Companies in Brief
Google: The New Threat from Beijing
Google may lose the right to operate in China after Beijing objected to its efforts to skirt censorship controls. In March, the search-engine company began automatically redirecting users on the Chinese mainland to its uncensored site in Hong Kong. Chinese authorities indicated on June 29 that they would not renew Google's license if it continued the practice. Google has proposed a compromise whereby it would point users to the unfiltered Hong Kong site rather than routing them there automatically. That may not be enough to mollify Beijing: On June 30, Google reported that its mainland search engine had been partially blocked.
Ford: An Encouraging Sign in Detroit
Ford Motor will pay about $3.8 billion into a union health-care fund, a sign that the automaker is confident it's back on a profitable track. Under a 2007 agreement between the United Auto Workers and Ford, the automaker must make annual payments into the fund through 2022. As part of an ongoing effort to pare back debt, Ford opted to pre-pay $2.9 billion, on top of the $859 million installment that was due by June 30.
Le Monde: Investors Throw It a Lifeline
Le Monde, France's struggling newspaper of record, has accepted a buyout offer from a trio of investors that includes an Internet billionaire, a banker, and a member of the fashion Establishment. French Prime Minister Nicolas Sarkozy had pressured the managers of the 65-year-old Paris daily to reject the bid. At least one of the investors, Pierre Bergé, the business partner of the late designer Yves Saint Laurent, is allied with members of the leftist opposition. The businessmen have offered to retire nearly $74 million of the paper's debt and kick in more than $61 million in new investment.
Telefónica: Portugal Blocks a Bid in Brazil
The Portuguese government used its veto power to block Telefónica's $8.7 billion bid for Portugal Telecom's stake in Vivo, Brazil's largest mobile carrier. Telefónica, which owns half of Vivo, launched a tender offer that drew participation from 74 percent of Portugal Telecom investors present at a June 30 shareholder's meeting in Lisbon. But Prime Minister José Sócrates invoked the government's "golden share" in the onetime telecom monopoly to block a deal. The Court of Justice of the European Communities in Luxembourg will weigh in on the issue on July 8.
China Resources: Battling to Be King of Mainland Coffee
China Resources, the state-backed company that is the largest coffee brewer in China, is paying $42 million for control of Hong Kong's No. 2 chain of cafes, Pacific Coffee Group. China Resources says it plans to grow Pacific Coffee, which has 88 outlets (including five on the mainland), to eventually surpass Starbucks in China, which has about 380.
GlaxoSmithKline: More Setbacks for a Diabetes Drug
A pair of new studies link GlaxoSmithKline's diabetes drug Avandia to heart attacks and other cardiovascular complications. One study found that almost 50,000 elderly Americans either died or suffered strokes or heart failure after taking Avandia instead of a rival medication since 1999. Scientists involved in both studies have called for the drug, which had sales of $1.2 billion last year, to be pulled from the market. A UBS analyst estimates Glaxo's potential liabilities from some 13,000 Avandia lawsuits at $1.1 billion. Glaxo says it will review the data with the FDA at a meeting in July.
Swatch: The Savior of the Swiss Watch Industry Dies
Swatch Group Chairman Nicolas Hayek died of heart failure on June 28 at the age of 82. The Lebanese-born Hayek is credited with reviving the Swiss watch industry in the face of competition from cheaper, Japanese-made watches in the 1980s. As a consultant, he advised the makers of Omega, Longines, and Tissot watches to merge and develop an inexpensive watch, called the Swatch, to market along with their more expensive timepieces. Swatch posted a profit of around $840 million last year on sales of around $4.9 billion. Hayek, who refused to retire, died on the job at Swatch headquarters. He will be succeeded by his daughter Nayla.