Business News & Financial News

The spectacular mergers and acquisitions announced in recent weeks nourish hopes of a general resumption of trading but the French bankers polled by Reuters remain cautious optimism for the fall.

The hostile bid of nearly $ 40 billion launched the world's leading fertilizer Potash or the stock market battle for control of the data storage company 3PAR have been seen by some analysts as a sign announcing a possible new cycle.

"Such operations raise a little mercato" judge a banker, a comparison of sports in the same vein as the one launched during the World Cup soccer player Cristiano Ronaldo by: "The goals is like ketchup: when they arrive, they all come together. "

Announcements and takeover rumors are linked together with a consistent and disturbing intended target size in almost all sectors: automobiles Alfa Romeo, the Australian brewer Foster's with the bank with Nedbank of South Africa, insurance with the UK's Aviva or energy with Polish ENEA.

Figures gathered by Thomson Reuters for the French market is also impressive, even excluding the approximately $ 20 billion Sanofi-Aventis would be willing to spend on the U.S. Genzyme.

THE CONTEXT IS BEST

Transactions involving at least one French company are, at August 25, two times larger in value than in 2009 although it remains far from achieving the speculative frenzy in 2006.

On August 25, 2006, volumes amounted to 239 billion dollars, against 105 billion reached Wednesday.

"Generally, we can say that the context is better than the last two years and the probability of operations is improving, although significant uncertainties remain," Thierry J. Silver, Global Head of 'M & A activity at Societe Generale.

"There is no reason to believe that the major cross-border operations will slow.They are now once again well received by shareholders when the companies have demonstrated their ability to cope with the crisis, "said the banker.

The poor market performance since the beginning of the year is still a risk factor and observers recall that many transactions or IPOs had to be canceled after the crash loosened markets in the first quarter .

MOTION FRAGILE

"We are seeing a recovery in 2010, but this movement will remain fragile until the current uncertainty about valuations persist," the judge for his part in a research note Rivalland Jean-Claude, a lawyer with Allen & Overy in Paris.

The degradation of the sovereign rating of Ireland by Standard & Poor's has also recalled Tuesday that the euro zone was not yet out of the rut and the specter of a relapse of the U.S. economy is also a source of concern.

"The problems on the sovereign credit may resurface, CFOs remain cautious because they do not want to take full credit crunch, they must restructure their debts after a major operation," noted for its share Philip Caraman, a banker from UBS to Paris.

"As long as there is no more visible on sovereign risk, the volumes remain as low as three or four years," Judge said.

For Monique Cohen, managing partner of private equity firm Apax, one of the keys to continued activity is the continued financing of transactions by banks, a vital issue for the private equity industry.

"We can not consider access to the debt as an asset of the moment," she said, noting however that "no new restrictions on debt, many LBO (leveraged transactions) should be provided be in September.

To some bankers, corporate strategic imperatives also explain that they go ahead even if the timing is not ideal.

Some major transactions announced or expected to emerge this logic rather than a genuine recovery in overall mergers and acquisitions, they believe.

"In pharma we got to a point where the economy is good or bad, the problems must be addressed," said a banker based in London.

Large groups such as Sanofi-Aventis and not have enough new molecules for activity in the coming years and must grow through acquisitions.

Similarly, some companies must gain control of new technologies or new markets and therefore have to attack even when conditions are not ideal.

"It's a matter of life or death," Judge the same banker.

The Paris stock exchange resumed on Tuesday the path of decline, concerns about slowing global growth had returned to second place the ads on mergers and acquisitions cause a rebound in European equities Monday.

Around 9:10, the CAC 40 lost 0.95% to 3519.44 points.

Accor (+1.5%) is the only value of the CAC 40 in the green after the group announced the sale of walls 48 of its hotels in Europe, allowing it to exceed its debt reduction targets for 2010.

Lafarge (-3.9%) shows the largest decreases of ACC. Bank of America-Merrill Lynch lowered its recommendation from neutral to underperform.

