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European Business News (EBN), 97-10-01
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 WorldCom's rival bid for MCI threatens British Telecom's global expansion plansBritish Telecom's global expansion strategy was under threat after its revised $18 billion bid for America's MCI Communications was trumped by a rival offer from WorldCom.
But BT shares rose strongly in heavy volume on the view the counter offer represented a way out of its bid.
Britain's biggest telephone company declined to comment, saying only: 'We are awaiting further details.' MCI also said it was premature to respond.
BT's shares surged to 455 pence before trading 43 pence higher on the day at 452-1/2 by early afternoon after acquisitive US carrier WorldCom said it was offering $30 billion in a paper bid for control of MCI, the second biggest long-distance US phone group.
Some analysts, such as Deborah McCutcheon from Robert Fleming, welcomed news of the counter-bid, saying it allowed BT to abandon a merger in which the risks outweighed the rewards.
'It is a great opportunity for BT to leave the deal with MCI,' she said. 'I think it's great news.'
'The presents BT with a get-out-of-jail-free card,' agreed one trader.
BT revised its original $21 billion bid for MCI in August, one month after the U.S. company issued a surprise profit warning which rocked what was set to be the biggest transatlantic merger in history.
BT has said that its international strategy and global expansion plans hinge on its merger with MCI to create Concert, which will have 43 million customers and a 6% share of the booming $670 billion global telecommunications market.
But some analysts and investors had called for the company to drop the bid after news of far greater-than-expected losses in MCI's local business and amid mounting concerns about rising competition in its core long-distance operations.
WorldCom said its $41.5-per-share paper bid for each MCI share outstripped BT's bid by $9.0 billion. BT, which is offering a cash and paper bid initially valued at $32.64 per MCI share, already owns 20% of MCI.
But some analysts said the rise in BT's share price, coupled with a likely fall in WorldCom when that the U.S. market starts trade could make the two offers look very similar by the end of the day.
WorldCom accompanied its unsolicited bid for MCI with a letter to MCI's chairman and chief executive Bert Roberts, in which it said the two companies shared similar legacies pioneering the introduction of competition in the telecoms market and histories of innovation, agility and growth.
'Indeed, these two companies are the paradigm for the American entrepreneurial spirit,' WorldCom's president and chief executive Bernard Ebbers wrote, adding that he was certain the deal could be completed by the first quarter of 1998.
MCI shareholders have yet to vote on BT's revised terms and some have already started legal action against MCI for failing to advise investors that BT was renegotiating the price.
 Italian government rocked by crisis as key allies reject budgetItaly's hope of becoming a founder member of the single European currency could be in jeopardy after the government of Romani Prodi was jolted by a sudden political crisis, analysts said.
Prime Minister Prodi said that his centre-left government was officially in crisis after the hard-left ally, the Communist Refoundation party, broke ranks over the 1998 budget, leaving him without a parliamentary majority. And analysts say that if Italy has to call a snap general election to fight its way out of the emergency, its dreams of joining European economic and monetary union from the outset will be shattered.
Prime Minister Prodi said he was doing everything to avoid a government crisis but 'if it happens, it happens,' Italian press agencies reported. Prodi has a majority in the Senate but lacks one in the house of deputies where he relies on the votes of far left party Rifondazione Comunista for a majority. RC has said it won't vote for the 25 trillion lire 1998 budget adjustment presented by the government last weekend.
'The budget does not respond to the big social problems in our country and it doesn't respond to the dramatic unemployment problem in the south. It does not offer reforms capable of improving public services, while it penalizes public health and social security,' the party said.
Prodi's centre-left coalition needs the communists' votes for a majority in the Chamber of Deputies.
After a late meeting yesterday, the party's legislators announced they would vote against the government's proposed package, which includes tax increases and cuts to Italy's pension system. 'On this budget adjustment the government does not have a majority,' said Fausto Bertinotti, the leader of RC. Prodi declined to comment on whether or not he would go to President Oscar Luigi Scalfaro. However Luigi Manconi, a spokesperson for the Green party, said Prodi will meet with Scalfaro later this evening to discuss the current government crisis. Manconi, though, stressed that Prodi was not going to offer his resignation.
