Archive for July 19, 2007

Business this week: 14th – 20th July 2007

July 19, 2007 Leave a comment

Business this week

Jul 19th 2007
From The Economist print edition

EADS announced that it was streamlining its management structure. The European aerospace and defence company has been hampered by meddling politicians in France and Germany, its primary backers, and the dual-management structure was criticised by many for being unwieldy. Louis Gallois will become EADS‘s sole chief executive. Tom Enders, currently EADS‘s other co-chief executive, becomes head of Airbus. See article

The board of Altadis, a Franco-Spanish cigarette company, accepted a third takeover offer from Britain’s Imperial Tobacco. The euro16.2 billion ($22.4 billion) deal gives Imperial Altadis’s continental and Moroccan operations and its profitable cigars business (it has a 50% stake in Cuba’s Habanos). Imperial’s bid trumped a rival offer from CVC Capital Partners, thus raising further questions about whether the private-equity boom was tapering off. See article

There was another big deal in the plastics industry. Basell, a private firm which is owned by Len Blavatnik’s Access Industries, agreed to meld with Lyondell Chemical, based in Houston, in a transaction valued at $19 billion. The acquisition is welcome news for Mr Blavatnik, an industrialist who sits on the boards of RUSAL, Russia’s biggest aluminium company, and TNK-BP, BP‘s joint venture in Russia. Last week Apollo Management, a private-equity firm, managed to tempt Huntsman, a chemicals company, away from an agreed takeover by Mr Blavatnik with a $10.6 billion offer.

J. Sainsbury received a preliminary approach from a property investment-fund that is owned by the government of Qatar and which already holds a 25% stake in the British supermarket chain. The retailer rejected a putative private-equity buy-out in April.

The chief executive of Whole Foods Market, America’s biggest natural- and organic-food retailer, apologised for posting derisive comments about Wild Oats Markets, a rival with which it wants to merge, on an online financial message-board. John Mackey said the remarks, which were posted under a pseudonym and are now being investigated by regulators, were an “error of judgment”. See article

EMI recommended that shareholders accept a buy-out offer from Terra Firma Capital Partners after Warner Music decided not to make a rival bid. The British and American music companies have danced around a merger several times over the past few years.

A consortium of banks led by Royal Bank of Scotland sweetened its euro71 billion ($95 billion) bid for ABN AMRO by raising the cash proportion of its offer. All eyes are on the response of Britain’s Barclays, which first unveiled a takeover plan in an all-share offer that was accepted by the Dutch bank in April.

Merrill Lynch and JPMorgan Chase reported a rise in second-quarter net profit of, respectively, 31% and 20% compared with a year earlier. The investment-banking and asset-management businesses of both firms remain robust, but worries persist about their future exposure to defaults in America’s housing market.

Rupert Murdoch came a step closer to taking over Dow Jones when the company’s board recommended to shareholders a $5 billion offer from News Corp, Mr Murdoch’s media conglomerate. The remaining obstacle to a deal is the Bancroft family, which controls 64% of the voting shares in Dow Jones. It will meet next week.

Japan’s best-known shareholder activist, Yoshiaki Murakami, a former trade-ministry official, was found guilty of insider trading and sentenced to two years in prison. His Murakami Fund was charged with receiving inside information from livedoor, whose boss, Takafumi Horie, is appealing against a separate sentence. Prison convictions in white-collar cases are rare but, unusually for Japan, both men pleaded innocent.

China’s GDP in the second quarter grew at its fastest rate in 11 years, and inflation rose to 4.4% in the year to June. Analysts debated what, if anything, the government could do to cool the economy.

The euro reached another record high against the dollar as investors shied away from American assets amid concerns about the fallout from losses in America’s subprime-mortgage market. Meanwhile, Nicolas Sarkozy continued to press the European Central Bank over its policy on the euro. The French president thinks the currency’s strength is hurting exports and growth and hinted that Germany was moving towards his position on the matter. But Angela Merkel, Germany’s chancellor, reiterated her view that the ECB should remain focused on holding inflation down.

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Politics this week: 14th – 20th July 2007

July 19, 2007 Leave a comment

Highlights from this week’s edition of The Economist
Bombs away | John Edwards and the other Democrats | The importance of Turkey’s election | Talent management | A good year at the Fed | The Pope’s diplomatic service | The Litvinenko fall-out | A legitimate bug auction | The partition of India | Lady Bird Johnson, first lady and environmentalist

Politics this week

Jul 19th 2007
From The Economist print edition


General Pervez Musharraf revealed that he intends to seek re-election as Pakistan’s president later this year without stepping down as army chief. He told newspaper editors that a purely civilian government would not be strong enough to control extremists. His comments came as a series of attacks, mainly on security forces in North-West Frontier Province, claimed more than 130 lives. See article

