NEW YORK: Charlotte, North Carolina-based Bank of America is buying out MBNA Corporation, the largest independent credit card operator in the U.S. for $35 billion. The acquisition will push the No 2 U.S. bank (and No 5 credit card operator) as the world’s top card operator, with 40 million card holders on its rolls and as the largest issuer of debit, prepaid and credit cards from Visa and Mastercards.

The deal will also bring in a business balance of $143 billion to the bank.

The stock-and-cash deal values each MBNA share is valued at $27.50 (a 36 per cent premium) and the company’s shareholders will get 0.5009 of a Bank of America share and $4.125 in cash for each MBNA share.

This is Bank of America’s second big acquisition after the $48 billion purchase of FleetBoston Financial Corp. in April 2004.

The bank’s chairman and chief executive Kenneth Lewis said the acquisition will bring in $31.2 billion in deposits, but it will not exceed the stipulated 10 per cent cap on U.S. deposits.

“Today’s announcement is not only about the creation of one of the world’s largest card providers,” Mr Lewis said. “That is compelling in and of itself. But it’s really a much larger story about two companies with complementary strengths.”

The acquisition will see job cuts to the extent of 6,000 from a combined workforce of 200,000 in order to have savings of $850 million a year by 2007 and to claim a restructuring charge of $1.3 billion.

The bank intends to rebrand MBNA cards with the bank’s name. This may result in some revenue loss as some of the existing MBNA co-branding companies are banks that may not want to continue with the arrangement. MBNA has a number of co-branded cards, called affinity cards, in alliance with several organization.

The deal has been been negotiated and concluded at super speed. It is also linked to a helicopter accident — happened on 17 June — in which several senior MBNA executives, including chief executive Bruce Hammonds were travelling. They escaped the crash that landed them in New York’s East River, apparently while returning from negotiations for a possible acquistion of the company by Wachovia Corporation. The publicity of too many senior officials of the company travelling together and the subsequent rejection of the offer by Wachovia’s board had put MBNA officers in an unpleasant situation. The deal with Bank of America was worked out against this background and Hammonds approached the bank on 22 June and the deal was through on 30 June.

Post-acquistion, the bank said, 55 per cent of its earnings will be from global consumer and small business banking, 17 per cent from global business and financial services, 11 per cent from global capital markets and investment banking and 10 per cent from global wealth and investment management.

The bank had earlier this month announced a $3bn investment in the equity of China Construction Bank.

Recently, JP Morgan Chase had bought BankOne for $59 billion and Wachovia Corporation acquired South Trust Corporation for $14 billion.

SAN FRANCISCO: Sun Microsystems is changing tracks. It is shelving plans to sell its Linux-based Java Desktop System for desktops.

JDS will, however, continue to be there as a product, but as part of Solaris operating system and targeting programmers than end users.

Sun’s executive vice president of software, John Loiacono, told news persons, “You’re going to see less of an emphasis on JDS on Linux. The strategy has changed slightly.”

When Sun launched the project three years ago, JDS was meant to be used both in servers and Linux-based PCs, a combination that would have been cost-effective compared with the Windows OS. It had then announced that a server and 100 PCs using the JDS would cost about $300,000 over five years.

The concept apparently did not click. The company has now made it official that it is “shifting” its marketing emphasis away from JDS for Linux as a way of “targeting resources”.

Loiacono said the focus henceforth will be on JDS for Solaris and Sun Rays. “Right now the developer is using a Sun Ray or a Solaris device.”

How the company will handle customers who have already signed for Linux-based desktops is not certain. For example, the China Standard Software Company had in 2003 contracted to buy 200 million copies of the Linux-based desktop for sale in China. The UK’s National Health Service too has purchased licenses for 5,000 copies after an eight-month trial of the Linux desktop.

Sun’s decision may have something to do about doubts expressed about the viability of Linux as a desktop OS. Though analysts had predicted a rosy picture for the open source software, there is lack of enthusiasm in using Linux mainly because of absence of desktop productivity applications for business / home use. While it is effective on servers, in a field where Microsoft has near total monopoly, it is a losing game.

