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Wednesday, 14 August 2024
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European Business News (EBN), 97-07-08European Business News (EBN) Directory - Previous Article - Next ArticleFrom: The European Business News Server at <http://www.ebn.co.uk/>Page last updated Tue, July 08 5:47 PM CETCONTENTS
[01] NATO invites three new members from Eastern EuropeNATO nations reached deep into Eastern Europe, inviting Poland, Hungary and the Czech Republic to join the alliance at the end of this century. The top ranking NATO official said the 16-member body 'remains open to new members.' In a setback for France, no promise was made to admit Romania or Slovenia.The decision to add three of Russia's former allies was revealed after a three-hour meeting where NATO chiefs debated how far and how fast to expand. Russia has signed a security pact with NATO but still opposes expansion into formerly communist Eastern Europe. NATO's top official called the summit 'a defining moment' for the alliance. The final communique, although singling out Romania and Slovenia for making progress toward admission, did not give them a specific date for NATO admission. 'We reaffirm that NATO remains open to new members. The alliance will continue to welcome new members,' Solana said. The NATO chief said there had been positive developments toward democracy in a number of European countries, 'especially Romania and Slovenia.' President Clinton, who pushed for the three-nation limit, said of Poland, Hungary and the Czech Republic: 'These are the countries who have proved their readiness to join us at this table.' While France sought greater assurances on behalf of Romania and Slovenia, leading to a delay in the outcome of the communique, nevertheless it was adding up to another foreign policy triumph for Clinton. The American president alerted NATO allies in June that the United States would insist that the initial expansion include only Poland, Hungary and the Czech Republic. 'They did reach a consensus on admitting three countries,' a Western official said. 'We have to make clear that all countries that wish to join NATO will be considered on their merits,' said the NATO official. 'The field is wide open.' [02] GEC to shift group's focus onto defence contractorsBritain's General Electric Company announced full year pre-tax profits of $1.7 billion, unchanged from last year, and unveiled its strategic blueprint to take it into the next century.The Defence electronics group company said it is to move away from its 'joint venture culture', with GEC-Marconi, the defence division, becoming the new heart of the group. George Simpson, GEC's managing director and successor to the former veteran chief Lord Weinstock, also said active discussions with France's Alcatel Alsthom are under way to determine the future of GEC Alsthom and it is also in talks with Germany's Siemens about the repositioning of GPT. Commenting on the future of the GEC-Alsthom joint venture Simpson said, 'That business has become very large. It is beginning to outgrow its parent and has developed its own identity and it needs to move on now. 'On a personal basis, I think it is best.' He said such a route would be 'very tax efficient' and good for shareholder value. The decision is expected within the next three months. But if the decision is in favour of demerger, that could take another six to nine months to implement. Analysts said there are several options under discussion for the future of GEC-Alsthom, but neither Alcatel-Alsthom nor GEC-Alsthom would comment on what those plans might be. Listing GEC-Alsthom on the stock exchange is one option. Philippe Smitt, analyst at Massonaud-Fontenay-Kervern in Paris, also said it might separate out activities so that each company will concentrate on its areas of expertise. Those companies would then be listed separately on the U.K and/or French stock exchanges. Looking at recent performance, GEC said more than 70% of sales were to customers outside the U.K. for fiscal 1997, and exports from the U.K. rose to £1.9 billion from £1.8 billion a year earlier. The order book at year end rose by 8.4% to a record £15.3 billion from £14.1 billion. Exceptional charges included £203 million in restructuring costs and £100 million in losses and anticipated losses on the disposal of businesses. [03] US Justice Department approves BT-MCI mergerThe Justice Department gave the green light to another huge communications merger, approving with conditions the $24 billion acquisition of MCI Communications by British Telecommunications.The merger, which pairs industry renegade MCI with the staid British national phone monopoly, would be the largest-ever foreign acquisition of a U.S. company. It has already begun to reshape the global communications industry, accelerating efforts to open foreign markets to competition and forging cross-border alliances by other phone companies. The transaction, which has been increasing in value with the rise in MCI's stock since the deal was announced in November, was approved by European regulators in May but must still win approval from the Federal Communications Commission and state regulatory agencies. While no new roadblocks are expected, the FCC could impose added requirements to ensure