Police in Bangladesh arrested Sheikh Hasina Wajed, a former prime minister and leader of the Awami League, the main opposition to the civilian government whose term ended last year. She faces corruption charges and is accused of complicity in the killings of four political opponents. The army-backed interim government that took power in January has promised to clean up Bangladeshi politics. Sheikh Hasina’s rival, Khaleda Zia of the Bangladesh Nationalist Party, also faces charges. See article

International inspectors confirmed that North Korea’s plutonium-producing nuclear reactor at Yongbyon, north of the capital, Pyongyang, and four other facilities there have been shut off. A first instalment of fuel oil promised to North Korea in return for ending its nuclear programme arrived, and six-country talks resumed in Beijing. See article

A constitutional convention reopened in Myanmar. It has been meeting on and off since 1993, but is now likely to finish in two months and put a new charter to a referendum. The ruling junta was trounced in an election in 1990 but refused to honour the result. The main opposition National League for Democracy is boycotting the convention, which will entrench the army’s role.

An earthquake rocked Kashiwazaki in Japan, killing ten people. A nuclear plant was damaged and leaked water containing radioactive compounds, raising safety concerns about Japanese facilities.

George Bush called for a conference to relaunch a peace process to settle the Israel-Palestine conflict. He also took steps to boost the Palestinian president, Mahmoud Abbas, and his secular Fatah group in the West Bank, in the hope of weakening its Islamist rivals in Hamas, which took over the Gaza Strip last month. Mr Abbas said he would call for new elections. See article


At least 85 people were killed by bomb attacks in the disputed city of Kirkuk, which is controlled by Iraq’s Kurds. The biggest blast, detonated by a suicide-bomber in a lorry, hit an office of the party led by Iraq’s president, Jalal Talabani, a Kurd.

A Libyan court commuted the death sentences passed on five Bulgarian nurses and a Palestinian doctor to life imprisonment. In a trial widely condemned abroad as unfair, the six have been convicted of deliberately infecting hundreds of Libyan children with HIV.

A national reconciliation conference opened in Somalia’s embattled capital, Mogadishu, but proceedings were promptly postponed until the end of the month, with no sign of any progress. See article

In Brazil, a TAM Airbus jet on an internal flight overshot the recently resurfaced runway at São Paulo’s commuter airport and exploded on contact with a fuel and cargo warehouse, killing all 186 people on board and several on the ground. See article

Argentina’s economy minister, Felisa Miceli, resigned after prosecutors ordered her to testify about $64,000 in cash found in a bag in her office bathroom. Her replacement, Gustavo Peirano, is expected to retain the policy of an undervalued exchange rate and artificially low energy tariffs.

In Venezuela, RCTV, an opposition-supporting television station which closed down in May after its broadcasting licence was not renewed by Hugo Chávez’s leftist government, took to the air again as a cable and satellite channel. See article

Bolivia’s president, Evo Morales, said he planned to nationalise the country’s railways, which have been run for the past decade by investors from Chile and the United States.

On a visit to Latin America, Canada’s Conservative prime minister, Stephen Harper, offered to start free-trade talks with Colombia. That was in pointed contrast to the Democrat-controlled United States Congress, whose leadership has refused to ratify a trade agreement with Colombia. See article

After an all-night session in the American Senate, the Republicans easily denied the Democrats the 60 votes they needed to proceed with a plan to pull troops out of Iraq. The debate on the defence-spending bill to which the plan is attached was deferred until September.

A court in Los Angeles accepted a $660m settlement between the local Catholic archdiocese, America’s biggest, and victims who allege sexual abuse by clergy. It is the largest such payout in a string of national sex-abuse scandals over the past few years involving the church. See article

Jim Gilmore, a former governor of Virginia, pulled out of the race for the Republican presidential nomination. Very few people knew he had ever been in it.

Britain expelled four Russian diplomats. The British complained that the Russian authorities had not co-operated in an investigation into the murder of Alexander Litvinenko, a former KGB agent, by polonium poisoning in London last year. See article

An independent candidate running in Turkey’s general election was shot dead in Istanbul. The campaign for the election, on July 22nd, has been unusually tense. See article

Poland’s president, Lech Kaczynski, met his American counterpart, George Bush, in Washington, DC. Mr Kaczynski strongly defended the American plan to site a new missile-defence system in Poland over fierce objections from the Russians. See article

Athens was engulfed in thick smoke after strong winds and a heatwave set off dozens of forest fires. Ecologists said it would take 100 years to repair the environmental damage.

Rex Features
Rex Features

Britain’s pagan groups expressed outrage at the depiction of a doughnut-wielding Homer Simpson next to the Cerne Abbas Gi
ant hill-figure in Dorset, a pagan symbol of fertility. The painted Simpson is publicising a film, but the promoters promised that the persistent summer rains would wash him away.

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