Like a bad soap opera, the Internet storyline is getting more and more convoluted. The tale so far: Microsoft Corp, spurned by Yahoo Inc, is courting Time Warner Inc to allow a union with Internet division AOL. But Yahoo, which turned its back on Microsoft’s $47.5 billion bid, also wants AOL’s hand. These talks have taken on a new urgency ahead of Yahoo’s Aug. 1 shareholders meeting, a source familiar with discussions told Reuters on Tuesday. How either marriage will work is not immediately clear, but any combination will likely redraw the landscape for advertising on the Internet. So why is AOL so attractive? Both Yahoo and Microsoft view it as beneficial to leverage their positions in the Internet marketplace, where search giant Google Inc dominates. Stay tuned.

But good soaps are not only made in America. It seems the Germans are good at them, too. Tires-to-brakes maker Continental rejected Schaeffler Group’s surprise 11.2 billion euro ($17.8 billion) bid, saying only the family owned firm stood to gain from the offer which was too low. Late on Tuesday, the ball-bearing maker announced the terms of its proposed takeover after winning control of more than a third of Continental’s shares through a web of options organized for it discretely by banks. Schaeffler’s bearings are found in London’s landmark Ferris wheel, the London Eye and it also makes high-precision bearing supports for the U.S. space shuttle and the European launch vehicle Ariane, not that that has any bearing on a deal.

Some suitors, however, do get lucky. Mining company Cleveland-Cliffs Inc said on Wednesday it would acquire Alpha Natural Resources Inc for about $10 billion in cash and stock to expand its coal assets. Stockholders of Alpha, an Appalachian coal producer, will receive 0.95 of a Cleveland-Cliffs common share and $22.23 in cash for each of their common shares when the union is completed. Based on closing stock prices on Tuesday, the deal values Alpha at $128.12 per share, a premium of 35 percent, the companies said in a statement. The combined company will be renamed Cliffs Natural Resources and will include nine iron ore facilities and more than 60 coal mines located across North America, South America and Australia.

More deals of the day:

** Shareholders of utilities Suez and Gaz de France are set to approve a long-delayed 100-billion euro ($159.5 billion) merger, creating Europe’s second-largest electricity and gas group.

** The Co-Operative Group has agreed a long-awaited deal to buy Somerfield for 1.57 billion pounds ($3.1 billion) to strengthen its position as Britain’s fifth-biggest food retailer.

** Russian real estate company LSR said it had acquired a property developer in Yekaterinburg in the Urals region for 100 million euros ($159.5 million).

** Bank Hapoalim, one of Israel’s largest banks, said it was in advanced talks to buy at least 75 percent of Russian mid-sized SDM Bank at a value of $142 million.

** Irish healthcare services company United Drug said it had bought U.S. packaging maker Sharp Corporation for $99 million in cash.

** The board of Australian energy firm Roma Petroleum NL said shareholders should accept the revised A$49.4 million ($48.4 million) takeover offer from Queensland Gas Co Ltd.

** Parsvnath Developers Ltd said it will invest 4 billion rupees for a 38 percent stake in the Nanocity project in northern India.

** Shares in SK Telecom, South Korea’s top mobile carrier, fell early after a CNBC report that it was negotiating to buy Sprint Nextel Corp , the No. 3 U.S. mobile service.

** Swiss engineering group ABB said it will acquire U.S. transformer company Kuhlman Electric Corporation from private equity firm Carlyle Group for an undisclosed sum.

** EPIC Energy Ltd said it had acquired Sathian Sun Power Systems, a solar energy products supplier based in the southern state of Tamil Nadu, for an undisclosed sum.

** Airbus said it has agreed to set up a venture with Harbin Aircraft Industry Group (HAIG), the parent of Hafei Aviation Industry Co, to make aircraft components.

