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.

Banks financing the $34.8 billion private equity buyout of BCE have been hammering away all weekend to win higher interest rates, tighter loan restrictions and stronger protections that far exceed the original terms, according to the New York Times. Citing people on both sides of the transaction, the paper said talks began to fray late on Friday but lasted all weekend. “It’s patently obvious that the banks have no intention of closing the deal,” said one executive who read the revised terms. Investors have long worried that the massive private equity buyout might be repriced, delayed or abandoned altogether. Looming over the discussions is the spectre of the Clear Channel deal, in which some of the very same lenders also tried to back out, producing an ugly tangle of court cases that was only resolved last week.

Microsoft said it proposed an alternative deal to Yahoo rather than a full acquisition, but a person who knows the mind of Carl Icahn, the man driving trying to unseat Yahoo’s board, said the move was likely to prompt the billionaire investor to nudge Yahoo back toward Google. This source isn’t just familiar with the matter, but has a taste for rustic allusions: “Microsoft is trying to get the milk without buying the cow, and if you look at Icahn’s history, he has never been used that way.” Microsoft did not clarify what that alternative deal might be.

Facebook founder and CEO Mark Zuckerberg stressed his company’s independent spirit, after a report said the social networking site might be sold to software giant Microsoft, which is hunting for ways to beef up its Internet business. “You can tell, from our history and what we’ve done, that we really wanted to keep the company independent, by focusing on building and focusing on the long-term,” Zuckerberg told Reuters while in Japan to launch a Japanese language version of Facebook. Microsoft already has a small stake and the Wall Street Journal said this month the software giant, with the Yahoo deal in limbo, had approached Facebook to gauge its interest in a full takeover.

U.S. diversified manufacturer Manitowoc has increased its bid for British kitchen equipment maker Enodis to $2.1 billion to trump a rival offer. Manitowoc, which makes cranes and restaurant equipment, said it was offering 294 pence a share for Enodis, topping an agreed bid of 282 pence a share from U.S. rival Illinois Tool Works. The offer from ITW beat an earlier bid of 260 pence a share from Manitowoc. Enodis, which makes fryers for fast food groups such as McDonald’s and Burger King, will also pay an interim dividend of 2 pence a share.

Other deals of the day:

* The direct banking arm of Dutch financial services group ING Group is offering 416 million euros ($644 million) in cash for Germany’s Interhyp to expand its global business.

* France’s PSA Peugeot Citroen said it would invest between 300 million euros and 350 million euros ($467.9-545.9 million) in a Russian joint venture with Japan’s Mitsubishi Motors Corp.

* The Czech government will demand at least 100 billion crowns ($6.2 billion) from the winning bidder for Prague Airport, Finance Minister Miroslav Kalousek said in a newspaper interview.

* Cyprus Trading Corp agreed to buy up to 50 percent of local mobile telephone operator Areeba Ltd from South Africa’s MTN, CTC said.

Yahoo has struck an advertising partnership deal with WPP Group that will let WPP units GroupM and 24/7 Real Media buy ads on Yahoo’s online ad exchange. Yahoo said the deal would first involve WPP units GroupM and 24/7 Real Media. It may be a stretch to expect this shake off the dogs of war unleashed by Carl Icahn, who is trying to unseat the Yahoo board for its failure to deal with a $47.5 billion unsolicited takeover bid from Microsoft. If the ad tie-up deal with Google that’s still in the trial phase hasn’t done so, why would a deal with WPP? But at the same time, Yahoo CEO Jerry Yang can hardly be seen to be sitting on his hands.

Warren Buffett’s Berkshire Hathaway has pulled out of the bidding in Royal Bank of Scotland’s 7 billion pound ($13.62 billion) auction of its UK insurance business, according to the Financial Times. Berkshire told the FT it had looked at the business, which includes the insurers, Direct Line and Churchill, but had decided not to bid, without giving a reason.

Japan’s Bridgestone said it was forming a strategic alliance with rival Toyo Tire & Rubber aimed at coping with high materials prices and intensifying competition. The two companies plan to team up in developing advanced tire technology and procuring raw materials. They will also use each other’s production facilities and said they would take stakes in each other worth 8 billion yen ($76 million).

Other deals of the day…

* Finnish shareholders holding together more than 10 percent of TietoEnator said they would not accept the 1.08 billion euro ($1.67 billion) offer for the firm from Sweden’s Nordic Capital.