London fell by 0.7% and Frankfurt 0.63%.The European indices, EuroStoxx 50 and 300 Eurofirst yield more than 0.9%.

The dollar is trading around 1.2642 per euro against 1.2635 late Monday.

A barrel of U.S. light crude lost 88 cents to 72.22 dollars.

The Canadian group called Potash Monday its shareholders to reject hostile takeover bid from mining giant BHP Billiton and said he was discussing with other possible suitors for an alternative giving it a better value.

The world's largest producer of potash added in a statement expected to bring proposals have higher than 39 billion dollars (30.7 billion euros) made by BHP or other strategic options.

Discussions were held with several parties in order to generate higher offers, he said.

According to Bloomberg, Potash has been contacted by the Chinese and Brazilian Vale Sinochem.

The action Potash gained 1% in pre-market transactions on the New York Stock Exchange, to $ 151.

The action BHP gained about 2% in London, to 1858.5 pence.

Electrolux reported an operating profit below expectations for the second quarter and reaffirmed its forecast of a rise in demand this year in its main markets.

Operating income was 1.5 billion kronor (157 million) excluding exceptional items, against one billion kroner in the second quarter of 2009.The 17 banks and brokerages surveyed by Reuters had expected a net profit of 1.6 billion kronor for the period Apr-Jun 2010.

At 7:36 GMT, yielded 5.0% to 158.70 kronor on the Stockholm Stock Exchange.

"The demand for appliances on the group's main markets should be growing during 2010," the Swedish group in a statement.

The second largest manufacturer of household appliances has been forced to sharply reduce its costs to cope with the slowdown in consumption last year but said its main markets had continued to recover in the second quarter.

Electrolux said the North American market had risen for the third consecutive quarter after 13 quarters of contraction.

"At the industry level, the supply of aircraft destined for the United States in the second quarter would have increased approximately 10%," the group said.

"The entire European market has stabilized during the quarter, with major markets such as Germany, France and Sweden showing positive trends," he added, while noting that southern markets Europe had suffered a sharp slowdown over the period.

'The demand in eastern Europe has increased somewhat, further stated Electrolux.

Fiat announced Friday it would invest 700 million euros to produce the Panda in its factory near Naples Pomigliano after a landmark agreement with unions.

The decision to relocate production in Italy of the best-selling small car in Europe, built up in Poland, has been a while appear compromised because only 62% of factory workers in Naples had voted in favor of the plan Fiat, which also includes a significant change in working conditions.

The agreement gives Fiat more flexibility regarding the fees, limits the number of strikes and sick-leave.

It is part of an investment program of Fiat to eight billion euros until 2011 which is designed to make the group more efficient and competitive in a market that has experienced a severe crisis.

Fiat has finally decided to pursue his project after meeting with the four unions that support the project, FIM, UILM, Fismic and UGL.

Fiom, only union opposed the agreement, said it will help the government dismantle the labor law.

The union's national coordinator, Enzo Masini, said the union would consider a lawsuit for infringement of the rights of employees.

The Secretary General of the UILM Palombella Rocco told Reuters: "We hope the employees who voted against the plan will realize that the investment is important and it is in their own interest."

The Fiat Chief Executive Sergio Marchionne has written a four-page letter to convince employees.

"What we're doing is (…) to use all possible means to save the work, even work on which the Italian Republic is founded," says the boss of the group.

He added that his entire strategy for Italy depends on the agreement at Pomigliano.

The government of Silvio Berlusconi welcomed the announcement of Fiat.

The plant in Naples, which employs 5,000 people, shows the lowest productivity of the five Italian factories of Fiat. It is lower than that of the Polish site, which, with just over 6,000 workers, produced 600,000 cars per year.

