hard-muscled labor strife made the union feared. But the Teamsters union still has some kick and a well-earned reputation for shrewd and pragmatic negotiations.

The labor movement in general has "really taken it on the chin over the last couple of decades, but the Teamsters are better situated than a lot of manufacturing unions," said Roland Zullo, assistant research scientist at the University of Michigan’s Institute of Labor and Industrial Relations. Why? A concerted effort to diversify the union’s membership beyond truck drivers, said Zullo.

The Teamsters have lost some of their pull in the national labor movement and in state and local politics, but they "still carry clout among the workers at Anheuser-Busch, and they will still have something to say," said Henry W. Berger, emeritus professor of history at Washington University.

Now, the Teamsters are trying to rebalance the scales of power between unions and a brewing powerhouse — Anheuser-Busch InBev — that will supply one-fourth of the world’s beer. The Teamsters and other unions are trying to forge a new international partnership of unions that represent workers at InBev’s breweries in Brazil, Canada, Europe and — when the A-B takeover closes — the United States.

The rise of global entities like Anheuser-Busch InBev means "we must all adapt to new circumstances," said Cipriani. "The Teamsters in St. Louis are adapting to a new international reality."

jmcwilliams@post-dispatch.com

314-340-8372

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Bank of America says it will buy back about $4.5 billion of auction-rate securities as part of a settlement agreement with Massachusetts regulators.

The Charlotte, N.C.-based bank says it continues to cooperate fully with ongoing investigations by the Securities and Exchange Commission and the New York Attorney General’s Office.

Bank of America (BAC, Fortune 500) joins eight other big investment banks that have agreed to buy back a total of more than $50 billion of the securities.

The auction-rate securities market involved investors buying and selling instruments that resembled corporate debt, except the interest rates were reset at regular auctions, some as frequently as once a week payday advance. The market for the securities collapsed in February. 

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Tsingtao Brewing Co., one of China’s largest brewers, agreed that the 27 percent stake in the company that is currently held by Anheuser-Busch Cos. will transfer to InBev of Belgium when InBev finalizes its proposed takeover of Anheuser-Busch. A short notice about the agreement was filed today with the Securities and Exchange Commission.

InBev hopes to take over St. Louis-based Anheuser-Busch by the end of the year in a $52 billion buyout. The Tsingtao deal would give the combined company — Anheuser-Busch InBev — control of roughly one-fifth of the Chinese beer market, the world’s largest.

Anheuser-Busch said it first invested in China in 1993, when the company acquired a minority stake in Tsingtao cash advance in one hour. In October 2002, Anheuser-Busch and Tsingtao formed a strategic alliance to share best practices in areas such as production technology, marketing, sales and management. In 2005, Anheuser-Busch increased its investment in Tsingtao to 27 percent.

jmcwilliams@post-dispatch.com | 314-340-8372

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General Electric Co. said Friday it has been informed that the Securities and Exchange Commission may recommend fines and other action for possible violations of securities law related to accounting changes the company made.

GE said in a regulatory filing that the notification, called a "Wells notice," is related to issues dating to several years ago concerning GE’s accounting for certain derivatives used for hedging interest rate risk and other transactions.

GE said it disagrees with a recommendation for civil action and is cooperating with the SEC.

The conglomerate says the change was made in its accounting for profits in 2002 on some aftermarket spare parts, primarily in its aviation business, as well as on transactions in 2003 and earlier involving financial intermediaries in its rail business and other GE units.

The impact of the changes was to reduce net earnings by about $300 million from 2001 through Dec online payday loan. 31, 2007, GE said.

Net earnings for GE, which makes locomotives, water treatment plants and owns NBC-Universal, totaled $22.2 billion last year.

GE (GE, Fortune 500) said it has established "remedial actions and internal control enhancements" that have been reviewed or discussed with its accounting firm, which audited all GE financial statements in the period under review.

GE, based in Fairfield, disclosed in 2005 that in a regular audit review, it concluded it improperly accounted for financial instruments used to protect the company’s financial services businesses from changes in interest rates and currency exchange rates.

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Stocks plummeted Thursday, with the Dow plunging around 345 points as mixed retail sales, lower oil prices and dour labor market readings amplified worries about a global economic slowdown.

The concerns overshadowed a better-than-expected sales report from Wal-Mart Stores and surprisingly strong readings on productivity and the services sector.

The Dow Jones industrial average (INDU) lost 345 points, or 3%. It was the fourth-biggest one-day decline on a point basis this year and the third-worst day on a percentage basis.

