European Business News (EBN), 97-07-28

European Business News (EBN) Directory - Previous Article - Next Article

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

Page last updated Mon, July 28 5:34 PM CET

CONTENTS

[01] Oder tears through dyke as East German villagers await another flood wave

[02] LVMH's Arnault reduces stake demand in proposed group

[03] Bank Austria posts 25% 1H profit boost

[04] Credit Lyonnais to sell Credito Bergamasco stake

[05] Puma shares surge on rumours of Benetton interest

[06] Audi first-half group sales jump 16.1%

[07] Tulip Computers and Commodore scrap takeover talks

[08] E.U. clears Siemens, Thomson-CSF air-traffic control joint venture

[09] Wacker Siltronic to invest in Singapore wafer plant

[10] United Auto Workers accept GM contract to end strike

[11] World Briefs

[01] Oder tears through dyke as East German villagers await another flood wave

Three weeks of flooding in Central Europe have already wreaked havoc, causing over $3 billion worth of damage. More than a hundred have died and thousands of homes and businesses are under water. The disaster marks a serious test for the emerging economies of the region.

Officials said the 15,000 people still in the Oderbruch region, about 50 kilometres (30 miles) northeast of Berlin, were not in immediate danger. But with another flood wave on its way, fears remained high that the waterlogged dyke would give way again.

After nearly two weeks of at times record-high water, 'the dykes are melting away practically before our eyes,' said Michael Muth, head of the state's crisis management team.

Five thousand people were evacuated from the low-lying, rural Oderbruch area last week and another 9,000 have been told to be ready to go at a moment's notice.

Just to the north, a section of dyke gave way again, just three days after it had been patched.

Hundreds of soldiers were repairing the damage, adding to the 5 million sandbags that have already been piled on the 160 kilometre (100 mile) dyke.

The north-flowing Oder, which forms a natural border between Poland and Germany, started flooding early this month. About 100 people were killed in Poland and Czech Republic, but Germany has avoided any casualties since the high water arrived July 16 on its way to the Baltic.

Another flood surge from Poland was expected to reach Germany late Tuesday, but Muth said reports were it was not as high as had been feared - and it would probably be the last.

'If the dykes stand against that, then most of it's over,' he said.

Muth said Germany's sand reserves were depleted and more was being shipped from Holland and Scandinavian countries. Forestry workers were assigned to bundle twigs to put under the sandbags to keep them from sinking in the muck.

Brandenburg Interior Minister Alwin Ziel said he expected no evacuation would be necessary for Frankfurt an der Oder, a border city of 80,000 about 80 kilometres (50 miles) east of Berlin, although the 17,000 residents of Slubice, Poland, just across the river, were ordered out of their homes as a precaution.

Street-level stores and apartments were cleared, giving that city the look of a ghost town. About 2,000 people defied the evacuation order; they were allowed to stay after signing a release, said Krzysztof Pomes, flood headquarters spokesman in Warsaw.

'The dykes are like sponge,' he said. 'There is a danger the saturated dykes will break and a 7-metre (23-foot) wave will flood the city.'

[02] LVMH's Arnault reduces stake demand in proposed group

Arnault's revised position, signalling increased flexibility, was announced in the French newspaper La Tribune, which he controls. Arnault's initial demand was for 35% in the group he has dubbed Drinksco. LVMH had recently signalled it would be willing to take less than 35%, and analysts estimated it would hold out for 30% in any negotiations with GrandMet and Guinness.

On Friday, GrandMet and Guinness rejected his proposal that they create a joint 70 billion franc ($11.6 billion) drinks group whose brands would range from Hennessy and Moet & Chandon, J&B, Smirnoff, Gilbey's, Tanquery, Johnnie Walker and Gordon.

The British groups said Arnault's plan would add £1.5 billion ($2,4 billion) in tax costs.

'LVMH maintains that its plan would create more shareholder value. Determined, if needed, to increase pressure on Guinness and GrandMet to achieve the creation of a listed wines and spirits company, the French group has let it be understood that it would accept bringing the stake it seeks to a minimum of 25%,' La Tribune said.