The Wall Street Journal leads with a piece saying Microsoft is preparing a new bid for Yahoo’s search business that could bring on board media giants Time Warner and News Corp and effectively lead to Yahoo’s breakup. The talks are preliminary and unlikely to result in a deal with Yahoo, the paper said, and although it all seems whimsical, Yahoo shares jumped more than 6 percent in early trade. Yahoo rejected a $47.5 billion takeover offer by Microsoft, and earlier this week questioned whether the software maker was ever serious about a full-scale merger. Carl Icahn, who is running a slate of directors to replace Yahoo’s board and has called for the removal of Chief Executive Jerry Yang, has met with Microsoft, which is encouraging him to press his proxy contest as a way to keep pressure on Yahoo to enter into a deal that would lift its share price, the paper said, citing people familiar with the matter.

British events organizer and publisher Informa said it was considering a 2.15 billion pound ($4.3 billion) bid approach from a consortium of private equity firms, sending its shares 10 percent higher. Informa said in a statement that Providence Equity, The Carlyle Group and Hellman & Friedman had made a bid proposal of 506 pence a share on June 26. “Discussions continue to be at an early stage and there can be no certainty that an offer will be made,” it said. When news emerged last month that the equity firms were working on a bid for the media company, the shares showed only modest gains as analysts questioned whether a deal would succeed in the current tight credit markets.

The markets took down another deal yesterday. Blaming grim market conditions Blockbuster abandoned its $1.3 billion offer to buy electronics retailer Circuit City. Shares of the video rental chain jumped more than 7 percent in extended trade after the news while Circuit City’s shares fell 1.6 percent, after declining nearly 12 percent at Tuesday’s close — hitting their lowest point in two decades. Speculation that a potential deal with Blockbuster would not happen gained ground after Circuit City posted a wider quarterly loss and cut its dividend in June.

France Telecom said it was seeking acquisitions that would be smaller than its failed $40 billion bid for TeliaSonera but declined to comment on a possible cash return to shareholders. France Telecom has repeatedly said it is aiming to make acquisitions in emerging markets in Africa and Asia. After becoming a majority shareholder in Kenya Telecom, the French operator is eyeing stakes in Ghana Telecom, Algerie Telecom and Vietnam’s Mobifone. “The matter is closed and definitely closed,” France Telecom Chief Executive Didier Lombard told a telecoms conference organized by Les Echos newspaper, referring to its failed bid for Nordic operator TeliaSonera. “We will make more modest things in the coming months,” he said.

More deals of the day:

* Biotechnology firm Maxygen said a unit of Germany’s Bayer AG has agreed to buy its hemophilia program assets in a deal valued at $120 million, including a potential milestone payment of $30 million.

* Glenmark Pharmaceuticals has bought seven drug brands in Poland from Iceland’s Actavis and its Polish affiliate Biovena, expanding the Indian firm’s presence in Europe.

* British Airways has agreed to buy small French business airline l’Avion for 68 million euros ($107.3 million) and it will become part of its new OpenSkies unit, they said in a joint statement.

* Auto parts maker Amtek Auto is in preliminary talks to buy German light metal castings maker KSM Castings to consolidate its business in the European market, a source close to the development told Reuters.

* Jiuquan Iron and Steel Group, China’s No. 16 steelmaker, plans to inject assets worth 30 billion yuan ($4.38 billion) into a joint venture with a Kazakhstan iron miner, Jiugang’s listed unit said.

* Diversified manufacturer Johnson Controls said it would form a joint venture to acquire the interior products assets of bankrupt auto parts maker Plastech Engineered Products.

* Chesapeake Energy and Plains Exploration & Production said they have entered into a joint venture in north Louisiana and east Texas.

* Microsoft said it had agreed to buy Powerset, a start-up that is working on a new class of Web search that relies on insights from linguistics rather than simple keyword strings.

Fresh from having Yahoo slip through its fingers, Microsoft’s plan to leapfrog into Consumerville takes another hit with news that Nokia is paying 264 million euros ($410 million) to buy out other shareholders of Symbian, the dominant player in smartphone software. Nokia says it will dissolve royalty payments for the platform, making it more attractive when compared to Google’s rival free platform, Android. Symbian’s operating systemis already used in two-thirds of smartphones; Nokia makes 40 percent of all phones sold globally. “This puts a lot of pressure on Microsoft right at a time when they are trying to really push into the consumer space,” said Gartner analyst Carolina Milanesi. “For operators this offers a good alternative to Android.”

