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Business Highlights

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Yahoo takes big leap with $1.1 billion deal for Tumblr

SAN FRANCISCO (AP) — Yahoo is buying online blogging forum Tumblr for $1.1 billion as CEO Marissa Mayer tries to rejuvenate an Internet pioneer that had fallen behind the times.

The deal announced Monday is Mayer’s boldest move since she left Google 10 months ago to lead Yahoo’s latest comeback attempt. It marks Yahoo’s most expensive acquisition since the Sunnyvale, Calif., company bought online search engine Overture a decade ago for $1.3 billion in cash and stock.

Yahoo is paying mostly cash for Tumblr, dipping into what remains of a $7.6 billion windfall reaped last year from selling about half of its stake in Chinese Internet company Alibaba Holdings Group. Taking over Tumblr will devour about one-fifth of the $5.4 billion in cash that Yahoo had in its accounts at the end of March.

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Tumblr CEO’s mom gushes over billion-dollar baby

NEW YORK (AP) — As a teenager, Tumblr CEO David Karp would canvass the streets of New York City’s Upper West Side, offering to build websites for local businesses. After his freshman year of high school, the precocious, computer-savvy kid decided to drop out altogether to devote more time to his passion for technology.

A few years later, Karp built Tumblr — the wildly popular blogging forum — from his tiny childhood bedroom, hunched over his laptop with bags of Tostitos. And on Saturday, the 26-year-old technology wunderkind returned home to inform his mother that, in a game-changing transaction, Yahoo was buying Tumblr for $1.1 billion.

The deal was a transcendent moment for Karp, who created one of the world’s busiest websites. It boasts 75 million daily posts and a user base that’s loyal, young and hip. While Facebook has morphed into a mainstream social network where grandparents talk golf, Tumblr is still that little corner of the Internet where the cool kids hang out.

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Panel: Apple uses firms outside US to avoid taxes

WASHINGTON (AP) — Apple Inc. employs a group of affiliate companies located outside the United States to avoid paying billions of dollars in U.S. income taxes, a Senate investigation has found.

The world’s most valuable company is holding overseas some $102 billion of its $145 billion in cash, and an Irish subsidiary that earned $22 billion in 2011 paid only $10 million in taxes, according to the report issued Monday by the Senate Permanent Subcommittee on Investigations.

The strategies Apple uses are legal, and many other multinational corporations use similar tax techniques to avoid paying U.S. income taxes on profits they reap overseas. But Apple uses a unique twist, the report found. The company’s tactics raise questions about loopholes in the U.S. tax code, lawmakers say.

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Russian oligarchs foot most of 2014 Sochi Olympics

SOCHI, Russia (AP) — The mountains of Sochi are now home to Potanin’s slope, Gazprom’s gondola lift and Sberbank’s ski jump. The nicknames used by locals and an army of construction workers leave no doubt about who is paying for the 2014 Winter Games: Russia’s business powerhouses.

Other countries that have hosted the Olympics have overwhelmingly used public funds to pay for the construction of needed venues and new infrastructure. The Russian government, however, has gotten state-controlled companies and tycoons to foot more than half of the bill, which now stands at $51 billion and makes the 2014 Winter Games by far the most expensive Olympics in history. In contrast, the much-larger 2012 Summer Olympics in London cost about $14.3 billion and the 2008 Summer Games in Beijing cost about $40 billion.

For President Vladimir Putin, the games have been a matter of pride. He has entrusted the country’s top businessmen with Sochi’s key projects. He himself is spending increasing amounts of time in the southern Russian city, hosting world leaders at his luxurious presidential palace.

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Actavis buying Warner Chilcott in $8.5 billion deal

NEW YORK (AP) — Actavis is buying Warner Chilcott in an all-stock deal valued at about $8.5 billion that would create the third-biggest specialty pharmaceutical company in the U.S. market.

The announcement Monday comes after the companies said earlier this month that they were in talks about a possible pairing of one of the world’s largest generic drugmakers, Actavis Inc., with an Irish company that has a portfolio of established, branded drugs.

The combined company will be incorporated in Ireland, and analysts say that country’s lower tax rate is a key to making the deal work. Actavis said it expects about $400 million in after-tax savings and cost cuts from the combination, counting the lower tax rate.

