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* * * * * * FRIDAY, MAY 31, 2013 ~ VOL. CCLXI NO. 126 WSJ.com HHHH $2 .00
CONTENTSArt & Books................ D6Business Tech............ B8Corporate News.... B1-7Global Finance............ C3Heard on Street........ C8In the Markets........... C4
Markets Dashboard C5Opinion................... A11-13Sports.............................. D8Stock Listings............. C7U.S. News................. A2-6Weather Watch........ B8World News............ A7-9
DJIA 15324.53 À 21.73 0.1% NASDAQ 3491.30 À 0.7% NIKKEI 13589.03 g 5.15% STOXX600 303.55 À 0.35% 10-YR. TREAS. unch., yield 2.126% OIL $93.61 À $0.48 GOLD $1,411.50 À $20.20 EURO $1.3049 YEN 100.73
s Copyright 2013 Dow Jones & Company. All Rights Reserved
Vital Signs
Americans are sockingaway less. The personalsaving rate—which reflectshow much people have leftafter spending and taxes—fell to 2.3% in the first quar-ter from 3.6% a year earlier.The rate leapt late last yearwhen fiscal-cliff concernsled some firms to give bo-nuses early, but it has slid asconsumers have spent moredespite their incomes beingcrimped by higher taxes. A2
Personal saving rate
Source: Commerce Department
’13’10 ’11 ’12
2
1
0
3
4
5%
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U .S. consumers were theoverwhelming drivers of
moderate growth in the firstquarter, as gross domesticproduct advanced at a 2.4%seasonally adjusted annualrate, a small downward revi-sion from April’s reading. A2n The bond market’s drophas pushed long-term inter-est rates on mortgages andTreasurys to their highestlevels in more than a year. A1n U.S. stocks shook off amarket rout in Tokyo for thethird time in a little over aweek. The Dow industrials rose21.73 points to 15324.53 afterJapan’s Nikkei lost 5.2%. C1n Procter & Gamble is plan-ning to elevate four seniorexecutives to new top roles,a move that would publiclyidentify candidates to suc-ceed returned CEO Lafley. B1n Dish Network launched atender for shares of Clear-wire, throwing a wrench intoSprint’s planned purchase ofthe broadband company. B3n Neiman Marcus spurned arecent proposal in whichbuyout firm KKR would in-vest in Saks and the two lux-ury retailers would merge. B2n Surging U.S. demand forsome Subaru vehicles couldlead to dealer shortages iftrends continue, the Japaneseauto maker’s CEO said. B1n Smithfield’s CEO would beeligible for a stock payoutworth roughly $17million if themeat company’s planned saleto Shuanghui is completed. B7nA government panel is ex-pected to decideMondaywhether several large, nonbankfinancial firms should be sub-jected to increased scrutiny. C3n Sony’s CEO defended own-ing an electronics-gear busi-ness and entertainment oper-ations under one roof—a mixthat has come under fire. B8n The fee for copper deliv-ery in the U.S. hit a recordhigh as more metal enterswarehouses owned by com-modity-trading firms. C1n PulteGroup, the nation’slargest home-building com-pany, plans to move its head-quarters from BloomfieldHills, Mich., to Atlanta. B2n Seventh Generation, aclosely held maker of house-hold cleaners, is buying amaker of reusable filtered wa-ter bottles called Bobble. B3n Bitcoin exchange Mt. Goxis beefing up its identifica-tion procedures for usersamid increased scrutiny. C2n The IMF is questioningthe practice of using euro-zone bailout funds to repayprivate-sector creditors. A9n Telecom Italia, that na-tion’s biggest telecoms opera-tor, said its board chose to splitoff its fixed-line network. B4n Legendary Pictures isteaming up with China FilmCo. to launch an Asian movieventure, Legendary East. B7
n Assad mocked Syrian reb-els and threatened Israel.In a TV interview, the Syrianleader appeared emboldenedby battlefield gains madewith the support of Iran andHezbollah. Assad said oppo-sition demands that he stepdown and transfer authorityto a transitional governmentwere nonnegotiable. A7Assad accused Israel ofsupporting the rebels andwarned of retaliationagainst Israeli airstrikes.nA top FDA regulator is seek-ing stronger warnings about aclass of blood-pressure drugs,saying theymay be linked tohigher rates of cancer. A1n The Pakistani Talibancalled off plans to open peacetalks with Islamabad after aU.S. drone strike killed thegroup’s deputy leader. A8n TheWhite House easedcurbs on exports of phones,laptops and software to Iran,part of a bid to spread toolsthat