World Brief

The European Commission has said it would examine the proposed 25 billion dollar merger between U.S. computer giants Hewlett-Packard Co. and Compaq Computer Corp.

The merger is expected to shake up the struggling computer industry. Both Compaq and HP have been hit hard by the downturn in the technology sector over the last year, laying off hundreds of employees.

Even though both companies are based in the United States, the EU is allowed to examine the merger if the combined world sales of the companies are over US$ 4.5 billion and where each company has sales of at least US$ 225 million in the 15-nation bloc.

The merger, if approved, will create a giant with 145,000 employees and US$ 87 billion in revenue – about the size of IBM Corp. – with products not only in the personal computer business but also in computer servers, printers and high-tech services.

The HP-Compaq merger comes in the wake of the EU’s rejection of US$ 41 billion merger between General Electric Co. and Honeywell International Inc. in July. That ruling was the first time European regulators blocked an all-American deal which had been approved by U.S. regulators.

BMW, Toyota to Sign Deal

German automaker, BMW AG is close to signing an agreement with Toyota Motor Corp. under which the Japanese firm will supply diesel engines for BMW’s new Mini, a statement from BMW said.

BMW said that the deal was nearly done but added that it was uncertain exactly when the companies will finalize the deal. BMW also declined to say how many engines the deal would include or how much they would cost.

Japan’s Nihon Keizai financial newspaper reported last month that Toyota may be supplying a newly designed 1,400 cc diesel engine to BMW as early as next year, and may build up its annual supply of the engine to 30,00 units in 2003.

Matsushita, NEC to Tie up

Japan’s Matsushita Electric Industrial Co. Ltd. and NEC Corp. will join forces in third generation (3G) mobile phone devices in a bid to boost their competitiveness against foreign rivals, a newspaper report said.

Under the alliance, Matsushita and NEC will jointly develop software for 3G mobile telephones and fast data-communications technologies, the Nihon Keizai Shimbun reported.

Matsushita’s production arm and Japan’s largest mobile phone equipment maker, Matsushita Communications Inc., will also join the tip-up, the business daily said.

The 3G phones-capable of accessing the Internet, downloading pop videos as well as connecting plain old voice conversations –are posed to hit the market over the next few years.

Merger of DG, GZ Banks

Shareholders of two German cooperative banks approved overwhelmingly a merger that will create the county’s sixth-largest bank in terms of assets, sealing a deal announced in June.

DG Bank and its smaller regional rival GZ Bank are both based in Frankfurt. The new bank will be called DZ Bank and have assets of 700 billion marks ($327 billion).

The deal follows several failed mergers involving bigger German banks over the last 18 months – notably Deutsche Bank’s failed merger with Dresdner Bank and Dresdner’s botched attempt to buy Commerzbank.

Talks between DG Bank and GZ Bank began in February, and the two sides have said they can cut costs by roughly 220 million marks ($103 million) by combining operations. To broker the deal, DG Bank will issue its stock to shareholders of GZ Bank, it is reported.

Job Cut Spree in Japan

Japanese electronics leader Hitachi Ltd. is considering cutting some 20,000 jobs at home and abroad as its microchip business feels the pinch of the global slowdown, said a report.

The Hitachi group, employing 340,000 workers globally, has entered the final stage of drawing up the payroll-cut plan and expects to announce it soon, the Yomiuri Shimbun newspaper claimed.

The report came a day after the Japanese media said the nation’s largest chip marker Toshiba Corp. would become the latest Japanese electronics firm to step up job cuts, slashing 20,000 jobs from its 190,000-strong workforce. Toshiba, reeling from deteriorating semiconductor sales, will unveil the plan soon as to when it announces downward revisions in its earnings forecast for the year to March 2002, the Asahi Shimbun reported.

The Yomiuri said the Hitachi group’s job cuts would focus on money-losing divisions such as semiconductors and electronics parts. Hitachi plans to streamline microchip business while concentrating financial resources on software and other growth sectors, the mass-circulation daily said. The restructuring would involve consolidation of chip-making plants and sales of some operations, it added.

NEC Corp., replaced by Toshiba as Japan’s biggest chip manufacturer last year, has already announced 4,000 job cuts in Japan and abroad, while another rival, Fujitsu Ltd., plans a reduction of 16,000 jobs in a sweeping restructuring plan in reaction to a global slump in demand for technology.

