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McDonald’s starts table service in Germany

FRANKFURT (Reuters) – McDonald’s Corp (MCD.N) is introducing table service in Germany as it reinvents itself as a “modern, progressive burger company” under new Chief Executive Steve Easterbrook.

The world’s biggest fast-food chain has been testing myriad new ideas, including kiosk ordering, custom burgers and even a completely new restaurant brand in a bid to revive slumping sales and better compete with more nimble chains ranging from Chipotle Mexican Grill Inc (CMG.N) to Burger King (QSR.TO).

“This is where McDonald’s is headed,” Easterbrook said at a McDonald’s in the Frankfurt Airport that serves more than 1 million customers a year.

Diners at that restaurant can now choose to be served at their table after placing an order at the front counter, via a digital kiosk or with a waiter carrying a tablet computer.

McDonald’s has tested table service in other markets, a spokeswoman told Reuters.

Easterbrook, 47, made the announcement at the reopening of the restaurant, which is Germany’s biggest with more than 500 seats. Germany has been a challenging market for McDonald’s, which has struggled to find the right recipe for selling to the nation’s health- and cost-conscious diners.

McDonald’s executives have identified its priority turnaround markets as Germany, Japan, Australia and the United States, where it plans to expand a custom hamburger program called “Create Your Taste” and next month will start testing all-day breakfast in San Diego.

Easterbrook, a Briton who took the helm on March 1, is the second non-American to take the job. His challenge is to halt a slide in sales around the world.

Weakness in France and Germany, which has almost 1,500 restaurants, contributed to a 1.1 percent decline in comparable sales in Europe in the fourth quarter. Britain, France, Russia and Germany together accounted for 67 percent of European revenue in 2013.

McDonald’s said earlier this month it would remake itself after competition from Chipotle, Chick-fil-A and other chains bit into U.S. restaurant sales. Easterbrook has already said McDonald’s USA will switch to chicken raised with fewer antibiotics, putting it more in step with Chipotle and Chick-fil-A.

Easterbrook did not take media questions at the event.

In meetings with financial analysts last week, the new CEO called himself an “internal activist” and said he would look at everything that could create shareholder value, including cost cutting and a real estate investment trust but said he had not yet committed to a strategy, analysts said.

(Reporting by Georgina Prodhan; additional reporting by Lisa Baertlein in Los Angeles; Editing by David Holmes and Jonathan Oatis)

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U.S. investor lawsuit over Harbinger’s LightSquared is dismissed

NEW YORK (Reuters) – A federal judge on Monday dismissed a lawsuit accusing Philip Falcone and his Harbinger Capital Partners LLC of misleading investors by taking a majority stake in wireless company LightSquared Inc without disclosing the investment or its risks.

U.S. District Judge Alison Nathan in Manhattan said some claims did not adequately show how Falcone and Harbinger allegedly breached their duties to investors, while other claims were precluded under federal securities law.

“We respectfully disagree with the judge, and are considering our options,” Jacob Zamansky, a lawyer for the plaintiffs, said in a phone interview.

Once known as SkyTerra Communications Inc, LightSquared filed for bankruptcy protection in May 2012 after the U.S. Federal Communications Commission revoked its spectrum license.

Investors accused Falcone and Harbinger of marketing their hedge funds as diversified, but using them to invest $3 billion in LightSquared prior to the bankruptcy, without disclosing the new strategy or its risks.

They also claimed that Falcone improperly arranged a $113.2 million personal loan from his funds, and entered “side agreements” that provided favored treatment to large investors.

A lawyer for Falcone and Harbinger did not immediately respond to requests for comment.

Last Thursday, a federal bankruptcy judge said LightSquared can emerge from Chapter 11 under the control of Centerbridge Partners LP and Fortress Investment Group LLC (FIG.N).

In 2013, Falcone accepted a five-year securities industry ban as part of an $18 million settlement of U.S. Securities and Exchange Commission of civil fraud charges. He was still allowed to manage public companies.

