European Business News (EBN), 97-07-15

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CONTENTS

[01] Fashion designer Gianni Versace killed in Florida Gianni Versace 1946- 1997

[02] Theo Waigel, defending the weakening mark says that Germany wants a strong currency

[03] Kinkel says Germany will fulfil EMU criteria for timely entry

[04] EU Commission gives Rome the all-clear to give $1.57 billion in aid to Alitalia

[05] Long-Term Credit Bank announces tie-up with Swiss Bank

[06] BA strike won't affect long-term outlook

[07] A rebound in car purchases pushes US retail sales to an unexpected increase in June

[08] Car sales in Europe grow 1.7% in the first six months of this year

[09] U.K. retailers call for Bank of England to leave interest rates unchanged

[10] LVMH to present GrandMet and Guiness with three way merger proposal by the end of the week

[11] Benetton is to buy $325 million Sportsystem

[12] Germany suffers setback in attempt to force Deutsche Telekom to unbundle network access

[13] E.U. reportedly not satisfied with Boeing's concessions

[14] Japanese industrial data shows that the economy is better than the gloomy market view

[15] Stork takes over Fokker technology

[16] Investors consider their options after MCI's profit warning puts the BT-MCI merger in doubt

[17] Fifty year old designer was a symbol of Italian fashion

[18] Corporate and Economic Briefs

[01] Fashion designer Gianni Versace killed in Florida Gianni Versace 1946- 1997

The Italian designer was walking back from the nearby News Cafe, where he picked up an Italian newspaper around 7 a.m. (1100 GMT), waiter Michael Kislingbury said.

He was pronounced dead at Jackson Memorial Hospital, spokeswoman Concha Ruiz-Topinka said.

'This is a major blow to our community., I just can't believe it.' said G. Jack Donahue, associate publisher of Fashion Spectrum magazine, who described himself as good friend.

Cindy Weber-Cleary, fashion director for Glamour magazine in New York, said Versace had 'a huge impact on fashion. There's only a handful of designers who really influence and inspire the whole fashion community, and he was one of the top two or three.

'He was one of the most knocked-off designers in the world because his clothes are very distinctive. ... It's that body-conscious colorful aspect is what people most associate with him.

The minute his clothes went down the runway, they were knocked off the world over.'

[02] Theo Waigel, defending the weakening mark says that Germany wants a strong currency

In the second leg of a two-pronged offensive against the strengthening dollar, Finance Minister Theo Waigel added his weight to comments from Bundesbank president Hans Tietmeyer last week, making clear a recent fall in the mark was overdone. Waigel also added that Germany stood by previous agreements on foreign exchange rates within the Group of Seven industrial nations and was in contact with its partners. When asked, Waigel said he wouldn't judge France's efforts to meet the single currency criteria. On Monday, French president Jacques Chirac said that he respects the timing and criteria for the currency union, but estimated the present French deficit at 3.5% of gross domestic product. The currency criterion states that a country's deficit mustn't exceed 3% of GDP, except in temporary and exceptional circumstances when it is near that norm.

[03] Kinkel says Germany will fulfil EMU criteria for timely entry

In an interview with the Neue Osnabruecker Zeitung newspaper, Kinkel said Germany would meet the deficit criterion for monetary union as well as other fiscal targets as spelled out in the Maastricht Treaty. 'We will fulfill the debt criterion and the other criteria,' Kinkel said.

In a further report, the Bundesbank declined to comment on market speculation that it was checking mark prices in the foreign exchange market. 'We are not commenting on this,' a spokesman said. Currency dealers earlier said the Bundesbank was checking mark prices, but actions could not be confirmed. A Frankfurt-based dealer also said there was no indication of Bundesbank intervention and attributed the dollar's slip against the mark to Waigel's comments.

[04] EU Commission gives Rome the all-clear to give $1.57 billion in aid to Alitalia

The aid will be paid in three instalments: deal is dependent on Alitalia sticking to strict restructuring plan

In a decision expected to signal the end of an era of subsidising European airlines, the European Union Commission gave the Italian authorities the all-clear to pump 2.75 trillion ITL in state aid into ailing flag carrier Alitalia.

The aid, which will be granted in three annual instalments, is dependent on the company sticking to a stringent restructuring plan designed to restore the airline to profitability. 'This decision should close the cycle of state aid applications that has characterised the efforts by European airlines to restructure and meet the challenges of global competition,' E.U. transport chief Neil Kinnock said in a statement.