British gas producer BG Group launched a hostile $13.1 billion bid for Australia’s Origin Energy, as it seeks to boost its position in Asia-Pacific’s fast-growing gas market. BG is taking its A$13.8 billion all-cash bid, valuing Origin at A$15.50 a share, direct to shareholders after Origin’s board rejected it last month. Origin claimed then that its coal seam gas reserves alone were worth over $15 billion. Shares in Origin, which have surged over 85 percent this year, rose 6.2 percent to a record A$16.48 before closing up 5.8 percent at A$16.42, indicating investors expect an even higher offer. If successful, the deal would be the second-largest foreign takeover of an Australian company after Cemex, North America’s largest cement producer, bought Rinker Group last year for $14.2 billion.

Russian oil major Lukoil bought a 49 percent stake in Italian refiner ERG SpA’s Mediterranean plant for 1.35 billion euros ($2.1 billion), in a sign of the growing energy ties between Russia and Italy. Lukoil and ERG, Italy’s second-biggest refiner by market share, agreed a joint venture valued at 2.75 billion euros to control ERG’s Isab di Priolo refinery on Sicily. ERG will have 51 percent of the new company.

Other deals of the day:

* UBS said it had acquired Dutch wealth manager VermogensGroep.

* French aero engine and telecoms maker Safran said it had bought Dutch-based passport and secure ID document maker Sdu-Identifaction.

* Shares in China Oilfield Services, an arm of the CNOOC, jumped more than 3 percent as speculation grew about a potential takeover of Norwegian offshore driller Awilco Offshore.

* South Korean food group Dongwon said it will buy canned tuna company StarKist from Del Monte Foods for about $300 million, in the latest push by South Korean food makers for global expansion.

* Australian zinc and lead miner Perilya rejected as inadequate a takeover proposal from CBH Resources, both companies said, but Perilya left the door open to further talks.

* Flowers Foods, which produces baked goods, said it agreed to acquire Holsum Bakery in a cash and stock deal.

* Italy’s Banca Popolare dell’Emilia Romagna will launch a buyout offer for the 71.8 percent of its Meliorbanca unit it does not already own at 3.2 euros per share, BPER said.

* Hospital operator Tenet Healthcare said it will sell its interest in health care services company Broadlane Inc to TowerBrook Capital Partners for proceeds of about $155 million.

* Occidental Petroleum said it is buying a stake in a major Canadian oil sands project for C$500 million ($492 million), giving it a foothold in one of the world’s biggest developing oil plays as crude prices surge.

* Digimarc, a provider of secure identity technology, said it is spinning off its digital watermarking business as part of a deal with L-1 Identity Solutions, a photo and fingerprint identity equipment maker.

Japan’s Sumitomo Mitsui Financial Group may invest about $926 million in British bank Barclays, people familiar with the matter told Reuters, the latest in a string of subprime-hit Western lenders increasingly turning to Asia for funding. Japan’s third-largest bank is also considering a business alliance in Asia with Barclays, which is expected to raise about $8 billion from sovereign wealth funds and other investors and then offer shareholders the right to buy on the same terms. If Sumitomo Mitsui opts to invest it would give the Japanese bank a stake of just over 2 percent. Up to five outside investors are also expected to participate, and backers may include existing Singapore-based sovereign wealth fund Temasek and China Development Bank, plus the Qatar Investment Authority.

Steve Ballmer insisted Microsoft will not seek to make a spate of other Internet acquisitions (Facebook, we’re looking at you) in the wake of its failed bid for Yahoo, according to the Financial Times. “People don’t understand what they’re talking about,” Ballmer said. “At the end of the day, this is about the ad platform. This is not about just any one of the applications.” Meanwhile, over at Yahoo, a spate of executives are reported running for the hills, just as the company is trying to justify its decision to go it alone and to repel Carl Icahn’s proxy fight. Among the departed: Flickr co-creator Stuart Butterfield, whose bizarrely hilarious resignation letter could best be summed up as: “There Will Be Tin.”