The case is In re: Harbinger Capital Partners Funds Investor Litigation, U.S. District Court, Southern District of New York, No. 12-01244.

(Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker)

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Oil down as Iran races for Tuesday deadline on nuclear deal

NEW YORK (Reuters) – Oil settled down for a second straight session on Monday as Iran and six world powers tried to negotiate a deal on Tehran’s nuclear program that could end Western sanctions and allow the OPEC member to ship more crude into an already flooded market.

Crude prices finished sharply off the day’s lows, however, as prospects that the talks would produce a deal looked even at best, with just 24 hours before the March 31 deadline.

Iran and negotiators for the world powers have made progress in their discussions, according to officials following the talks in Lausanne, Switzerland, and many investors believe there will be some sort of an agreement to free Tehran from at least part of the U.S.-led sanctions that have restricted its oil exports.

But with only a day to the deadline, U.S. State Department spokeswoman Marie Harf offered just a 50-50 chance of achieving a framework agreement with Iran.

That led to a late burst of support for oil, and prices settled only slightly lower, after falling more than 2 percent earlier in the session, extending Friday’s 5 percent drop.

“When you’ve barely 24 hours to announce a deal, it’s not very convincing to hear that you’ve just a 50-50 chance,” said John Kilduff, partner at New York energy hedge fund Again Capital.

“I myself am convinced that this market should be trading a lot lower. But we’re reacting to headlines, and after Friday’s selloff, anything even remotely positive to the bulls could lead to a surfeit of short-covering.”

Benchmark Brent oil settled down 12 cents at $56.29 a barrel, after falling $1.21 earlier.

U.S. crude finished down 19 cents at $48.68, having slid by $1.26 earlier.

The Iranian issue aside, oil prices were also pressured by a stronger dollar that made commodities denominated in the greenback, such as oil, costlier for holders of other currencies. [USD/]

Tehran is keen to recover market share lost under the U.S.-led sanctions that have restricted its crude exports to just 1 million barrels per day from 2.5 million bpd in 2012.

Oil markets are well supplied, with recent figures showing global production outstripping demand by around 1.5 million bpd.

“Regarding Iran, there are two possible outcomes: a framework deal or an extended deadline,” Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo, told the Reuters Global Oil Forum.

(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Dale Hudson, Susan Thomas and Lisa Von Ahn)

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AIG Chairman Steve Miller to step down in July: WSJ

(Reuters) – American International Group Inc (AIG.N) Chairman Robert “Steve” Miller intends to step down in July after five years in the role, the Wall Street Journal reported.

The insurer’s directors have not yet decided on a replacement, but the next outside chairman is expected to be a current board member, the Journal said, citing a person familiar with the matter.

Miller, a turnaround specialist, joined AIG board in 2009 and became chairman in July 2010, replacing Harvey Golub who resigned after clashing with former chief executive Robert Benmosche over the botched sale of the insurer’s Asian life unit.

Miller joined at a time when the insurer was hit hard by the financial crisis and had to be bailed out by the government using taxpayer’s money. In 2012, AIG fully repaid the $182.3 billion bailout.

Benmosche, who stepped down as CEO due to cancer, died last month.

Miller served in a number of corporate restructuring situations, heading auto-parts maker Delphi Corp [DCLC.UL], Bethlehem Steel, Federal-Mogul Holdings Co (FDML.O) and Waste Management Inc (WM.N).

AIG’s corporate governance guidelines state a non-executive chairman should not serve for more than five years, the Journal said. Miller will remain a board member.

AIG declined to comment.

(Reporting by Avik Das in Bengaluru; Editing by Don Sebastian)

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UnitedHealth to buy pharmacy benefit firm Catamaran for $12.8 billion

(Reuters) – Health insurer UnitedHealth Group Inc (UNH.N) agreed to buy Catamaran Corp (CTRX.O)(CCT.TO) in a deal worth about $12.8 billion to boost its pharmacy benefit business as it competes with bigger rivals such as Express Scripts Holdings Co (ESRX.O).