The aid will be paid out in tranches of 2.0 trillion ITL, 0.5 trillion ITL and 0.25 trillion ITL over the period of 1996-2000. The first tranche of aid - of which 1.0 trillion ITL was already paid out in June 1996 - will be paid out immediately.

Payment of the other two instalments in May 1998 and 1999 respectively is dependent on Alitalia sticking to conditions including that the airline must sell its stake in the Hungarian carrier MALEV and that the aid be used 'only to restructure Alitalia and not to purchase holdings in any other air operator.'

The Italian authorities also undertook not to favour Alitalia over other airlines in the area of airport slot allocation, traffic rights or groundhandling. In addition, Alitalia agreed not to use the subsidy to overly boost its capacity in terms of number of seats and passenger miles.

The airline also agreed not to use the aid to undercut its competitors' prices on competitive journeys until Dec 31, 2000. Alitalia will also provide accounting systems capable of quickly analysing the ratio of profitability on any route.

The first part of Alitalia's restructuring plan to run through the end of this year is designed purely to haul the company back onto the viable track, while the second part to run from 1998-2000 is a corporate development plan.

[05] Long-Term Credit Bank announces tie-up with Swiss Bank

LTCB will raise 200 billion yen ($1.8 billion) in capital during the current fiscal term by issuing stocks and bonds to speed non-performing loan write-offs in connection with its alliance with Swiss Bank, Nikkei News reported.

Nikkei said 130 billion yen of the funds will raised by issuing preferred shares and the remaining 70 billion yen through perpetual subordinated bonds.

Swiss Bank is expected to be the lead manager of the share issue and will hold about 50% of the newly issued preferred shares as investments, Nikkei reported.

The LTCB will as a result write off a substantially larger amount of non- performing loans during the current fiscal term than the 200 billion yen it had originally forecast at the start of the fiscal year, Nikkei said.

As previously reported, LTCB and Swiss Bank signed an alliance agreement aimed at jointly carrying out investment banking operations in Japan. The two banks agreed to take 3% stakes in each other's equity capital, according to a statement by Swiss Bank.

Swiss Bank, one of Switzerland's largest, said the core of the alliance will be three joint ventures based in Japan. These ventures will be in investment banking, asset management and private banking in Japan and around the world.

[06] BA strike won't affect long-term outlook

Speaking at the group's annual shareholders meeting Chairman Colin Marshall defended the company's cost-cutting program. Marshall said these cuts are necessary to allow maximum investment in new opportunities including network development, new aircraft, strategic business ventures, and services.

British Airways is currently waiting for the British Airlines Stewards and Stewardess Association to provide in writing its proposals on how to achieve the £42 million in savings agreed in the cabin crew department. The pay package is part of the company's plans to cut one billion pounds in cost by 2000.

Chief Executive Bob Ayling called on BASSA to adopt the 'constructive approach to change' demonstrated Monday by the union's counterpart representing ground crew workers. The Transport and General Workers Union dropped the threat of strike by ground employees Monday and accepted the company's offer for further talks on the sale of its catering business.

'This dispute is not about union busting. I have no plans to de-unionise BA, though many of the newer airline competitors have no unions at all,' Ayling said. 'But I do want to work with modern, forward thinking unions who have an interest in achieving BA's future competitiveness,' Ayling added.

[07] A rebound in car purchases pushes US retail sales to an unexpected increase in June

A Dow Jones Capital Markets Report survey of 15 economists published Monday found an average estimate of an unchanged performance of retail sales in June from May.

The dollar came off slightly as the market looked at the data.

The dollar is was quoted at 1.7941 marks and 114.33 yen, compared with 1.7945 marks and 114.30 yen just before the indicator's release at 1230 GMT.

'The dollar didn't really fall very much. We went into the numbers a little strong on the dollar and when ex-autos came in weaker than expected, we came off a little bit,' said Lizbeth Goldberg, vice president of foreign exchange at Bayerische Hypotheken-und Wechsel Bank AG in New York.

[08] Car sales in Europe grow 1.7% in the first six months of this year

Sales in June rose 9.0% to 1,135,600 vehicles, the ACEA European carmakers association said Tuesday, bolstered by a surprisingly strong 8.4% rise in Germany, Europe's largest market.

For the full year, however, analysts still see the market growing only between 2% and 3% above a weak 1996 level.