* Nuclear power company British Energy has received three bid approaches, a source familiar with the matter told Reuters. The potential bidders are French utility EDF, France’s Suez and a combined proposal from Germany’s RWE and Spain’s Iberdrola, the source said.

* Norway’s biggest media group, Schibsted ASA, said it had acquired all shares in Belgian online classified site Kapaza.be for 20.25 million euros ($31.34 million).

* Thai Beverage PCL, the country’s largest brewer and distiller, plans to take over Thai green tea and sushi maker Oishi Group for 6.94 billion baht ($214 million). Thai Beverage — the maker of market leaders Beer Chang and Mekhong whisky — has agreed to buy a 43.9 percent stake in Oishi from Yodkit Thurakij Co, for 3.045 billion baht ($94 million), Oishi said in a statement.

* Swedish-Canadian mining and exploration firm Lundin Mining has sold its 90 percent stake in the Norrliden project to Canada’s Gold-Ore Resources, IGE Nordic AB said.

Photo: “Follow Carl,” from the Good Dog, Carl series of Classic Board Books published by Farrar, Straus & Giroux, 1989

Ok, we understand that Carl Icahn has been a little bit busy, as today’s Yahoo news illustrates. But ever since that memorable February day when he promised to deliver his trademark brand of incisive commentary to the blogosphere, we’ve been waiting. For 99 days now we’ve checked out The Icahn Report, only to find that same taunting message: “Blog coming soon.”

He has blamed the delay on his lawyers: “Every night, I write for an hour and they tear it up.”

He has promised that the blog was “a week or two away” — that deadline passed yesterday.

Mr. Icahn, we respectfully submit that today’s letter to the Yahoo board would make a stellar debut entry. Take it from us: cut-and-paste is to blogging what proxy fights are to activist investing.

Citigroup chief Vikram Pandit has sold off assets here and there in the months since taking over the top job, including stakes in CitiStreet, CitiCapital and Diners Club. But with sources saying some $400 billion of extraneous assets are going on the block, it’s fair to ask whether the head of the country’s biggest bank is being boldly aggressive or slamming the panic button.

“The only reason you’d sell off that many assets is you have a lot more losses coming than you originally thought,” said Jim Huguet, co-chief executive at fund manager Great Companies LLC, which does not own Citi shares. Since late last year, Citi has recorded more than $45 billion of writedowns and credit losses, raised more than $40 billion of new capital including $2 billion of preferred shares this week, and slashed its dividend 41 percent. The Financial Times, which first reported the story on Thursday, said the moves would take place over several years.

Global economic instability has created huge investment opportunities for China Investment Corp, but the sovereign wealth fund’s head said he will be careful not to destabilize countries where it operates. CIC paid $5 billion in December for a stake in U.S. investment bank Morgan Stanley but has otherwise kept its powder dry as Western financial institutions have sought to replenish capital depleted by big subprime credit losses. “The current international market turbulence has produced unprecedented investment opportunities,” said Lou Jiwei, head of the $200 billion sovereign wealth fund. “In the 1990s, some hedge funds exploited defects in the macroeconomic policies of some emerging economies and attacked them, which damaged their economies and caused hardship for people,” he said. “CIC will certainly never do a similar thing.”

Sovereign Bancorp, the second-largest U.S. savings and loan, plans to raise just over $1 billion in an equity offering to help it navigate a difficult economic environment, according to a person close to the transaction. The offering will be broadly distributed to institutional investors and will likely be conducted over the weekend. Sovereign is determining how much Banco Santander, which has a 24.99 percent stake in the thrift, might participate in the offering, while keeping any transaction with the Spanish bank at arms-length, the person said.

Google expects to launch new products for its YouTube Web video service in the next few months and sees reason for closer cooperation with Yahoo, Google Chief Executive Eric Schmidt said. Schmidt has said getting the video sharing site to make money is the Web search company’s top priority for the year. He did not give details of the products, however, and they are not even in beta testing. The Web search leader played a large role in the takeover battle between Microsoft and Yahoo. During a two-week test, it sold search advertisements on rival Yahoo last month as part of Yahoo’s attempt to find an alternative option to Microsoft’s offer. Schmidt said the trial run provided good reason for the companies to discuss cooperation, but there was no deal yet.

