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Eli Lilly and Co (LLY.N: Quote, Profile, Research, Stock Buzz) will record a $1.4 billion charge because of probes into past marketing of its top-selling Zyprexa schizophrenia drug and is in advanced talks to resolve the investigations, the company said on Tuesday.

Lilly will record the charge, which totals $1.29 a share, in the third quarter. Analysts are expecting profit of $1.02 a share before special items for the period, according to Reuters Estimates.

The company has faced long-running accusations that it improperly marketed Zyprexa to patients who were not approved users and that it played down side effects such as weight gain, which can increase the risk for diabetes.

The U.S. Attorney’s Office in Philadelphia launched a probe into the matter in early 2004, and Lilly received a grand jury subpoena for Zyprexa-related documents this past November, the company said.

The Medicaid fraud control units of more than 30 states are coordinating with federal prosecutors in the investigation of any claims related to the health insurance program for the poor savings account payday advance.

If the discussions are successfully concluded, the company expects they would settle the Zyprexa-related federal claims as well as the Medicaid-related claims of states, Lilly said. It said the $1.4 billion charge reflected the company’s “currently estimable exposure” with respect to these matters.

Eleven states, including Pennsylvania, Connecticut and Mississippi, have filed lawsuits over Zyprexa and are not participating in the coordinated investigation, Lilly said.

“The government’s investigation of Zyprexa has been ongoing for five years, and we now have a heightened sense of responsibility to all our stakeholders to intensify efforts to resolve these issues,” Lilly General Counsel Robert Armitage said in a statement. 

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NEW YORK–A bankruptcy judge decided just after midnight Saturday that Lehman Brothers can sell its investment banking and trading businesses to Barclays, the first major step to wind down the nation's fourth-largest investment bank.

U.S. Bankruptcy Judge James Peck gave his decision in a courtroom packed with lawyers at the end of an eight-hour hearing, which capped a week of financial turmoil.

The deal was said to be worth $1.75 billion earlier in the week but the value was in flux after lawyers announced changes to the terms on Friday. It may now be worth closer to $1.35 billion, which includes the $960 million price tag on Lehman's Midtown Manhattan office tower.

Lehman Brothers Holdings Inc. filed the biggest bankruptcy in U.S. history Monday, after Barclays PLC declined to buy the investment bank in its entirety.

The British bank will take control of Lehman units that employ about 9,000 employees in the U.S.

"Not only is the sale a good match economically, but it will save the jobs of thousands of employees," said Lehman lawyer Harvey Miller of Weil, Gotshal & Manges.

Barclays took on a potential liability of $2.5 billion to be paid as severance, in case it decides not to keep certain Lehman employees beyond the guaranteed 90 days. But observers have said Barclays' main reason for acquiring Lehman is to get its people and presence in North America, making widespread layoffs less likely.

"It's unimaginable to me that they can run the business without people," said Lehman's financial adviser, Barry Ridings, of Lazard Ltd.

Barclays had little competition to land the deal.

Miller said that before it filed for bankruptcy, Lehman had negotiated with just one other bidder, Bank of America Corp. BofA instead announced Monday that it would buy Merrill Lynch & Co., saving it from a fate similar to Lehman's. That deal was originally valued at $50 billion.

Miller said that since Lehman filed for bankruptcy, Barclays had been the only buyer to express interest in acquiring even parts of the 158-year-old investment bank.

Lehman lawyers announced a number of changes to the deal before the hearing, which started at 4:30 p.m. Friday and continued well past midnight Saturday.

Lehman lawyers said the value of stock Barclays will buy and liabilities it will assume has fallen since the start of the week due to market volatility. Under the new deal, Barclays will buy $47.4 billion in securities and assume $45.5 billion in liabilities.

Barclays also said it would buy three additional units – Lehman Brothers Canada Inc., Argentina-based Lehman Brothers Sudamerica SA and Lehman Brothers Uruguay SA absolutely free credit report. The two South American entities are part of Lehman's money management business. Barclays is not paying extra to get the three units.

There was no change to a $250 million goodwill payment and the purchase of two data centers in New Jersey that will go to Barclays, although Barclays may pay less for them. Lehman's investment management business Neuberger Berman was not bought by Barclays.