The fate of the world’s largest leveraged buyout hangs in the balance ahead of Friday afternoon’s decision by the Supreme Court of Canada on whether BCE treated its bondholders unfairly in agreeing to a $34.8 billion ($34.5 billion) takeover. Ontario Teachers’ Pension Plan, with U.S.-based private equity firms Providence Equity Partners, Madison Dearborn Partners and Merrill Lynch Global Private Equity, are offering C$42.75 a share to take BCE, parent of Bell Canada, private.

More Deals of the Day:

** France Telecom declined to comment on a report in French paper Les Echos that it might be ready to make new concessions to improve its $41 billion cash-and-share offer for rival TeliaSonera.

** Malaysia’s second-largest lender, CIMB Bank, has agreed to buy a 42 percent stake in Thailand’s BankThai for about 5.9 billion baht ($177 million), the Bank of Thailand said on Friday.

** France’s leading sugar producer Tereos abandoned plans on Friday to bid for the sugar business of Danish food group Danisco, saying it would instead look for alternative acquisitions.

** Private equity firm Bain Capital will launch a $445 million bid to buy out Japan’s D&M Holdings Inc, the maker of Denon audio equipment, from U.S. buyout firm Ripplewood and the other shareholders.

** Australian-listed miner Indophil Resources NL said it had received a A$488 million ($465 million) bid that trumped a hostile offer from Xstrata Plc, and recommended shareholders take it.

** South Korean food group Dongwon said it was in talks to buy the StarKist seafood business from Del Monte Foods Co, sending shares of its key units higher.

** AviChina Industry & Technology Co Ltd said its controlling shareholder, China Aviation Industry Corporation II, was proposed to merge with China Aviation Industry Corporation I.

** Hynix Semiconductor Inc, the world’s No. 2 memory chip maker, said it would buy a 2 percent stake in Taiwan-based chip design house Phison Electronics Corp.

** Investment firm Guiness Peat Group Ltd said it had reached its target 35 percent stake in New Zealand insurance and fund management company Tower Ltd.

** Ithaca Energy Inc said it has received an unsolicited non-binding offer from Endeavour International Corp. The offer consists cash and shares at an indicative price of $3.25 per Ithaca share, it said.

** Norwegian offshore driller Prosafe Production sold its 30.1 percent stake in peer Teekay Petrojarl to U.S.-listed shipping group Teekay Corp for $258 million.

** Vienna’s bourse submitted the highest bid for a majority stake in Slovenia’s stock exchange, outbidding Greek bourse operator Hellenic Exchanges, the Greek bourse said on Friday. In a bourse filing, Hellenic Exchanges said its binding offer for Slovenia’s stock exchange was not the highest.

** The European Commission restarted on Friday its review of plans by Itema to buy specialised equipment used in textile production from Barco of Belgium.

A story in The Wall Street Journal about Yahoo’s “reorganization” plans even as executives are leaving had us wondering which came first, the reorganization or the departures. The cynical might envision two scenarios:

Scenario 1: Yahoo begins hemorrhaging executives the week after it chooses Google over Microsoft. Investors, already mad at CEO Jerry Yang and the board for not cutting a deal with Microsoft, are likely to see the loss of top talent as a fallout. So Yahoo decides to do some damage control by “reorganizing” its various products, such as mail and messaging, into something more centralized, and indicate that as the reason for some six departures this week.

Scenario 2: After failing to strike a deal with Microsoft, and with investors less than thrilled at the Google partnership, Yahoo needs to do something to show the world it’s worth more than $47.5 billion. It dips into a fast-depleting bag of tricks and pulls out, wait, a “reorganization” plan we’ve sort of heard before. Executives shake their heads, worry that may not save the company and that they’re better off as venture capitalists (or maybe they’re considering job offers at Microsoft), and begin deserting.

So which came first, the chicken or the egg? Send us your thoughts.

(Photo: Reuters)

Oprah, meet Howard. Reports in the Washington Post and The Wall Street Journal say the head of the FCC will support the merger of XM, home to Ms. Winfrey, and Sirius,  where Mr. Stern holds court, removing the last regulatory hurdle to the long-awaited merger of the country’s only two satellite radio operators. Aides to the FCC chief said he decided to give his support after the companies agreed last week to concessions intended to prevent the new company from raising prices or stifling competition among radio makers, the Post reported.  As of last week there was still some static coming from members of Congress, but with the FCC backing the deal it’s unclear how they will make themselves heard.

