Business this week: 24th – 30th March 2007

Another chapter was added to the 18-month saga of the takeover of Endesa, Spain’s biggest power company. E.ON, a German utility, won the backing of both Endesa‘s board and its third-biggest shareholder after (again) raising its offer, to euro42 billion ($56 billion). However, with threats of legal action flying between E.ON and an Italian-Spanish alliance willing to pay more for Endesa, its success is not assured. Meanwhile, the European Commission referred the Spanish government to the European Union‘s highest court for trying to thwart the German bid.

In yet another sign of Russia’s tightening grip on its energy resources, Rosneft, the state oil company, bought back the 9% stake that was held in it by Yukos, a private oil firm that was forced into bankruptcy by a “revised” government tax demand. Rosneft won the stake in the first auction of Yukos’s former holdings and paid far less than the market value. The only other bidder, TNK-BP, a Russian joint venture involving BP, quit the bidding after less than five minutes. See article

EDP, Portugal’s biggest utility, said it would buy Horizon Wind Energy from Goldman Sachs. Based in Houston, Horizon operates wind farms throughout America, where wind power’s generating capacity rose by 27% last year and is estimated to increase by a similar amount this year.

Xstrata, an Anglo-Swiss miner, boosted its nickel business when it agreed to buy LionOre Mining, which is listed in Toronto, for C$4.6 billion ($4 billion).

Relative clause

Porsche increased its stake in Volkswagen to 31%, instigating a mandatory takeover bid under German regulations. Porsche signalled that a takeover wasn’t its immediate goal when it offered shareholders the minimum price allowed by law, but the manoeuvre solidified its strategic control of VW under the assertive hand of Ferdinand Piëch, VW‘s chairman and a member of the Porsche family. See article

In another blow to the reputation of Siemens, Johannes Feldmayer, a member of its management board, was arrested in connection with alleged payments to a pro-management labour group and potential counterweight to IG Metall, Germany’s largest trade union. Europe’s biggest engineering company is the subject of a separate investigation of alleged bribery.

Flying into a new dawn

Delta Air Lines applied for permission to list shares again, starting in May. The carrier entered bankruptcy protection in September 2005 and expects to leave it at the end of April.

Alitalia made a pre-tax loss of euro405m ($508m) in 2006, almost three times as much as the previous year. Several potential buyers are negotiating with the Italian government for the controlling stake it is selling in the beleaguered national airline. The last time Alitalia reported an annual profit was 1998.

Intel unveiled plans to open a $2.5 billion factory in the Chinese city of Dalian by 2010. The decision is a boon to China’s ambitions to be a centre for high-tech industry as well as a maker of low-cost electronics. However, with an eye on potential opposition from American politicians to the export of sensitive technology, Intel said the new plant will make chips other than microprocessors. See article

Lennar’s quarterly net profit plunged by 73% compared with a year ago. America’s third-biggest homebuilder said a soft market had been worsened by problems in subprime mortgages. Beazer Homes denied reports that it was being investigated for fraud stemming from mortgage loans. It confirmed it was co-operating with federal prosecutors, but that there were “no allegations of any wrongdoing”. Its share price slumped.

Ben Bernanke assured Congress that he would continue to watch the subprime-mortgage market carefully. However, the Federal Reserve‘s chairman told the Joint Economic Committee that inflation remained the Fed’s “predominant policy concern”.

Taylor Woodrow and George Wimpey announced a merger, so creating Britain’s biggest housebuilder. See article

The Tokyo Stock Exchange named a new boss. Atsushi Saito, who until recently headed a state corporation charged with reviving some of Japan’s more anaemic companies, will lead the exchange through a period of alliance-building among bourses worldwide.

Anxiety attack

The price of oil rose sharply to reach its highest level this year, partly in response to increased tensions in the Gulf region. Rumours that Iran had fired at an American warship caused the price to push briefly past $68 a barrel in intra-day trading. See article