European Business News (EBN), 97-03-18

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

Page last updated March 18 1730 CET

CONTENTS

[01] Krupp offers 435 marks per share for Thyssen in rare hostile bid

[02] German public debt figures push Germany outside the Maastrict treaty criteria

[03] Novartis first annual figures show healthy profit

[04] Alcatel Alsthom, France's biggest industrial group, swings back to profit

[05] Alcatel looks to conclude major deals after Thomson bid

[06] UK borrowing lower than expected

[07] U.S. housing starts up 12.2%

[08] Corporate and Economic brief

[09] CeBIT '97: What's happening at the world's biggest computer and telecoms fair

[01] Krupp offers 435 marks per share for Thyssen in rare hostile bid

'This is the pre-condition needed in order to later merge Krupp and Thyssen into a powerful internationally competitive enterprise,' Krupp said in a statement.

The takeover would be consistent with the past activities of Krupp Chairman Gerhard Cromme, who masterminded the controversial merger of Fried Krupp and Hoesch in 1992.

Meanwhile, Thyssen, which has trimmed its workforce by 9.3% over the past five months, said it would fight a takeover, which threatens the jobs of tens of thousands of its 111,000 remaining workers. Thyssen says it will seek partners to fight off a hostile takeover bid, which will put it in a serious situation. Any bidder would need 8 to 9 billion marks ($4.7 - 5.3 billion) in capital, Thyssen said.

In a statement signed by Thyssen's management board chairman Dieter Vogel, supervisory board chairman Heinz Kriwet and works council head Georg Bongen, said that to assure investors of an adequate return on a takeover bid, a buyer would have to consume all of Thyssen's capital reserves and make deep rationalisation cuts.

'This has nothing to do with a planned, responsible management strategy that is equally oriented toward the workers' interests as well as capital,' it said.

'These are Wild West methods that are incomprehensible in view of the current problems in Germany and in North Rhine-Westphalia.'

'It cannot lead to sensible results, to destroy a strong, healthy company, well prepared for the future, to solve the possible problems of another company or to satisfy the short-term profit interests of capital providers, ' Thyssen added.

Deutsche Boerse said that floor and electronic trading in both concerns would probably be suspended all day.

[02] German public debt figures push Germany outside the Maastrict treaty criteria

The bank said in its March monthly report that Germany's public debt as a proportion of gross domestic product had risen to 60.3% at the end of 1996, slightly above the 60% ceiling set by the Maastricht Treaty for countries seeking to join monetary union.

The bank also commented that Germany cannot sustain the inexorable rise in its public debt level since reunification.

The central bank warns at length of a vicious circle of higher debt servicing charges taking an ever larger part of public expenditures, generating persistent deficits and crowding out other public spending. 'The rise in the debt ratio in the last years has had a strong connection to the high debt servicing burden,' the Bundesbank writes. 'Indebtedness is thus feeding itself.'

In a special chapter of the report on the development of German public debt since reunification, the central bank concludes that 'the only way out of the precarious debt situation is 'a convincing consolidation strategy' by the public sector.

[03] Novartis first annual figures show healthy profit

The Swiss drug company company reported group net profit for 1996 of 2.3billion Swiss francs ($1.5billion), against 4.2billion francs in 1995 calculated from the old Ciba-Geigy and Sandoz, which merged to form Novartis. Before exceptional items, 1996 net profit totalled 4.17bn francs versus 4.096bn, a rise of 2%.

The Swiss pharmaceuticals and life sciences giant said it expected operating profit and net profit to grow sharply in 1997, but gave no detailed forecast.

It also pleased investors by proposing to raise its dividend to 20 Swiss francs ($13.7) per share from 16.80, giving its shares a boost of around 1% in pre-bourse trading.

[04] Alcatel Alsthom, France's biggest industrial group, swings back to profit

The group reported net income of 2.7 billion francs ($473 million) in 1996, compared to a loss of 25.6 billion francs in 1995 and announced a hike in its net dividend to 10 francs per share from eight.

Alcatel said that, in addition to current restructuring, it would pursue other action to improve productivity this year, streamlining the organisation, 'optimising real estate holdings' and reinforcing internal controls, notably via centralisation of the company's treasury.

'The actions already achieved or in progress, as well as our knowledge of developments in the group's main markets, underpin the objective of a return to a satisfactory level of profitability by 1998,' it said in a results statement.

Net sales rose one percent to 162.1 billion francs from 160.4 billion francs, while research and development costs - at 16.6 billion francs - were equivalent to 10.2% of sales, the same as the previous year.

