Japanese firms to merge
Nippon Oil Corp, Japan’s top oil refiner, and Nippon Mining Holdings Inc said yesterday they had agreed to merge in response to dramatic changes in the global energy industry. The move comes against a backdrop of plunging crude oil prices as fears grow of a deep global recession. The companies plan to merge by next October under a single holding company and integrate their businesses to become “one of the world’s leading integrated energy, resources and materials groups,” they said. The two companies aim to achieve cost savings of at least ¥60 billion (US$645 million) per year, and eventually at least ¥100 billion through the tie-up. The merger ratio has not yet been decided.
Goldman Sachs rejects offer
Goldman Sachs yesterday it rejected a new offer from Panasonic Corp for its stake in rival Sanyo Electric Co, part of a planned merger to create Japan’s biggest electronics maker. “We decided not to accept this offer. We don’t believe this process and the price is fair for all Sanyo’s shareholders,” the Wall Street giant said in a statement. It said it was considering its options including whether to exercise its right to buy other Sanyo stakeholders’ shares in the company. Panasonic said last month that it aimed to acquire Sanyo, which is controlled by a group of financial heavyweights, including Goldman.
Economic activity down
Economic activity weakened across the country over the past several weeks with most sectors facing pressure, the Federal Reserve said in its Beige Book report on Wednesday. The report, to be used by Fed policymakers for their meeting on interest rates next week, indicated a further decline in already grim economic conditions. “Overall economic activity weakened across all Federal Reserve districts since the last report,” the Beige Book said. The report noted weak consumer spending and auto sales “down significantly” in most regions.
Jet maker makes layoffs
Jet engine maker Pratt & Whitney laid off about 350 employees across the US on Wednesday amid concerns that airlines may delay or cancel orders as the global economy slows. The cuts will affect less than 1 percent of the company’s work force of more than 38,000 employees, and will take effect immediately, Jennifer Whitlow, a spokeswoman said. Pratt & Whitney, a subsidiary of United Technologies Corp, supplies both military and commercial jet engines for Boeing and Airbus, among many others.
Oil reaches multi-year low
Oil prices sank to multi-year lows during Asian trade yesterday in a market dominated by declining demand and dismal economic news, analysts said. In afternoon trade, New York’s main futures contract, light sweet crude for January delivery, fell US$0.93 to US$45.86 a barrel. The contract at one point fell as far as US$45.30, its lowest point since Jan. 12, 2005, after closing down US$0.17 at US$46.79 on the New York Mercantile Exchange on Wednesday. Brent North Sea crude for January delivery dropped US$1.19 to US$44.25 after dropping to US$43.80 — its lowest point since Feb. 20, 2005. “This market is trying to find the bottom,” said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage in Tokyo. Hasegawa said there were no bullish factors in the market, which he sees reaching as low as US$40 a barrel.