It was the 51st session in 2008 in which the Dow posted triple-digit losses, according to Dow Jones. That’s the worst record for the blue-chip barometer since 2002, when the Dow declined at least 100 points 67 times during the year.

The big daily swings this year reflect the markets’ volatility amid the uncertainty concerning the economy and financial sector.

The broader Standard & Poor’s 500 (SPX) index fell 3.2% and the Nasdaq composite (COMP) lost 3%.

Small caps got pummeled too, with the Russell 2000 (RUT) index plunging 3%.

Friday’s focus will be the August employment report from the government. But economists don’t expect a job market turnaround anytime soon. (Full story).

Investors have come back from Labor Day and the summer to find that few of the negatives have changed, said Gus Scacco, managing director at AG Asset Management.

"The market is looking out and trying to discount six months from now, but all the same issues are still there," he said. "And now there’s more of a realization that global growth has slowed. That’s become a front-burner issue."

Stocks were mixed Wednesday as falling oil prices, a sluggish economic reading from the Federal Reserve and weak sales reports from many automakers added to recession fears. Such concerns were magnified Thursday by the retail sales reports and economic news.

"I think the economy is really weak and this bear market is a correct reflection of that," said Len Blum, managing director at Westwood Capital.

He said that whether it meets the technical definition of a recession or not, the current environment feels like a recession and it’s being led by the consumer.

"Consumers are getting hit on a lot of fronts," he said. "They’re getting crushed at the grocery store and the gas pump, they can’t borrow and the labor market is weak."

A lot of those realities were reflected in the day’s news.

Adding to the gloom and doom in the afternoon: comments from two Fed officials that reiterated the central bank’s dour forecast. Dallas Fed president Richard Fisher discussed anemic growth. San Francisco Fed president Janet Yellen said that the credit crunch is severe and deepening and that the housing market has not bottomed yet.

Additionally, bond manager Bill Gross stated in a commentary on the PIMCO Web site that the Treasury needs to step up its efforts to help Fannie Mae and Freddie Mac and to rescue the housing industry.

Wal-Mart: The world’s leading retailer reported stronger-than-expected August sales at its stores open a year or more, a metric known as same-store sales. Sales rose 3% versus forecasts for a rise of 1.6% and included the critical back-to-school period. (Full story)

Wal-Mart (WMT, Fortune 500) shares ended the session barely lower.

Other retailers: While Wal-Mart and select other discount retailers benefited from the need for a strapped consumer to still buy essentials, mall-based clothing chains and high-end sellers suffered.

Clothing chain Abercrombie & Fitch (ANF) said sales fell 11%, versus forecasts for a 7.9% drop. Shares slumped 6.8%. Pacific Sunwear of California (PSUN) reported a decline of 6%, shy of forecasts for a drop of 8.8%. Shares dropped 4%.

On the high end, Saks (SKS) said same-store sales fell 5.9% versus forecasts for a drop of 4.7%. Shares were little changed. Nordstrom (JWN, Fortune 500) said same-store sales slumped 7.9%, worse than the 7.1% consensus. Shares slipped 4%.

Jobs: The number of Americans filing new claims for unemployment jumped unexpectedly last week, rising to 444,000 from a revised 429,000 the previous week, the government said. Economists surveyed by Briefing.com thought claims would fall to 420,000 last week.

A separate report from payroll services firm ADP showed that the private sector lost 33,000 jobs in August, eclipsing forecasts for a drop of 30,000 payday loan.

The report can sometimes be a harbinger of the broader government-issued monthly employment report, due Friday. Employers are expected to have cut 75,000 non-farm jobs from their payrolls, after cutting 51,000 in July. The unemployment report, generated by a separate survey, is expected to hold steady at 5.7%.

Other economic news: Other reports were more positive. Second-quarter productivity was revised up to a 4.3% annualized rate from an initial rate of 2.2%. Economists thought it would be revised up to a 3.5% rate.

At the same time, unit labor costs, the report’s inflation component, showed a bigger-than-expected decline, suggesting that the boost in productivity has not boosted wages.

And the Institute for Supply Management’s reading on the services side of the economy showed expansion in the sector, versus forecasts for further erosion. The index rose to 50.6 in August from 49.5 in July. Economists thought it would hold steady at 49.5. Any number over 50 signals expansion and a number below it signals weakness.

Company news: Ciena (CIEN) reported a steep drop in fiscal third-quarter profit and warned that fourth-quarter sales won’t meet forecasts as large customers delay purchases due to the weak economy. Shares of the network-gear maker slumped almost 25% in active Nasdaq trade and dragged on the technology sector. (Full story).

Cisco (CSCO, Fortune 500), Oracle (ORCL, Fortune 500), Intel (INTC, Fortune 500), Yahoo (YHOO, Fortune 500), Amazon.com (AMZN, Fortune 500) and Google (GOOG, Fortune 500) were among the big tech stocks sinking.

Blue chips were hit hard too, with 29 of 30 Dow components sliding. The lone exception was Coca-Cola (KO, Fortune 500).

The Dow’s biggest losers were financial components AIG (AIG, Fortune 500), American Express (AXP, Fortune 500), Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and JP Morgan Chase (JPM, Fortune 500).

Caterpillar (CAT, Fortune 500) declined 5.6%. The heavy-equipment maker has been sliding for the last few sessions and was also reacting Thursday to fellow machinery maker Terex (TEX, Fortune 500)’s warning that 2008 profit won’t meet forecasts. Terex fell almost 20%.

Aluminum producer Alcoa (AA, Fortune 500), aerospace companies Boeing (BA, Fortune 500) and United Technologies (UTX, Fortune 500), automaker General Motors (GM, Fortune 500) and telecom Verizon Communications (VZ, Fortune 500) all lost around 4%.

Among other movers, airlines, railroads and truckers declined, dragging down the Dow Jones Transportation (DJTA) average by 2.7%.

Market breadth was negative. On the New York Stock Exchange, losers beat winners five to one on volume of 1.3 billion shares. On the Nasdaq, decliners topped advancers by nearly four to one on volume of 2.38 billion shares.

Fuel prices: U.S. light crude oil for October delivery fell $1.46 to settle at $107.89 a barrel on the New York Mercantile Exchange, a fresh five-month low.

Prices slipped after the government’s weekly inventories report showed crude stockpiles tumbled unexpectedly. Investors were also keeping an eye on updates about the damage from Gustav to Gulf Coast oil facilities, which account for about 25% of U.S. oil production.

Oil has fallen steadily over the last few weeks after tumbling more than 20% off the record high of $147.20 a barrel hit on July 11. Worries about Gustav’s impact initially added to that rise, but the storm proved to be less destructive than had been feared, and oil prices resumed their slide on bets of a global economic slowdown. (Full story)

Gas prices declined for a fourth straight day, according to a national survey of credit-card activity. Even the Gustav-ravaged Gulf Coast states saw prices decline.

Other markets: In global trade, Asian and European markets ended lower.

In the bond market, Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.62% from 3.70% late Wednesday. Prices and yields move in opposite directions.

The dollar gained versus the euro and fell versus the yen.

COMEX gold for December delivery fell $5 to $803.20 an ounce. 

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Smith & Wesson Holding Corp.’s first quarter revenue rose 5 percent on the strength of increased demand for pistols.

The Springfield, Mass., company reported revenue of $78 million for the three months that ended July 31. That’s up from $74.4 million in the year-earlier period.

Pistol sales grew 18.4 percent, as they were snapped up by consumers and law enforcement agencies payday loans online. Net income in the quarter was $2.3 million, compared with $4.7 million in the year-earlier quarter.

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A federal judge has ruled that Oracle Corp. destroyed or failed to preserve chief executive Larry Ellison's e-mail files sought as evidence in a class-action lawsuit filed in 2001 against the software maker, according to reports.

The suit seeks damages on behalf of Redwood City-based Oracle (NASDAQ:ORCL) shareholders who held the stock when it fell after the company reported disappointing results in 2001.

The lawsuit claims Ellison and other Oracle executives made false statements about the company's financial condition as well as the functionality of its Oracle 11i suite of business management software, according to the reports.

U.S. District Judge Susan Illston also ruled that Oracle improperly failed to produce tapes and transcripts from interviews that a journalist conducted with Ellison in 2001 and 2002 as he gathered material to write "Softwar," a biography of the company's founder.

She said the tapes and transcripts were held by the author, Matthew Symonds, who had them destroyed in late 2006 or early 2007.

Illston said Oracle should have figured out a way to comply with the order to produce the information, which was issued in late 2006, saying that Ellison knew of the litigation at the time most of the interviews were conducted pay day loans. She said that he shared intellectual property rights to the materials with Symonds.

"It is appropriate to infer that the emails and software materials would demonstrate Ellison's knowledge of, among other things, problems with Suite 11i, the effects of the economy on Oracle's business and problems with defendants' forecasting model," Illston said in an order released on Tuesday.

Illston said she would instruct jurors to make such an inference when they consider the case during a trial scheduled to begin on March 30.

Oracle has asked the court to throw out the case prior to the start of the trial.

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