Welcome to ESL Business News for April 9, 2007. ESL Business News gives you a podcast and script of international business news every week in slow, clear English. Find us on the web at eslbusinessnews.com, where you can follow along with the podcast script as you listen.
After ten months of negotiations, the United States and South Korea have agreed to a new free trade deal, the biggest the US has signed since the North American Free Trade Agreement in 1993. Both sides agreed to reduce barriers to each other's auto industries. The US also wanted greater access to the South Korean financial services industry. The two countries currently do about $75 billion of business a year, and the new agreement could add $20 billion to the flow of commerce between the two countries. As US representatives negotiated for greater access for their farmers and beef ranchers to the South Korean market, large protests in South Korea revealed fears there that cheaper US food would hurt their farming industry.
Two North American mobile phone companies are trying to buy a controlling interest in Telecom Italia, Italy's largest telephone company, but there are complications. US company AT&T and Mexico's America Móvil have made a combined offer of €4.5 billion for a third of Olimpia, a holding company that owns 18% of Telecom Italia. Italian tire company Pirelli has been trying to sell their 80% stake in Olimpia because it has lost half its value since they acquired it in 2001. Italian politicians are opposed to foreign control of the phone company. After AT&T and America Móvil made their bid, Telecom Italia chairman Guido Rossi resigned his position; despite his reputation as a turnaround specialist, he could not come to an agreement with Pirelli chairman Marco Tronchetti Provera on the best financial strategy for the company.
German utility company E.ON has given up on their attempt to buy Spanish electric company Endesa. Spanish energy company Acciona and Italian energy company Enel had announced plans to bid together on enough Endesa shares to give them more than 50% of the company, so E.ON gave up on the condition that Acciona and Enel would sell them €10 billion worth of Endesa assets if they do gain control of the company. E.ON has been trying to buy Endesa for 18 months, and the Spanish government's attempts to block them caused political friction with Berlin and with European Union regulators. Debates about the legality of the Acciona-Enel offer led to the resignation of Manuel Conthe, Spain's top stock market regulator.
Kirk Kerkorian, who first became famous building Las Vegas casinos and later owned 9.9% of General Motors, has made a $4.5 billion bid to buy auto company Chrysler from DaimlerChrysler. Through his company Tracinda (named for his daughters Tracy and Linda), Kerkorian has offered a $100 million deposit if the auto company can work out a good contract with the United Auto Workers union. A Tracinda representative also said that they would offer the UAW a chance to buy into the company. Tracinda has tried to buy Chrysler before, losing to German company Daimler-Benz in 1998. According to rumors, two private equity groups and Canadian car parts group Magna International have also made recent bids for Chrysler.
Computer company Apple Inc. had claimed that it was the record companies decision, not theirs, to offer music on their iTunes service that could only be played on their iPod player. Apple and the EMI music company have just announced that songs from EMI artists will now be available in higher quality audio and without copy protection for thirty cents more than the 99 cents that each song currently costs. Meanwhile, the European Commission has opened an antitrust investigation into iTunes for only allowing customers to buy music from an iTunes store in the country where they live. According to the commission, "Consumers are thus restricted in their choice of where to buy music and consequently what music is available, and at what price."
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