10. Japanese May Aid Chemicals Industry

Japan’s ailing petrochemical industry may be offered fiscal incentives to encourage rationalization.

A strong possibility exists that tax exemptions, interest-free loans and other incentives could be offered to the industry in an effort to help restructuring, said Mr Hajime Furuta, director of the basic chemicals division of Japan’s Ministry of International Trade and Industry.

Restructuring was needed because the Japanese petrochemicals industry was weak and uncompetitive, added Mr Furuta, in London for the Financial Times conference on petrochemicals.

The plight of the Japanese industry, the world’s second largest after that of the US, with an annual turnover of nearly $65bn was worse than in the last recession 10 years ago.

Consumer demand seemed saturated and the inventory adjustment would last longer than during the last recession. Raw material prices were lower this time.

The industry had severe structural problems because of excessive competition. The sector was highly fragmented, with 12 ethylene manufacturers. The largest had 12 per cent of the market and the smallest 6 per cent.

Alliances and other forms of cooperation were needed, with both domestic and foreign partners.

In the scramble for market share, excess capacity had been built up. Annual Japanese production next year would be 7.3m tones, while demand would be 6m tones.

The industry was facing increased competition from other Asian producers, especially South Korea. Miti estimates a global oversupply of ethylene of 5.2m tones a year. In addition, the slowdown in the Japanese economy meant there was more than two months’ worth of stocks.

The industry’s profits last year had already fallen 45 per cent to under $80m. For the first half of this year, the figures were worse, with profits down 80 per cent to $12m. Five ethylene producers were in the red and others would follow.

There was no question of intervention. But Miti would try to act as a catalyst.

VOCABULARY:

fiscal incentives - меры по стимулированию (в данном случае – рационализации отрасли) за счет средств государственного бюджета (в виде налоговых льгот, послаблений, беспроцентных займов и т.д.)

incentive - поощрение, стимул, побуждение

tax exemption - освобождение от уплаты налогов

interest-free loan - беспроцентный заем

turnover - товарооборот (суммарная стоимость продаж за отчетный период (для отдельной компании, отрасли или экономики в целом); объем продаж

annual turnover - годовой товарооборот

recession - спад, рецессия

saturation – насыщение рынка; положение на рынке, когда предложение полностью удовлетворяет спрос

Consumer demand seemed saturated… - Казалось, что рост спроса приостановился

inventory adjustment – зд. распродажа товарно-материальных запасов

raw material - сырьё

excess capacity - избыточная [неиспользуемая] производственная мощность, резерв производственной мощности

slowdown – замедление темпов роста (экономики)

intervention - вмешательство

TRANSLATION NOTES:

Japan’s ailing industry may be offered… - Возможно промышленности Японии, испытывающей трудности, будут предложены….

Модальный глагол may в зависимости от контекста выражает либо позволение, либо возможность совершения действия и тогда он переводится как «возможно», «возможно, что». (См. часть Ш, раздел 3, §3, п.3.1)

A strong possibility exists…, said Mr Furuta, director of the basic chemicals division of Japan’s Ministry of International Trade and Industry. – По словам главы подразделения Министерства Внешней торговли и Промышленности по производству базовых химических продуктов Фуруты велика вероятность…..

В английском языке источник информации, обстоятельства места и времени, стоят в конце предложения, в русском языке – в начале. (См. часть Ш, раздел 3, §2)

the industry was facing increased competition from… – данной (фармацевтической) отрасли (а не промышленности в целом) грозил рост конкуренции со стороны…

При переводе необходимо обращать большое внимание на артикли, некоторые из которых требуют конкретизации значения . (См. часть Ш, раздел 3, §10)

Причастие прошедшего времени часто переводится существительным.

increased prices – рост цен (См. часть Ш, раздел 3, §6)

there was more than two months’ worth of stocks – количество запасов было достаточно для бесперебойной работы в течение более двух месяцев

Основное широкое значение слова stock(s) – «материальная база». Перевод этого слова на русский язык – «запас», «товар», «инвентарь», «акционерный капитал», «акции», «поголовье скота» - всегда необходимо давать по контексту. (См. часть Ш, раздел 2, §4, п.4.1)

stock of goods – запас товаров

stock of orders – портфель заказов

stocks and bonds – акции и облигации

from stock – со склада

stock in transit – груз в пути

VOCABULARY CHECK

1. Существует несколько способов повышения эффективности деятельности компании: внутреннее развитие, сокращение масштаба, увеличение масштаба.