Markets, which surged in recent weeks as Italy's EMU hopes soared, fell back on the news, but panic has not set in as investors anxiously await the outcome.
Prodi's government has taken huge strides towards taming the once-tearaway deficit and squashing once-rampant inflation. During its 17 months in office, the centre-left coalition has introduced around 100 trillion lire ($57.6 billion) of belt-tightening measures to reduce the deficit to 3% of gross domestic product this year from 6.7% in 1996.
Most analysts think the government should meet or get extremely close to the target, thereby meeting one of the key criteria laid down in the Maastricht Treaty for EMU aspirants. But the 1998 budget is seen as vital to completing the overhaul of state accounts - especially the planned reform of the welfare state which is due to be included in the package. This is precisely the part of the budget Refoundation wants ripped up. Analysts said that would be disastrous. 'The government has no choice but to stick to fiscal rigour. If it doesn't, Italy will not be accepted into Europe,' said Pio de Gregorio, Italian specialist at Natwest Markets in Milan.
 US manufacturing growth slowed in September, but economy remains robustManufacturing activity in the US grew at a slower pace in September compared to August, but the National Association of Purchasing Management's latest survey showed overall economic growth for the 77th consecutive month.
The NAPM's composite index retreated to 54.2% in September from 56.8% in August. Despite the decline in the index, it remains above 50%, which points to continued expansion in the manufacturing sector. The composite index was below the consensus forecast for a reading of 56.5% and is now at its lowest level since April, when it also registered at 54.2%.
While the manufacturing sector slowed in September compared to the summer months, the U.S. economy is still enjoying solid growth with little inflation, said Norbert Ore, chairman of the National Association of Purchasing Management's Business Survey Committee.
The September NAPM report 'tells the story of good solid growth' whereby 'prices don't seem to be a problem,' Ore said, 'I'm not sure there is a lot out of this report that there are signs of inflation jumping out at us,' he said.
NAPM's composite index slipped to 54.2% in September from 56.8% in August. Economists had expected the index to post a 56.5% reading.
Any index over 50.0% indicates expansion, while an index below 50.0% denotes contraction.
'If you look at the trend line, at a three-month moving average, we peaked in July,' Ore said.
Still, the economy retains 'sufficient momentum to sustain itself through the fourth quarter at rates similar to what we've got right now,' Ore said.
Ore said the September survey indicated the year-to-date average gross domestic product growth was 3.9%.
Meanwhile, the prices paid index edged up slightly to 54.7% from 53.8%. Ore called the upward price pressure 'very modest.' 'A number of industries were reporting prices increases, but it still doesn't seem to be a problem, ' he said. NAPM members 'don't express a lot of concern about pricing.' Ore also noted that while 10 industries reported growth in new orders, 'it's not as strong obviously as it has been in the past.' The new orders index slipped to 55.8% in September from 60.6% the month before.
'Some of the industries that had been fairly strong in the middle of the summer have backed off,' Ore said. He said the slowing in new orders reflected the fact that 'economy could not continue at the rate of growth we were experiencing.'
Ore did note, however, that demand for American manufactured goods remains very strong.
Ore said a 55.8% new orders index reading was still a good number, and that the figure indicates that production 'should stay reasonably strong' in the next few months.
Meanwhile, some NAPM members indicated some difficulty in recruiting workers, despite the fact that the employment index slipped to 50.7% from 52.0%. Ore noted the index showed the seventh consecutive month of growth, and that manufacturers said they 'had to pay a little more to be able to recruit the (employees) they want.'
Ore said employment concerns generally were confined to Midwestern manufacturers, and that most members didn't believe the tight labour sector caused them to miss business opportunities. 'It was just they were having to change some hiring practices,' Ore said.
He added that over the long term, tight labour markets could affect economic growth. But, he added, 'the good thing about our economy is it has a way of reallocating resources,' so that people migrate to industries where jobs are plentiful.
 Pearson bids $373 million to acquire All AmericanPearson moved a step closer to its double-digit earnings growth goal with its £233 million ($373 million) proposed acquisition of All American Communications.
The move, which would promote it to the world's leading international producer of entertainment and serials dramas, has already received commitments from 49% of All American's shareholders and unanimous approval from its board.