Other deals of the day:

* U.S. private equity firm The Carlyle Group will lead a 58.1 billion yen ($560 million) management buyout of an LCD glass venture jointly owned by Japan’s Hoya Corp and Nippon Sheet Glass, Hoya said.

* Norwegian aluminum group Norsk Hydro said it has agreed to buy privately owned Spanish aluminum building systems group Alumafel for 77 million euros ($118 million).

* Shares in British engineering software firm Flomerics Group surged after rejecting a buyout offer from larger U.S. rival Mentor Graphics, saying it would explore interest from several other parties.

* A local fund managed by U.S-based Lombard Investments plans to buy 10 percent of Asiasoft Corp, Thailand’s top online gaming firm, for up to $11.3 million, partly via an IPO this month, an IPO underwriter said.

* Australia’s Macquarie Group is interested in buying a key part of German power giant E.ON as it prowls for investment opportunities, one of its top managers said.

EBay’s lawsuit against Craigslist alleges that founder Craig Newmark and CEO Jim Buckmaster tried to dilute eBay’s 28.4 percent stake in the company after a marriage proposal. According to court papers unsealed Wednesday, Craigslist wanted out of the relationship since eBay had launched a competing product, Kijiji, but Meg Whitman countered with a bid to buy the entire company, leading to the allegedly “clandestine” meetings between Newmark and CEO Jim Buckmaster. At stake is the world’s third most valuable Web startup, as ranked by Silicon Alley Insider, valued at approximately $5 billion.

Microsoft’s board met on Wednesday to discuss its stand-off with Yahoo, but don’t get too excited: they failed to reach a decision on what to do next, according to a Wall Street Journal report. The board is still weighing whether to adopt a hostile approach and nominate a proxy slate of directors to replace Yahoo’s board, sweeten its cash-and-stock offer for Yahoo, or possibly walk away from the deal. A Microsoft-imposed “deadline” passed last Saturday.

Three-headed canine guardian of the gates of Hell, meet controversial private security contractor Blackwater. Cerberus Capital Management is in talks to invest $200 million for a stake in Blackwater USA, ABC News reported on Wednesday, citing sources. Or, not. The Wall Street Journal confirmed that Blackwater is seeking outside investment, but quotes a Cerberus spokesman as saying the private equity firm took a look but decided to pass. As the WSJ’s Deal Journal notes, the “secretive, billionaire, former paratrooper [Cerberus’ Steve Feinberg] trains his largesse on a secretive, lucrative quasi-military operations company” story was just too good to be true.

** British software company Micro Focus International Plc said it was to buy U.S. peer NetManage Inc for an agreed $73.3 million, or $7.20 per share.

** Britain’s Hornby Plc has agreed to buy model car maker Corgi for 8.3 million pounds ($16.5 million) to add to its stable of iconic toy brands, which include Scalextric racing cars, Airfix model planes and its eponymous train sets.

** Turkey’s leading mobile phone operator Turkcell is in talks to buy 80 percent of Belarussian Telecommunication Network (Best), a Turkcell official told Reuters.

** Japanese staffing service firm United Technology Holdings Co Ltd said it had abandoned plans for a capital and business tie-up with bigger rival Goodwill Group Inc.

There’s something about deadlines that sharpens the mind. Reporters know this and Yahoo is finding out with its decision to get into a Web search advertising test with arch-rival search firm Google Inc.

Yahoo is facing a three-week deadline to sit down with Microsoft, which has offered $42 billion to buy the company, and seems to be getting ever more creative in figuring out ways to resist the advances of its suitor to the North. The length of its limited test with Google? Two weeks.

Google, of course, isn’t about to object. “A long-term deal could be the only option that allows Yahoo to remain an independent company,” a person close to Google told us.

So why would Yahoo start hooking up with Google? Flaunting its flirtation with the enemy could put pressure on Microsoft to raise the bid. After all, if the test results show a spike in advertising revenue, that could mean Yahoo is worth more to a buyer if it starts outsourcing full time. That could lead to lightening Microsoft’s wallet more than the software giant had first anticipated.

But Yahoo plays a dangerous game. Microsoft said a deal between Yahoo and Microsoft could make the Web search market less competitive, just the kind of thing that leads to politicians calling for hearings. And as Microsoft knows, trips to Washington are never fun.