future competition. The companies said they expect to complete the deal on schedule this fall. The conditions announced yesterday by the Justice Department aim to ensure an open British communications market and are expected to benefit AT&T Corp. and other U.S. long-distance carriers. They are an expansion of conditions imposed in 1994 when London-based BT bought a 20% stake in MCI, of Washington. [04] BA scraps 14 flights as workers call in sick before strikeBritish Airways ran into trouble one day ahead of a planned strike by flight attendants, as hundreds of workers phoned in sick and forced the cancellation of 14 flights.Passengers faced some delays getting from London's Heathrow Airport to destinations within Europe, but the airline said they all were being placed on other flights operated by either British Airways or competitors. Barring a last-minute breakthrough in a pay dispute, the airline and its customers are heading for even tougher times for the rest of the week. Some 8,500 members of the British Airline Stewards and Stewardesses Association say they will strike for three days beginning tomorrow - which could cripple British Airways during its peak summer season. British Airways says many of its flights will operate normally but acknowledges tens of thousands of passengers could be stranded. Rival airlines are heavily booked and say they cannot accommodate very many extra travellers. Some 3,500 members of a breakaway union, called Cabin Crew 89, have accepted the pay deal and say they will stay on the job. The airline is also hoping to use some managers to perform flight attendant work during the walkout. A day before the strike deadline, some 350 flight attendants phoned in sick, forcing the flight cancellations, according to British Airways spokeswoman Alison Dewar. British Airways said it would be up to the union to restart any further negotiations, after earlier talks collapsed on Sunday. The airline took a tough line, warning workers that anybody who strikes will lose all travel privileges and any chance of job promotions through March 2000. British Airways also threatened a legal challenge over the way the strike ballot was taken last month. The Transport and General Workers Union, which has been negotiating for the flight attendants, accused management of last-minute intimidation tactics and said its strike ballot was taken legally. Each side has accused the other of trying to force a strike - which would be Britain's first big labour dispute since the new Labour government of Prime Minister Tony Blair took office in May. [05] ING Groep to take over Equitable of IowaING Groep, the largest Dutch insurance and banking combination, said it is taking over Equitable of Iowa in the United States for $2.2 billion.The takeover, ING's largest since its 1991 formation, 'is part of the growth strategy for the life insurance activities of ING in the United States,' the company said in a press release. The acquisition will double its life insurance operations in the United States, ING said, adding that it expects the U.S. group to have a positive influence on earnings per share in the first year. The Dutch company also said that the acquisition should boost premium income in the United States to $ 4.3 billion from the current $ 2.2 billion. The deal still needs the approval of U.S. authorities and the shareholders of Equitable. Analysts reacted positively to the news, saying the group's expansion came sooner than expected. Financial analyst Henk Brouwer with Bank Bangert Pontier said that Equitable will only make a small contribution to ING's earnings this year, but added that the benefit will increase along with integration of activities. 'This brings strong growth potential for ING's insurance activities over the next few years,' said Brouwer. Equitable of Iowa is a 'productive, fast growing and profitable life insurer which has developed itself in the last couple of years to a full service retirement savings company,' said ING. Based in Des Moines, Iowa, the American company is active in almost every state. In 1996, the group reported a premium income of $2.1 billion and a net profit of $123 million, ING said. ING plans to finance the deal with a mixture of borrowings and a placement of American Depository Shares on the New York Stock Exchange. [06] German unemployment eases slightly from 11.1% to 11%The German federal labour office announced that June's jobless rate eased to a non-seasonally adjusted 11.0%, from 11.1% in May.Although the unemployment figures show that the situation remains tense, German economics minister Rexrodt said that 'the turning point' has been reached. German unemployment won't increase any further in the medium term, he said. 'We will see no further increase in unemployment within the foreseeable future,' the minister said in an interview on the fringes of a ministerial conference on global information systems in Bonn. But Germany's June unemployment data hardly astonished any economists. Instead, they said the most surprising thing is how indifferent the market has become to the overall unemployment level that is actually very high. 