Pearson has offered $25.50 a share in cash, valuing the company at $373 million, or £233 million.
In addition to the acquisition of shares, Pearson will assume All American's net debt which totaled $136 million at June 30.
Net assets, excluding debt are estimated at $63 million, although this excludes goodwill, which would push All American value to $451 million, or £282 million.
Pearson said it will fund the acquisition from its existing cash resources. Already this year Pearson has raised £134 million from the sales of its minority stakes in Hong Kong broadcaster TVB and Flextech.
 EU to open formal investigation into WestLB unlawful state aid chargesThe European Union Commission said it would open a formal investigation into claims that Germany's third-largest bank, Westdeutsche Landesbank, received 5.9 billion marks ($3.3 billion) in unlawful state aid.
Private banks have complained that a 1992 capital injection of housing development funds given to WestLB - the largest of Germany's state-owned regional banks - gave it an unfair competitive advantage.
Though part of the capital is bound to promote house building, WestLB can use at least 2.5 billion marks of these funds as capital for its own banking business, the Commission said in a statement.
'Through this it can expand its funding considerably, which permits subsequently an increase in its lending volume. It will be investigated whether the capital increase has been put at the disposal of the publicly owned WestLB against such favorable conditions that it can use the funds as a cheap source to expand at a lower cost than its private competitors,' the Commission said.
At the June EU summit in Amsterdam, German Chancellor Helmut Kohl obtained a limited amount of protection for German state banks from EU competition and state aid rules, to the extent that their activities relate to their public state duty. But any activities outside the scope of the banks' public functions would still be subject to EU competition law, according to the June agreement.
WestLB is a 100% publicly owned bank of public authorities in the German region of North Rhine Westphalia. The Commission has given the German authorities one month to respond to the private banks' objections.
 Elf Aquitaine exploring oil deals with Iran and IraqOil giant Elf Aquitaine confirmed it is seeking petroleum contracts with Iran and Iraq, days after another French company's deal with Teheran threatened to spark a US-European trade conflict.
Elf is pursuing oil exploration and production deals with both countries, but only in compliance with UN sanctions against Iraq and with a cautious eye on US attitudes toward Iran, Elf spokesman Thomas Saunders said in a telephone interview.
'We have said we hoped to sign as quickly as possible something with Iraq, but of course in compliance with U.N. resolutions,' Saunders said.
The United States, which accuses Iran of sponsoring terrorism, has said it would consider penalising French oil company Total for a $2 billion with Iran. Under the US Iran-Libya Sanctions Act, Washington can penalise companies investing more than $20 million in Iran or $40 million in Libya.
The European Union yesterday warned that any trade sanctions would damage transatlantic relations. The 15-nation EU has prepared retaliatory measures in case it has to react to such sanctions.
Saunders confirmed statements made by Elf executive Jean-Luc Vermeulen that were published in the Oct. 1 issue of a monthly industry newsletter, Arab Oil and Gas.
Elf is talking to the Iranian government about production in the Doroud oil field, despite concerns about US opposition to such deals, said Vermeulen, Elf's vice president for exploration and production.
'The situation is very different from that of Iraq because there is no law binding us that prohibits working in Iran,' Vermeulen said.
'However, we have considerable interests in the United States, in exploration and production but also in chemicals and pharmaceuticals, and we need to be extremely cautious about the attitude of the US administration,' he said.
About 15% of Elf's annual sales of 232.7 billion francs ($38 billion) is in the United States.
Elf is pursuing deals to produce the oil in Iraq's Majnoon field, which has an estimated capacity of 600,000 barrels of oil a day, Vermuelen said, adding the company would like to bring in US partners to such a deal.
In a continuation of yesterday's controversy, Russian President Boris Yeltsin has warned the United States not to meddle in a $2 billion natural gas deal between his country, France and Iran.
'Thank God that Russia, France and Iran are independent, freedom-loving states, and interference from any other state is not to be tolerated,' Yeltsin said in remarks broadcast on Russian television.
The United States has being trying to organise a global boycott of Iran, complaining that the Islamic nation sponsors terrorism and is trying to develop a nuclear bomb.