Most Expensive Asian Cities

Tokyo, Hong Kong, Bombay and Seoul are among the 20 costliest places in the world for office rentals, with London’s chic West End remaining the most expensive, a global property consultancy said.

Rental growth for high-end office space "slowed dramatically around the world" in the January to July period due largely to the Japanese economics and the meltdown in the technology sector, CB Richard Ellis said.

A total of 81 out of 153 markets surveyed showed average occupancy costs declining, the consultancy said in a report.

Tokyo’s inner central district remained the second most expensive office location worldwide with rentals costing 124.07 US dollars a square foot in July, down 15.6 percent from 147.05 dollars in January.

London’s West End was charging 157.63 dollars a square foot, up slightly from 156.89 dollars in January.

Tokyo’s outer central district fell to number four position from number three with office rentals of 109.16 dollars a square foot, down 14.4 percent from 127.54 dollars at the start of the year.

Hong Kong remained the number five most expensive office location, charging 81.71 dollars a square foot in July, down 11.3 percent form 92.16 dollars in January.

Indian commercial center Bombay was in seventh place, down from sixth in January, with rentals of 79.80 a square foot, down marginally from 80.16 dollars.

Seoul dropped to 13th place, from 11th in January, charging 58.13 dollars a square foot, down 6.7 percent from 62.33 dollars.

Melbourne in Australia, although not in the top 20 list, led the world in the year to July in rental increases-with costs growing 46.8 percent to 23.73 dollars a square foot, CB Richard Ellis said.

US Investors Sign Deal for Hyundai Units

A consortium led by American International Group (AIG) and merchant bank W.L. Ross Co. have agreed to invest 1.1 trillion won (860 million dollars) in Hyundai Securities Co. and two other financial units of the troubled Hyundai Group, it is learned.

The South Korean government will invest 900 billion won into the three firms, it is reported and it is expected that the authorities hope a final contract will be signed by the end of October.

The accord is said to mark the virtual dismantlement of the Hyundai Group, which just last year was classified as South Korea’s biggest "chaebol" conglomerate. The once-mighty group has left South Korea’s business mainstream, with key semiconductor, construction and auto units already spun off.

The US investors will hold a controlling 29.5 percent stake in Hyundai Securities, a Hyundai official said. The consortium will also take over Hyundai Investment Trust and Securities Co. (HITSC) and Hyundai Investment Trust and Management Co. (HITM).

AIG, W.L. Ross and other US partners will together make the biggest foreign investment in South Korea’s financial sector, it is believed. W.L. Ross is a specialist on investment in Asia while AIG is a major player in the Asian insurance market.

SL Waives Landing Charge

Sri Lanka announced further concessions to attract foreign airlines to the country’s only international airport which was hit by a devastating Tamil Tiger rebel attack in July.

The aviation ministry said there would now be no landing charges on any cargo or passenger aircraft, a concession which was earlier only open to aircraft bringing in more than 200 passengers at a time.

The sweeteners were offered to airlines to offset the high war-risk insurance premiums slapped on international airlines after the July 24 attack on the airport and an adjoining military airbase. Four aircraft of Sri Lanka’s national carrier, Sri Lankan Airlines, were completely destroyed, while two others were damaged.

Hong Kong’s Cathay Pacific has pulled out of Sri Lanka, while several other airlines have scaled down operations and are using smaller and older aircraft to operate to Colombo to keep insurance rate down.

Sri Lankan Airlines has already shed 711 jobs in the past weeks and is said to be due to cut 1,700 more by the end of the year.

Four Mobile Phone Units to Merge

The reshaping of Japan’s telecommunications industry took another step with the four mobile phone units of Japan Telecom announcing a merger in a bid to tackle the stranglehold of NIT DoCoMo.

The units of Japan Telecom Co. Ltd., which is part-owned by Britain’s Vodafone Group PlC, said they would merge on November 1. J-Phone East Co. Ltd., J-Phone Central Co. Ltd., and J-Phone West Co. Ltd. are to merge with J-Phone Communications Co. Ltd. through a share swap, the companies said in a statement issued jointly with Japan Telecom and Vodafone.

In order to further enhance competitiveness and create an even stronger presence in the Japanese mobile market, the four companies have agreed to merge into a single operating company, the statement said.

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Hewlett-Packard, Compaq Attempt Merger