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Economists predict increase in consumer spending

WASHINGTON (AP) — Consumer spending is likely to pick up this year, while government spending declines at a faster rate, according to a survey of business economists.

The economists predict that the U.S. economy will grow 2.4 per cent this year and 3 per cent next year. That’s unchanged from their forecast in February.

But they are more bullish on consumer spending and housing than they were three months ago, in part because of a more positive view about unemployment.

The survey was released Monday by the National Association for Business Economics, which periodically surveys economists for banks, manufacturers and universities.

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Special K churns out products in brand evolution

NEW YORK (AP) — Special K was once just a line of cereals. Today, it’s a diet food empire.

The brand first hit shelves in 1955 as a no-frills breakfast alternative but now caters to dieters who see its airy chips and pastries as a way to beat cravings and lose weight. And this summer, Kellogg Co. is building on its biggest moneymaker with a “hot cereal” called Special K Nourish that’s made with quinoa and other grains.

The new line, which promises to fill people up with 8 grams of protein and 5 grams of fiber, reflects Special K’s push to move in step with evolving trends. Until now, Special K products largely gave dieters low-calorie imitations of their fantasy foods. But weight watchers are increasingly looking for added nutritional benefits, rather than just counting calories.

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Seamless and GrubHub to combine, no terms revealed

NEW YORK (AP) — Rival online takeout services Seamless North America and GrubHub on Monday announced plans to combine and create a new company covering more than 20,000 restaurants in 500 cities across the U.S.

Financial terms were not disclosed and it’s unclear what the combined company will be called. GrubHub CEO Matt Maloney will become CEO, while Seamless CEO Jonathan Zabusky will serve as president, the companies said in a joint statement.

Brian McAndrews, an independent director on the Seamless board, will serve as chairman. Both New York-based Seamless and Chicago-based GrubHub will have significant representation on the new company’s board.

The combined company’s name and marketing brands will be determined following regulatory approval, the companies said.

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United restarts 787 flights after grounding

United Airlines put its 787 back in the air on Monday, with both the airline and Boeing hoping to put the plane’s four-month grounding behind them.

The flight from Houston to Chicago was just the kind of 787 flight that airlines are hoping for: uneventful.

Smouldering batteries on two 787s owned by other airlines prompted authorities to ground the planes in January. The failure of Boeing’s newest, flashiest and most important plane embarrassed the company and its customers.

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FDA says Merck drug helps treat insomnia but may cause daytime drowsiness and driving issues

WASHINGTON (AP) — Federal health regulators say an experimental insomnia drug from Merck can help patients fall asleep, but it also carries worrisome side effects, including daytime drowsiness and suicidal thinking.

The Food and Drug Administration on Monday released its review of the company’s sleep aid, suvorexant, ahead of a public meeting on Wednesday. The pill works by temporarily blocking chemical messengers that keep people awake.

The FDA said company trials show suvorexant is better than placebo at helping people fall asleep and stay asleep. And regulators said the drug’s effectiveness was consistent across several doses tested by Merck & Co. Inc.

But patients taking the higher doses of the drug showed an eight-fold increase in daytime drowsiness, which sometimes interfered with driving the next morning. Patients taking 20 milligrams and 40 milligrams of suvorexant had trouble staying in their driving lanes when tested by company researchers. FDA notes that four women actually had to stop the driving test due to excessive sleepiness.

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By The Associated Press(equals)

The Dow Jones industrial average closed down 19.12 points, or 0.1 per cent, at 15,335.28. The Nasdaq composite index fell 2.53 points, or 0.1 per cent, to 3,496.43 points. The Standard & Poor’s 500 index fell 1.18 points, or 0.1 per cent, to 1,666.29.

Benchmark oil for June delivery gained 69 cents to close at $96.71 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for many international oil varieties, rose 16 cents to $104.80 a barrel on the ICE Futures exchange in London.

Wholesale gasoline was flat at $2.91 a gallon. Heating oil rose 1 cent to $2.95 a gallon. Natural gas gained 4 cents to $4.09 per 1,000 cubic feet.