In his first public comment on the end of the Yahoo/Microsoft merger talks, billionare financier Carl Icahn, said on Sunday the subsequent deal Yahoo forged with Google “might have some merit.” He had previously said a Google deal should be considered a secondary alternative to the Microsoft offer. “While the Google deal is not the same as an offer of $34.375 per share for Yahoo, I am continuing to study it,” Icahn told Reuters. Icahn declined to comment on whether he would continue to press his proxy battle to replace the board of Yahoo.

Belgian brewer InBev warned U.S. rival Anheuser-Busch that it should fully explore its $46 billion takeover offer before doing a deal with Mexico’s Modelo. In a letter that appeared to be aimed at Anheuser-Busch shareholders, InBev suggested that doing a deal with Modelo could impact the value of its $65-a-share takeover offer. Inbev’s Chief Executive Carlos Brito wrote to Anheuser-Busch’s CEO August Busch IV that he was committed to a “friendly combination,” and “we would expect that prior to proceeding with any alternative transaction, especially if your shareholders will not be given the opportunity to vote on it, you would first fully explore our offer and the potential adverse consequences any such transaction could have on the ability of your shareholders to receive our premium offer.”

Other deals of the day:

* French market watchdog AMF has approved the merger document of Gaz de France and Suez, removing one of the last hurdles to the utilities’ long-delayed 100 billion euro ($153.3 billion) merger.

* Shareholders in Australian miner Zinifex approved a A$4.3 billion ($4.0 billion) takeover by fellow miner Oxiana, creating Australia’s third-largest diversified mining group. The new company said it would look at any assets BHP Billiton may need to sell to satisfy anti-trust regulators in its bid to acquire Rio Tinto

* Rio Tinto dismissed concerns that it could be barred from digging a huge iron ore mine in Africa, as it builds its defense against a $180 billion bid from bigger rival BHP Billiton.

* De La Rue, the world’s largest banknote printing company, has agreed to sell its Cash Systems business to private equity firm Carlyle Group for 360 million pounds ($700 million) in cash.

* Australian oil firm Roc Oil offered to buy Anzon Australia in a deal valuing Anzon at about A$612 million ($572 million), after agreeing to acquire UK-listed Anzon Energy.

* Swiss machine maker Schweiter Technologies said it is selling its Satisloh Holding unit to French eyeglass maker Essilor International for 340 million euros ($521.3 million) in cash, boosting its shares.

* ProSiebenSat.1 has agreed to sell its Scandinavian pay-TV group to Sweden’s TV4 in a deal with an enterprise value of 320 million euros ($492 million) that will help it cut debt, lifting its shares.

* Vodka label Stolichnaya is to be put up for sale after Russian company SPI asked Lehman Brothers to find a buyer, a source familiar with the matter told Reuters.

* Credit Suisse said that it has won approval from regulators to set up a securities joint venture in China, which will allow it to underwrite domestic stock and bond offerings in the country.

* Enmax Corp said that it extended the deadline for the takeover of junior natural gas producer Cordero Energy as the two sides agreed to sweeten the deal with a special dividend.

* Cogeco Cable plans to acquire all the shares of city-owned Toronto Hydro Telecom for C$200 million ($194 million), the cable company said.

* Chip equipment maker Applied Materials said it remained interested in buying some businesses of Dutch rival ASM International and wants to enter discussions on possible transactions.

* ArcelorMittal, the world’s largest steelmaker, bought a 11.31 percent stake in the Turkish steel company Erdemir, bringing its total ownership to 24.9 percent and sending Erdemir shares sharply higher.

* Swedish engineering group Sandvik agreed to buy a 49 percent of U.S. tool maker Precorp for an undisclosed sum.

* Gemini Communication said it has acquired 51 percent stake in Chennai’s Veeras Infotek in a deal valued at 70 million rupees.

