Opening Bell: 11.01.06

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CVS, Caremark Rx Hold Merger Talks (WSJ)
Wal-Mart's aggressive moves on the prescription drug front is prompting nervous ticks in the competition. Major pharmacy chain CVS said it's been holding merger talk with pharmaceutical benefits manager Caremark RX, which distributes medicine through a variety of different channels. If they did tie the know -- in what's being described as a merger of equals -- it would represent real vertical integration, something we don't get enough of these days, in our opinion. In would probably prompt similar deals, as companies look for any advantages and cost savings they can find.
Venture Firm Is Giving Loans a Try (NYT)
Lending is hot. The big investment banks are increasingly getting into lending to private equity firms. The man who invented microlending won the Nobel prize. And now VC firms are getting into lending, as opposed to their traditional model of buying equity stakes in small startups. The reason for this, says Charles River Associates, is that so many firms are starting for so little, it just doesn't make sense to buy equity in it, when that amount will be so small. That makes sense, but the strategy still seems odd to us. You'll still have failures, companies that don't go anywhere and can't pay you back. But you won't have any homeruns. Loaning money to a young Google won't let you share in its awesome upside when it later goes on to IPO.
Is It Time for Consolidation 2.0? (Dealbook)
Speaking of startups, Dealbook could probably be forgiven for using the term Consolidation 2.0, even though we don't remember having gone through Consolidation 1.0. It's true though, there has been quite a number of deals lately ranging from big (Google buys YouTube) to small (Google buys a maker of wikis). From the very beginning, many of these one product companies were basically seen as "built to flip", in other words, get a product all hot and then sell out to a big boy when the money runs out. Will we see more of these deals? Absolutely, there's just to many of these young companies out there that can't hack it as standalone business for too long. And as long as you have more mature companies worried that they're missing out on the next big thing, Consolidation 2.0 will continue apace.
BP Alaska president to step down at end of the year (Anchorage Daily News)
Other than all of the affected caribou, the oil leak at Prudhoe Bay seems to have cost one person his job. The head of BP Alaska is going to step down by the end of the year. The company says the move isn't related to recent events, but we all know that it's related to recent events. Steve Marshall will stay at the company and lead a new division called, get this, "BP Operations Academy". Yeah, no idea. By moving him to this role, he'll also be able to stay in anchorage; how lucky.


EU Probes for Price Fixing in Computer Memory Market (Bloomberg)
The EU always has room for another monopoly/price-fixing/price-gouging case on its plate. So when it saw that the US was investigating Sony for allegations that it conspired to fix the price of SRAM, it didn't need much convincing to sign up and launch its own investigation. Regulators showed up at several offices in unannounced raids. What were they hoping to find? Probably they were hoping that these companies would have a price fixing office, or at least a big file with the words "PRICE FIXING" in red sitting on the secretaries desk.
Ethanol powers ADM's gains (Chicago Tribune)
You must always remember that whenever someone talks about the need for farm subsidies to protect independent family farms that by independent family farms they mean Archer Daniels Midland or perhaps they just don't know what they're talking about. Strength in Ethanol fueled the company's latest surge; no wonder, the government is still in love with the crop. One analyst had a funny quote relating to the company's results, "These are the best of times. Corn was cheap, ethanol was expensive, and demand for soybean meal was strong."
Vox populi (Airline Business)
Here's an idea that more airlines should try. Discounter Airtran is inviting people on its website to vote for one of 49 cities for where it should go next. Choices include Fort Wayne, Indiana; Albany, N.Y.; San Juan, Puerto Rico, and Chicago O’Hare. We've all heard people say "Man, I wish so and so airline flew to so and so city". Finally you can tell someone that, instead of complaining to someone who has no power over such as these things.
Power Grab (Oligopoly Watch)
On Monday, French circuit breaker company Schneider Electric announced it would buy out American breaker bar maker American Power Conversions. Little do most people realize that Schneider's been on quite the acquiring binge over recent years. Not including this most recent announcement, it's bought 20 companies since 2003. And now it's set to take a dominant position in the business for uninterrupted power supply systems. The company will now have a greater than 50% stake in the US market for these systems, which guarantee and regulate the flow of electricity for businesses where that's absolutely critical.
Play Offense, Defense or Sit Out the Game? (NYT)
The Times has an interesting survey of Citgo and the Citgo question, on the impact to Citgo's business from its ties to Venezuela. Not surprisingly, despite calls to boycott the company coinciding with when Hugo Chavez came to New York, there hasn't been any meaningful dropoff in Citgo business. Good! It's a testament to the rationality of people that they basically ignore all that political crap. If you need gas and a Citgo happens to be close by, then it would be silly to drive around to somewhere else because you didn't like something that Hugo Chavez said at the United Nations, just as it would be silly to go from drinking Champagne to Prosecco because of France's policy on the war in Iraq. You have to really wonder about people who are always getting offended, getting up in arms, calling for boycotts of things over political issues. Perhaps they have weaker constitutions than the rest of us, who go about our lives without getting so bothered.

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