'A seasonally adjusted number of 4.37 million jobless was something we couldn't have fathomed a year ago and now we are looking at it with little surprise,' said Adolph Rosenstock, chief economist at the Industrial Bank of Japan in Frankfurt. Rosenstock stressed that this number is roughly 400,000 above the German government's average forecast for 1997, which served as the base of its 1997 budget. And the outlook remains bleak. While the summer months should show a improvement on the jobless front, Rosenstock warned that the supply side effect of more than 100,000 new graduates in summer could well negate any seasonal improvement. Meanwhile German Finance Minister Theo Waigel said he plans to cut funding to Germany's labour office by 2 billion Deutsche marks ($3.5 billion) in the 1998 budget, according to an article in the regional German newspaper Leipziger Volkszeitung. The 1998 budget, along with a supplementary budget for 1997, will be presented to the German cabinet on Friday. According to the newspaper's sources, Waigel will base 1998 funding for the labour office on an average unemployment figure of 4.185 million for next year. [07] Federal regulators hold up the Bell Atlantic-Nynex mergerFederal regulators are holding up approval of the $23 billion merger between Bell Atlantic and Nynex while they press the companies to take concrete steps to open their local telephone markets to competition.Staff lawyers at the Federal Communications Commission have been negotiating the conditions in recent days with lawyers for the companies. Although the discussions are occurring solely at the staff level, the agency lawyers are acting with the approval of FCC Chairman Reed Hundt, people in industry and government said. Industry officials had expected the FCC to grant swift approval after the Justice Department's antitrust enforcers cleared the deal in April. But one industry official who has met with FCC staffers said: 'It would seem that the FCC does not share that perception of their role. The FCC takes extremely serious its own separate role ... of judging what's in the public interest. This is a very intense, fact-specific detailed review.' The FCC also appears to be upstaging the Justice Department, which has been criticized by lawmakers and consumer advocates for allowing the Bell Atlantic-Nynex deal to proceed without conditions. [08] Underlying June UK inflation rises unexpectedly to 2.7%British retail price inflation rose to 2.9% in June from 2.6% in May while the underlying rate, which excludes mortgage interest payments, rose to 2.7% from 2.5%.The prices data, reported by the Office for National Statistics, was stronger than expected in financial markets. Economists were expecting the all-items rate to have to have risen to 2.8% and the underlying rate to have remained unchanged at 2.5%. All-items inflation stands at its highest level since December 1995, when it was 3.2%. The figures increased expectations that the Bank of England will have to raise base lending rates by at least 0.25 percentage point after its monetary policy committee meeting ends Thursday. Rates currently stand at 6.50%. Adam Cole, U.K. economist at James Capel, said they were 'clearly poor figures' adding that although food prices are edging higher, the sector is still having a damping effect overall. He said a quarter point rate rise is still likely on Thursday, with a half point perceived as a panic measure, especially after rate rises in successive months. Sterling reached a new six-year high against the Deutsche mark early in London after Britain announced that retail inflation rose more than expected in May. The pound last traded higher May 17, 1991, when it closed at 2.9790 marks. The high in May 1991 was 2.9868. Sterling also rose sharply against the dollar, only to quickly ease back from its early highs against both the dollar and mark. [09] Burton plans to spin off DebenhamsBritish retail group Burton Group has announced its intention to demerge its Debenhams unit, the household items chain and seek a separate stock market listing for it.The demerger will aim to capitalise on a revival in the fortunes of the department store, which has become one of the fastest growing retail sectors in the country. Burton said the demerger would 'significantly enhance' shareholder value and was in the best interests of the group's shareholders and customers. Burton Group Chief Executive John Hoerner said that the Debenhams department store business the company would be worth about 100 pence a share, according to estimates from broker Societe Generale Strauss Turnbull. Burton, the second biggest clothing retailer in Britain after Marks and Spencer, said the remaining business, which includes Top Shop, Principles and Dorothy Perkins, would be reorganised into a single business, renamed, and would keep its existing listing. 