Many European countries have refused to join the boycott, arguing that economic development will be more persuasive with Iran than sanctions.
 Chief Bundesbank economist issues rate warning as prices keep risingGerman industry continued to generate inflationary pressures in September, according to a report, and a Bundesbank official held out the prospect of interest rate increases throughout Europe.
The BME/Reuters German Purchasing Managers' Index for September showed the strongest monthly expansion in Germany's manufacturing sector since June. Upward price pressures remained almost as strong as in August, the survey showed. But other data released today showed Germany's August wholesale sales fell a preliminary 3% in real terms from a year earlier.
Bundesbank chief economist Otmar Issing said in a newspaper interview that the 'entire inflation trend no longer is correct'. He was also reported to have said interest rate rises, coordinated among Europe's central banks, would be vital to choke off inflationary expectations and help the future European Central Bank to get a good start at the 1999 launch of monetary union.
Issing said in the interview with the International Herald Tribune that German monetary policy at present was 'clearly expansive'. A monetary policy which was too easy in the May to December 1998 period - after EMU members had been chosen and conversion rates fixed - could damage the European Central Bank's credibility, he added. Economists said Issing's comments confirmed expectations that the Bundesbank would gradually raise its main money market rate, the 3.00% repo rate, in a series of small steps, possibly to 3.15 or 3.20% by the end of 1997.
The Bundesbank is widely expected to do its bit for monetary union by raising rates to aid the convergence of interest rates before May 1998, when EMU members will be chosen. Supporting that view, Issing said the Bundesbank today already recognised its European responsibilites.
He said the room for manoeuvre for national monetary policy would become 'much narrower' after May when coordination among EMU members would become stronger. The BME/Reuters index, modelled on the closely-watched US National Association of Purchasing Managers' index, rose to a seasonally- adjusted 55.97 in September from 54.72 in August, research group NTC Publications said.
NTC said the rise was mainly driven by growth in new orders amid strengthened demand from both domestic and export markets. The resulting supply bottlenecks kept price pressures on the boil with the price index component down only slightly to 59.35 from 59.51, NTC said.
 EU adopts new ruling on state grants to shipbuildersThe European Union Commission adopted new rules for granting state aid to European shipbuilders that, if approved by EU ministers, would abolish contract-related operating aid at the end of 2000.
The Commission said shipbuilding has been the one European industry that has benefited 'systematically' from operating aid, which it said tends to distort competition between EU countries as well as raising government costs.
The Commission has decided, however, to maintain a transitional period - until 2000 - in which governments will continue to be allowed to pay up to 9% of a contract's cost.
The new rules are a direct response to the US's failure to ratify an Organization for Economic Cooperation and Development Shipbuilding Agreement, which would abolish state aid globally, even though the EU has already ratified it. In what is a highly political issue, the EU is adamant it won't implement the OECD accord until the US does; hence the new regime.
The proposed new rules, which still require the approval of EU ministers, would come into effect on January 1, 1999, unless the US ratifies the OECD accord in the meantime. Until then, the Commission has proposed extending current EU shipbuilding aid regulations, which otherwise would have expired at the end of 1997.
The proposals are expected to be reviewed at the next meeting of Industry ministers on November 13.
'The Commission has acted so that the Community is prepared should the OECD agreement fail to enter into force,' the Commission said. 'It continues to believe that the OECD agreement, which is aimed at respecting normal competitive conditions in the commercial shipbuilding and ship repair industry, is the best way of normalizing the world shipbuilding market.'
 UK telecommunications watchdog to modify British Telecom licenceUK telecommunications regulator OFTEL said that it will modify British Telecommunications license in order to safeguard consumer interests and promote competition in the telecoms market.
Don Cruickshank, director general of telecommunications, said in a statement that the modifications will ensure that BT can meet its obligations to UK customers while promoting fairer competition in the market for independent service providers.
In addition, OFTEL will reform the way BT charges other operators for use of its network. BT now has a new clause in its license which will prevent the company from 'doing anything which would leave it unable to provide and finance services in accordance with its license obligations,' said the regulator.