Pharmacy benefit managers (PBM) administer drug benefits for employers and health plans and run large mail order pharmacies, helping them get better prices from drugmakers.

As employers look to cut prescription costs on expensive drugs, the deal with Catamaran will give UnitedHealth’s pharmacy benefits unit, OptumRx, the scale to negotiate favorable prices from pharmacy companies.

U.S. drug prices rose 12 percent in 2014 due to a new treatment for hepatitis C that cost more than $80,000 but cured almost all recipients with few side effects. Another new class of drugs, to treat high cholesterol, is expected to hit the market in 2015 and has insurers worried about drug costs this year as well.

The purchase of Catamaran will increase UnitedHealth’s market share to 15 percent to 20 percent of the people who receive their drug benefits through pharmacy benefit managers, BMO Capital Markets analyst Jennifer Lynch said in a research note.

With a combined 1 billion scripts annually, UnitedHealth will be about the same size as current industry number two, CVS Health Corp (CVS.N), she added.

Catamaran was formed after SXC Health Solutions and PBM Catalyst Health Solutions merged in 2012.

UnitedHealth’s offer of $61.50 per share represents a premium of 27 percent to Catamaran’s Friday close on the Nasdaq.

Catamaran’s stock was trading at $60.01 premarket on Monday, while UnitedHealth was up nearly 4 percent.

The deal “makes sense to us, but admittedly came much earlier than we expected,” Jefferies analyst Brian Tanquilut said in a research note.

“We had always viewed Catamaran as a compelling asset for companies looking for scale in the PBM sector such as Optum or Walgreens but expected Catamaran to grow the business much further before pursuing a sale.”

He added that the offer seemed adequate and he did not expect competing bids at this point.

The deal value is based on Illinois-based Catamaran’s total diluted shares outstanding as of Dec. 31.

The transaction is expected to close in the fourth quarter of 2015 and add about 30 cents per share to UnitedHealth’s profit in 2016, the companies said.

Catamaran Chief Executive Officer Mark Thierer will be CEO of OptumRx and OptumRx CEO Timothy Wicks will become president.

(Additional reporting by Caroline Humer in New York; Editing by Savio D’Souza, Saumyadeb Chakrabarty and Meredith Mazzilli)

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U.S. not liable for alleged SEC negligence in Stanford fraud: court

(Reuters) – A federal appeals court said on Monday the United States is not liable to victims of Allen Stanford’s fraud who claimed that the Securities and Exchange Commission was incompetent for having taken too long to uncover the swindler’s $7.2 billion Ponzi scheme.

A panel of the 11th U.S. Circuit Court of Appeals in Miami said the government is entitled to sovereign immunity.

Stanford’s victims accused the SEC of negligence for having waited until 2009 to uncover the Ponzi scheme, despite having had evidence of it as early as 1997.

But the court said the SEC had discretion to decide how to enforce securities laws, and could not be liable for certain misrepresentations. It said this justified shielding it from claims raised by the victims under the Federal Tort Claims Act.

“We reach no conclusions as to the SEC’s conduct, or whether the latter’s actions deserve plaintiffs’ condemnation,” Circuit Judge Julie Carnes wrote for a three-judge panel. “We do, however, conclude that the United States is shielded from liability for the SEC’s alleged negligence.”

Victims claimed that the SEC thought Stanford’s business was a fraud after each of four examinations between 1997 and 2004, but failed to advise the Securities Investor Protection Corp, which compensates victims of failed brokerages.

The plaintiffs were led by Carlos Zelaya and George Glantz, who claimed to lose a combined $1.65 million, and sought class-action status. Monday’s decision upheld rulings in 2013 by U.S. District Judge Robert Scola in Miami.

Gaytri Kachroo, a lawyer for the plaintiffs, did not immediately respond to requests for comment.

The U.S. Department of Justice, which represented the SEC in the appeal, did not immediately respond to similar requests.