help organize protests. A7nHolder told news editors ina privatemeeting that he iscommitted to changing JusticeDepartment guidelines onprobes involving journalists. A4nThe FBI is probing twomoresuspected ricin-laced letterssent to Obama, one of themsimilar to amailing sent to NewYork Mayor Bloomberg. A6nA Chechenman killed inFlorida by an FBI agent duringan interrogation appears tohave died after being shot mul-tiple times, his father said. A6nPentagon chief Hagel, enroute to talks in Singapore, saidhe would reassure allies budgetcuts won’t derail U.S. militaryexpansion plans in Asia. A7n Chinese leader Xi kicks offhis Americas visit in Trinidadand Tobago as Beijing seeksfresh energy sources. A7n China’s elderly have highrates of poverty, illness anddepression, a survey said. A7nA dual U.S.-Iranian citizenwas sentenced to 25 years inprison for his part in a plot tokill the Saudi ambassador. A7n Paterno’s family sued theNCAA over sanctions againstPenn State after the Sanduskychild-sex-abuse scandal. A6nHighway-safety officialsencouraged research on self-driving cars but called for ruleson licenses and training. A6nA suspect in the murder ofa British soldier in Londonmade his first court appear-ance under heavy security. A8nBritain vowed to fight ef-forts to ensure access by citi-zens of other EU nations toU.K. social-security benefits. A9n A U.N. court acquitted twoex-allies of the late Serbianleader Milosevic over a rolein Balkan War atrocities. A9n Bombings in Iraq killed atleast 30 people, bringing theMay death toll to over 500.n Died: Andrew Greeley, 85,Catholic priest and writer.
Business&Finance World-Wide
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TODAY IN MANSION
Moving the Entire HouseARENA The Art Merchants of Venice
What’s News–i i i i i i
When Seibu Railway Co. needed cash back in2005, the problem-plagued Japanese conglomerateturned to U.S. private-equity giant Cerberus CapitalManagement LP. One of the deal clinchers: TheAmericans said they wanted to help management,not take control.
Eight years later, nobody is talking about har-mony anymore. Cerberus is at war with Seibu’s topexecutive and has launched a hostile tender offer,set to expire Friday, for a stake large enough tothwart management proposals. In a letter to share-holders, Cerberus blasted leaders of the company,now part of Seibu Holdings Inc., for “poor operat-ing performance and lack of corporate governance.”
Seibu Chief Executive Officer Takashi Goto nowrefuses even to accept phone calls from his Ameri-can investors, which has triggered a trans-Pacific
exchange of acerbic letters. On Dec. 28, Mr. Gotowrote Cerberus executives that he had curbed con-tact because the investment firm has “continued tomake individualistic and unreasonable argumentsthat are in complete disregard of the rules.” Firingback on Jan. 11, Cerberus Chief Executive StephenFeinberg wrote that the communications break-down was “a bad faith attempt by Seibu to bullyCerberus.”
The messy showdown, which pits one of the big-gest names in American private equity against oneof Japan’s best-known companies, is drawing atten-tion from investors in both countries. Japan haslong had a reputation as an unwelcome place forU.S. buyout firms, in part because companies therehave been hesitant to undertake restructurings in-volving deep job cuts and sweeping asset sales. Pri-vate-equity firms struck just $3.7 billion of deals in
PleaseturntopageA10
The top-selling class of blood-pressure drugs is under attackfrom an unusual source: a seniorregulator at the Food and DrugAdministration.
Bucking his bosses, Thomas A.Marciniak is seeking strongerwarnings about the drugs knownas angiotensin receptor blockers,or ARBs, according to internaldocuments reviewed by The WallStreet Journal.
The drugs, which are taken bymillions of people and generated$7.6 billion in U.S. sales in 2012,may be linked to higher cancerrates, Dr.Marciniak argues, a viewshared by some outside doctors.
Top FDA officials say evidencedoesn’t support a link.
The debate over ARBs high-lights the question of whether theU.S. drug-safety agency devotesenough effort to examining thesafety of long-marketed blockbust-ers as it focuses on newdrugs. In arare rebellion by an FDA reviewer,Dr.Marciniak has clashedwith hisbosses over his desire to spendtime onARB safety, instead of juston new-drug applications.