A second modification has redefined the split between BT's network systems business and its supplemental services business. OFTEL said it wants to ensure fairer competition by widening the range of BT's network services to which independent service providers can obtain access on the same terms as BT's own supplemental service business. The changes come into force April 1. Lastly, a third modification will allow BT to set its own charges to operators who want the use of its network services.
 The Bank of Scotland reports a 14% profit rise to $600 millionThe Bank of Scotland reported a 14% rise in first half pre-tax profits to 369.4 million pounds ($600 million) and announced that businessman Sir Alistair Grant would replace Sir Bruce Pattullo as Governor from next year.
Pattullo, who has held the most senior positions at the bank since 1979, will step down next May at the bank's annual general meeting.
Bank of Scotland shares were firmer, gaining five pence to stand at 517p in late morning trading. 'The results were sound and sensible, there were no pleasant surprises and there were no nasty ones,' said Tim Clarke, banking analyst at Nikko Europe.
But Clarke was less impressed with the bank's strategy saying he is unconvinced by its need to be in the Australian and New Zealand markets and unclear what its strategy is for the burgeoning direct banking market.
'They need to make a quantum leap in the direct market and I don't think they have a large enough market share in the UK to justify their existence alone any more.'
The bank's profit figures were at the higher end of market expectations and it also raised its interim dividend by 19% to 3.46p per share.
Grant, who has been on the board of Bank of Scotland for five years, is a former chairman of stores group Safeway and is non-executive chairman of brewer Scottish and Newcastle.
Pattullo expressed confidence in the bank's future, saying that strong growth in its direct banking business had given the group added impetus.
The bank showed an improvement in the cost-to-income ratio to 51.4%, despite a six percent rise in operating expenses, and its tier one capital ratio strengthened to 6.8% from 6.4% at the end of February.
 Bank of Japan 'tankan' survey sends Japanese bonds surging, stocks fallingEconomic gloom deepened in Japan after business sentiment proved surprisingly poor in the Bank of Japan's key 'tankan' corporate survey, sending bonds surging and stocks and the yen falling.
The latest batch of negative data boosted Japanese government bonds to record high levels, while sending their yields in the other direction. The key long bond's yield fell below 1.8%, the lowest anywhere in the industrialised world in over 50 years and possibly this century.
Meanwhile, the dollar rose against the yen, while stocks fell more than 2% at one point before partially recovering by midday.
The much-watched diffusion index for major manufacturers, the key index of the survey, fell to plus three in September from plus seven in the previous survey in June. Economists' forecasts had ranged from minus one to plus seven.
Non-manufacturers and smaller firms were even more pessimistic, the survey showed, with numbers for both significantly lower than they had been in June.
'The diffusion indices for small firms were unbelievably weak, (which) lends more ammunition to the view that the economy may be headed toward a recession,' said Takeshi Naito, assistant general manager at Daiwa Securities.
The diffusion index represents the percentage of firms expecting business to improve minus those which expect it to worsen. The higher the number, the more optimistic the outlook.
Economists say the economy has been hit hard by the rise in the national sales tax in April, with the negative effects of the increase lingering beyond expectations.
Bond traders said the tankan merely reinforced the gloomy sentiment that has been behind relentless bond rises over the past few weeks, and may signal even more gains.
The market consensus is that bond yields will next test 1.75%, but that even further falls may lie in store if upcoming economic data proves weak. Many traders predict falls to 1.70% or even lower by the end of the year.
The yield of the key bond had fallen as low as 1.785 by afternoon Tokyo. The previous low was 1.85%, set in the United States in 1941.
Although some analysts said the weak tankan figures could put the government under pressure to enact fiscal stimulus measures, traders felt this chance remains remote.
'Restricting government expenditures is one of the jewels in the crown of the current (Prime Minister Ryutaro) Hashimoto government, so the chance of any new fiscal measures is highly unlikely. This leaves bonds free to rise more,' said Toru Iguchi, a manager at Mitsui.
The benchmark December 10-year Japanese government bond rose as high as 129.57 by the afternoon, a record high for any benchmark, compared to 128.62 at its Tuesday Tokyo close.
Dealers said that weakness in the Tokyo stock market and falling Japanese interest rates also encouraged buying of the dollar against the yen.
'The tankan survey results reinforced the weak sentiment about the economy. In this mood, it'll be difficult to build fresh yen positions,' a Japanese city bank dealer said.