'It's hard to move away from that range,' said Christopher Will, an analyst at Lehman Bros. in London.

For starters, Italy's booming market, fuelled by government incentives on trade-ins, should calm down slightly. And while France's market should be less disastrous over the full year than the 24% drop seen in the first half, a decline of nearly 20% looks likely.

Even in Germany, the market over the next few months could be weaker than it was a year ago, because consumers are likely to hold off purchases until the new VW Golf model comes on the market in September. The Golf is the best-selling car in Germany and the second-best in Europe.

'June sales rose 4% if you consider there was an extra working day,' noted Jurgen Pieper, an analyst at Deutsche Morgan Grenfell in Frankfurt. 'We still see the German market rising only 2% this year, with some risk of it being less.'

[09] U.K. retailers call for Bank of England to leave interest rates unchanged

The BRC blamed the slowdown on wet weather in June and said tax rises announced in the budget are unlikely to restrain strong growth consumer spending.

However, it said there is no immediate need for a further rise in interest rates because consumers and homeowners haven't yet digested the three 0.25- percentage-point rises since the beginning of May. The official lending rate stands at 6.75%. Most economists expect at least one more 0.25-point rise before the end of the year.

'With the pound soaring to new heights, it would make sense for the Bank of England to wait and see how consumers react over the summer months before making any further interest rate moves,' said Andrew Sentance, chief economic adviser to the BRC.

Measured on a 'like-for-like' basis, which compares the same area of selling space, the value of goods sold in the shops was 4.5% higher in June compared with the same month a year earlier, the BRC said. This compares with rates of 4.8% in May and 4.1% in April, giving an average of 4.4% over the past three months.

The BRC said underlying growth in sales volumes remains healthy and inflation low, with retail prices up just 1.1% in the year through June. Food prices were lower than in June last year due to strong competition.

Andrew Higginson, chairman of the BRC's economic affairs committee, said the slowdown in sales growth came despite some sectors benefiting from windfall gains from building societies that have demutualized and floated on the stock market. Consumers are spending their payouts on 'big ticket' items such as electrical goods, furniture and kitchens.

Sales of womenswear were hit by the poor weather, as were sun protection creams and ice creams, according to the survey, which covered the period between June 1 and July 5. The winners, though, included department stores which benefited from the extra influx of customers escaping the rain.

[10] LVMH to present GrandMet and Guiness with three way merger proposal by the end of the week

'LVMH is still working on the hypothesis of a three-way marriage,' a company spokeswoman said, reacting to newspaper reports which said LVMH could swap its cognac for champagne with Guinness.

The newspapers said LVMH could sell its 66% stake in the cognac business, including Hennessy, and buy Guinness' 34% in the champagne business, which includes the Moet et Chandon brand.

The papers said that LVMH would keep its worldwide distribution contracts and would also obtain a seat on the board of GMG - the planned £24 billion ($40.5 billion) merger by Guinness and GrandMet.

Arnault wants to merge his wine and spirits business with those of the two British companies into a separately listed company. Under the original plan, this would exclude LVMH's luxury goods and the British companies' food businesses.

LVMH had no comment on a report it would have dropped its demand that the food business - such as Burger King - be excluded from the venture.

The Breton entrepreneur is one of the biggest investors in both of the other companies.

He has bought some 6.4% in GrandMet for over 8 billion francs ($1.3 billion) since mid-June on top of LVMH's 14.2% stake in Guinness.

Guinness and GrandMet announced their merger in May and Arnault immediately signalled his opposition. Greener and Bull came to Paris on July 3 to listed to Arnault's proposal and they asked him to give written details.

[11] Benetton is to buy $325 million Sportsystem

The holding company, Edizione Holding, currently controls 100% of Sportsystem, whose major name brands include Rollerblade, Prince, Nordica and Killer Loop.

Benetton has been looking for some time to diversify its retail holdings. At the same time, the fresh cash enables Edizione Holding to pursue its goal of making new investments, especially in upcoming Italian privatisations.

Edizione Holding is known to be looking to acquire a 5% stake in the highway management firm and construction company Concessioni e Construzioni Autostrade, which is slated for privatisation later this summer.

Benetton will integrate Sportsystem into its current retail network, thus enabling it to develop the latter's brand names using its experience as a leading clothing producer.