'This proposal would result in two strong independent companies each with a strong cash flow, in which Burton Group shareholders would participate,' the company said. SGST retail analyst Nick Bubb confirmed the valuation, saying he'd set a per-share target for an independent Debenhams of between 90 pence and 100 pence. Hoerner spoke this morning en route to a meeting with analysts following Burton's announcement of the Debenhams spinoff and other restructuring details earlier in the day. Whether the move leads to better value for High Street customers or not, analysts and investors applauded the decision. [10] Corporate and Economic BriefsMannesmann Arcor, the German telecommunications group, said it had filed a complaint with the German government against monopoly Deutsche Telekom over the prices it is charging to allow rivals to access its networks. Mannesmann's complaint is the first to target the prices that Telekom has been charging for allowing rivals to use its monopoly network to reach customers in local networks. The industry has alleged that Telekom's prices were well above internationally accepted levels.Hungary's general government budget deficit in the first half of 1997 was 187.5 billion forints ($0.9 billion), the Ministry of Finance announced. Within the general deficit, also known as the consolidated deficit, the deficit in the government's central budget during the first six months of the year was 165 billion forints, the ministry said. That's 53% of the total central budget deficit projected for the year. A former investment adviser of Merrill Lynch and Co. has been detained in Hong Kong after the brokerage filed fraud charges against him, police reported. A police spokeswoman said no police charges have yet been filed against American Kevin Wallace, who was one of Merrill Lynch's highest producing stock brokers in Singapore. If charged by police, Wallace could face trial either in Singapore or Hong Kong, she said. Shares in Germany's Saltus Technology will be priced between 32 Deutsche marks ($19) and 37 marks, as established by the bookbuilding procedure, the Deutsche Genossenschaftsbank (DG Bank) said. A definitive price will be set July 12, DG Bank said. DG Bank is lead manager for the initial public offering. Saltus plans to issue 800,000 shares with a total nominal value of 4 million shares. Shares will be listed on the Frankfurt Stock Exchange as of July 14 as part of the exchange's new market segment of trading, which lists the shares of companies in high-growth industries. U.K. government proposals aimed at facilitating the development of fallow acreage on the U.K. continental shelf could be available by the end of July, a spokesman at the Department of Trade and Industry confirmed. The confirmation followed Friday's comments by U.K. Energy Minister John Battle that it is essential to the future of Britain's offshore oil sector that a way be found to exploit fallow acreage reserves. Battle said he had asked the DTI to examine ways to get full use from undeveloped fields in the North Sea. After years of losses due to weak markets and internal problems, cost reductions have given Continental General Tire Inc. some traction. Now, the U.S. arm of Germany's Continental is driving to improve sales and profitability for the world's fourth-largest tire maker. 'Continental General Tire in the first half (of 1997) has continued its turnaround,' President Bernd Frangenberg told Dow Jones. The unit, based in Charlotte, posted 1996 earnings before interest and taxes of $55 million, or about 4% of the company's $1.37 billion in sales. [11] World News BriefsFresh violence erupted across Northern Ireland early today with fires and riots in retaliation for Britain's decision to allow Protestant marchers through a Catholic neighborhood. A policeman was shot and wounded on Garvaghy Road, the Catholic enclave in the predominantly Protestant town of Portadown where the latest round of violence was triggered Sunday. Police said he was not badly injured. In north Belfast, a Protestant man was shot and wounded in a burst of gunfire from the Catholic Ardoyne neighborhood as he stood on the street with a group of other Protestants. Police said the man's injuries were not life-threatening.At least seven Russian policemen were killed and more than a dozen wounded when their truck was hit by a remote-controlled bomb near the border with Chechnya, news reports said. It was one of the most serious acts of violence in the region since Russia and the Chechen rebels reached a peace agreement last year, ending a two-year war. The policemen were traveling in a truck in Khasavyurt, a southern town only a few kilometers from Chechnya, when the were hit by the explosive device attached to a roadside tree, Russian news agencies said. President Fidel Ramos has ordered the evacuation of about 500 Filipinos from Cambodia because of continuing fighting after a coup there. Foreign Secretary Domingo Siazon said the government is trying to obtain clearance for Philippine military planes to land in either Bangkok or Ho Chi Minh City and then fly on to Phnom Penh, Cambodia's capital. 'The situation is bad,' Siazon told reporters, saying forces loyal to Cambodia's rival premiers have vowed to continue fighting. At least two C-130 cargo planes are standing by in Manila for the airlift, said air force spokesman Col. Charles Hotchkiss. Tamil Tiger rebels seized a North Korean cargo vessel after it unloaded food at a port in northern Sri Lanka, navy and shipping officials said. The Moran Bong was returning from Point Pedro harbor when three or four rebel boats approached it shortly after midnight yesterday, officials said. They spoke on customary condition of anonymity. From the European Business News (EBN) Server at http://www.ebn.co.uk/European Business News (EBN) Directory - Previous Article - Next Article |
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