As Citi announced plans of a radical dismantling, CEO Vikram Pandit said he “will continue to look at all assets dispassionately.”

For some time to come, that might really be all that he can do when it comes to his plan to sell off non-core assets.

Citi said it will realign into two businesses, Citicorp and Citi Holdings, as it posted its fifth straight quarterly loss. Citicorp will focus on universal banking, the other on brokerage and retail asset management, local consumer finance, and a pool of assets that require special management.

The bank is considering selling off Citi Holdings’ assets or letting them mature on their own.

Selling off assets is likely to prove tough. The question is how will Citi find buyers for businesses that even it doesn’t want? And even if it does find a buyer, what will it get for those assets?

The bank is looking at possibilities “but we’re not in a rush to sell businesses,” Pandit said.

(Photo: REUTERS/Mike Blake)

Anheuser-Busch is set to reject InBev’s $46.3 billion takeover offer, a source tells Reuters. After a few weeks of stonewalling by the company and posturing by Missouri politicians, is that really such a surprise? The company’s defensive strategy will hinge on restructuring  the workforce and spinning off non-core assets like the SeaWorld theme parks, but as DealZone’s David Jones notes, those same strategies have already been offered up by InBev as a justification for its bid. Might as well crack open a few icy cold Budweisers — looks like this is going to take a while to sort out.

Fortis shareholders might also be in need of a Stella six-pack, as the Belgian-Dutch financial services group announced plans to shore up its finances with measures worth more than 8 billion euros ($12.54 billion), including issuing new shares, hitting its stock on dilution worries. Fortis will issue 1.5 billion euros in new shares plus up to 2 billion euros of non-dilutive preference shares, save 1.3 billion euros by not paying an interim 2008 dividend, and will also sell non-core assets and sell and lease back real estate. “We believe that 2008 will be a difficult year for our industry and we do not expect an improvement in the economic environment soon,” said CEO Jean-Paul Votron. “The measures announced today will help Fortis navigate through the current challenging market circumstances.”

Goldman analyst William Tanona has pulled a page from the Meredith Whitney playbook, questioning the viability of the Citibank’s dividend, predicting $8.9 billion in second-quarter writedowns, and adding its stock to the “conviction sell” list. He also said that the bank may have to issue common stock or sell assets to raise capital because regulators may forbid it from issuing more preferred or convertible securities. Citi shares were down 3.7 percent in pre-open trading.

Other deals of the day:

* BT Group is to acquire German IT services specialists Stemmer GmbH and SND GmbH.

* Swedish telecom operator Tele2 divests Tele2 luxembourg and Tele2 liechtenstein to Belgian telecom operator Belgacom for approximately SEK 2 billion.

* World number one bearings maker SKF said it had signed a deal to buy U.S.-based Peer Bearing Co for an undisclosed sum.

* Oriola-KD Oyj said it has increased its holding in Kronans Droghandel, based in Sweden from 85.62 percent to 98.13 percent.

 * Singapore’s United Overseas Bank said it will pay 780 million yuan ($114 million) for a 15.38 percent stake in China’s Evergrowing Bank.

* German chemical maker Lanxess said it planned to acquire two inorganic pigments production facilities from a previous Chinese partner, marking its first acquisition in China. 

* Tyson Foods said it is selling its Canadian beef operation to XL Foods, a Canadian-owned beef processing company, for C$107 million.

* Russian metals giant OAO Severstal agreed to acquire U.S. steel company Esmark after increasing its previous offer, which had been rejected, the companies said.

* Hedge fund SAC Capital reported that it owns a 5.3 percent stake in the common stock of Take-Two Interactive Software, publisher of the blockbuster ‘Grand Theft Auto’ video game.

Citigroup is eyeing a break-up or sale of its business in Germany as part of a global reorganization, sources familiar with the matter have told Reuters. Citi’s German unit, which makes most of its money from loans for everything from televisions to cars, contributed nearly 3 percent of the bank’s global pretax profit in 2006. Citi’s manager in Germany wrote to staff in March, saying the unit would not be sold, but he was replaced last week.

Lehman Brothers has been taking advantage of the Fed’s new borrowing window for investment banks, the Wall Street Journal reported, by using some of the same financial engineering methods that have brought so much chaos to the financial system. In a nutshell: Move $2.8 billion in unattractive debt into a new investment vehicle, get a AAA credit rating, and use as collateral to borrow much-needed cash from Uncle Sam. Fed officials had been worried that the new borrowing window might carry a stigma, but as it turns out, not so much.

U.S. buyout group J.C. Flowers is prepared to walk away from takeover target Friends Provident, frustrated at a lack of contact with the British insurer’s management. “There is no light at the end of the tunnel,” a source close to the matter told Reuters on Friday. Flowers has a regulatory deadline of April 30, by which time it must either make a firm takeover bid or walk away.

Frontier Airlines Holdings filed for bankruptcy protection on Friday, citing unexpected problems with its credit card processor, but said it would operate its flights normally. The low-cost carrier’s attempts to operate normally despite its troubles sets it apart, at least for now, from Aloha Airlines, Champion Air, ATA Airlines and Skybus Airlines — all of which said last week that they would stop flying.

** Virgin Blue Holdings Ltd, Australia’s second-biggest airline, said on Friday a strategic review found buyer interest in airline undervalued the business, and it would not pursue a change of control.
** Philips Electronics NV said it agreed to acquire Chinese patient monitoring company Shenzhen Goldway Industrial Inc. Financial details of the transaction were not disclosed
** London-listed Econergy International said a 27.5p/share all-share approach from carbon credit developer Trading Emissions undervalued the Colorado, United States-based, company.
** Norwegian solar industry group Renewable Energy Corp has acquired 20 percent of U.S. company Mainstream Energy LLC for about $40 million, the company said.
** Electricite de France is drawing up plans to make an offer of more than 700 pence a share for nuclear power firm British Energy, the Times newspaper said on Friday.
** India’s Essel Propack Ltd and Ess Dee Aluminium are jointly bidding for the packaging unit of Rio Tinto, the Economic Times said on Friday.
** Yahoo Inc may have played its top two cards by pulling out possible deals with AOL and Google, but it does not seem to have changed Wall Street’s view that Microsoft will eventually win the takeover battle.
** Quebec’s securities regulator has approved the C$1.02 billion cash and stock takeover of the Montreal Exchange by TSX Group, owner of the Toronto Stock Exchange, saying it is satisfied the combination will produce benefits.
** H&R Block Inc chairman and activist investor Richard Breeden raised his stake in the tax preparer for the second time in a month, bringing his total ownership in the company to 3.2 percent.