[12] Germany suffers setback in attempt to force Deutsche Telekom to unbundle network access

The decision, made by a Cologne administrative court judge, represents a setback for both government regulators and companies that hope to compete against Europe's largest phone carrier when the German market is thrown open to competition Jan. 1. New entrants have complained that they can't compete profitably against Deutsche Telekom if they are forced to lease all of the carrier's network facilities rather than just pick and choose the parts of the Deutsche Telekom network they want to use and pay for.

In a preliminary decision, the court ruled that the government couldn't immediately contemplate fining Deutsche Telekom for missing a deadline yesterday to issue a new proposal on unbundled access. The ministry could levy a penalty of as much as 1 million Deutsche marks ($563,000).

A ruling on the actual challenge to the government's order over unbundled access could stretch out for two years or more. Post and Telecommunications Minister Wolfgang Boetsch has ordered Deutsche Telekom to give competitors access to what is known in the industry as the 'final mile' - in this case, the Deutsche Telekom lines that connect homes and offices to local switches.

Both government officials and competitors were restrained in their reactions. A spokesman for Mr. Boetsch said the government has made its position clear but now must await the court ruling. A spokeswoman for Mannesmann Arcor, one of the three companies that had appealed to the ministry for unbundled access, only said this means a few more weeks will go by before a decision is reached. She wouldn't comment on how this would affect Arcor's business plans.

As part of Deutsche Telekom's aggressive stance in the face of increased competition, the company plans to become the first global network operator to offer Internet-based telephony. According to the German newsweekly Der Spiegel, the telecommunications giant is preparing to test the service, dubbed T-Netcall, with 1,000 customers in Germany, the U.S. and Japan. A phone call to the U.S., for example, would then cost only 24 pfennig a minute instead of the current 1.32-1.44 marks. A Deutsche Telekom spokesman wouldn't confirm the report or offer additional details.

[13] E.U. reportedly not satisfied with Boeing's concessions

One source said in some areas the offers made by Boeing in talks with the Commission which went on late into the night were 'not sufficient' and in other areas 'totally insufficient'. None of the Commission's three areas of concern had been met, he said, adding that the deadline for negotiations was later today.

'Unfortunately, as regards substance, the offers made were not enough,' the source said.

The European Commission has expressed concerns about the merger's impact on competition in three areas, arguing for example that it would add to Boeing's already dominant position in the aircraft industry.

It also opposes Boeing's exclusive contracts to supply aircraft to airlines such as Delta, American and Continental and worries about the possibility of spillovers of public money, earmarked for research and development in defence, into Boeing's civil aviation business.

'None of these points have been, in a totally satisfactory way, concluded,' the source said, adding, however, that progress had been made on one of the issues. He declined to say which one.

[14] Japanese industrial data shows that the economy is better than the gloomy market view

The Ministry of International Trade and Industry revised data to show May industrial production rising by 4.5% from the prior month and jumping by 7.5% from a year earlier. In preliminary data released more than two weeks ago, MITI initially said May output rose by 3.8% from April and increased by 6.8% from last year.

A MITI official said that if June output falls by no more than 2.6% from May - as was forecast when the preliminary figures were released - April- June output would rise by 0.2% from the prior quarter and increase by 6.8% from last year.

'Japan is producing at full capacity, at full throttle, and these figures confirm that Japan is in a broad-based economic recovery,' said Richard Werner, chief economist at Jardine Fleming securities in Tokyo.

In the meantime, sales at Tokyo department stores fell by 5.6% in June compared with the same month last year, as the lingering impact of the April 1 consumption tax hike and bad weather damped demand.

'In addition to the tax increase, we had two typhoons hit Japan in June, so it's natural that department store sales are bad,' noted Susumu Kato, chief economist at BZW Securities in Tokyo. 'But the weather has been sunny and hot in July, so that should help sales improve,' he added.

Economists noted that the latest Tokyo department sales figure revealed improvement after May data showed a 5.9% year-on-year decline.

'The figures show that demand is moving closer to year-ago levels and the impact of the consumption tax hike is falling off,' said Matthew Poggi, economist at Lehman Brothers Japan.

Financial markets didn't react much to the release of the data, reflecting what some economists have dubbed 'negative irrational exuberance.' Tokyo stocks closed lower on profit-taking while government bond prices edged lower due to the dollar's rise against the yen.

Economists said market players are selling the economy short.