* Shares in Banco Popular fell more than 3 percent after Mexican telecoms company Axtel denied reports that it or its chief executive could buy a stake in the Spanish bank.

* French catering and services company Sodexo said it had bought a 90 percent stake worth 23 million euros ($35.3 million) in Yachts de Paris, which operates cruises on the river Seine in Paris.

* The Philippines rebuffed an offer to sell its 40 percent stake in oil refiner Petron Corp to investment fund Ashmore Group for around $550 million, saying it wanted a higher price.

With Google looking like the big winner after doing an ad search deal with Yahoo, pretty much everyone else involved is looking like a loser. Microsoft will have to take its mammoth war chest and try to find another way to make a meaningful stab at the coveted online ad space — or concede the market altogether. Though Yahoo is waving enhanced revenue and cash flow figures around, the deal is seen as better for Google, which is the undisputed heavyweight champion in ad search and just gets a juicy space to show how mighty it is. “Google has made an enormous gain strategically. This move might well have shut Microsoft out of the online space altogether,” said Sanford Bernstein analyst Jeffrey Lindsay. Speculation is rising that the Yahoo/Google deal could provoke antitrust scrutiny, and Carl Icahn still has his troops massing to oust Jerry Yang and the Yahoo board. But if he had any clout to force Yahoo into a deal with Microsoft, it wasn’t on show yesterday. Did he lose cred, or does he plan to keep fighting? He may say soon, but probably not on his blog.

With signs that its wealthy clientele are growing nervous, UBS has wrapped up a 16 billion franc ($15.4 billion) rights issue. Flows into its wealth management business slowed to a trickle in the first three months of the year, and this is the Swiss bank’s second effort to resuscitate finances ravaged by the global markets crisis. Dieter Ewald, a fund manager at UBS shareholder Frankfurt Trust, said such concerns had prompted him recently to pare back his investment in the Swiss bank. “UBS is handicapped,” he said. “We are worried that wealth management will be hit. We want to see that the new management can bring it back on track, and then we would invest more again.”

Pfizer may bid for Ranbaxy Laboratories, countering a $4.6 billion offer by Japan’s Daiichi Sankyo for the Indian generic drug maker, the Business Standard newspaper said. Ranbaxy’s shares jumped nearly 5 percent on the report while Daiichi Sankyo’s shares dropped 2 percent. Daiichi Sankyo and Ranbaxy are seeking to become a pharmaceuticals powerhouse that sells both branded drugs and generics. The newspaper added Pfizer had held talks with the Ranbaxy founders for a possible acquisition a year earlier.

An infrastructure fund managed by Australia’s Babcock & Brown is to buy UK train leasing firm Angel Trains from Royal Bank of Scotland for 3.6 billion pounds ($7 billion) including debt. The deal came as shares in Babcock and Brown plunged for a second day on concerns about its debt and ability to raise funds but it will help Royal Bank of Scotland, Britain’s second-biggest bank, which is selling off non-core assets to further boost its balance sheet after raising 12 billion pounds ($23.5 billion) this week in the biggest ever rights issue.

Other deals of the day:

* Britain’s AEA Technology said it would buy U.S. company Project Performance Corp for $65 million and would raise 39.7 million pounds ($77.6 million) through a rights issue to help fund the deal.

* Struggling Finnish fine paper maker M-real Oyj cancelled a plan to divest its Reflex paper mill in Germany to Arjowiggins Group, citing to a condition set by the European Commission.

* India’s Jet Airways has decided to pull out of talks to buy a stake in low-cost carrier SpiceJet owing to differences over valuation, Business Standard newspaper said, citing sources from both airlines.

* A property investment arm of Morgan Stanley plans to sell at least two high-end serviced apartment projects in Shanghai, which are wholly owned by the Wall Street bank, for several billion yuan, people familiar with the situation said.

* South Korea’s National Pension Service, the world’s fifth-largest pension fund, will pump $173 million into a deal in which LS Cable has agreed to buy wire and cable maker Superior Essex.

A plan to sell the Wrigley Field, home of the Chicago Cubs, has failed to make progress after an Illinois state group said it could not agree to terms set by Tribune Co, the field’s owner. The proposed deal hinged on a plan to sell fans “equity seat rights” which they could then split or trade.