It reiterated Arnault's offer, made late on Friday, to sit down with the British managers to study ways to limit the tax costs of any deal.

[03] Bank Austria posts 25% 1H profit boost

The bank released the figures early without commentary, but has scheduled a press conference on the results for later in the day. Operating income during the first-half was up 13% to 21.5 billion schillings from 19.02 billion schillings in the first half of 1996.

Last week, Creditanstalt Bankverein, Bank Austria's largest subsidiary, said net profit in the first half of 1997 rose 69% to 2.2 billion schillings while operating profit was up 38% to 4.21 billion schillings. Operating income at Creditanstalt in the period gained 20% to 10.86 billion schillings. Bank Austria has a 70% stake in Creditanstalt.

Bank Austria also said that group interest income during the first half rose 0.3% to 11.69 billion schillings from 11.66 billion schillings. The bank bought control of Creditanstalt, its main domestic rival, from the government earlier this year. A spokesman said comparative 1996 figures given by the bank incorporated 1996 results from Creditanstalt.

Although the spokesman wouldn't give 1996 figures which excluded Creditanstalt's results, last year Bank Austria reported half-year operating profit at 2.63 billion schillings and operating income at 9.94 billion schillings. Based on these 1996 figures stripped of Creditanstalt's influence, Bank Austria operating profit rose 171% and its operating income 116% following the acquisition.

[04] Credit Lyonnais to sell Credito Bergamasco stake

It said in a statement that it had signed an agreement on Friday to sell the stake to Banca Popolare di Verona.

The French bank is under pressure to sell assets in exchange for European Commission approval of state aid.

'Credito Bergamasco, a full service bank established in northern Italy whose activity is mainly geared to individual customers and small and medium sized entreprises, does not correspond to Credit Lyonnais' new European strategy,' Credit Lyonnais said, adding that it was focusing on corporate business.

Credit Lyonnais said it would keep a presence in Italy through a branch in Milan serving big Italian and foreign corporate clients. 'It intends to pursue its development on this market,' it said.

Credit Lyonnais said the sale of the bank stake, which hinges on supervisory approval, was expected to close before the end of the year.

Banca Popolare di Verona is Italy's fourth-largest cooperative bank with assets of 28,127 billion lira at the end of last year.

[05] Puma shares surge on rumours of Benetton interest

'There has been talk that Benetton is interested in Puma and that is what has been driving the share price,' said one Frankfurt-based analyst who asked not to be named.

Puma officials said they were unable to comment on the matter, saying only they could not find an explanation for the strong share price move. 'It's not true that Benetton is interested in Puma,' a Benetton spokesman said.

On the other hand analysts said that while they had no reason to believe Benetton had made a bid for Puma, the suggestion was not entirely ludicrous.

'This is not wholly implausible,' said an analyst who also asked not to be named.

Speculating on where the share price might move in coming days, traders and analysts said this depended largely on what happens with the takeover rumours.

'If one of the two companies comes out and says there is really nothing to the talk and the market believes this, then the euphoria in Puma shares will evaporate very quickly,' a dealer said.

Puma's main operations are in shoes. Analysts said rumours that Benetton could bid for a sports shoe company have run rife since Benetton acquired Benetton Sportsystem from Edizione Holding, a Benetton family holding company. Benetton Sportsystem does not have a sports shoe unit.

[06] Audi first-half group sales jump 16.1%

In a company magazine, Audi also said that pretax profit during the first half 'developed pleasingly.' In the year-ago period, pretax profit was 405 million marks. Audi said it will report its first-half figures sometime after August 8.

In the U.S. alone, Audi sold 17,019 vehicles during the first half 1997, a 34% increase from the year before, VWD reported. This marks the best half- year results in the U.S. in 10 years.

In July, U.S. sales increased 48%, compared with the same month a year ago, the news agency said.

[07] Tulip Computers and Commodore scrap takeover talks

Tulip announced in June it was in talks to acquire Commodore, saying the takeover would boost annual revenues to over 1 billion guilders ($481 million).

