Barclays Bets With China, Oil Drillers Bet On Synergy

Britain's Barclays bank said it would increase its offer for Dutch bank ABN Amro to about $93.2 billion, including $34.2 billion in cash, by selling as much as 19 percent of itself to two Asian state-run banks. The bid still fell short of a rival $98 billion offer from a consortium of banks led by Royal Bank of Scotland, which includes about 93 percent cash. (MarketWatch) The two Asian banks, China Development Bank and Singapore's Temasek Holdings, will buy a combined $5 billion in Barclays shares now, and another $13.5 billion if the ABN acquisition is successful. (AP in Yahoo! Finance) "This feels like the final rolling of the dice" for Barclays, said analyst Antony Broadbent at Sanford C. Bernstein in London. (Bloomberg)

Offshore oil drillers to merge

The world's two top offshore oil and gas drillers, Transocean and GlobalSantaFe, agreed to a "merger of equals." The combined company, to be called Transocean, will have a market capitalization of about $50 billion. The Houston-based company will be headed by Transocean CEO Robert Long and GlobalSantaFe Chairman Robert Rose. (MarketWatch). The shareholders of the two companies will receive about $15 billion in cash, the companies said. The merger was announced after fellow oil-services firm Halliburton reported that its second-quarter net income had more than doubled. "You've had a global increase in overall rig activity," said analyst Kurt Hallead at RBC Capital Markets in Austin, Texas. (Bloomberg)

UAW contract talks get in gear

The United Auto Workers union starts contract negotiations with GM and Ford today, following the launch of talks with Chrysler on Friday. The financial health of the Big Three Detriot automakers has deteriorated since the last round of contract talks in 2003. (AP in Forbes.com) The automakers are expected to offer a one-time cash payment to set up a union-managed trust fund that will take over the health benefits of UAW retirees. (Bloomberg) The talks are "a defining moment" for the U.S. car industry, said analyst James Womack of the Lean Enterprise Institute. "It could be the end of an era for a lot of things." (The Christian Science Monitor)

The ABC (anywhere but China) premium

As consumer confidence in Chinese products falls in the wake of contaminated imports of human and pet food ingredients, companies are finding ways to cash in on the "Not Made in China" label. Smaller brands that can procure all their ingredients locally — and heavily promote that fact — have seen their business pick up substantially in recent months. But larger producers can't use all local ingredients, so proving food origins and safety are increasingly important. Companies like IBM are stepping in to offer third-party tracking and quality-assurance systems. "Whenever there's a crisis, there will always be a silver lining for someone who can help alleviate whatever pain is out there," says crisis consultant Gene Grabowski of Levick Strategic Communications. (BusinessWeek.com)

BEST COLUMNS OF THE DAY

A better carbon-emissions policy

The Kyoto Protocol's carbon dioxide emissions cap-and-trade "system has not lived up to its promise," says Sebastian Mallaby in The Washington Post. It "is supposed to promote development," but most of the benefits have been reaped by "comparatively rich developing countries such as China." The protocol's "clunky procedures" have left poor countries and communities unrewarded for their efforts. U.S. "politicians have stopped denying climate change," but if Congress wants to act, it should look toward the "voluntary market" that has arisen among buyers and sellers "who want to avoid red tape." A Kyoto-like mandatory system would "funnel billions to Chinese industrialists" but "exclude village-based projects."

The upside of the down dollar

"The weak dollar is a source of humiliation" and "a potential economic problem," but it's not all bad, says Daniel Gross in Slate. The flagging currency has helped "put a dent in our chronic trade deficit," and "substantial sectors of the vast U.S. economy" — notably tourism and large multinationals — are doing quite well. Coke and McDonald's made 65 percent of their sales overseas last quarter, and the number of visitors to the U.S. was up 6.8 percent as of April. Sure, "many Europeans may view the United States as an arrogant hyperpower," but they now also view us "the way many Americans view Mexico — as a cheap place to vacation, shop, and party, all while ignoring the fact that the poorer locals can't afford to join the revelry."

GOOD DAY FOR: Muggle publishers, as the final installment of the Harry Potter series sold 8.3 million copies in its first 24 hours on the shelves of U.S. bookstores, setting a new record. The sales of the $35 book far surpassed the first-weekend box office revenue of the latest Harry Potter movie. (AP in BusinessWeek.com)

BAD DAY FOR: Regifting, as cybercrooks are increasingly using stolen credit card information to buy gift cards, and then selling those gift cards online. The lucrative scam has become a popular way to extend the life of stolen credit card data. (USA Today)

NOTED: The developers of the Burj Dubai skyscraper being built in downtown Dubai said that the unfinished structure is now the world's tallest building, at 1,680 feet. The reigning tallest skyscraper, Taiwan's Taipei 101 building, weighs in at 1,667 feet. Dubai's state-owned Emaar Properties development company won't say how high the Burj Dubai is supposed to reach, except that it will end somewhere above 2,275 feet when it is finished in 2008. (AP in USA Today)

Harold Maass is on vacation. Contributing editor Peter Weber wrote this column.