In 2013, federal appeals courts in New York, Philadelphia and Pasadena, California, dismissed lawsuits accusing the SEC of incompetence in investigating Bernard Madoff.

Stanford, 65, is appealing his March 2012 conviction and 110-year prison term for what prosecutors called a scam centered on his sale of fraudulent high-yielding certificates of deposit through his Antigua-based Stanford International Bank.

The SEC’s inspector general in 2010 criticized the regulator for being too slow to uncover Stanford’s fraud.

The case is Zelaya et al. v. U.S., 11th U.S. Circuit Court of Appeals, No. 13-14780.

(Reporting by Jonathan Stempel in New York; editing by Matthew Lewis)

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SEC accuses financier Lynn Tilton of defrauding investors

WASHINGTON (Reuters) – U.S. regulators on Monday accused flamboyant New York financier Lynn Tilton and her advisory business of defrauding investors by hiding the poor performance of assets underlying three collateralized loan obligation funds.

The Securities and Exchange Commission said Tilton and several of her Patriarch Partners firms were able to collect almost $200 million in fees by not properly valuing the assets in the funds through the methodology described to investors.

Known for her flashy outfits and colorful language, Tilton has portrayed herself as a hard-charging female executive in a field dominated by men. The former investment banker for Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) has referred to herself as the “turnaround queen” because of her penchant for buying distressed assets and rejuvenating them.

Tilton plans to fight the SEC’s charges in the agency’s in-house court, a Patriarch spokeswoman said.

In an administrative hearing, SEC enforcement lawyers and the defense counsel present their case before an agency judge. The losing party can appeal the decision, first to the five-member commission and ultimately to a federal appeals court.

“We are disappointed that the SEC has chosen to bring an enforcement action that is ill-founded and at odds with Patriarch’s investment strategy, which was consistently disclosed since the inception of the funds,” the Patriarch spokeswoman said.

According to the SEC’s lawsuit, Tilton, 55, and several of her Patriarch Partners investment fund companies misled investors in the three “Zohar” collateralized debt obligation funds.

The SEC said the Zohar funds raised $2.5 billion from investors and used the money to make loans to distressed companies. The companies, however, failed to perform well and did not make some or all of the interest payments back to the funds over several years.

In fact, the SEC said, internal Patriarch emails it obtained in the probe showed Tilton directed how much interest each company had to pay, and in some cases, the amounts she demanded did not match those due on the loans.

The SEC said she failed to use the valuation method described to investors, masking the poor performance and boosting her firm’s compensation by nearly $200 million.

The agency also accused the firm of filing false financial reports. The complaint does not specify how much in penalties could be at stake in the case.

“Tilton breached her fiduciary duty to her clients,” SEC Enforcement Director Andrew Ceresney told reporters Monday.

Tilton is one of the more high-profile asset managers targeted by the SEC in recent years. The media often quoted her as a valuation expert during the financial crisis.

Later, however, she clashed with Forbes after it published a series of articles raising questions about her business and accusing her of fraud.

According to SEC public records, Patriarch Partners, which is known for investing in troubled companies in manufacturing and heavy industry, reported assets under management of about $5.3 billion as of Feb. 28, 2014.

(Reporting by Sarah N. Lynch; Additional reporting by Lauren T. LaCapra and Jonathan Stempel in New York; Editing by Susan Heavey and Lisa Von Ahn)

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Tesla CEO Musk’s upbeat tweets about China boost stock

DETROIT (Reuters) – Elon Musk, the widely followed chief executive of electric car maker Tesla Motors Inc, tweeted several optimistic statements about the company’s sagging China operations on Monday, sparking a sharp rebound the company’s stock.

On his Twitter feed around midday, Musk said that he was “very optimistic about Tesla’s long-term future in China, despite our earlier mistakes.”

He also tweeted that he visited Chinese President Xi Jinping and other government officials and expressed “great faith” in Tesla’s embattled team in China.

Tesla shares rose 3 percent to $190.60 after trading earlier in the day as low as $181.80, near its 52-week low of $177.22.

