Home > Uncategorized > Business this week: 7th – 13th April 2007

Business this week: 7th – 13th April 2007

articles from this week’s edition of The Economist
The battle for the French presidency | Land of promise | Pakistan’s lurch towards extremism | Europe’s risky dependence on Russian gas | The resurgence of Scottish nationalism | Indian tribes and casinos | Italian luxury goods | Trees may warm the Earth | Human rights in Argentina and Chile | Dealing with the nuclear proliferators | Retirement and banks | Iraq’s fiery priest, Muqtada al-Sadr | Softbank’s reinvention | Lazard | Mariá Julia Hernández, fighter for human rights

Business this week

Apr 12th 2007
From The Economist print edition

Citigroup unveiled a much-trailed restructuring plan saying it would shed 17,000 jobs (5% of its workforce) in an effort to cut costs. The world’s biggest financial institution is responding to pressure from shareholders to rein in its operating expenses, which last year grew at twice the rate of its revenues. See article

America filed two separate complaints against China at the World Trade Organisation, one on enforcing copyright laws, the other on opening markets to American media. The decision to ratchet up the pressure on trade came eleven days after America imposed tariffs on certain types of Chinese paper and when American politicians are agitating for action against what they see as Chinese protectionism. China said the most recent action would “seriously undermine…co-operative relations” on trade.

DaimlerChrysler‘s search for a buyer for its North American car division took a twist when Kirk Kerkorian offered $4.5 billion. The billionaire investor fought a protracted battle to win control of Chrysler in the 1990s but was bested by Daimler-Benz. He then attempted to sue the newly merged DaimlerChrysler.

PPR, a luxury-goods group that includes Gucci in its portfolio, agreed to buy Puma, a German sports-equipment and fashion company, for euro5.3 billion ($7.1 billion). Puma’s share price rose amid speculation that Nike might step in with an offer. See article

Guido Rossi resigned as chairman of Telecom Italia following a dispute with Pirelli, a conglomerate that holds a controlling stake in Europe’s fifth-biggest telecoms firm. Meanwhile, AT&T and América Móvil, a Mexican mobile operator, tried to shore up support for their joint bid for most of Pirelli’s stake, which is opposed by some Italian politicians. Analysts pondered whether a counterbid would emerge from Italian investors.

A consortium of three private-equity firms ended its putative bid for J. Sainsbury after failing to win the support of the British supermarket chain’s board for an offer worth some £10 billion ($20 billion). Kohlberg Kravis Roberts, a fourth member of the consortium, had pulled out earlier to focus on its effort to buy Alliance Boots, a British drugs retailer.

Britain’s Imperial Tobacco raised its offer for Altadis to euro12 billion ($16 billion), which the Franco-Spanish cigarette-maker promptly rejected. Imp
erial wants to buy Altadis to save costs and expand in markets where smoking is increasing. Altadis has a strong presence in eastern Europe and Morocco.

Nestlé offered $5.5 billion to Novartis, a Swiss drugs company, for Gerber, its baby-food business. The world’s biggest food company has been steadily expanding its range of nutritional brands and the deal provides it with most of the baby-food market in the United States.

The board of Rinker, an Australian building-materials company, accepted a sweetened $14 billion takeover offer from Cemex, a Mexican cement-maker. Cemex first approached Rinker last October.

Royal Dutch Shell proposed a settlement with non-American investors on the collapse of its share price in early 2004 after the company’s admission that it had overstated its energy reserves by more than 20%. Shell offered to pay $352.6m to settle claims “without admitting any wrongdoing” and said it wanted to make a similar deal with investors in the United States in proportion to their holdings.

ConocoPhillips became the first big American oil company to call on the government to set targets to reduce greenhouse gases when it joined the United States Climate Action Partnership, a business forum pressing for such legislation (BP‘s American arm is also a member). The Democrats have vowed to pass a bill this year that reduces America’s emissions.

It emerged that Ray Irani received a compensation package worth $416m in 2006 as chairman and chief executive of Occidental Petroleum, one of the biggest annual payouts ever netted by an executive. Around two-thirds of the figure is accounted for by Mr Irani cashing in stock options.

Apple said it had chalked up 100m sales of the iPod music player since its launch in November 2001. Apple’s online music store, iTunes, has sold more than 2.5 billion songs.

The IMF released its twice-yearly World Economic Outlook and slashed its forecast of America’s GDP growth rate in 2007 to 2.2% from the 2.9% it predicted last September. However, the fund said it expected the “cooling” of the American economy would have a “limited impact” on the rest of the world. See article

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