European Business News (EBN), 97-01-13

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated January 13 1300 CET

CONTENTS

[01] Bank Austria wins control of Creditanstalt

[02] Gehe confident of victory

[03] Sears to offload Freemans

[04] Airbus group signs accord

[05] Japan current account surplus narrows

[01] Bank Austria wins control of Creditanstalt

Under the terms of the agreement, the government will sell its controlling 49% stake in Creditanstalt for 17.2 billion schillings ($1.55 billion). In return, Bank Austria is committed to dilute its own political links, to buy out Creditanstalt's minority shareholders and to maintain its new subsidiary as a separate entity for five years. Together the two institutions will have a virtually unchallenged grip on Austria's banking sector, with a combined 24% market share in terms of net assets. However, the deal will require approval from Austrian and European Union antitrust authorities.

The transaction will begin with the sale of the state's 19% stake in Bank Austria, either in a public offering or to institutional investors. Then the City of Vienna's influence, wielded through the Anteilsverwaltung Zentralsparkasse foundation, which holds 45% of Bank Austria's shares, will be diluted to a maximum 20% stake through several capital increases over the next seven years.

The Austrian government has been trying to privatize Creditanstalt since 1990, but its attempts have been foiled by sparring between the country's two main political parties, which wield great influence over the national banking sector. The ruling Social Democrats effectively control Bank Austria through the City of Vienna's influence over a foundation that is the bank's main shareholder. The Conservative Party favored selling the bank to a consortium led by Austro-Italian insurance group EA Generali AG. EA-Generali's bid was estimated at between 14 billion schillings and 15 billion schillings.

Bank Austria promised it will cut Creditanstalt's 8,000-strong work force through 'natural attrition' instead of layoffs.

[02] Gehe confident of victory

On Friday, the German drugs wholesaler improved their offer for Lloyds in a bid which their rivals, UniChem, failed to match. And despite Unichem's reluctance to concede victory to Gehe, the German's are confident they will win outright control. 'I am now 99 percent sure (that Gehe will succeed in the takeover),' said Gehe chief executive Dieter Kaemmerer.

Kaemmerer also said Gehe's 1996 sales would be around 21 billion marks ($13.1 billion), compared to the 19.2 billion marks made in 1995, and that 1997 sales would receive a boost of over 25% if the Lloyds takeover was completed.

UniChem of the U.K. said it won't raise its offer for Lloyds Chemists, despite the Gehe's higher offer for the retail pharmacy chain. In a statement to the U.K. equities market, UniChem said 'there are substantial ongoing benefits available to Lloyds Chemists shareholders if they accept UniChem's offers.'

'What should be of fundamental importance to Lloyds Chemists shareholders are the potential rewards that will be available from the combination of UniChem and Lloyds Chemists,' said UniChem's Chief Executive Jeffery Harris in a written statement.

[03] Sears to offload Freemans

The U.K. retailer said in a statement the sale price may be adjusted upwards or downwards depending on whether the net assets of Freemans exceeds or falls short of the sum assumed during discussions. Sears said it will also bear the costs relating to changes in VAT announced in November's U.K. budget. This is expected to be £25 million.

'The sale of Freemans is the most significant step in the simplification and focusing of Sears. During the last four years we have exited from 23 businesses including house building, jewelry and menswear,' said Liam Strong, chief executive of Sears.

He added that the company's future lies in the development of retail businesses, which hold strong market positions and have the potential for growth.

The company said the net assets of Freemans amount to £240 million, giving rise to a profit after costs but before goodwill of £130 million. After the write-off of goodwill the company expects an exceptional loss of £220 million.

Sears also said it would look for a buyer or joint venture partner for its home decorations store concept, The Source, resulting in the elimination of about 3.0 million pounds per year of development costs.

Among its other divisions, Sears said the trading performance of its footwear business over the next 12 months would be crucial in terms of determining its potential.

[04] Airbus group signs accord

The signing was expected after the companies agreed verbally to such an understanding at the beginning of January and is expected to enable the company to compete against the merging Boeing and McDonnell Douglas in the U.S.

'The establishment of Airbus Industrie as a single corporate entity is an important initial step in the consolidation of the aerospace industry within Europe,' Airbus said.

The single corporate entity structure will broaden Airbus' responsibilities from marketing, sales and product support to include engineering, testing, production, procurement and customer service.

[05] Japan current account surplus narrows

Japan's monthly current account surplus has continued to decrease monthly since December 1994, except for August 1995. However, November's 15.4% decline was the smallest in eight months as automobile and other exports rose amid the yen's fall against the dollar. A weaker yen makes dollar- denominated Japanese exports more competitive on the global market.

In goods and services trading in November, Japan's surplus dropped 32.8% to 302.4 billion yen, marking a 24th consecutive monthly decline, the ministry said in a preliminary report. A ministry official said, 'Japan's monthly current account surplus will remain on a downtrend for the time being, though the pace of decline may slow.'

Import growth has been outpacing increases in exports, and the deficit in services trading has been on an upward trend, the official said. Akiyoshi Takumori, chief economist at Sakura Securities, said Japan's monthly current account surplus will continue to show small decreases from year- before levels.

'In merchandise trade alone, Japan's surplus is expected to show an upward trend later in the year, as exports have been growing at a rapid pace amid the yen's weakness against the dollar, ' Takumori said.

'With an increasing number of Japanese travelling abroad, however, Japan is expected to continue to see a rise in the deficit in services trade, more than offsetting the surplus in merchandise trade,' he said.

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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