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Archive for September 21, 2006

Business this week: 16th – 22nd September 2006

September 21, 2006 Leave a comment

Concerns were raised about the regulation of hedge funds after Amaranth Advisors, based in Connecticut, lost billions of dollars because it misjudged the natural-gas futures market; its losses this month could reach 65% of its funds. As speculators, including Goldman Sachs, counted their losses, Christopher Cox, head of America’s Securities and Exchange Commission, gave warning that certain types of hedge funds are not appropriate for individual investors. See article

Russia was criticised by Europe and Japan after withdrawing its approval, on environmental grounds, of a permit required for a $20 billion energy project led by Royal Dutch Shell on the eastern island of Sakhalin. The decision to revoke the licence (which must be approved by regulators) raises the chances that Gazprom, the state gas monopoly, will force its way into the project. See articleE+

Responding to speculation, which was putting pressure on its share price, EADS confirmed that there would be “further delays” in the production of Airbus’s A380. The planemaker’s parent company gave no details (a review of the super-jumbo’s production is expected soon).

Scania, a Swedish truckmaker, rejected a euro9.6 billion ($12.2 billion) takeover bid from MAN, a German rival. Scania’s two leading shareholders, Volkswagen and the investment arm of Sweden’s Wallenberg family, believe the offer undervalues the company. But a battle for control seemed certain after MAN received the support of Renault, which holds a 5% voting stake in Scania. See article

Ford said it had employed the services of Sir John Bond, Vodafone’s chairman and a former chairman of HSBC, as a part-time financial consultant to Bill Ford, the carmaker’s chairman. Last week investors showed little enthusiasm when Mr Ford unveiled plans for 10,000 more white-collar job cuts and two additional plant closures.

Detroit’s woes continued as DaimlerChrysler’s boss, Dieter Zetsche, predicted that Chrysler would make a loss for the year, rather than a previously forecast profit. As it continues to lose market share in North America, the carmaker is making additional cuts to vehicle production this year. See article

The row over Telecom Italia’s restructuring scheme intensified when the company’s chairman resigned in apparent protest at government meddling. The centre-left government and unions say they will oppose TI‘s plan to spin off its fixed-line and mobile businesses to concentrate on broadband and media services. But TI‘s commitment to the plan was underscored when it announced the acquisition of AOL‘s broadband business in Germany. See article

A consortium of private-equity firms led by Blackstone looked set to seal a $17.6 billion bid for Freescale Semiconductors after a rival consortium ended negotiations on its offer. Freescale, once part of Motorola, accepted Blackstone’s bid, but has 50 days to solicit other offers. See article

Motorola made its biggest acquisition since it took over General Instruments in 2000 by agreeing to buy Symbol Technologies for $3.9 billion. The deal allows Motorola to expand its corporate logistics business; Symbol makes hand-held devices (often used in supermarkets) for tracking stock and reading radio-identification tags.

Oracle reported a 29% increase in net profit for the quarter ending August 31st, compared with a year earlier—evidence that Larry Ellison’s strategy is working. Mr Ellison has spent $20 billion in acquisitions over the past three years, and maintained that his spree would result in higher profits. More tellingly, Oracle’s sales of new software licences rose sharply, indicating stable future revenues from its core business.

Serono, a Swiss pharmaceutical company, which had been searching for someone to take it over, finally found a buyer. Merck, a German rival, said it would buy the 64.5% stake in Serono held by the Bertarelli family for SFr16.6 billion ($13.3 billion) and make an offer for the remaining shares.

Another long-running drugs saga, over the purchase of PLIVA, a Croatian drugs company, came to a head when Actavis, an Icelandic rival, withdrew its bid, leaving a $2.5 billion offer from Barr Pharmaceuticals on the table.

America’s Federal Reserve left the federal funds rate unchanged at 5.25%. The decision came after it was reported that America’s headline inflation rate had fallen by more than expected in August, partly because of a slower increase in energy prices, which rose by 0.3% in August compared with 2.9% in July.

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Politics this week: 16th – 22nd September 2006

September 21, 2006 Leave a comment

The leaders of Thailand’s (bloodless) military coup gave assurances that a new prime minister would be named shortly and promised new elections within a year. A military junta seized power after months of political limbo following April’s contentious general election. Thaksin Shinawatra, who had retained the post of prime minister, was in New York at the time of the coup. He was told he was welcome to return, but could face corruption charges. See article

Shinzo Abe was virtually assured of becoming Japan’s next prime minister after the ruling Liberal Democratic Party chose him as its leader. Although a protégé of Junichiro Koizumi, who steps down at the end of this month, observers have questioned Mr Abe’s commitment to a reform agenda. See article

A suicide-bomber riding a bicycle killed four NATO soldiers in a district of southern Afghanistan, one day after the district had been declared free of Taliban insurgents. Britain’s defence secretary admitted that battling the insurgents was “harder than we expected” and urged NATO countries to respond to a request for 2,500 extra troops.