The Securities Investor Protection Corporation liquidated Lehman accounts on Friday under a bankruptcy-style process to transfer assets from 639,000 Lehman customer accounts – about 130,000 of which are owned by individual investors – to Barclays accounts.

"The substance of this transaction is to continue a business for the benefit of the economy," Lehman lawyer Miller said in court.

The hearing drew more than 200 lawyers and observers, who spilled into overflow rooms on two floors of the U.S. Bankruptcy Court in Lower Manhattan.

In response to the extraordinary events of the week, the Bush administration announced Friday the biggest proposed government intervention in financial markets since the Great Depression. Some are calling it an "RTC-style bailout" in reference to the government-owned Resolution Trust Corp. that wound down the assets of Savings and Loan Associations, mostly in the 1980s.

"Somehow Lehman Brothers gets left on the sidelines," said Daniel Golden of Akin Gump Strauss Hauer & Feld LLP, who represents clients holding about $9 billion in bonds. "We believe this was a flawed sales process. It benefits Barclays and the federal government but not the creditors of this estate.

"The economic landscape seems to have changed over the last two days," he said. "Yet the debtors and the Fed seem determined that nothing get in the way of this transaction.''

Had Lehman filed for Chapter 11 a week later than it had, its fate may have been different.

"This is a tragedy – maybe we missed the RTC by a week,'' Miller said.

"That occurred to me, as well," the judge said. "Lehman Brothers became a victim, in effect the only true icon to fall in the tsunami that has befallen the credit markets.''

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A broad-based increase among Canadian stocks and news that U.S. investment bank Lehman Brothers will sell part of its business sent Toronto's main index up sharply today after days of losses amid jitters about the financial and energy sectors.

Toronto's S&P/TSX composite index rose 332.35 points to 12,479.11, with all sub-indexes up, after losing almost 500 points on Tuesday and coming close to the stock market's lows for the year.

New York indexes were higher after Lehman said will sell a majority stake in its investment management unit after losing US$3.9 billion in the third quarter.

The TSX Venture Exchange was down 35.85 points to 1,585.41 and the Canadian dollar fell 0.15 cent to 93.56 cents US.

The Dow Jones industrial average rose 142.33 points to 11,373.06 while the Nasdaq composite index gained 37.06 to 2,246.87 . The S&P 500 index was up 18.12 to 1,242.63.

Unease about the No. 4 securities firm in the United States touched off heavy selling Tuesday as investors worried that it had few options to raise capital.

Wall Street has worried about the financial sector since the near-collapse and subsequent sale of Bear Stearns Cos. in March.

"Frequently, when you get days of very big losses there's a reaction subsequently to reconsider the downward movement; you see some type of rally,"said Meny Grauman, senior economist at CIBC World Markets.

"In this type of environment it seems like it's still a little bit short-lived – we've seen quite a number of bounces and the market has been quite volatile over the last few weeks."

Investors seemed encouraged that Lehman was close to a deal to sell a majority stake in its investment management business and bring in much-needed capital.

"Yesterday, towards the end of the day, there was some bad news regarding Leham Brothers … and concern over a failed deal that would have seen them being sold to a Korean bank," Grauman said.

"This morning we got an early peak into their results for the quarter and some news about the restructuring so it seems like that has sort of eased fears that were surrounding that bank in particular but were also affecting financials in general and weighing on the markets. The prospect of another U.S. investment bank going under was seen as a big risk factor for the markets and the economy as a whole."

Today's gains were driven by the energy sector, which moved up more than three per cent as EnCana Corp. (TSX: ECA) rose $1.89 to $68.99, after the U.S. Energy Department reported larger-than-expected drops in the nation's crude and gasoline inventories.

The TSX has sustained severe losses as oil and materials stocks, which make up about half of the Toronto stock market, have been sliding amid a sharp move away from commodities.

The price of oil, one of the most influential determinants of the direction of the Toronto stock market, fell as strength in the U.S paydayloan. dollar and indications of a weakening economy overshadowed OPEC's decision to cut back excess production.

Light, sweet crude for October delivery fell 26 cents to $103 a barrel on the New York Mercantile Exchange closer to midday. The contract fell $3.08 overnight to settle at $103.26, the lowest close since April 1.