Alongside, Solaris has become a popular application among developers and naturally Sun would want to capitalize on this. The launch of Solaris 10, OpenSolaris and IBM’s decision to use Solaris 10 for its web sphere, Rational, Tivoli and DB2 software are not just coincidental.

“It’s a way of targeting our resources. With the re-invigoration of Solaris, ISVs are saying ‘you have a platform’. It’s open source, you have new tools and NetBeans which is good – that makes it something that’s viable,” said Loiacono on the decision to change the focus.

LONDON: Britain’s largest ports and shipping firm Peninsular and Oriental Steam Navigation Company (P&O; is ending its association with container shipping. It is selling its entire 25 per cent holding in Dutch company Royal P&O; Nedlloyd to AP Moeller-Maersk of Denmark for 378 million pounds, ending a 40-year-old involvement.

The deal will take the Danish company’s stake in P&O; Nedlloyd to 44 per cent. The sale is being routed through two banks, said Maersk Wednesday, Danske Bank (15 per cent) and Nordea (10 per cent). These banks will in turn sell the holdings to Maersk. A spokesperson said the company had evolved an arrangement with the banks to meet certain prevailing legal formalities.

The stake acquisition is part of Maersk’s plan announced earlier this month to take over P&O; Nedlloyd for 2.3 billion Euros with an aim to consolidate its position as the world’s No 1 container shipping firm. It had offered 57 Euros a share. Although the deal is agreed, it is to receive regulatory approval in Europe and the Americas.

P&O;, however, receives 56.25 Euros a share for its 10.16 million shares. The company said it intends to use the proceeds to reduce its debts, reduce the deficit in the pension fund and invest in the expansion of its port business. A spokesperson said, “Our sole focus in terms of investment at the moment is our ports business.” The company will book a profit of 175 million pounds under International Financial Reporting Standards.

P&O; was one of the founding members of Overseas Containers Limited, which became P&O; Containers in 1985 and merged with Nedlloyd Lines in 1996. The Dutch company owns a fleet of 156 ships calling at 217 ports. Its revenue in 2004 stood at 5.6 billion Euros.

Britain’s biggest supplier Centrica has warned that household energy bills for the year will soar by an unprecedented 15 percent. Its flagship company British Gas has added that there would be a further increase in the bills in the face of escalating gas and electricity costs.

Centrica said in a statement that higher wholesale costs meant it was necessary “for further increases in retail energy tariffs, as has also been signaled by other suppliers.” British Gas could face further depletion in its customer base if the price rise goes through; it has already lost 445,000 since the start of the year.

British Gas managing director Mark Clare said, “All suppliers are facing declining UK gas reserves, high oil prices and the lack of access to European pipelines to get new gas supplies to the market. In the long term, the better news is the investments British Gas is making to secure future energy supplies should help put downward pressure on prices which in turn would benefit consumers.”

Centrica said that wholesale gas prices this year were expected to be 51 percent higher as compared to last year. Consumer group Energywatch warned that these increases would adversely affect Britain’s poorest households, “There comes a point where customers can’t bear any more. Any price rise will have a terrible impact on low earners and vulnerable people. It may be time for companies to think about social tariffs and ways of helping the vulnerable,” it said.

Jeremy Nicholson, director of the Energy Intensive Users Group, which represents companies that use large amounts of energy, said, “This puts manufacturers in an awful position. If they are able to pass the costs on to consumers they will, but manufacturing firms are often competing in international markets and can’t, and so it harms their profits.”

Shona Robison, the SNP shadow health minister, said, “It is very unfair of British Gas, who make such massive profits, to pass this increase on to customers, particularly those on low and fixed incomes. It will increase poverty among groups like the elderly, many of whom are trying to get by on their pensions. I also dread to think how it will affect the health and well-being of those with babies and young children who have so many other calls on their resources.”

Microsoft’s next generation operating system, Longhorn will have features to help PC users subscribe to sites that use the Really Simple Syndication protocol. Microsoft will be announcing this at the Gnomedex conference in Seattle this morning.

Commenting on this move, Windows Group product manager Megan Kidd said, “We believe RSS is the key to how people will use the Internet moving forward. We made a commitment to it, delivering support for RSS in Longhorn that’s integrated throughout the operating system.” Microsoft also said that the RSS capability would be integrated into the OS making it easier for software developers to work on their applications.

