European Business News (EBN), 96-12-11

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updatedDecember 1630 CET

CONTENTS

[01] Hoechst bids $3.5 billion for all of Roussel

[02] Former GM executive faces industrial espionage charges

[03] China taps shipping magnate to lead Hong Kong after handover

[04] Daewoo official, South Korean group attack France's Thomson decision

[05] Iraq resumes oil exports after six-year suspension

[06] November U.S. producer prices higher in November

[07] UK Paymaster General resigns from government

[01] Hoechst bids $3.5 billion for all of Roussel

The long-awaited transaction is among the biggest announced this year on the Paris Bourse, and it continues the wave of consolidation reshaping the global pharmaceutical industry.

It also provides a little help for the cash-strapped French government, which holds 4.3% of Roussel-Uclaf, valued at 1.53 billion francs at the group's current share price.

And the deal continues Hoechst's efforts to bring some order to its broad business interests. One of the world's largest chemical and pharmaceutical groups, Hoechst has businesses worldwide ranging from agrochemicals and fibre's to plastics and prescription medicines.

Over the past two years, Chairman Juergen Dormann has steered Hoechst through an ambitious program to bring some order to its far-flung business interests.

Speeding ahead of his German archrivals Bayer and BASF, he has completed a series of billion-dollar acquisitions and corporate partnerships.

Just Tuesday, Hoechst signed an agreement to merge its specialty-chemical division with Switzerland's Clariant, in exchange for a large minority stake, creating the world's market leader in the sector.

Roussel-Uclaf's stock has surged in recent months on the French stock market, rising no less than 68% since the beginning of January.

'Roussel-Uclaf hasn't been trading on fundamentals but on the likelihood of Hoechst buying out minority shareholders,' said Genghis Lloyd-Harris, pharmaceutical analyst with CS First Boston in London.

The offer could add pressure for consolidation throughout the European drug industry.

Analysts cite France as the next hot spot for big mergers or takeovers since its three remaining major drug companies - Rhone-Poulenc, Sanofi and Synthelabo - have slipped in industry rankings, and many analysts expect the three will seek alliances. Some analysts suggest new alliances in the industry would be modelled on Novartis, the company formed by the merger of Switzerland's Ciba-Geigy and Sandoz.

[02] Former GM executive faces industrial espionage charges

Prosecutors in the central German city of Darmstadt scheduled a news conference for Friday to announce charges against former GM purchasing chief Jose Ignacio Lopez and three other former GM managers for alleged betrayal of 'trade and company secrets.'

Both companies said that prosecutors had notified them of the indictment Wednesday, although neither side had yet been given a copy.

GM's German subsidiary, Adam Opel AG, immediately claimed moral victory, saying word of the indictment 'officially confirmed the suspicion of industrial espionage.'

General Motors accuses Lopez of taking files with purchasing price lists and details for a super-efficient car factory among thousands of pages of documents and computer diskettes.

Although the criminal charges appeared to be a blow for VW, a civil suit pending in a U.S. District Court in Detroit could prove more damaging, if not more costly, to Europe's largest automaker.

But Volkswagen, which denied any wrongdoing, said the fact of an indictment should not be interpreted to mean GM has a strong case. Although it has not yet seen a copy of the charges, Volkswagen said its lawyers believed 'that the prosecutors for the most part found Opel and GM's accusations unfounded' and that the charges were based on 'one-sided' witnesses from GM and Opel.

Lawyers for Lopez said they don't expect the charges to stand up, and announced that they will seek to have them thrown out before they can go to trial.

General Motors' accusation that Lopez took files with purchasing price lists and details for a super-efficient car factory among thousands of pages of documents and computer diskettes date back to his defection in 1993. The prized executive, who was about to be named head of North American operations, took seven other managers with him.

[03] China taps shipping magnate to lead Hong Kong after handover

Hong Kong people, who had no vote in the Beijing-controlled selection process, seemed to take the result with resignation, while 29 protesters, including two leading democratic legislators, were arrested after lying down on the sidewalk outside the voting hall.

The Hong Kong stock market, and in particular the Tung family company Orient Overseas (International), greeted the news with enthusiasm. The Hang Seng Index initially rallied 1%, while shares of Orient Overseas jumped 20%. Both cooled in the afternoon.

Tipped from the outset as Beijing's favourite, Tung took 80% of the votes of the Selection Committee of 400 Hong Kong notables.

Tung will become chief executive of Hong Kong's semi-autonomous government when it returns to Chinese sovereignty on July 1 and Chris Patten, the last British governor, goes home.

It marked the first time that Hong Kong people - even in limited numbers - have had a say in picking their leader.