The Chicago Tribune had slightly different take on the story, saying “the state’s efforts to purchase Wrigley Field slammed into an ivy-covered wall Monday when owner Tribune Co. rejected a no-tax proposal.” Regardless of who rejected whom — perhaps the Curse of the Billy Goat is to blame? — it looks like the deal isn’t happening, which could be good news for Internet billionaire Mark Cuban, who has said he wants to buy the Cubs together with Wrigley Field.

A Yahoo employee severance plan meant to protect workers after a merger or change of control should be scrapped, according to a new shareholder lawsuit against the Internet company and its directors, The New York Times reported on Tuesday.The plaintiffs, two Detroit pension funds, and billionaire investor Carl Icahn, who is waging a battle for control of the Yahoo board, have criticized the severance plan as costly and said it was an obstacle to any merger. The lawsuit claims Yahoo could be faced with up to $2.4 billion in potential severance payouts under the plan — which was put in place as the prospect of a Microsoft acquisition was looming, but would also be triggered if Icahn were to take control of the company.

Other deals of the day:

    ** Global brewer SABMiller Plc said it had agreed to buy Russian brewer LLC Vladpivo. The value of the gross assets to be acquired is about $69 million, said SABMiller in a statement. It did not disclose the purchase price.

    ** Norway’s government has bought 498,900 more shares in Norwegian oil and gas producer StatoilHydro as part of its long-term plan to boost its stake to 67 percent from 62.5 percent, the company’s share registry showed.

    ** Private equity company Cinven Ltd said it had agreed to buy British financial services firm Partnership Assurance (PA) in a deal worth around 200 million euros ($316 million).

    ** Indonesian coal producer PT Bumi raised its offer for Australian-listed Herald Resources Ltd to A$2.80 a share, the companies said in a joint statement, valuing Herald at A$553.6 million ($527 million). 
 
    

Lehman Brothers is looking for fresh capital in South Korea, the Wall Street Journal reports. If the investment bank does end up tapping South Korea, it will have taken slightly over a decade for the 1997 multibillion loan from the IMF, backed by Wall Street and the Federal Reserve, to come full circle. The Journal says Lehman is looking to state-run Korea Development Bank and Woori Financial Group as it searches for funds to ward off a Bear Stearnsian crisis of confidence. The IMF demanded strict economic reforms for its money. A South Korean lender, like the Chinese and Arab investors bailing out Citi and Merrill Lynch, might just want a juicier cut.

The best part of waking up is Folgers in your cup — with a side of Smuckers jelly. The maker of Jif peanut butter and Crisco oil said it would buy Folgers from Procter & Gamble for stock valued at $2.95 billion plus the assumption of $350 million in debt. J.M. Smucker & Co also acquired Jif and Crisco from P&G.

Yahoo set its annual shareholder meeting for Aug. 1 in the heart of Silicon Valley, as it braced for a proxy showdown with billionaire activist investor Carl Icahn. Earlier, The Wall Street Journal reported that Icahn would seek to remove Jerry Yang as Yahoo chief executive, citing the company’s failure to reach a merger or partnership deal with Microsoft. Icahn had proposed an alternate slate of directors for Yahoo’s board, but until now had not directly targeted Yang. “It’s no longer a mystery to me why Microsoft’s offer isn’t around,” the Journal quoted Icahn as saying. “How can Yahoo keep saying they’re willing to negotiate and sell the company on the one hand, while at the same time they’re completely sabotaging the process without telling anyone?”

Novartis has bought privately held biotech company Protez Pharmaceuticals in a deal worth up to $400 million, giving it rights to an antibiotic which could be used to fight superbugs. Protez has a broad-spectrum antibiotic given by injection that is currently in mid-stage Phase II development against drug-resistant infections, and Novartis hopes to submit it for regulatory approval in 2012. The Swiss group will pay $100 million immediately for the business, with a potential for up to $300 million of additional payments depending on the future success of the new drug with the catchy code name: PZ-601.