Major European stock markets ended near their highest of the day and even down to Frankfurt and Zurich, investors remain concerned about the apparent fragility of economic recovery following the announcement of job destruction in the United States that many more 'Early in June

The Paris Bourse ended the session up 0.25% to 3348.37 points. However in the week, it sold 4.87%.

The U.S. economy has destroyed 125,000 non-agricultural jobs in June, according to Labor Department statistics, a figure slightly higher than expected.This is the first time since the beginning of the year that the U.S. economy is destroying jobs.

Moreover, following the division of Accor effective Friday, with the IPO of his ex-services division, became an independent entity called Edenred, it has jumped almost 30% compared to the reference price announced Thursday, while Accor has dropped from 4.64% to 23.53 euros.

In turn, Dana Petroleum has gained 22.34%, after being approached for a takeover, a possibility which has benefited other values in the oil or oil-related UK, as Premier Oil, Cairn Energy and Tullow Oil who gained 5.18 to 7.91%.

On the downside, Sanofi-Aventis has yielded 2.42%, according to press reports suggesting a proposed acquisition in the U.S. could reach 20 billion dollars.

Airbus said it was pursuing "greater good" talks with European states on the financing of the A350, its new long-haul, saying the talks were in no way affected by the opinion issued Wednesday by WTO on subsidies to the aviation industry.

"(…) The A350 is not affected by the outcome of the WTO. Together with the four states, we are moving at full speed, "said Rainer Ohler, communications director of Airbus, a subsidiary EADS, in an e-mail.

"The completion and timing of the announcements are the responsibility of States.Thus, we can not make any comment on that, "he added.

Justices of the World Trade Organization have inflicted a blow Wednesday to scathing EU ordering him to remove certain export subsidies provided to Airbus.

In his report of more than 1,000 pages, the "special" WTO believes that Airbus could launch a series of civilian aircraft thanks to subsidies from the EU and member states that are France, Germany, Spain and the United Kingdom. Without this aid, Airbus has been a society very different and much less powerful, the report said.

Bourbon has unveiled a new plan for the period 2011-2015 which includes the sale of its fleet of 16 bulk carriers and other non-core assets for a total of 500 million Euros.

The specialist maritime services to the offshore oil announced in a press release that it has signed an agreement to sell its Bulk with the American Genco Shipping & Trading Ltd for 545 million dollars (440 million euros).

As part of its strategic plan, Bourbon also wishes to invest two billion dollars (1.62 billion euros) in the construction of 80 supply vessels and 64 vessels transporting personnel to operate in 2015 a fleet 600 vessels dedicated logistics services in the continental offshore and deep offshore.

The offshore fleet amounted to 357 ships by end of 2009 and 99 are now in command in the context of its previous strategic plan.

"The bulk current activity will continue to a lesser extent and without the contribution of a fleet that is owned," said the CEO of Bourbon, Jacques de Chateauvieux, during a conference call."This is not disturbed our ability to meet the expectations of our customers."

Jacques de Chateauvieux has also indicated that the sugar activities of Bourbon in Vietnam, among other things, would be sold in addition to bulk carriers.

Apart from sales, financing the new investment program will be provided by changing the payment terms of vessels during construction, 75% of the price now being paid on delivery, as well as a 12-year loan of 400 million dollars granted by the China Exim Bank.

CASH FLOWS FROM POSITIVE in 2013

"The combined effect of generating cash flow from operations, disposal of assets in 2010 and the new payment policy should allow vessels a ratio of debt to equity of less than 0.5 and a ratio net debt / EBITDA of less than 2 by 2015.Bourbon and generate positive cash flow from 2013 onwards, "added the company.

Bourbon also said that its dividend policy would be to distribute approximately 40% of its consolidated net income.

After an average growth of 28% of the activity of its offshore division between 2002 and 2009, the new plan Bourbon displays a target of 17% average annual growth between 2011 and 2015.

The company is also concentrating on increasing the availability rate of the fleet with a goal of 95% against 92% today, and a decline in the index of its operational costs by 4% rate constant 2015.