But on Monday, the company announced that it had scrapped the negotiations after failing to reach agreement with Commodore about terms.

Den Bosch-based Tulip manufactures microcomputers, system boards and automation products for the business and professional markets.

Tulip is a manufacturer of microcomputers, system boards and automation products for the business and professional markets. Although the systems are developed and manufactured in the Netherlands, about 61% of Tulip's turnover is generated abroad.

[08] E.U. clears Siemens, Thomson-CSF air-traffic control joint venture

'Airsys will be by far the market leader (in Europe), well ahead of other European and U.S. competitors, and will be the sole company with size comparable to that of the major U.S. companies in the field, such as Lockheed Martin and Raytheon,' the European Commission said.

However, the Commission said it found no indications the merger would allow Airsys to gain a dominant position.

The Commission stressed the new company would face competition from several significant rivals and pointed out that their customers for air traffic management equipment, mostly national civil aviation authorities, have strong buyer power.

'Both customers and competitors will thus act as sufficient constraints on the competitive behaviour of Airsys,' the Commission said.

The joint-venture will cover equipment to provide airspace surveillance and control facilities for civil aviation operations.

[09] Wacker Siltronic to invest in Singapore wafer plant

The company's first factory in Asia will have the capacity to make up to 250,000 200-millimeter wafers a month. Construction will start next month and the plant should be operational by mid-1999.

It is expected to generate about 10 to 15% of the company's overall output when fully operational, said Paul Linblad, an official at Wacker Chemicals (South Asia).

Singapore's Economic Development Board confirmed the investment. The government says this city-state will have up to 25 wafer fabrication plants over the next few years.

[10] United Auto Workers accept GM contract to end strike

About 2,800 workers walked off the job last Tuesday after a strike deadline expired without a contract deal. The shutdowns affected about 16,500 workers, not including the strikers, and led to fears that production disruption would quickly spread to GM's other U.S assembly plants.

About 2,800 union employees went on strike at the GM Powertrain Group plant in Warren, which makes front-drive transmissions, wheels and suspension parts for many GM cars and trucks. Two days after a tentative contract agreement was reached, the pact was approved by 89.4% of the 1,082 workers who voted, the UAW said Sunday.

'We're elated, we think that the membership is happy with what they saw and the vote total indicated that,' UAW Local 909 President Al Benchich. Production at the Warren plant resumed Sunday at 11 p.m.

The strike had forced the shutdown of four assembly plants in Michigan and Canada by Friday. A total of 19,300 GM workers - including the strikers - were without work. GM spokeswoman Darla Park said GM would likely not know until Monday when those four plants would reopen.

GM and the UAW have been at odds over the company's decision to cut costs by trimming the work force through attrition - a factor in each of six strikes against GM this year.

One of the main issues in Warren was the company's decision to transfer production of car and truck wheels to an independent supplier, a practice known as outsourcing. Few automakers still make their own wheels, which can be bought cheaper from suppliers.

Under the agreement, GM will hire 420 new employees at the Warren plant, according to a summary prepared by the union and distributed to workers.

In addition, GM agreed to pay $550 to each worker on the payroll before July 14 to settle grievances over outsourcing, the summary said. The company is paying more than $2 million to settle various grievances, Benchich said. The Warren plant will continue making wheels through at least 2002. Employees in wheel assembly also have their jobs guaranteed if work is shifted elsewhere or phased out.

[11] World Briefs

Four Indian soldiers have been killed in clashes between Indian and Pakistani forces guarding the border that separates the two hostile neighbors, Pakistani soldiers. Pakistan's Chenab Rangers said they opened fire on Indian soldiers Sunday night after a Pakistani farmer sowing wheat near the border was shot.

A fugitive German businessman linked to Gianni Versace murder suspect Andrew Cunanan is negotiating his return to Germany, his lawyer said. Meanwhile, a German prosecutor said his office was considering filing new fraud charges against the businessman, Torsten Reineck.

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

European Business News (EBN) Directory - Previous Article - Next Article