Sales rose in all of its main activities except the cables business where they slipped to 36.4 billion francs from 40.7 billion due to a 'significant loss' from submarine cables, despite rises in sales in other cable businesses. Net income from the cable division slid to 2.1 from 2.3 billion francs.

In the telecoms division, the firm's largest, income from operations amounted to 1.4 billion francs, marginally up from 1.3 billion in 1995, on the back of higher turnover of 71.2 billion, up from 66.9 billion.

[05] Alcatel looks to conclude major deals after Thomson bid

Chairman Tchuruk told a news conference his bid with Dassault would also involve state-owned Aerospatiale.

Alcatel, together with Dassault Industries, and Lagardere Groupe are the declared candidates for buying a 58% stake in defence electronics group Thomson-CSF from the state. The deadline for candidates closes on March 28 and the state aims to declare the winner by June 30, and if they win Alcatel reckon the joint operation would create a defence group with annual sales of 60 billion francs ($10.5 billion).

Last week, the government said that Aerospatiale could not participate itself in the bidding for Thomson-CSF by allying itself to one candidate or another.

'The project, as we have presented it, is a joint project with Dassault, Alcatel being the syndicate leader, the main shareholder in the plans,' Tchuruk said.

'Aerospatiale plays an integral part in these plans .... Aerospatiale will have a stake in Thomson,' he said.

'If we succeed in obtaining the deal, we would be very keen in building European cooperation. We have, of course, had discussions with DASA and GEC. That being said, the game is entirely open,' he added. Asked whether Alcatel had obtained firm commitments from DASA or GEC, Tchuruk said he was not seeking such commitments.

'I have excellent relationships with GEC and with DASA, but it is already difficult to mount a precise deal with two or three French parties,' he said.

He added that while in the U.S. a big wave of restructuring was going on, in Europe the defence industry was shattered due to national interest and had led to a number of joint venture deals in which 'nobody is the boss'. He said he hoped to be able to find middle ground between the U.S. and European models.

[06] UK borrowing lower than expected

The data, published jointly by the Office for National Statistics and the Treasury, showed that the cumulative deficit for the first 11 months of the 1996-97 financial year, which began in April, was £14.1 billion. This was down from £22.2 billion a year earlier. Excluding privatisation proceeds, the cumulative deficit was £18.3 billion, down from £24.5 billion a year earlier.

And the ONS said that the PSBR in March will be reduced by the £500-million first installment from the sale of the Housing Corporation loan book and also the total proceeds - amounting to £100 million - from the sale of the Housing for Wales loan book. Both transactions will reduce net departmental outlays.

For 1996-97 the Treasury is forecasting a PSBR of £26.4 billion, an improvement on 1995-96's shortfall of £31.69 billion.

Income tax receipts rose 30% in February compared with the year before, corporation tax was down 24% and value added tax fell 13%.

[07] U.S. housing starts up 12.2%

The February increase followed a revised rise of 0.7% in January to an adjusted 1,362,000 unit pace while December was revised to down 9.0%.

The January performance was previously reported as rising 2.0% while December housing starts were previously reported as falling 11.0%.

The February increase is almost double analysts' expectations. A Dow Jones Newswires' survey of 20 economists published Friday forecast a 6.7% rise in housing starts to a 1,440,000 annual rate.

[08] Corporate and Economic brief

BAYER the German chemicals group said that its profit in the first two months of 1997 was well above plan and that sales grew eight percent in the period.'During the first two months we posted a sturdy sales increase of eight percent and the profits clearly exceeded our plans,' Bayer chief executive Manfred Schneider told the company's annual news conference. Earlier, Bayer said it planned to raise its sales to 50 billion marks ($29.6 billion) in 1997 from 48.6 billion in 1996.

BASF the German chemicals group has reported stronger-than-expected 1996 earnings and said it planned to raise its dividend for the year to 1.70 marks per share from 1.40 marks. Group net profit rose 12.9 percent to 2.79 billion marks ($1.7 billion) from 2.47 billion marks, BASF said in a statement.

AUDI, the luxury carmaker unit of Volkswagen, said it hoped to be able to keep up its growth in 1997 and planned to add new models in the premium market in the coming years.

'We assume that we will be able to maintain our positive course in 1997,' incoming Audi management board chairman Franz-Josef Paefgen said, noting a 15% increase in group sales to 3.32bn marks (1.9bn dollars) for January and February.