The gold sector rose 3.5 per cent even as the December bullion contract on the Nymex fell $34.70 to US$758.30 an ounce. Goldcorp (TSX: G) rose $1.09 cents to $28.03.

The base metals sector was up four per cent per cent as Teck Cominco Ltd. (TSX: TCK.B) climbed 95 cents to $35.26.

The financial sector was up three per cent as TD Bank (TSX: TD) climbed $1.97 to $63.78.

In economic news, Statistics Canada said the labour productivity of Canadian businesses has fallen for a third-straight quarter, down 0.2 per cent in the second quarter of the year, driven by the mining and oil and gas extraction industries, as well as construction.

On the corporate side, Ford Canada will phase out a third shift at the body and paint shops at its Oakville, Ont., and eliminate about 500 jobs. The cutback follows an earlier decision by Ford to scrap a third shift in the plant's final assembly operation and comes amid a deep slump in the U.S. market.

Continued strength in the global agricultural sector powered grain distributor Viterra Inc. (TSX: VT) to a 70 per cent increase in third-quarter profit to $166.7 million, the company said today. Its shares rose four cents to $10.25.

Travel company Transat A.T. Inc. (TSX: TRZ.B) reported a third-quarter net loss of $2.4 million, reversing a year-ago $16.1-million profit, as tour operators were unable to adjust prices to keep up with surging fuel costs. Stock in the company traded at $17.170, down 76 cents. Its stock fell 43 cents to $17.50.

Ur-Energy Inc. (TSX: URE) said it now expects first production from its Lost Creek uranium project in Wyoming will be delayed to the second half of 2010, due to a slower-than-anticipated licensing process at the U.S. Nuclear Regulatory Commission. Its stock fell 23 cents to 93 cents.

Microsoft Corp. had the official opening for its first Canadian development centre in the Vancouver suburb of Richmond, B.C., which employs 300.

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OTTAWA–Bombardier Inc. has teamed up with Russia’s CJSC Transmashholding to develop a new high-tech locomotive that is more efficient and cheaper to operate, the companies said yesterday.

A new joint-venture company, to be located in Russia, will initially focus on Eastern European markets for the "new-generation" locomotives using asynchronous propulsion technology, they said.

The technology uses alternating current rather than direct current, which improves reliability and promotes dynamic brake regeneration, which puts energy back into the system, Bombardier said.

"This propulsion system is used elsewhere, but for Russia .. cash advance loans. this type of technology is an upgrade," Bombardier spokesperson David Slack said.

"These cars, typically rail cars, have a 30- to 40-year lifespan. So as operators replace these older cars, you’re seeing replacement typically from DC type of propulsion systems to AC."

Russia’s national railway expects to need 11,675 locomotive vehicles between 2008 and 2015.

It’s the third venture between Bombardier and Transmashholding, Russia’s top rolling stock firm.

Reuters, The Canadian Press

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OTTAWA – Canada further diversified its trade portfolio last year, as overseas advanced largely on the strength of growing trade with Britain, Norway and China.

Statistics Canada says overseas exports continued five years of growth, rising 17.4 per cent last year, but Canada's merchandise trade surplus nevertheless fell to its lowest level since 1999.

Merchandise exports increased 2.1 per cent to $465.2 billion, while imports rose 2.8 per cent to $415.8 billion; Canada's annual merchandise trade surplus with the world fell to $49.5 billion.

Countries other than the United States represented more than a fifth of Canada's export market in 2007.

Exports to China were responsible for nearly 20 per cent of the total growth in Canada's exports in 2007, as China overtook Japan as the country's third-largest export market.

Imports from countries other than the United States also rose to more than 45 per cent of Canada's total imports last year, largely due to growth in shipments from China and Mexico.

In total, Canada's merchandise imports and exports reached record highs in 2007 following the rapid appreciation of the dollar, the housing slowdown in the United States, and rising energy prices spurred by the soaring price of crude oil no fax payday advances.

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The country’s broadcast regulator has approved the sale of BCE Inc. to a consortium of Canadian and U.S. buyers, but investors continue to express doubt the $52 billion transaction will be completed.

