CITY

BLACKROCK BUYS STATE STREET RESEARCH FOR $375 MILLION

BlackRock Inc., the largest publicly traded U.S. manager of bond funds, agreed to buy State Street Research & Management from MetLife Inc. for $375 million to broaden its stock and real estate investments. Under the terms, MetLife will receive $325 million in cash and $50 million of stock, BlackRock and MetLife, both based in New York, said in a statement. The price may increase by as much as 25% if the transaction meets certain unspecified conditions, the companies said. BlackRock is trying to lessen dependence on bonds by attracting more equity and hedge fund investors. About half of State Street Research’s $52 billion of managed assets is in stocks and real estate. MetLife has been exiting the money management business the last four years, having sold Conning Corp. in 2001 and the insurer’s 48% stake in Nvest LP in 2000. “This transaction brings to BlackRock the benefit of SSRM’s talented professionals as well as an important alliance with MetLife – both of which will further strengthen BlackRock’s ability to work with clients,” BlackRock’s chairman and chief executive, Laurence D. Fink, said in the statement. The combined firm would manage about $366 billion of assets. The boards of MetLife and BlackRock have approved the transaction, which will close by early next year. Shares of MetLife rose 12 cents to $36.57 in New York Stock Exchange composite trading. BlackRock, majority owned by Pittsburgh-based PNC Financial Services Group Inc., gained 93 cents to $66.59.

– Bloomberg News

STATE

PATAKI INCREASES PENALT Y FOR DO NOT CALL LAW

The penalty for telemarketers who violate the state’s “Do Not Call” law was more than doubled yesterday under legislation signed into law by Governor Pataki at the opening of the 2004 New York State Fair. The new law increases the penalty from $5,000 to $11,000 to match the federal “Do Not Call” program. Although more than 4.5 million households have signed up for the registry since it was created in April 2001, Mr. Pataki said “a handful of telemarketers have figured out they can make more money ignoring the law than following the law because the fine for the first violation is only $5,000.” It is the second increase in the penalty, which originally was established at $2,000 per violation. New York Consumer Protection Board Executive Director Teresa Santiago said the state has improved compliance by reaching 72 settlements and collecting more than $1 million from telemarketers accused of violating the law. Ms. Santiago said the board is conducting a two-day campaign at the fair to sign up more New Yorkers to the registry. Mr. Pataki signed the bill during his annual visit to the state fair, which runs through Labor Day. Mr. Pataki was joined at the opening ceremony by members of the Syracuse University and LeMoyne College national champion lacrosse teams and the Syracuse Babe Ruth All-Stars, winners of the 2004 Babe Ruth World Series championship.

– Associated Press

NATIONAL

U.S. INITIAL JOBLESS CLAIMS RISE 10,000 TO 343,000

American initial jobless claims rose for the first time in four weeks, boosted by more filings related to Hurricane Charley, a government report showed. First-time applications for unemployment benefits rose by 10,000 to 343,000 in the week ended August 21 from a revised 333,000 the week before, the Labor Department said in Washington. About half the gain was attributed to the storm, a Labor spokesman said. Hurricane Charley, which struck southern Florida August 13 causing 20 deaths and about $7.4 billion in insured losses, was the strongest to hit Florida since Hurricane Andrew more than a decade ago. Initial claims also rose 10,000 the week Andrew hit Florida in August 1992 and 8,000 the following week. “We may see some additional upward pressure for another two weeks,” from job losses related to the hurricane, said the chief U.S. economist at Barclays Capital Inc. in New York, Henry Willmore. “The peak effect usually comes in the second week.” Since rising to 350,000 in early July, initial claims have declined, suggesting an improving labor market. Employment in August is forecast to accelerate after slowing in the previous two months, according to economists in a Bloomberg News survey. The four-week moving average, a less volatile measure, fell to 336,750 from 337,500, the Labor Department said. That compares with an average of 402,000 for all of last year.

– Bloomberg News

SMITHFIELD’S NET DOUBLES AS PORK DEMAND, PRICES GAIN

Smithfield Foods Inc., the world’s largest hog producer, said profit in the fiscal first quarter more than doubled as livestock prices and pork demand surged. Net income in the three months ended August 1 rose to $54.9 million, or 49 cents a share, from $22.1 million, or 20 cents, a year earlier, the Smithfield, Va.-based company said in a statement. Sales climbed 34% to $2.65 billion.

Hog prices rose as much as 45% this year, helping to boost earnings from raising pigs. Demand for pork jumped after meat importers banned American beef because of a lone case of mad cow disease in December. Smithfield’s president, Larry Pope, said export sales of pork were “very robust,” rising 22%.

“The operating conditions are very good,” said Jonathan Feeney, an analyst with Wachovia Securities in New York, who rates Smithfield “outperform” and doesn’t own the stock. “Pork is the one meat to see improving prices.”

Profit from hog production jumped 71% to $99.6 million, the company said. The rally was limited because Smithfield arranged to sell some hogs at prices that were below the highs reached in June. By locking in prices using futures contracts, Smithfield said it missed out on $47 million of earnings from livestock sales.A futures contract is an agreement to buy or sell a commodity at a specified quantity, price, and date.

– Bloomberg News

EYETECH, PFIZER DRUG HELPS SLOW EYE DISEASE, FDA SAYS

Eyetech Pharmaceuticals Inc.’s and Pfizer Inc.’s Macugen may slow a condition that is the leading cause of blindness among the elderly, American regulators said. Eyetech shares rose as much as 12%. A Food and Drug Administration staff review supported the companies’ conclusions about Macugen, which treats a condition called macular degeneration. A panel of outside advisers will consider the review tomorrow as they make recommendations to the agency at a meeting in Rockville, Md. The panel’s support would move Eyetech closer to approval of its first product, which may have sales of more than $500 million within three years, analysts said. Eyetech hasn’t released complete Macugen data, and some investors had worried that the FDA would find flaws with the studies. “I didn’t see anything in the [FDA’s] questions that was a big red flag,” said Christopher J. Sylvester, a senior analyst with Schwab Sound view Capital Markets in Jersey City, N.J. He has a “neutral” rating on Pfizer. Shares of New York-based Eyetech rose $3.92, or 11.11%, to $39.20 in Nasdaq Stock Market composite trading.

– Bloomberg News

INTERNATIONAL

LUKOIL STAKE TO BE SOLD FOR AT LEAST $1.93 BILLION

The government stake in OAO Lukoil, Russia’s largest oil producer, will be sold for at least $1.93 billion next month in the biggest state asset sale in the country’s history. ConocoPhillips, the third-largest American oil company, has discussed the sale with the government, the Federal Property Fund’s acting chairman, Kirill Tomaschuk, told a Moscow press conference. The starting price will be $29.87 a share, 4.8% more than yesterday’s closing price. The auction of the 7.59% stake will start August 30 and run through September 29. The government is selling the Lukoil stake as demands for more than $3.4 billion of back taxes from OAO Yukos Oil Co., Russia’s second-largest oil company, has raised concern of the risks of investing in the nation. The benchmark Moscow stock index has plunged 28% since peaking in April. “The sale will go a long way to balance a lot of bad Yukos vibes out,” said an analyst at Brunswick UBS in Moscow, Paul Collison. “A lot of market losses will be recouped.” Lukoil shares rose 1.4% to $28.50 on the Russian Trading System as of 6 p.m., when trading closed. The stock has risen 2.9% over the past six months, outperforming the benchmark Russian Trading System Index. “We expect the final price to be either in line with the market price or at a premium,” Mr. Tomaschuk said. “If the stock market falls, the sale may be postponed.”

– Bloomberg News