The committee, dominated by pro-China business and professional leaders, gave Tung 320 votes. Retired chief justice Yang Ti Liang got 42 and Peter Woo Kwong-ching, former head of the Wheelock & Co.-Wharf (Holdings) Ltd. business group, got 36. Two ballots were spoiled.

Tung's triumph is likely to please Hong Kong's powerful business community, which had rooted for a tycoon to take charge of this economic titan of Asia.

But those concerned with civil liberties worry about Tung's advocacy of 'Chinese values,' and his criticism of Hong Kong's popular and combative Democratic Party. They fear he is too comfortable with China's authoritarian style.

[04] Daewoo official, South Korean group attack France's Thomson decision

Daewoo Electronics vice president Nam Kwi-hyen told a European businessmen's lunch: 'After our group scrutinised the opinion with our financial advisors, we were profoundly shocked to find the subjective, unfair and even discriminatory nature of the analysis.'

It was one of the harshest public denunciations to date of France's decision to postpone the sale of Thomson to Lagardere, which would have passed Thomson Multimedia to Daewoo.

The sale was scuttled after the French privatisation commission objected to the transfer of technology to the South Korean company.

But many South Koreans blame French xenophobia, and feel their country has been snubbed as an Asian outsider.

Nevertheless, Nam made clear that Daewoo had not given up the battle to acquire Thomson Multimedia and become the biggest television maker in the world.

'Yes, we still want to take Thomson over. But we have to wait for the French government's decision,' Nam said, repeating a pledge to add 5,000 jobs. 'There's no reason to worry about any change in working conditions and welfare.'

On Tuesday, French sources said Paris planned to unveil new privatisation terms for Thomson this week.

South Korea's Federation of Korean Industries also joined the attack on Paris in an escalating row that threatens French investment in the booming Asian 'tiger' economy.

In a letter to the French ambassador to Seoul, the Federation of Korean Industries, which represents all of South Korea's top industrial conglomerates, 'expressed worries about the French government's discriminatory practices towards non-European companies', a statement said.

Last week the South Korean government said it was seeking an 'understandable explanation' from France.

Meanwhile, French businessmen in South Korea were worried that the Thomson fiasco could sour the business atmosphere.

South Korea plans to spend billions of dollars upgrading infrastructure and modernising its military, and French firms are well placed to pick up lucrative contracts for nuclear power plants, railways and even fighter jets.

The federation letter said French-Korean business cooperation was in a 'golden age' and that the timing of the French decision was unfortunate.

[05] Iraq resumes oil exports after six-year suspension

A Turkish pipeline official said oil began flowing around 1000 GMT and he expected around 350,000 barrels per day to be pumped to Turkey's Ceyhan port from the Iraqi oil city of Kirkuk. Turkish oil officials said the first oil would probably leave Ceyhan at the weekend.

Next week, Iraq will increase the flow of oil through the Kirkuk-Yumurtalik pipeline to 440,000 barrels a day, said Ahmet Bulca, technical director with Turkey's state-owned pipeline company, Botas.

Demet Sentasci, a chemical engineer who conducted the quality test for the oil which arrived today, said the oil was of 'very high quality.'

The initial oil flow follows U.N. approval of a 75,000 b/d sales contract between Iraq national oil concern Somo and Turkey's state-run refinery company Tupras.

The contract was triggered by the U.N./Iraq 'oil-for-food' deal which allows Iraq to sell $2 billion worth of oil for an initial 180 days. The revenue will go for essential food and medicines, U.N. weapons monitoring and compensation for Gulf War victims.

[06] November U.S. producer prices higher in November

The index for finished energy goods rose 2.3% in November, after rising 1.9% a month earlier. Within that broader measure, prices for residential gas advanced 3.8%, after registering no change in October. Gasoline prices rose 2.8% in November after a 5.5% rise in October, while costs for home heating oil declined by 0.4%.

Excluding the volatile energy and food components, the Producer Price Index (PPI) rose just 0.1%. From November 1995 to November 1996, overall producer prices have risen at a 2.6% rate.

The data differed from economists expectations. Twenty analysts polled by Dow Jones News Sevices this week generally thought the overall PPI would rise 0.3% in November, while the so-called rate was expected to rise 0.2%.

[07] UK Paymaster General resigns from government

But his departure will not affect the number of seats the government has in the House of Commons as he will remain a Conservative Member of Parliament.

The Standards and Privileges Committee condemned Willetts for `dissembling', meaning he tried to conceal information, in October 1994 to influence the committee's investigation into the 'cash for questions' affair. Willetts was a junior whip for the government at the time.

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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