WALL STREET

JP MORGAN MAY BUY HEDGE FUND FIRM HIGHBRIDGE

JP Morgan Chase & Co.’s Fleming Asset & Wealth Management unit agreed to buy a majority stake in closely held Highbridge Capital Management, securing a foothold in the burgeoning hedge-fund business. In a press release yesterday, JP Morgan said founders Henry Swieca and Glenn Dubin would remain at the helm of Highbridge, a $7 billion New York-based fund company, operating it as a “separate entity.” The deal is subject to regulatory approval. The Wall Street Journal reported yesterday that the deal reflects a trend among large financial institutions seeking access to the high-fee, high-return hedge-fund industry. Hedge funds use short-selling, derivatives, and other strategies unavailable to traditional money managers, and consequently charge higher fees. The Journal reported that J.P. Morgan’s proposal valued Highbridge at about $1 billion and that Highbridge brought in about $140 million in fees annually. A spokeswoman for J.P. Morgan said terms of the deal were not disclosed. For 2003, J.P. Morgan earned $6.72 billion, or $3.24 a share, on revenue of $31.72 billion. New York Stock Exchange-listed shares in J.P. Morgan closed Friday at $39.75, up 29 cents, or 0.7%.

– Dow Jones Newswires

CITIGROUP’S KRAWCHECK NAMED HEAD OF FINANCE, STRATEGY

Citigroup Inc., the world’s biggest bank, named Sallie Krawcheck chief financial officer and head of strategy, making her the highest-ranking woman on Wall Street and giving her responsibilities outside the brokerage industry. Ms. Krawcheck, 39, is swapping jobs with Todd Thomson, 43, who becomes head of the Smith Barney brokerage unit, the New York-based bank said in a statement.

Chief Executive Officer Charles Prince, 54, took control a year ago and pledged to resolve litigation and regulatory violations that hurt the stock and eroded profit. Ms. Krawcheck, who has run the brokerage unit since October 2002, may have to enact tighter financial controls amid fresh probes into Citigroup in Japan and Britain.

“What surprises me is taking someone who has absolutely no history whatsoever in running the financial structure of a company and putting her at the top of what’s the most sophisticated and complex financial organization in the world,” said a Pinellas Park, Fla.-based analyst at Punk Ziegel & Co., Richard Bove.

Citigroup Chairman Sanford Weill hired Ms. Krawcheck, the former CEO of New York-based Sanford C. Bernstein & Co., in response to accusations that Citigroup analysts misled investors by publishing slanted research to win investment-banking business. Sanford Bernstein is a research firm that does no investment banking.

– Bloomberg News

ENERGY

CRUDE OIL PRICES REACH RECORD $50 A BARREL

Crude oil surged to a record $50 a barrel in New York as rebel attacks in Nigeria may reduce production and daily American output from wells in the Gulf of Mexico still is below normal more than a week after Hurricane Ivan swept through the region. The rally came in electronic trading on the New York Mercantile Exchange after the open-outcry floor session ended. Crude oil for November delivery rose 32 cents, or 0.6%, to $50 a barrel at 5:19 p.m. Oil ended the exchange’s normal session up 76 cents, or 1.6%, at $49.64 a barrel, the highest closing price since trading began in 1983. Royal Dutch/Shell Group evacuated 235 workers from the Niger River delta in Nigeria, Africa’s top oil producer. In America, oil supplies fell 10% in the eight weeks ended September 17, leaving them close to a 29-year low. Daily oil output in the Gulf of Mexico is down by almost 500,000 barrels, according to the U.S. Minerals Management Service. “This is a market that’s tighter than it was at the beginning of the 1973 oil crisis,” said the chairman of Cambridge Energy Research Associates, Daniel Yergin, at an energy conference in Washington. “There is no margin for error.” Oil futures were up 76% from a year earlier. Prices have closed higher in eight sessions, the longest stretch since August 2002.

– Bloomberg News

CABLE TV

TIME WARNER, COMCAST MULLING ADELPHIA PURCHASE

Time Warner Inc. and Comcast Corp. said they are considering making a joint bid for bankrupt cable-television operator Adelphia Communications Corp. Time Warner, the world’s largest cable and entertainment company, and Comcast, the world’s largest cable-TV operator, are exploring a transaction for Adelphia, the companies said. “It is very early in the process,” Comcast spokesman Tim Fitzpatrick said in an interview, declining to comment further. The companies may use systems acquired from Adelphia to terminate Comcast’s ownership of a 21% stake in Time Warner’s cable unit, said an analyst at Sanford C. Bernstein in New York, Craig Moffett,in an interview. New York-based Time Warner may swap assets it buys from Adelphia in exchange for Comcast’s interest in Time Warner Cable, he said. “Both Comcast and Time Warner have said Adelphia may hold the key to unwinding the Comcast equity interest for cable systems,” Mr. Moffett said. An exchange would allow Time Warner to “regain control of its destiny” and create a tax-deferred transaction, he said. Mr. Moffett doesn’t own shares in the companies. He rates Comcast as ‘outperform’.” Time Warner and Philadelphia-based Comcast also today reached an agreement that allows Comcast to cut its stake in Time Warner Cable, the second-largest U.S. cable-TV operator, taking another step toward unwinding the joint venture.

– Bloomberg News

HEALTH CARE

WAL-MART, GM MAY ADOPT BUSH HEALTH-CARE PLAN

Texas Plywood & Lumber Co., a seller of homebuilding products with 130 workers, has adopted a Bush administration plan to reduce health-care costs that Wal-Mart Stores Inc. and General Motors Corp. may follow. Texas Plywood is among a growing number of small businesses turning to health-savings accounts proposed by President Bush. By requiring workers to shoulder more of the costs, which they can pay for by setting aside money tax free, Texas Plywood expects to slash $90,000 off the $400,000 it spent last year on health care. The surge in health-care costs has damped economic growth because companies are wary of raising salaries or adding workers, said a Morgan Stanley economist, Richard Berner. America spends $1.7 trillion a year, or 15% of economic output, on health care. “The rising cost of health insurance is bad for the small-business community and it impedes growth in the overall American economy,” said Treasury Secretary John Snow, who advocates for the health-savings accounts at almost every press event.

– Bloomberg News

MERCK DEVELOPING NOSE SPRAY FOR OBESITY

TRENTON, N.J. – Could squirting a little medicine up the nose before mealtime be the Holy Grail for people trying to shed pounds? Pharmaceutical giant Merck & Co. appears to be betting on it, with a multimillion-dollar partnership with a company that last year began small-scale testing of a nasal spray drug designed to make the stomach feel full faster. Nastech Pharmaceutical Company Inc. of Bothell, Wash., said yesterday its compound, known as PYY for short, could help address not only the nation’s obesity epidemic but related health problems such as diabetes, high blood pressure, heart disease, arthritis, and cancer. The other possible applications are part of the company’s overall program. “They’re the dessert, not the entree,” said Nastech’s chairman, president, and chief executive officer, Dr. Steven C. Quay. In an interview with the Associated Press, Dr. Quay said that if further testing of the drug goes well, he thinks it could reduce patients’ daily calorie intake by 30%. That would translate into an approximate 50-pound weight loss over a year, based on the 2,800 calories a day the average American eats, he said.

– Associated Press