Stocks were, in contrast, generally depressed. Brokers said that while the key Nikkei average had managed to recover slightly from earlier losses by midday, the buying was mainly technical and the longer-term outlook was grim.
The Nikkei tumbled over two percent to 17,552.28 in morning trade, the lowest intra-day level since 17,547.35 on April 14.
It was down 0.15% or 26.87 points at 17,860.84 in the afternoon. Market sources said the calendar 1997 closing low of 17,303 achieved in January was seen as a support level, but they were unsure if it could withstand the pessimism of the market.
'There seem to be zero reasons to buy at the moment and if U.S. stocks slump or if Japanese firms announce large, downward revisions in earnings forecasts, the Nikkei average will have difficulty keeping above 17,000,' one broker said
 Saga Petroleum operating profit rises 20% in first eight monthsSaga Petroleum said its operating profit rose 20% to 2.359 billion kroner ($328 million) in the first eight months of the year from the same period in 1996, on the back of increased oil production and higher oil prices measured in Norwegian kroner.
However, Saga's pretax profit in the first eight months of the year plunged 67% to 694 million kroner from the like period last year, owning sharp rise in the company's dollar denominated debt.
Saga's total production of oil and natural gas in the first eight months of the year swelled to 46.7 million barrels of oil equivalents from 34.2 million in the corresponding 1996 period.
The rise was mainly attributed to the addition of production from the UK continental shelf, which Saga gained access to through the acquisition of UK oil company Santa Fe Exploration in December 1996.
Looking ahead, Saga was upbeat, saying continued increases production, combined with current high oil prices should translate into record-high revenue.
 Mahathir Mohamad's calls for the control of currency trading sends the ringgit plungingTough talk from Malaysian Prime Minister Mahathir Mohamad calling for greater regulation or the outlawing of currency trading has dealt another blow to the bloodied ringgit, which plunged to a record low against the dollar.
'The activities of currency traders deny freedom to others,' he told a trade conference in Chile. 'We therefore need to regulate or outlaw currency trading, so free trade can flourish.'
Mahathir's repeated outbursts against the currency markets have so obviously had a negative impact on the ringgit that some traders and analysts are beginning to wonder if he is doing it on purpose to help boost exports.
If that is the case it is certainly working a treat, with the ringgit performing a spectacular nose-dive after his comments.
At one point it was losing around one sen (cent) a minute with dealers falling over themselves to bid up the dollar.
In less than two hours the ringgit plunged around 15 sen (cents), or more than 4%, before skidding to halt a 3.40 per dollar.
'I really can't understand this,' said one Singapore based trader. 'When he (Mahathir) says things like this confidence gets hit again and simply gives the market an excuse to sell. Maybe he sees it as a way of boosting exports.'
So is the Prime Minister trying to boost exports through a weaker currency, and if so, will it work, or is he simply misreading market sentiment?
It is clear that in the case of Britain in 1992 after sterling crashed out of the European exchange rate mechanism and dropped more than 15%, exports were boosted sub
A few years later Britain was enjoying a soundly based economic recovery with low inflation and exports leading the way.
But this would not work in Malaysia because other forces are present in a developing country. The ringgit's fall would hit property prices and debt servicing costs, and exacerbate credit risk in the economy.
This would be in addition to the damage it is doing to the stock market, which fell more than 2% as the ringgit slumped.
'The ringgit's weakness is a net negative for the economy,' said one analyst at a major European Bank in Singapore.
'A weak ringgit is not a policy option, at these levels there is no way it is going to benefit the economy. If they had wanted a weaker currency there are more controlled ways of doing it. This is just crisis.'
Emerging market economies are highly leveraged, have substantial imports, higher inflation risks and still rely on capital inflows.
It is possible for a country like Britain to devalue and simply start again at a new level, but for emerging economies a lower currency simply sees the investment they rely on so heavily, flee.
'In the U.K. the devaluation was expansionary. Here it is actually contractionary as interest rates will rise as a result of devaluation rather than fall as was the case in the U.K.,' the European Bank analyst said.