2. Отделившаяся от материнской компании фирма сконцентрировалась на своем основном виде деятельности.

3. Центр прибыли - это подразделение компании, получающее прибыль самостоятельно и независимо от деятельности основного подразделения.

4. Выкуп за счет кредита - покупка контрольного пакета акций компании, финансируемая выпуском новых акций или с помощью кредитов, которые должна погасить сама компания. Обеспечением служат ее активы.

5. Внутренний управленческий выкуп - покупка компании или части компании группой ее управляющих.

6. Рисковый капитал в основном вкладывается в новые или реорганизуемые компании, в том числе малые предприятия с высоким потенциалом развития.

7. "Бросовые облигации" - высокодоходные облигации корпорации с кредитным рейтингом ниже инвестиционного уровня.

8. Фирма, активно использующая заемные средства, может иметь высокую рентабельность инвестиций (return on investment, ROI).

9. Прибыль компании за последний квартал выросла в 3 раза и составила 150 миллионов долларов при объеме продаж в 1,5 млрд.долларов.

SECTION 4 MERGERS AND ACQUISITIONS

LEAD-IN

Mergers and acquisitions and corporate restructuring - or M&A for short - are a big part of the corporate finance world. Every day, Wall Street investment bankers arrange M&A transactions that bring together separate companies to make larger ones

Although they are often uttered in the same breath and used as though they were synonymous, the terms "merger" and "acquisition" mean slightly different things.

When a company takes over another one and clearly becomes the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist and the buyer "swallows" the business, and stock of the buyer continues to be traded.

In the pure sense of the term, a merger happens when two firms, often about the same size, agree to go forward as a new single company rather than remain separately owned and operated. This kind of action is more precisely referred to as a merger of equals.

In practice, however, actual mergers of equals don't happen very often. Often, one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it's technically an acquisition. Being bought out often carries negative connotations. By using the term "merger," dealmakers and top managers try to make the takeover more palatable.

A purchase deal will also be called a merger when both CEOs agree that joining together in business is in the best interests of both their companies. But when the deal is unfriendly, or hostile - that is, when the target company does not want to be purchased - it is always regarded as an acquisition.

So, whether a purchase is considered a merger or an acquisition really depends on whether the purchase is friendly or hostile and how it is announced.

Takeovers happen over the objection of the board and usual procedure is through the purchase of stock in the target company. Stock might be acquired through open market purchase, private transactions or launching a bid (tender offers). When a takeover attempt runs into very serious objections from the board of directors of the target company, it is referred to as a hostile takeover.

The takeover process is often described in terms of one animal hunting another: a company or individual seeking to take over another company may be referred to as a predator, and the target company as the prey.

Predators are also referred to as raiders or corporate raiders.

The tender offer price may not be high enough for the target company's shareholders to accept, or the specific terms of the deal may not be attractive. In a merger, there may be much at stake for the management of the target - their jobs, in particular. So, if they're not satisfied with the terms laid out in the tender offer, the target's management may try to work out more agreeable terms that let them keep their jobs or, perhaps even better, send them off with a nice, big compensation package. Board members worrying about losing their jobs as a result of a takeover can contrive for themselves something known as a golden parachute.

A company wishing to resist, ward off, or fend off being taken over has a number of options.

A poison pill scheme can be triggered by a target company when a hostile suitor acquires a predetermined percentage of company stock. To execute its defense, the target company grants all shareholders - except the acquirer - options to buy additional stock at a dramatic discount. This dilutes the acquirer's share and intercepts its control of the company. A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities is dilution.

It may devise plans that give existing shareholders special rights, or it may make itself less attractive to bidders by selling off a valuable part of the company, or holding on to an unattractive one. The company’s additional defence measures are sometimes called shark repellent.

As an alternative, the target company's management may seek out a friendlier potential acquirer, or white knight. If a white knight is found, it will offer an equal or higher price for the shares than the hostile bidder.

Bidders may agree to withdraw their bid if paid enough money for the shares they hold in the target company. This is greenmail. A spin-off of the term "blackmail", greenmail occurs when a large block of stock is held by an unfriendly company or raider, who then forces the target company to repurchase the stock at a substantial premium to destroy any takeover attempt.