[15] Stork takes over Fokker technology

In a written statement, Stork said it intends to integrate the Technology unit of bankrupt Dutch aircraft builder Fokker into Fokker Aviation, the maintenance unit of Fokker which Stork owns.

Stork expects Fokker Aviation to book orders worth 800 million guilders ($396 million) over 1997. Overall, Stork expects the group to book orders of 5 billion guilders ($2.47 billion) this year.

[16] Investors consider their options after MCI's profit warning puts the BT-MCI merger in doubt

MCI lost about $5 billion of its market capitalisation in response to news that its losses from trying to get into the local phone service market in the U.S. would be about $1 billion more than expected over the next two years or so.

Daniel Reingold, an analyst at Merrill Lynch, said arbitrageurs are fine- tuning their holdings in anticipation of a renegotiation of BT's $21 billion purchase of MCI.

'It's trading on the assumption that the exchange value will be reduced by 8% or 9%,' said Reingold. 'This deal has got to be renegotiated at a lower price.' He added that BT is surely under pressure to revamp the deal.

Other analysts said MCI is trading on the assumption that there will be no change in plans.

'There really is no chance of this being renegotiated,' Salomon Brothers analyst Jack Grubman said.

The rise of the shares and the heavy volume indicated investor confidence that the earnings shortfall will not affect the terms of the merger, said Anna-Maria Kovacs, analyst at Janney Montgomery Scott.

People would not be buying the stock at all if they thought a renegotiation was imminent, Kovacs said.

The rise, she said, represents a settling after Friday's frenzied reaction to the bad earnings news.

'I think some people are kind of backing off from the knee-jerk reaction,' Kovacs said.

BT cannot renegotiate its deal with MCI unless there is a 'material adverse change' in MCI's business, analysts noted. Under the terms of the merger agreement, such a change cannot be legal or regulatory in nature.

MCI has cited anti-competitive tactics by the local phone monopolies and inadequate regulatory response as the chief reasons it is getting hurt so badly on the way to the local market.

Other long-distance companies have complained about the same problems.

The Bells, for their part, have argued that the long-distance companies are not as committed as they sound to entering local markets and have accused MCI in particular of blaming local companies for its own bad decisions.

Given the trouble all the large long-distance companies are having in cracking the local market and the existing regulatory uncertainties, BT could not argue that MCI's particular circumstances have changed fundamentally, said Grubman of Salomon Brothers.

'There is no material adverse change to the core business,' Grubman said. 'Believe me, they (BT) ain't looking at 1997 and 1998 earnings.'

Other analysts have offered similar views and noted that Friday's stock drop created a buying opportunity.

The most BT might do, said Grubman, is have MCI slow its push into local markets, which the company said Friday it is accelerating. BT, meanwhile, has denied a report that it plans to oust top MCI executives, including Chief Financial Officer Douglas Maine, who is slated to become CFO of the merged company.

'BT really wants this deal to go ahead because it's the key to their international strategy,' said Andrew Harrington, a London-based analyst for Salomon Brothers.

'They're not going to jeopardize their one-year or two-year lead over their competitors with a long, drawn-out renegotiation and court battle,' Harrington said.

He predicted that most BT shareholders will support BT's management in pursuing the deal as agreed.

However, some investors on the Salomon Brothers call said they are concerned that BT has not issued a statement saying the merger will proceed on the existing terms. That, Reingold said, is because it won't.

'Those who don't see a change coming must have taken those little pink pills that I refused to take in college,' Reingold said.

'That stuff can come back on you years later,' Reingold joked. 'I don't know what they dropped in college, but it wasn't classes.'

[17] Fifty year old designer was a symbol of Italian fashion

Born Dec. 2, 1946, in Reggio Calabria in southern Italy, he began designing ready-to-wear for other firms in 1972 in Milan. He launched the Gianni Versace label with an autumn-winter collection in 1978.

Last year, he transformed a derelict Vanderbilt mansion into a New York emporium.

Versace gained fame in the 1980s with his flamboyant styles for both men and women. He staged his fashion shows with blaring rock music, glaring flood lights and mega-screens reproducing what was going on the runway.

At his debut of his winter collection in Milan this March, Versace toned down his style, taking his models off the runway and letting them walk close to the audience. Among the celebrity guests were Andie MacDowell, Elizabeth Hurley, Hugh Grant and pop star Boy George.

'I'm moving more into the reality of things,' Versace said at the time. 'It's time to step back and show clothes.'