 France's Natexis swings back to profit in first halfFrench banking group Natexis returned to profit on Wednesday with first half net attributable income of 177 million francs ($30 million) against a loss of 112 million francs in the same period last year.
The group, which is the result of a 1995 merger between Credit National and Banque Francaise du Commerce Exterieur, completed its first half-year as the new, integrated Natexis Groupe.
'The group has significantly improved its basic profitability thanks to a good evolution of its activity, firm control of its costs and well contained risks,' it said.
Several brokers had downgraded the group over the past year, citing a low level of recurring profitability by its commercial banking activities and a belief that prospects for improved earnings power were poor.
Natexis, which includes a bank as well as a brokerage, said the group had benefited from the positive effects of the higher dollar and pound sterling but had been slightly hurt by the low demand for business loans in France.
But currency gains had been balanced by loans abroad, particularly at its New York and Hong Kong units.
The strongest gains had been made by the investment side, which showed 102% growth compared with same period last year.
 Corporate and Economic BriefsBacob Groep said it has set up a joint venture with automobile leasing company Interleasing Belgium, a unit of the Athlon Groep of the Netherlands. The new company, to be 90% owned by the Bacob Groep and 10% by Interleasing Belgium, will sell operational leases to businesses, the self- employed and others, Bacob said in a statement. Operational leasing is a formula in which cars are rented long term to users who can count on an expansive service package. Interleasing Belgium has rented 8,000 vehicles since the beginning of this year, primarily operational leasing. The company is expecting 14% to 15% growth this year while the car lease market expected to grow just 7% to 8% in 1997. The Bacob Groep entered into the joint venture so its units, Bacob Lease and Bacob Leasing & Renting, can strengthen their strategy and enjoy better growth potential, Bacob said. Until now, the group was not active in the operational leasing market.
Legal and tax matters regarding the succession of murdered Italian designer Gianni Versace have delayed a stock market listing for his fashion house, Santo Versace was quoted as saying on. Santo, who took over the administrative helm of the fashion empire after his brother was gunned down in Miami in July, said the listing originally planned for summer 1998 will not take place before the first half of 1999. 'The process regarding Gianni's succession will not allow a bourse quotation by June 1998 as planned,' Santo said in an interview with financial daily Il Sole 24 Ore.
Tractebel said it had acquired a 50% stake in the Thai energy concern H- Power Company. H-Power owns all shares of Industrial Power and has a 51% stake in Bowin Power, a joint venture with Intergen of the US, Tractebel said in a statement. Tractebel's investment, including future equity commitments to Industrial Power and Bowin Power, exceeds BF2 billion, the company said. Industrial power is building a 195 MW, 130-ton steam cogeneration combined cycle facility at the eastern industrial estate in Map Ta Phut. The estate is owned by Hemaraj Land and Development Plc., the other major shareholder of H-Power. Industrial Power's facilities will consist of three gas-fired ABB GT8C-I single-shaft combined cycle plants. The first is being commissioned, the second is under construction and the third is at negotiation stage, Tractebel said.
Finnish chemicals producer Kemira Oy said its Kemwater unit has signed an agreement with ZAO Polychem of Russia to build an aluminum sulfate dissolving plant in St. Petersburg. The capacity of the plant will be around 30,000 metric tons a day, Kemira said. Liquid aluminum sulfate is being marketed to water utilities in north-western Russia as a product to enhance the quality of drinking water. Raw material to the new plant will be supplied by Kemira's Harjavalta plant and test deliveries of the finished product, the liquid aluminum sulfate, will be provided in November this year. 'The contract...strengthens the position of Kemira as a supplier of water chemicals to Russia and opens up a new channel for Kemwater to export chemical waste-water treatment know-how on an international scale,' Kemira said. No financial details were given on the investment.
Sodexho Alliance and Marriott International agreed to merge their North American food service and facilities management business. The merged company, Sodexho Marriott Services, will have annual sales topping $4 billion, and will be 51% owned by Marriott shareholders and 49% by Sodexho. In a statement, the companies said it plans to list the new entity on the New York Stock Exchange. As part of the transaction, Sodexho said it would raise FF2 billion that would be invested into Sodexho Marriott.