The Canadian Radio-television and Telecommunications Commission said yesterday after the markets closed that it has approved, with conditions, the takeover of the Bell Canada parent by the Ontario Teachers’ Pension Plan, Providence Equity Partners Inc. and Madison Dearborn Partners LLC.

The conditions include minor tweaks to the deal’s original structure to ensure the number of Canadians always outnumber the number of foreigners on the company’s board.

As well, the chair of the board must be Canadian and cannot be nominated by a non-Canadian director.

The chair is also prohibited from holding the position of chief executive, the CRTC said.

"These conditions will ensure that control of BCE remains in Canadian hands once the transaction is completed," CRTC chair Konrad von Finckenstein said in a statement.

While the CRTC had previously expressed concern with the way Teachers’ attempted to overcome rules that bar pension funds from holding more than 30 per cent of a company’s voting shares – a retired Teachers’ executive, Morgan McCague, will hold BCE shares for the pension plan – the regulator said it was satisfied by a letter provided by the country’s pension regulator that approved of the structure.

The CRTC’s approval should provide some comfort to nervous BCE investors, who have been valuing the company’s stock well below the accepted offer of $42.75 per share in the belief the transaction will fall apart.

But the biggest hurdle continues to be whether the buyers – or the banks backing them – remain committed to the deal despite an ongoing credit crunch resulting from billions of dollars worth of home-loan writedowns in the United States.

A Texas judge yesterday issued a temporary injunction barring a group of banks from refusing to fund a $20 billion (U.S.) buyout of U.S paydayloans. radio broadcaster Clear Channel Communications Inc. The order came a day after Clear Channel’s private-equity buyers launched a lawsuit claiming the banks were backing out of commitments to provide $22.1 billion in financing because of "lender’s remorse" stemming from the rising cost of borrowing.

Some of the U.S. banks involved in the Clear Channel transaction, Citigroup, Deutsche Bank and the Royal Bank of Scotland Group, are also backing the BCE takeover.

BCE investors viewed the Texas injunction as a sign the courts could be counted on to uphold existing buyout agreements. Shares of BCE yesterday regained the ground they lost a day earlier, closing up $1.92 (Canadian) at $36.94 on the Toronto Stock Exchange.

The BCE takeover is also being backed by Canada’s Toronto Dominion Bank, which pledged to underwrite $3.3 billion of a $34.2 billion credit facility and provide a $500 million equity bridge loan.

A spokesperson for TD Bank said yesterday the bank remains "comfortable" with the BCE deal.

Richard Powers, assistant dean of the University of Toronto’s Rotman School of Management, said the prospect of a major Canadian bank backing out of the biggest-ever private equity transaction is unlikely since it would undermine confidence in the country’s financial sector.

"In the Canadian markets, the banks set the standard," Powers said.

"We are in unprecedented waters, but for the banks to act contrary to the intention of the deal, I think, would be sending the wrong message to the Canadian markets and that’s the last thing we want to be doing at this time."

Powers added that, according to his understanding of the BCE agreement, there isn’t much "wiggle room" for any of the parties involved – no matter how badly they might want out.

"It’s obvious that everyone’s going to take a hit on this deal," he said.

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CALGARY – Agrium Inc. said Monday it is refiling documentation as the U.S. Federal Trade Commission continues its competition review of the Canadian company's proposed acquisition of UAP Holding Corp.

The notification and report form under the Hart-Scott-Rodino Antitrust Improvements Act was originally submitted when the deal was announced in December but was withdrawn on Jan. 11 to provide more time for FTC staff to review the transaction without issuing a formal request for more data.

Such a so-called second request would likely delay the takeover at least until summer.

The US$2.65-billion friendly acquisition, which would make Agrium (TSX: AGU) the largest farm-inputs retailer in North America, has been approved by competition authorities in Canada, where UAP (NASDAQ: UAPH) has little presence online payday loan.

Agrium said it has continued to provide the FTC with additional information, following the agency's informal requests.

The new re-filing provides a 15-day period to continue discussions under the Hart-Scott-Rodino waiting period, but Agrium observed that there is no assurance the FTC will not issue a second request.

The company said it "remains committed to working co-operatively with the FTC as it conducts its review of the proposed acquisition and remains confident of a successful close to the transaction." 08:37ET 11-02-08

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