The White House and Senate leaders sought a compromise on interrogating terrorist suspects after a mini-revolt by leading Republicans, including John McCain. The rebels backed legislation to bring America more in line with the Geneva Conventions. George Bush, in a testy press conference, warned he would shut a CIA interrogation programme if he didn’t get his way.

The Nuclear Threat Initiative, a private charity, offered $50m (if others stumped up a further $100m) from Warren Buffett to create a nuclear fuel bank run by the IAEA, the UN‘s nuclear guardian. The aim is to encourage countries to buy civilian nuclear-reactor fuel, rather than make their own using proliferation-prone technologies.

California launched a lawsuit against six carmakers for the impact of vehicle emissions on climate change. Although carmakers have been sued to force a reduction in emissions before, this is the first time that a state has sought damages for the consequences.

Reuters
Reuters

Hungary’s capital, Budapest, was hit by successive nights of riots and car-burnings as protesters took to the streets after a leaked tape revealed that the prime minister, Ferenc Gyurcsany, had misled them about the state of the economy. Mr Gyurcsany was quoted as saying, before his Socialist Party won re-election in April, that “we lied morning, noon and night.” He refused to resign. See article

Muslims around the world continued to protest, sometimes violently, over the pope’s recent lecture quoting a Byzantine emperor’s negative views of Islam. The Vatican issued a rare apology for any offence that had been caused, and the pope’s trip to Turkey in November is still on. See article

In their general election, disgruntled Swedes threw out the long-serving Social Democrats led by Goran Persson in favour of a four-party centre-right alliance under Fredrik Reinfeldt. Mr Reinfeldt will have a narrow majority of seven seats, but that is enough for him to form a new government, which promises modest tax and welfare cuts and some privatisation. See articleE+

The breakaway Moldovan enclave of Transdniestria held a referendum in which voters overwhelmingly opted for independence and possible union with Russia. No outside body endorsed the vote, not even Russia. See article

In two state elections in eastern Germany, the Christian Democrats, the party of Chancellor Angela Merkel, lost heavily. And the neo-Nazi National Democratic Party won a clutch of seats in Mecklenburg-West Pomerania for the first time.

Sudan’s president, Omar al-Bashir, told the United Nations that 7,000 African Union peacekeepers in Darfur could stay for a bit, despite an earlier threat to throw them out, but rejected the plan for a bigger UN force. The Security Council and African leaders tried to work out how to make the African force more robust. See article

Iran’s president, Mahmoud Ahmadinejad, told the UN General Assembly that America and Britain were using the Security Council for their own ends. George Bush adopted a relatively conciliatory tone in his address to the body, saying he hoped diplomacy could solve the stand-off over Iran’s nuclear programme. See article

General John Abizaid, America’s top military commander in the region, said that America is unlikely to begin withdrawing its troops from Iraq until mid-2007.

Abdullahi Yusuf, the president of Somalia (or at least of its temporary capital, Baidoa), narrowly escaped assassination by a suicide car-bomb, which killed several people.

A judge in South Africa threw out a corruption case against Jacob Zuma, a former deputy president, before it properly began. Mr Zuma was acquitted of rape earlier this year and it now looks as if he will run for president in 2009. See article

The World Health Organisation recommended that use of the insecticide DDT, which was more or less banned because of its effects on wildlife, should be actively encouraged in certain circumstances: people who live in malarious areas should spray their houses to kill mosquitoes.

Andrés Manuel López Obrador, the failed left-wing candidate in Mexico‘s presidential election in July, proclaimed himself president-elect, promised to set up a rival government and vowed to continue his campaign of “peaceful civil resistance”. But his populist movement of opposition to president-elect Felipe Calderón is losing momentum. See article

Brazil‘s president, Luiz Inácio Lula da Silva, sacked his campaign chief, Ricardo Berzoini, just 11 days before the presidential election amid ongoing allegations of dirty tricks. Mr Berzoini is president of the governing Workers’ Party. Two other Lula advisers resigned.

Getty Images
Getty Images

More than 50 heads of state from the 118-strong Non-Aligned Movement gathered in Havana for their three-yearly summit. The shrillest speeches came from the leaders of Iran, North Korea and Venezuela, who all predictably aligned themselves behind criticism of America, while the leaders of India and Pakistan encouragingly agreed to resume peace talks.

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