Bourbon is also a ratio for 2015 gross operating profit (EBITDA) on revenues of 45% for offshore and an EBITDA ratio on capital employed of 20%.

It plans to recruit 5,000 people who join its 7,000 employees.

Marc Touati, Associate Director of Global Equities

This topic is more socially and economically. In the current crisis, it is even very controversial, very "dangerous". We must therefore take tweezers in the formulation of the analysis to avoid offending the spell …

I. The model of solidarity to the French: the world's best

Originally the solidarity model, also called French social model may appear as the best in the world. Its basic principle is: high public spending and high tax burdens, but in exchange, through redistribution, greater solidarity and hence less inequality, less unemployment, less poverty and more comfort- be economic.

II.This model of solidarity no longer works

Unfortunately, the past ten years, this model is disintegrating, to the extent that public expenditures increase more and more (56% of French GDP in 2009), the tax burden is among the highest in the world. Despite this extravagant strategy, growth, structural decline, unemployment is around 10% sustainable, poverty rate increases (14% of French people living below the poverty line), including the widening inequalities in income and health and funding of the retirement pay is more assured. So the French model of solidarity is more effective.

Conclusion: how to find a more effective model

This is where the controversy settled: that it must also increase public spending and taxes.If this solution is certainly easier, it is not credible: it no longer works for 20 years and is a runaway. We must therefore stop veiling the face: the only way to make solidarity in France resides in the ability of the latter to the high growth. To achieve this, we must reduce the tax burden for all, make it as fairer, while lowering the inefficient public spending, including operating expenses.

Jean Paul Betbeze, director of studies of the Credit Agricole

Introduction: The word solidarity is one of the most important part of our vocabulary, one of the most sensitive too, because it is at the crossroads between economic and social. He asked how "to society", that is to say, how to combine growth, efficiency, distribution, justice.The issue of solidarity is today more acute because the growth is not at the rendezvous. This leads to questions about growth (innovation, the company …) and the terms of the distribution of wealth, with the idea that certain expenses, sometimes called Solidarity, were too high and / or have not contributed to growth, as might have been expected.

I. The French social model, an exception

Solidarity meeting in fact a set of situations. For one third of expenditure, are shocks that have affected people, health first, another third are economic shocks, mainly unemployment and its consequences for a third and third is the evolution costs associated with aging. Shock people, economic shock and the shock of aging are the sources of expenditure solidarity.We must study their rationale, their legitimacy and, where possible, their effectiveness. Looking in effect say that young people can not but be struck by the solidarity they restricted themselves to considering. The family, themselves and their friends and cronies. Altogether, they and their entourage. This sends the idea, positively, that the best solidarity begins at home and his family (training, job search and lifestyle), but also that state support, social activities are increasingly counted in First the conditions of retirement and old age support. Truth and realism.

II. There can be no solidarity without growth

So we must find ways to live together solidarity and growth, after some excesses were committed and at the inability to continue as before.It can therefore be, in any event, solidarity without legitimacy, without transparency, without verification. That is no explanation for it, without penalty to the excesses or misrepresentation and – increasingly – without education, training, to avoid any shocks. Economic solidarity corresponds to the current difficulties of the job. Unemployment is the brand, but also retirement (since the nonworking are partly taken into account). But support to individual entrepreneurs (with tax benefits) are also a de facto solidarity. A total of solidarity that we measure is often posterior to the problem, it must be proactive. It must be less than a correction, compensation of a preparation: training throughout life support mobility.Solidarity in the event of sickness is also essential, but it can not avoid the growing support in people themselves. Lifestyle, sports, medical conditions are independent of a reduction of medical risk and provide an old age happier, longer and less dependent on solidarity.

Conclusion: Overall, we must squarely address the solidarity at the intersection of economics and welfare, by making clearer the economy (transparency, fairness, efficiency), the general benefit of society.