VOCABULARY

mergers and acquisitions , M&A	- слияния и поглощения
take over takeover	- поглощать - поглощение: покупка одной компанией контрольного пакета акций другой компании
hostile takeover unfriendly takeover	- враждебное поглощение: попытка получить контроль над компанией путем скупки ее акций на рынке против воли руководства или ведущих акционеров этой компании
acquisition	- приобретение; поглощение компании
target company	- компания-цель, компания-объект поглощения; приобретаемая компания (компания, которая является объектом попытки поглощения со стороны другой компании)
merger friendly merger hostile merger	- слияние или объединение компаний - дружественное слияние - враждебное слияние
tender offer	- предложение о приобретении; тендерное предложение: метод осуществления поглощения через публичное предложение акционерам поглощаемой компании купить их акции
takeover bid	- предложение о поглощении: предложение о покупке контрольного пакета акций, сделанное акционерам поглощаемой компании другой компанией
launch a bid	- предпринять попытку поглощения, начать скупать акции другой компании
predator	- «хищник»: инвестор или спекулянт, специализирующийся на извлечении прибыли из ситуации, когда та или иная компания находится под угрозой поглощения или просто в трудном финансовом положении
prey	- компания-жертва; добыча
raider corporate raider	- рейдер, "налетчик": физическое лицо или организация, потенциально способные поглотить другие компании; рейд, "налет" осуществляется в виде массированной скупки акций компании-жертвы с целью получить контрольный пакет ее акций
golden parachute	- "золотой парашют": соглашение менеджера с корпорацией, по которому, в случае увольнения напр., после враждебного поглощения, менеджеры должны получить крупные денежные суммы или опционы на акции
ward off, fend off	- предотвратить (удар, опасность); защитить
poison pill	- "ядовитая пилюля", "отравленная таблетка": любые методы борьбы с враждебным поглощением компании; в случае попытки враждебного поглощения компания-цель может принять на себя обязательства, которые сделают такую операцию чрезмерно дорогостоящей (напр., это может быть выпуск новых привилегированных акций, погашаемых по высокой цене в случае поглощения компании, дорогостоящая система бонусов, др.)
dilute	- разводнять: понижать ценность акций путем увеличения их числа без соответствующего увеличения активов компании
dilution stock watering	- разводнение акционерного капитала, разводнение акций: выпуск акций в сумме, не соответствующей активам и потенциалу компании; отрицательное воздействие дополнительного выпуска акций на благосостояние существующих акционеров, проявляющееся в уменьшении величины прибыль на одну акцию и снижении возможности влияния на дела компании через участие в голосовании акционеров)
shark repellent	- "отрава для акул", "акулий репеллент": любые меры по защите компании от недружественного поглощения (напр., защитное слияние, поправки к уставу компании, и т. п.); имеют целью сделать компанию непривлекательной для "поглотителя"
white knight	- белый рыцарь: дружественный инвестор, который делает новое, более выгодное, предложение о поглощении компании, уже являющейся объектом попытки враждебного поглощения со стороны черного рыцаря; это поглощение согласовано с поглощаемой фирмой
greenmail	- "зеленый [мягкий] шантаж": форма вымогательства - лицо скупает достаточно большое число акций компании, так что у ее руководства возникает опасение, что компанию перекупят, после чего лицо продает компании скупленные акции по завышенной цене; производное от green в значении "деньги" и blackmail "шантаж"

COMPREHENSION QUESTIONS:

1. What is the difference between mergers and acquisitions?

2. What kind of action is referred to as a merger of equals?

3. What is a hostile takeover?

4. What kind of agreement may the target’s management try to work out?

5. What are the options of a company wishing to ward off being taken over?

6. What does dilution imply?

7. When does a target company look for a white knight?

8. What should a target company do if it comes up against greenmail?

VOCABULARY PRACTICE

The business was acquired from Orion four years ago.

The industry’s wave of mergers and acquisitions continues.

Medeva, the fast-growing pharmaceuticals group, rose 19p to 224p on the news that it has made another acquisition in America. Medeva is to buy Adams Laboratories, a Texas drugs manufacturer, for $77.2 million.