[09] CeBIT '97: What's happening at the world's biggest computer and telecoms fair

Debis T&M, the Japan-based unit of Germany's Daimler-Benz Interservices, is planning a telematics, or transportation information technology, joint venture with the Tokyo police force and and Japan's largest telecommunications company Nippon Telegraph & Telephone Corp. The joint venture will offer 'dynamic' auto navigation systems and personal traffic information. 'All system participants will be directed to the quickest route through the greater Tokyo area based on the traffic situation at the time,' Debis said at the CeBit electronics trade fair in Hanover.

Nokia, the giant Finnish maker of telecommunications gear, has unveiled a 2.1-ounce 'cellular card phone' that essentially transforms a laptop computer into a traveling office. With it, a laptop-wielding user can make phone calls, zap faxes, check electronic mail or even download files stored in distant computers.

Siemens said it continued to post 'solid growth' in its telecommunications businesses in the first five months of its fiscal year ending Sept. 31, 1997. It attributed the projected growth to its broad range of telecommunications products offered in a market that is showing strong growth.

Siemens Nixdorf Informationssysteme, the computer division of Germany's Siemens, said its unadjusted sales rose 11% to DM5.7 billion in the first five months of the current fiscal year ending Sept. 31. Adjusted for changes in the company's consolidation, sales rose 13% in the first five months, the company said. Over the five months, new orders rose an unadjusted 13% to DM6.0 billion, the company said. On an adjusted basis, new orders were up 14%.

Mannesmann Mobilfunk said it signed an agreement with Omnipoint Communications that will allow its D2 mobile phone network customers to telephone from parts of the U.S. The Omnipoint network is in operation in the greater New York area, and will soon expand to cover New Jersey, Vermont, Connecticut and other states in its license area, the Mannesmann Mobilfunk mobile telecommunications unit of industrial company Mannesmann said at a press conference. Separately, Mannesmann Mobilfunk said it will introduce six-month tryout tariffs for first-time customers in April. First- time D2 users won't have to pay a connection or basic monthly fee for a six- month period, as long as the monthly telephone bill totals at least DM29.95.

Mannesmann management board member and Mannesmann Arcor Chairman Peter Mihatsch Wednesday called on the German government to speed up its appointment of a telecommunications market regulatory body for when the market is liberalized on Jan. 1, 1998. 'The names of those responsible for regulation have not yet been finally decided,' he said, adding that the body should acutally be up and running by now. 'We're active in the market, we have invested and will invest a lot more - we expect encouragement from the policy-makers not handicaps,' he said.

Thyssen Telecom said its corporate network unit PLUSNET has signed a cooperation agreement with Danish carrier Tele Danmark. The agreement is aimed at expanding the companies' international telephone operations, in preparation for the liberalization of the German telecommunications market on Jan. 1, 1998, said Stefan Baustert, a member of Thyssen Telecom management board. In addition, Baustert announced new measures for Thyssen Telecom's fixed network operations which will make the company less dependent on national carrier Deutsche Telekom.

Start-up losses at Viag's telecommunications operations last year weren't as high as market speculation, but will surge in coming years, a company official said. Viag management board member Maximilian Adelt said ''In response to rumors about our startup losses in the telecommunications business, Viag Interkom and Bayernwerk Netkom posted a start-up loss of just DM100 million in 1996.'' That was between 40% and 50% lower than planned, Adelt said, adding that the cost will ''jump considerably'' this year to above DM300 million.

Microsoft and Intel released the NetPC reference specification for broad industry review. Intel said the NetPC is a new class of personal computers for business designed to reduce ownership costs by delivering new manageability advances. NetPC product announcements from many personal- computer manufacturers are expected over the next 90 days, the company said. NetPC systems will offer the performance and flexibility of traditional personal computers and will be compatible with existing investments in hardware, software and training. Compaq Computer, Dell Computer Corp., and Hewlett-Packard Co. helped develop the reference specification for the NetPC.

Deutsche Telekom announced details of its strategic Internet cooperation with Microsoft. 'The two companies have agreed on common marketing strategies for T-Online and the Microsoft Network, as well as cooperation on security solutions for online banking and the marketing of Microsoft's Internet and Intranet solutions,' Telekom said. T-Online is Telekom's Internet access service.

Sales at Siemens' three communciations units will rise by about 10% in the fiscal year ending Sept. 31, and earnings will rise 'at about the same rate,' a member of the company's management board. Volker Jung, who is responsible for Public Network Communications Systems, Private Network Communications Systems, and Defense Electronics, said the divisions' sales rose by a total of 18% in the first five months of the fiscal year, which was a greater increase than planned.

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

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