In one of his tweets, Musk said the company plans to unveil “a major new Tesla product line — not a car” on April 30 at its southern California design studio.

The announcement will involve a Tesla-branded storage battery for the home, according to a source familiar with the plan. Musk previously announced the battery in February during a year-end earnings briefing.

The company’s stock has been battered this year by investors concerned about the automaker’s failure to hit sales targets in China and the departures last year of two top Tesla executives in that country.

In February, Reuters disclosed that Musk was prepared to fire overseas executives after weak Chinese sales cast doubt on his ambitious global expansion plans, according to people with knowledge of the matter.

Tesla shares had slumped in mid-January.

“We’ll fix the China issue and be in pretty good shape probably in the middle of the year,” Musk said at the time.

In an internal email to Tesla managers in late January, Musk threatened to fire or demote country managers if they are “not on a clear path to positive long-term cash flow,” according to two people who had seen the email.

(Reporting by Paul Lienert in Detroit; Editing by Alan Crosby)

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Teva to buy U.S. drug developer Auspex Pharma for $3.5 billion

TEL AVIV (Reuters) – Israel’s Teva Pharmaceutical Industries said it would buy U.S. neurology drug company Auspex Pharmaceuticals Inc for an equity value of $3.5 billion to boost its portfolio of treatments for the central nervous system.

Teva, the world’s largest maker of generic drugs, will offer $101 per share in cash, representing a premium of 42.4 percent to Auspex’s Friday closing price, the companies said on Monday.

In February Teva – Israel’s biggest company by market value and revenue – said it was ready to return to making acquisitions after a year focused on cutting costs under its new chief executive, Erez Vigodman.

This is the first major deal for Vigodman, a turnaround specialist brought in last year to reduce costs and improve profit that had been squeezed by rising competition.

Teva’s biggest selling drug, multiple sclerosis injectable treatment Copaxone, faces competition from oral treatments and cheaper generics in coming years.

Shares in Auspex were up 41.7 percent to $100.51 in morning trade, while Teva shares were up 3 percent at $63.86.

Bernstein analyst Aaron Gal said the acquisition was a good strategic fit for Teva as the company looks to boost growth, and also leaves financial room for a bigger deal in future.

“To the extent Teva would like to make a transformative deal in the generic space, this deal is small enough not to impact that potential,” Gal said.

Auspex’s main product, SD-809, is being developed for the treatment of chorea, abnormal involuntary movement associated with Huntington’s disease, tardive dyskinesia and Tourette syndrome. SD-809 for Huntington’s is expected to win regulatory approval and be launched commercially in 2016, Teva said.

An estimated 30,000 people in the United States suffer from Huntington’s, 350,000 from tardive dyskinesia and 150,000 from Tourette, for which the drug is in early stage trials. Auspex has another drug being developed for Parkinson’s disease.


Teva said it expected the Auspex deal, which will be financed with cash on hand, to add to revenue from 2016 and to adjusted earnings per share (EPS) beginning in 2017. It will be “meaningfully accretive” thereafter, the company added.

It estimated sales of $2 billion from Auspex products in 2020. It expects minimal dilution to adjusted EPS in the second half of 2015 and 2016.

Cowen analyst Ken Cacciatore said the acquisition would fit well with Teva’s own neurology commercial and development infrastructure.

“The bottom line is that options remain and Teva is now finally on the offence,” he said, adding he hoped even more aggressive deals would be considered.

Michael Hayden, Teva’s chief scientific officer, said Auspex’s technology could represent “a significant breakthrough for patients who often have no sustainable symptom relief from their disease”.

The transaction has been approved by the boards of Teva and Auspex and key shareholders of California-based Auspex have entered into agreements indicating support for the deal. Teva expects it will close in mid-2015.

Goldman Sachs is acting as exclusive financial adviser to Teva and J.P. Morgan Securities is the exclusive financial adviser to Auspex.

(Additional reporting by Natalie Grover in Bengaluru; Editing by Pravin Char and Mark Potter)

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