Microsoft has also announced the IE 7 will have features that will enable users to be aware of website updates. The IE 7 will display an orange button on the toolbar, which will light up whenever a RSS feed is posted on the site.

Disclosing this Dean Hachomovitch, general manager of Microsoft’s Internet Explorer team, said, “We are making sure that throughout Windows the experiences for users are easy. We want RSS everywhere. I want it in more than just the browser and aggregators. We want to help RSS get even bigger and better than today.”

Microsoft also said that it was working on an extension of the RSS feeds called the Simple List Extensions. These would be made available through the Creative Commons license, thereby allowing other developers to incorporate them into their services and software products.

Mr. Hachamovitch said that Microsoft was really excited about the potential of RSS feeds, “Feeds are everywhere. We are not done with search. There are still a lot of people doing great innovative stuff with search. But there is this other thing called ‘subscribe’. It is not just a feature, it is a new approach. When I subscribe I can say what is interesting to me, the machine can do the work, and I can enjoy the fruits of its labour. It affects your web consumption habits. We believe in ‘subscribe’ very deeply. There is a lot of power and richness there,” he commented.

Longhorn is expected to debut only in December 2006, but Microsoft plans to release a beta at its Professional Developers Conference in September. Gary Schare, Windows product-management director, emphasized that Microsoft would incorporate the RSS features into the beta as well, “We’re making a really big RSS investment in Longhorn. We think RSS will work better than past push technology,” he commented.

The Big Recycle campaign has been launched across the UK in a bid to tackle the landfill crisis. The government is trying to induce more people to adopt recycling as a way of life as it seeks to control the ever-growing waste mountain.

New figures have shown that at least 60 percent of all household rubbish is recyclable. Anna Richards, manager of Waste Awareness Wales says, “At the moment, we’re throwing away about 80% of our rubbish. Why we don’t recycle is a big question. It’s certainly the case that other countries in Europe recycle more than us. Recycling is actually very easy. More and more, we’re seeing kerbside collections and, if you haven’t got that, just put it in the car and drop before you shop – take it to the supermarket and use the recycling bins there. Everyone can take part in a smaller way and it will make a huge difference.”

Launching the Big Recycle campaign this week, Environment minister Ben Bradshaw said that the UK would be able to meet the target of recycling 25 percent of waste next year, but cautioned that there was a lot of work to be done yet, “We need to continue expanding our recycling infrastructure, and encouraging all households and businesses to play their part. Awareness-raising campaigns such as the Big Recycle have an important role in shifting public attitudes. Councils have improved incredibly and so have we as a country. We have more than doubled since ’97, we will have trebled by next year the amount we recycle – it’s still not nearly enough, we need to do more. We are still lagging a heck of a long way behind the rest of Europe,” he said.

Last year was a good for the UK as far as recycling was concerned. A study by Valpak’s Pack flow project says that UK households recycled around a third of all their packaging in 2004; which means approximately 3.5 billion glass bottles and jars, 1 billion plastic bottles, 2 billion aluminum cans and 2.5 billion steel cans were recycled. Commenting on the findings of the study, Mr. Bradshaw said, “I welcome this new study which show that households and businesses are recycling more than ever before, which is excellent news. There is no doubt that it is becoming easier to recycle in the UK, and that people are becoming increasingly keen to do so.”

But environmental organizations have warned that a huge amount of work still needs to be done to meet the target of recycling 30 percent of waste by 2010, Martin Williams, of Friends of the Earth, said, “Local councils have done well to meet targets the government has set but those targets haven’t been ambitious by international standards.”

The Big Recycle campaign is organized by the Waste and Resources Action Programme and UK recycling organizations British Glass, Corus, Novelis, Paperchain, Recoup and Valpak.

A joint report by the National Audit Office and the Audit Commission says that the National Health Service is reeling under huge debts due to financial mismanagement.

The report says that almost one in five NHS bodies were mired in debts in 2003-4. On the whole, the NHS has run up a deficit of almost 140 million pounds last year. This state of affairs prevails despite record government investment in the health sector.

