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Porsche Raises Stake in VW, Forcing a Takeover Offer
World Business News | 2007/03/25 09:34

The German sports-car maker Porsche said Saturday that it would make a takeover bid for Volkswagen, a symbolically audacious but largely legal step in its growing control over VW, Europe"s largest carmaker and the inventor of the once-ubiquitous Beetle.

Porsche plans to lift its stake in Volkswagen to 31 percent from 27.3 percent. