Business news in brief

For $2.85 billion, Alcoa is jet-part-maker

Alcoa is delving deeper into the aerospace industry, spending nearly $3 billion to acquire the British jet engine component company Firth Rixson.

The Pittsburgh company said Thursday that the deal will raise its annual aerospace revenue by 20 percent, to about $4.8 billion, as the company continues to turn its focus away from its mining and aluminum-smelting roots.

Alcoa will pay $2.35 billion in cash and $500 million in stock to Firth Rixson's current owner, the private equity firm Oak Hill Capital. It also may spend an additional $150 million on the basis of preset performance targets.

Firth Rixson products include jet engine parts such as turbine and compressor cases. The company had $1 billion in revenue last year, mostly from the aerospace industry, and sales are expected to grow 12 percent annually through 2019, according to Alcoa.

The high cost of producing aluminum and falling prices for the metal have hurt Alcoa Inc. and pushed it toward more finished products that are used in aircraft, autos and other goods.

Shares of Alcoa climbed 39 cents to close Thursday at $14.94.

-- The Associated Press

Budvar: 'Budweiser' its alone in Portugal

PRAGUE -- The Czech brewery Budvar says a Portuguese trade court has upheld a decision preventing its rival Anheuser-Busch InBev from registering its beer under the Budweiser name in Portugual.

State-owned Budejovicky Budvar NP has been fighting with Anheuser-Busch for over a century over use of the Budweiser name. The legal battle continued when Anheuser-Busch was taken over by Belgium's InBev in 2008.

The Czech company said Thursday that the appeals court in Lisbon rejected AB InBev's challenge to a December trade court ruling because its Budweiser trademarks could be mistaken for those Budvar had already registered in Portugal.

Budvar says the verdict is final. The court could not be immediately reached for confirmation.

AB InBev spokesman Karen Couck said the ruling doesn't affected sales of the company's BUD brand in Portugal.

-- The Associated Press

St. Louis chief sees Fed rate rise in 2015

Federal Reserve Bank of St. Louis President James Bullard said Thursday that he's predicting the central bank will initiate an interest-rate rise in the first quarter of next year as unemployment falls and inflation quickens.

Speaking on Fox Business Network, Bullard said the U.S. unemployment rate may fall below 6 percent and inflation rise near 2 percent by the end of this year. He said markets may not be fully appreciating how close the Fed is to reaching its goals.

Bullard, who is not a voting member of the policy-setting Federal Open Market Committee this year, won't vote again until 2016.

Commerce Department figures Thursday showed that the price measure tied to consumer spending and watched by the Fed rose 1.8 percent from a year earlier. The Fed's inflation goal using this measure is 2 percent.

-- Bloomberg News

30-year mortgage rate falls to 4.14%

WASHINGTON -- Average U.S. rates on fixed mortgages declined this week, hovering near historically low levels.

Mortgage buyer Freddie Mac, the Federal Home Loan Mortgage Corp., said the average rate for a 30-year loan eased to 4.14 percent from 4.17 percent last week. The average for the 15-year mortgage fell to 3.22 percent from 3.30 percent.

Rising prices and higher interest rates beginning in mid-2013 have made homes less affordable for would-be buyers. At the same time, a limited supply of homes is available to buy. Sales of new homes are running about half the rate of a healthy housing market.

Home prices rose in April from a year ago at the slowest pace in 13 months, reflecting the recent drop-off in sales, according to the latest Standard & Poor's/Case-Shiller 20-city home price index released Tuesday.

-- The Associated Press

Ikea raises wage for U.S. retail workers

NEW YORK -- Ikea's U.S. division is raising the minimum wage for thousands of its retail workers, pegging it to the cost of living in each location instead of to its competition.

The 17 percent average raise is the Swedish ready-to-assemble furniture chain's biggest in 10 years in the U.S.

The pay increase will take effect Jan. 1. It will translate to an average wage of $10.76 an hour, a $1.59 increase from the previous $9.17.

About half of Ikea's 11,000 hourly store workers will get a raise. How much will vary on the basis of the cost of living in each store location.

Ikea evaluates its benefits plans every year and had always adjusted wages on the basis of its competition. But Rob Olson, Ikea's acting U.S. president, said the latest move shifts its approach.

"Now we decided to focus less on the competition and more about the co-workers," Olson said. He said he was guided by Ikea's vision of "creating a better life" for its workers.

-- The Associated Press

China ties gold sham, $15 billion in loans

China's chief auditor discovered $15.2 billion of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities-financing deals.

Twenty-five bullion processors in China, the biggest producer and consumer of gold, made a combined profit of more than $145 million from the loans, according to a report on the National Audit Office's website.

Steps by the Chinese government to rein in credit by raising borrowing costs in recent years created a surge in commodities-financing deals that Goldman Sachs Group Inc. estimates to be worth as much as $160 billion.

"This is the first official confirmation of what many people have suspected for a long time -- that gold is widely used in Chinese commodity-financing deals," said Liu Xu, a senior analyst at Capital Futures Co. in Beijing.

As much as 1,100 tons of gold may have been used in lending and leasing deals in China, where commodities including metals and agricultural products are used to get credit amid lending restrictions, according to World Gold Council estimates.

-- Bloomberg News

Business on 06/27/2014

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