Commenting on the state that the NHS is in, James Strachan, Chairman of the Audit Commission said, “Financial management is now a matter of major concern for the NHS. The Department’s welcome policy of greater transparency on financial matters means that many of the old practices, which obscured the year-end financial position, are no longer possible. We can now see where the real financial problems lie which is the first important step on the way to addressing them. Important reforms like Payment by Results and the new financial regime for NHS Foundation Trusts are also increasing the risks and demand first class financial management.”

The report also found that more than 100 NHS bodies were in the red with 16 of them reporting a deficit of more than £5 million. NAO head Sir John Bourn said, “2003-04 was a relatively stable year in terms of challenges facing NHS financial management but, even so, a number of bodies clearly found it difficult to manage their resources effectively. The major developments taking place in 2004-05 and beyond will pose unprecedented challenges with which all bodies in the NHS will have to deal.”

The pressure on the NHS was immense in the light of the new reforms regime, the report said. Mr. Strachan added, “All NHS bodies need to reassess their own financial management arrangements in the light of this report. We will help in that process. For the first time our auditors will now score PCT and NHS Trust financial management arrangements and show clearly what needs to be done to secure improvement.”

Responding to these findings, the Health Secretary Patricia Hewitt said, “The problem that I think we have got in parts of the NHS is that they are not particularly efficient. I think that what will happen is that individual hospital departments, if they are not able to deliver the quality of care that patients want and to balance their books, they will find themselves replaced by other hospitals who are doing better for that particular procedure.”

Shadow Health Secretary, Andrew Lansley lashed out at the government by saying, “The Government claims to be spending record amounts on the NHS but the money is not getting through to services. Extra costs, bureaucracy and waste are eating up the additional resources while deficits affecting the frontline are causing cuts to patient services.”

The report has also outlined four themes for improving the financial management at the NHS;
* The role of the board in improving financial management;
* Improving forecasting of the year-end position;
* Earlier production and audit of the annual accounts;
* Increasing the transparency of financial reporting.

For the detailed report, please visit www.nao.org.uk and www.audit-commission.gov.uk

LONDON: Congo became the world’s only chimpanzee to have his paintings sold at an auction when three paintings by the ape fetched more than £14,000. The Bonhams auction house witnessed wild scenes as the paintings by the chimp sold for more than 20 times their estimate.

At the auction, household names in the art world like Andy Warhol, Jake and Dinos Chapman and other contemporary artists took a backseat as the three abstract paintings created by Congo in 1957 got tangled in a bidding war.

Howard Hong, a Californian telecommunications consultant, who ended up winning the paintings, said, “Many people have said to me, ‘There is a cheaper solution. Buy a chimpanzee and put it in a room with some paper and paint’,” he said. “But on a purely artistic level, when I saw the paintings they struck me. (The style) looks like an early Kandinsky. My only upset is that Congo never titled his paintings. It is said that what makes us human is our ability to conceive of abstract concepts. This totally contradicts that theory.” He added that he was prepared to bid double the eventual amount for the paintings. He even labeled Congo as “the ultimate chimp of the art world”.

A Bonham’s spokesman said, “It was quite an historic moment and it was fantastically exciting. People seem to see these paintings as the truest form of creativity.” Howard Rutkowski, Bonhams’s director of impressionist and modern art, said, “It is not just any chimp — it is Congo. If you own a Congo you are in the company of Picasso and Miró. Desmond Morris traded Congo’s paintings with those artists. Perhaps Miró’s Congo is worth more than Morris’s Miró.”

Congo has created more than 400 drawings under the guidance of Desmond Morris, the zoologist and anthropologist. Morris even presented Congo as the star of Zootime, an animal programme presented from London Zoo. He became famous when the Institute of Contemporary Arts mounted a large exhibition of his work in 1957.

Morris has recorded a statement saying, “It was truly art for art’s sake. Congo became increasingly obsessed with his regular painting sessions. If I tried to stop him before he had finished a painting, he would have a screaming fit. And if I tried to persuade him to go on painting after he considered that he had finished a picture, he would stubbornly refuse.”

The champion chimp died of tuberculosis in 1964. He was 10.