German pharmaceuticals company Merck said it will acquire the generic drug maker Durachemie GmbH and the over-the-counter operations of Kytta Siegfried Pharma, both of which belong to American Home Products. The acquisitions are effective Nov. 1. A price wasn't disclosed. Durachemie specializes in the marketing and distribution of about 70 generic drug products, and its acquisition will make Merck 'one of the 10 biggest generic drug suppliers in Germany,' Merck said. Durachemie's sales in 1996 were around DM95 million. It employs more than 100 people in Germany. Merck's total sales from generic products in 1996 were DM620 million. In the first-half of 1997, generic sales reached around 500 million, a 71% increase from the same period a year earlier, Merck said.
Average hourly wages in Italy were up 0.2% in August from July and rose 4.6% from August 1996, the state statistics bureau Istat said. Istat said non-working hours due to strikes totaled 6.5 million in the first seven months, up 151.4% from the same period in 1996.
Royal Packaging Industries Van Leer said it acquired Nyman Manufacturing. Nyman Manufacturing, a producer of disposable tableware products, has annual sales of about 100 million guilders. Van Leer didn't provide any financial details about the takeover.
Spain's producer price index rose 1.3% in July on the year, the national statistics institute said. Spanish PPI was also up 0.2% in July from June, the institute said. Mining and metals company Boliden Limited, partly owned by Swedish industrial conglomerate Trelleborg said it will expand its Saudi Arabia gold mine. The Saudi Company for Precious Metals, a joint venture company owned equally by Boliden and a Saudi Arabian government agency, will proceed with a push back to the 150 meter level at the Sukhaybarat open-pit gold mine in Saudi Arabia, 500 kilometers southwest of Riyadh. Based on a feasibility study completed in the autumn, the push back is expected move around 4 million metric tons of inferred reserves into the proven ore category, Boliden said.
UK printing and packaging maker Arjo Wiggins Appleton said it named Ken Minton to succeed Cob Stenham as non-executive chairman. Stenham is retiring Nov. 6. Minton remains chairman of building and construction groups John Mowlem and SGB Group.
Burmah Castrol named chief executive Jonathan Fry to succeed Lawrence Urquhart as non-executive chairman in May 1998 and Tim Stevenson, chief executive of the lubricants division, as chief executive of the company from Feb. 1. Urquhart will step aside as chairman of the UK oil exploration and production company at a shareholders meeting in May 1998. Urquhart will remain a non-executive director for a year after the change. Fry will retire as chief executive on Jan. 31 and will serve as non-executive deputy chairman until Urquhart steps aside in May.
Chiroscience Group is in talks with a range of major drug companies over the possible marketing of chirocaine, the company's long-acting local anesthetic, according to John Padfield, chief executive of Chiroscience. Padfield told Dow Jones the company also is talking to a broader range of drug companies about the possible wider use of chirocaine, previously known as levobupivacaine, as a painkiller. 'Things are progressing very well,' he said. The chief executive wouldn't say when these talks might be concluded, but noted Chiroscience remains on track to make its first regulatory filing for chirocaine in the European market in December 1997 and in the US in March 1998. He hopes the drug will be available for sale, in some markets at least, by mid 1998.
UK holiday company Airtours said it doesn't anticipate any regulatory problems from its £70 million Sun International acquisition, despite a Merger & Monopolies Commission travel industry investigation. The Office of Fair Trading is concerned that the vertically integrated groups may be able in various ways to promote the group's own holidays at the expense of the holidays of competing non-integrated tour operators and to the detriment of true consumer choice. Reports had suggested that the leading travel groups including Airtours, Thomson and Thomas Cook may have to cut back on, or rebrand their retail outlets.
UK electronics group Bowthorpe said it has sold its subsidiary Starpoint Electrics to NatWest Equity Partners for a maximum consideration of £18.5 million. NatWest Equity Partners is the venture capital unit of NatWest Group. The disposal follows Bowthorpe's announcement in March that it intends to divest operations which don't fit its redefined strategy. Chief Executive Nicholas Brookes said the proceeds will be used to develop the group's core activities. Bowthorpe said it has received consideration of £17 million in cash and may receive further consideration subject to a predetermined formula when NatWest, as is expected, sells Starpoint at a later time.
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