Corporate Express will open its books to U.S. office supplies retailer Staples, which has made an unsolicited bid for the Dutch office goods wholesaler, Het Financieele Dagblad reports. On Tuesday, Staples raised its offer to 9.15 euros a share, or 1.7 billion euros ($2.65 billion), on the condition that Corporate Express shareholders reject the company’s plan to buy privately owned French peer Lyreco. The paper added that Corporate Express will probably give a neutral recommendation to its shareholders about the bid.

Other deals of the day:

* Australia’s Warrnambool Cheese and Butter Factory said it and National Foods, owned by Japan’s Kirin Holdings, would jointly pursue a bid for Australian dairy producer Dairy Farmers.

* Chinese metals trader Sinosteel said it has raised its stake in Midwest Corp to 28.37 percent from 19.89 percent as it seeks to take over the Australian iron ore prospector.

* AXA Asia Pacific, unit of French insurer AXA SA, said it would buy the financial planning business of Challenger Financial Group for A$100 million ($95 million) and in exchange for AXA’s annuity portfolio.

Microsoft’s $47.5 billion bid may not have met Yahoo’s price target, but the deal sure had a lot of promise, Yahoo’s Chief Executive Jerry Yang lamented during an on-stage interview at the D: All Things Digital conference. Yang said the software giant appears no longer interested in a full merger. “We did not walk away from that proposal. Microsoft did,” Yang said. This might just be a brave face for Yang, who will need one to face a potentially hostile board filled with activist agitators hand picked by Carl Icahn. Then again, Yang may feel emboldened by reports that Icahn may not be able to muster the votes to change Yahoo’s position. News Corp Chairman Rupert Murdoch, also at the D, was quoted by Dow Jones as saying: “Icahn? That’s not serious. It’s just a lot of helpful noise.”

Royal Bank of Scotland extended yesterday’s deadline for the auction of its insurance arm, which includes its Direct Line and Churchill brands, the Daily Mail reports. First-round bids for Britain’s largest motor insurer are expected to come within days, the paper said. RBS declined to comment on the auction for RBS Insurance, expected to be valued around 7 billion pounds ($13.8 billion). Italian insurer Generali, which had been seen as a strong candidate, pulled out of the running because of the hefty price and RBS’s unwillingness to consider breaking off parts of the unit, sources close to the situation told Reuters.

A member of the founding family of Anheuser-Busch said any talks with Belgian brewer InBev should be based on shareholder value rather than the Busch family’s legacy, the Wall Street Journal reports. The comments signal a hardening of the split within the family, which could embolden InBev to make a bid for the St. Louis brewer, the newspaper said. InBev is weighing an offer that could top $45 billion, the Journal reported, citing people familiar with the matter. “A possible merger is not a family issue,” Adolphus Busch IV, an uncle of CEO August Busch, wrote in a release to the newspaper. It is not “a matter of family solidarity or legacy. It is strictly a matter of shareholder value.”

Other deals of the day:

* Lottomatica, the world’s largest lottery operator, said it had agreed to buy an online betting concessionaire from Totosi Holding Srl in a deal worth about 41 million euros ($63.9 million).

* Australia and New Zealand Banking Group CEO Michael Smith said his bank is still in the running for Hong Kong’s mid-tier Wing Lung Bank and sees its fair price at closer to two times than three times its book value.

* Champion REIT said it plans to raise $1.66 billion through bond and unit sales as well as bank loans to fund its purchase of Langham Place office and retail complex from Great Eagle Holdings.

* U.S. investment company Harbinger Capital, the biggest shareholder in iron ore miner Murchison Metals Ltd, has built up a stake of 8.1 percent in rival miner Midwest Corp, the subject of a takeover battle between Murchison and China’s Sinosteel.

* Malaysia’s Petronas will buy a 40 percent stake in Australian energy firm Santos Ltd’s Gladstone liquefied natural gas project in Australia for $2.51 billion, sending Santos’ shares up 10 percent.

* China’s top steelmaker, Baosteel Group, aims to boost cooperation with Australian iron ore producer Fortescue Metals Group Ltd, a senior executive said, although officials gave no clear indications on the possibility of an equity tie.