Ellis Unger, chief of the drug-evaluation division that includesDr. Marciniak, called the com-plaints a “diversion,” and said inan interview, “We have no reasonto tell the public anything new.”
ARBs on the market in the U.S.
includeNovartis AG’s Diovan, Dai-ichi Sankyo Co.’s Benicar, Merck &Co.’s Cozaar, Boehringer IngelheimGmbH’s Micardis; Avapro, fromSanofi SAandBristol-MyersSquibbCo.; and AstraZeneca PLC’s Ata-cand. Patients take thesemedicinesdaily to avoid heart attack, strokeand heart failure.
In a 2010 study published inLancet Oncology, Ilke Sipahi andcolleagues at University Hospitalsin Cleveland looked at five studiesinvolving 68,402 patients andfound that people takingARBs hadan 11% greater risk of new canceroverall and a 25% greater risk ofnew lung cancer, compared withpatients who didn’t get the drugs.
Pleaseturntothenextpage
BY THOMAS M. BURTON
Dispute Flares Inside FDAOver Popular Drugs’ Safety
The bond market’s monthlongplunge has pushed long-term in-terest rates on mortgages andU.S. Treasurys to their highestlevels in more than a year, spark-ing a debate: Is this a burstingbubble, the aftereffect of clumsyFederal Reserve communicationor a welcome sign the U.S. econ-omy is, at last, on the mend.
Yields on the benchmark 10-year U.S. Treasury note nowstand above 2.1%—still low byhistoric standards, but nearly halfa percentage point higher than atthe start of May.
Rates on 30-year fixed-ratemortgages rose a hair above 4%this week, according to HSH As-sociates. Six months ago, theywere below 3.5%.
With stock prices, movementsare easy to read: Up is good.Down is bad. Reading the bondmarket is trickier.
One camp sees the recent fallin bond prices, which move in-versely to yields, as confirmationof a bond-market bubble fueledby the Fed and bound to endbadly, retarding an economywhose growth is already painfullyslow.
In this view, “the Treasurymarket is a beach ball being heldunder water, and the second theFed lets go [interest rates] are
Pleaseturntothenextpage
BY DAVID WESSELAND VICTORIA MCGRANE
SwoonInBondsPuts EyeOn FedInvestors Debate:Bubble, ConfusionOr Sign of Health?
Source: Dealogic The Wall Street Journal
Distant ShoresValue of private-equity deals in2012 by country of investment.
U.S. $99.3 billionU.K. $23.9Germany $9.8China $9.7Australia $5.2Canada $4.1France $4.1South Korea $3.9Sweden $3.8Japan $3.7
BY ATSUKO FUKASE AND CYNTHIA KOONS
Japanese Romance Sours for U.S. Investor
DELICATE DANCE: German Chancellor Angela Merkel and French President François Hollande agreed Thursdayin Paris to a plan for dealing with failing banks in the euro zone that sidesteps the issue of changing treaties. C3
Getty
Images
In Lithuania, the Tax Man ComethRight After the Google Car Passeth
i i i
Assessors UseWeb Giant’s Street View PhotosTo Find Signs of Undeclared Wealth
VILNIUS, Lithuania—One daylast summer, a woman was aboutto climb into a hammock in thefront yard of a suburban househere when a photographer forthe Google Inc. Street View ser-vice snapped herpicture.
The apparentlyinnocuous photo-graph is now beingused as evidence ina tax-evasion casebrought by Lithua-nian authoritiesagainst the undis-closed owners ofthe home.
Some Europeancountries havebeen going afterGoogle, complaining that thesearch giant is invading the pri-vacy of their citizens. But tax in-spectors here have turned to theprying eyes of Street View for
their own purposes.After Google’s car-borne cam-
eras were driven through the Vil-nius area last year, the tax menin this small Baltic nation gotbusy. They have spent monthscombing through footage lookingfor unreported taxable wealth.
“We were veryimpressed,” saidModestas Kase-liauskas, head ofthe State Tax Au-thority. “We real-ized that we coulddo more with lessand in shortertime.”
More than 100people have beenidentified so far af-ter investigatorscompared Street
View images of about 500 prop-erties with state property regis-tries looking for undeclared con-struction.
PleaseturntopageA10
Google Street ViewCapture Car
BY MARCIN SOBCZYK
Germany, France Embrace Plan for Failed Banks
U.S. stocks overcome Tokyo... C1 Bond investors dump ‘junk’.... C4
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