White Knight - is a company (the “good guy”) that gallops in to make a friendly takeover offer to a target company that is facing a hostile takeover from another party (a “black knight”). The white knight offers the target firm a way out with a friendly takeover.

London Weekend Television’s attempt to attract a white knight to help it ward off the unwanted takeover bid from Granada has collapsed. US West, the giant US telephone company and one of the largest cable operations in the UK, was interested in a stake of 29.9 per cent in the London ITV company – the largest amount possible without triggering a full bid.

Now that Oracle has more than 60% of PeopleSoft's outstanding shares the question is can the PeopleSoft board of directors stop the hostile takeover? The answer is they probably can with a poison pill tactic used by most companies, including Oracle, to prevent such a takeover. In PeopleSoft's case it is called a Shareholder Rights Plan and gives the board, at their discretion, the right to issue new shares of the stock. By distributing more shares and thus diluting the stock, it becomes virtually impossible for Oracle to gain a majority ownership of the outstanding shares of stock.

A golden parachute can be used as a measure to discourage an unwanted takeover attempt.

TEXTS TO TRANSLATE:

11. Olivetti on Verge of $60bn Bid for Telecom Italia

Olivetti, the Italian tele­communications group, is tomor­row set to launch a $60bn tender offer to take control of Telecom Italia, the telecommunications giant, in the largest takeover bid in Italy's corporate history.

The bid, expected to be announced at a board meeting in Milan, would mark the first attempt by a private sector company to take control of a big pre­viously state-owned company. The aim will be to secure 100 per cent of TI's share capital in a public offer. Success would be a milestone for Italian capitalism.

Olivetti's market capitalization, at about $10bn, is several times lower than that of TI. The company is expected partially to fund the offer through borrowing from a consortium of banks, expected to be in the range of $25bn to $30bn.

It is also set to announce the sale to Germany's Mannesmann of its $12bn stake in Oilman, the two companies' joint venture through which they run Omnitel and Infostrada, the mobile and fixed telephone operators.

The remaining cash is expected to be raised by selling TI assets. It is understood that there are no plans to dispose of Telecom Italia Mobile, TI's profitable mobile telephone operator.

The four banks understood to be financing the $30bn loan are Chase Manhattan, Donaldson Lufkin & Jenrette, Mediobanca and Lehman Brothers.

Some telecoms analysts said it was hard to see what added value Olivetti's management would bring to a company the size of TI. Nevertheless, Olivetti shares rose nearly 8 per cent in trading on the Milan bourse on speculation about the bid. TI shares rose 2 per cent.

Only two years ago Olivetti was close to bankruptcy. It has been in behind-the-scenes talks with the Italian government about the planned bid, which could raise political concerns in a country that has never seen a corporate takeover on this scale.

TI is run by a small nucleus of strategic shareholders that owns 6.96 per cent of the stock. The Italian Treasury has a "golden" share of 3.4 per cent but is expec­ted next week to announce the name of an investment bank that will advise on the sale.

There were suggestions last night that ministers would view an Olivetti bid favourably as a means of avoiding a takeover from outside Italy.

"The Treasury's view on an Olivetti bid is pretty neutral," said a person close to ministers. "There are also a number of min­isters in the cabinet who view the bid with favour." Many telecoms analysts regard TI as an undervalued company that has suffered from confused management. But Franco Bernabe, appointed chief executive in December, has a reputation as a turnaround manager and TI's share price has performed strongly since his appointment.

Nevertheless, people close to Olivetti said TI was still ham­pered by differences between its core shareholders.

VOCABULARY:

be on the verge of (doing smth) – собираться, намереваться сделать что-л

Syn.: be set to do smth; be on the brink of (doing smth); be about to do smth

public offer (= public offering) - публичное предложение (ценных бумаг), открытое размещение; предложение ценных бумаг широкому кругу инвесторов

market capitalization - рыночная капитализация: общая стоимость всех выпущенных в обращение акций компании, т. е. произведение рыночной стоимости одной акции на число акций в обращении

value added – добавленная стоимость: разница между продажами компании за определенный период и издержками на материалы, компоненты, услуги

bourse - франц. фондовая биржа ( в каком-л. европейском центре, кроме Лондона )

confused management – некомпетентное руководство

turnaround manager – антикризисный управляющий