There was lots of black leather in the collection, like the kind he was famous for a decade ago, but it caressed rather than grabbed the body in lady-like suits with long jacket and short skirt, straight trousers, or square-cut mini shifts. Click here for report on the shooting

[18] Corporate and Economic Briefs

Many people are losing out because of deficiencies in existing occupational and personal pension products, according to a report from Britain's Office of Fair Trading.

Austrian steel group VA Stahl and Germany's Preussag Stahl are to form a 50-50 joint venture to produce specialty welded plates for the automotive industry. The companies will invest a total of about 250 million schillings in the venture, which will be based in Munich and control plants in Linz, Austria, and Salzgitter, Germany.

June car sales in the E.U. rose 9.5% from a year ago, while sales during the first half of the year rose 1.9%. In Germany, Europe's largest market, sales rose 8.4% in June to 343,000 vehicles. Sales remain 2.8% lower for the first half at 1.86 million vehicles. In Western Europe, which includes Scandinavia and Switzerland, sales in June rose 9%. Sales are up 1.7% since the beginning of the year.

Rolls-Royce said it will provide two gas turbine engines for a new £35 million electricity generating station to be built at Fort Dunlop near Birmingham. The company said that it will finance, own and maintain the facility on a long-term basis.

Peninsular and Oriental Steam Navigation said it benefited from reduced Eurotunnel operations, with passenger traffic for all ferry routes to mainland Europe up 7.6% in the second quarter of 1997 to 3.628 million from 3.374 million a year ago. On the short-sea route of Dover to Calais, passenger traffic rose 7.2% to 2.7 million from 2.5 million, while tourist vehicle traffic rose 13% to 460,944 from 407,393 last year.

Sales of new cars in Switzerland fell 3.1% in June from year-earlier levels and first-half sales declined 4.2% from the corresponding 1996 period, the Swiss Association of Automobile Importers announced. June sales fell to 26,601 from 27,464 in June 1996, the trade group said. First-half sales fell to 149,596 from 156,128 in the corresponding 1996 period. Switzerland, which has no domestic auto industry, has seen sluggish consumer sentiment this year.

Italy's industrial producer price index was up 0.1% in May 1997, from April this year and was up 1.1% over the same month in 1996, the state statistical institute ISTAT reported.

Italy's wholesale price index for May rose 0.2% from April. The figure was down 0.2% on the year. The monthly rise was in line with current inflationary trends, ISTAT said.

Centrica, the trading and exploration business spun off from British Gas, said that it and fuel purchasers for the Netherlands' Elsta cogeneration project signed an interconnector contract. Centrica, through a unit called British Gas Trading, will sell to Inkoopcombinatie Elsta around 1.0 billion cubic metres a year for a period of eight years. Deliveries are scheduled to start in October 1998 with the opening of the U.K.-Interconnector, a 238- kilometre 40-inch pipeline running from Bacton, Norfolk to Zeebrugge in Beligium.

German diversified utility group Viag said it expects 1997 net profit and group sales to rise from 1996. Viag attributed the positive forecast to the strength of its chemical activities and the performance of its subsidiary, VAW Aluminum. Viag will release half year results Aug. 21. The Munich-based utility said, however, the first six months have developed 'as expected.' 'I am confident that for the full year 1997 we will once again be able to increase the group sales of Viag and be able to slightly increase net profits,' said Viag's Chairman Georg Obermeier at the annual shareholders meeting in Munich.

Finland's annual inflation rate jumped to 1.2% percent last month, up from 1.0% the previous month and 0.4% in June 1996, the government statistics agency said. During the 12-month period the largest price increase - of 2.9% - was in housing, Statistics Finland said. The prices of cigarettes and alcoholic beverages went up by 2.4%. Inflation was curbed primarily by cuts in interest rates for housing and consumer loans. Finland's inflation rate in June was the highest since May 1995. The average inflation rate for 1996 was 0.6%, one of the lowest in the European Union.

Italian retailer Benetton said it will buy sportswear company Sportsystem from the family's holding company for a total of 567 billion lire ($325 million). The holding company, Edizione Holding, currently controls 100% of Sportsystem, whose major name brands include Rollerblade, Prince, Nordica and Killer Loop. The Benetton group will buy 57% of Sportsystem immediately for 318 billion lire and will acquire the remaining 43% by March 31, 1998 for 249 billion lire.

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