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REWIND: International Business News #46

Posted on November 29th, 2012 | Author: Oren M. Chaplin


  • As part of their restructuring, four Spanish banks will soon receive a bailout payment from the European Commission (EC) totaling US $48 billion. The banks, BFA/Bankia, NCG, Catalunya Bank and Banco de Valencia, are expected to implement thousands of layoffs as part of one of the EC’s requirements for restructuring. The funds will be disbursed by the European Stability Mechanism, “a permanent international financial institution that assists in preserving the financial stability of the European Union monetary union by providing temporary stability support to euro area Member States.” The restructuring/funding initiative will lead to the  integration of Banco de Valencia into Caixabank, and a cut in the balance sheet of each of BFA/Bankia, NCG, and Catalunya Bank by more than 60 percent over the next five years. Notwithstanding this bailout, some experts posit that the Spanish banking industry will need further bailout funding in the future.
  • BP has been temporarily suspended from further federal contracting by the U.S. Environmental Protection Agency.  The move comes after the EPA expressed concern that BP exhibited a lack of business integrity after the Deepwater Horizons oil platform explosion and subsequent oil spill that led to mass-scale pollution throughout the Gulf of Mexico in 2010.  Earlier this month, BP agreed to pay US $4.5 billion in connection with a guilty plea to criminal charges that arose out of the environmental disaster. The EPA said the suspension was “standard practice when a criminal case raises responsibility questions about a company.”  Some have expressed the concern that the “suspension could threaten BP’s dominance in the Gulf of Mexico where it is one of the largest producers of oil and natural gas and … hamper BP’s ability to maintain its position as a top supplier of jet fuel and other refined products to the U.S. military.” Coupling these concerns with the fact that there does not appear to be a set timetable for when the suspension will be lifted, one might expect to see an impact on the per share price of BP stock. But, through Wednesday afternoon, the per share price did not appear to be materially affected.
  • Smith & Nephew is set to acquire substantially all of the assets of Healthpoint Biotherapeutics, a business that is involved with bioactive debridement, dermal repair and regeneration wound care treatments.  According to Smith & Nephew CEO Olivier Bohuon, the acquisition, which carries a purchase price of US $782 million, gives Smith & Nephew a “strong position in the fast growing area of bioactive wound care treatment.” “The global advanced wound care market was estimated to be $6.7 billion in 2011” and is expected to experience continued growth into the next decade.
  • John Lechleiter, who is both the Chairman of the industry group Pharmaceutical Research and Manufacturers of America (PhaRMA) and the CEO of Eli Lilly & Co., is meeting with officials of the Chinese government on behalf of the industry group. The meetings will include discussions about how to make the drug approval process in China more efficient. Currently, “China takes eight years longer on average to approve drugs than other major countries and U.S. drugmakers are looking at ways to help speed things up.”  With the “world’s fastest-growing pharmaceuticals market,” China is a target of companies like Eli Lilly for operational and research expansion. That company “itself plans to conduct simultaneous late-stage tests in China for products,” with the five year goal being the introduction of more than a dozen products, and the shorter term objective being a continuation of its recent annual trend of growth of 25% in sales in that country.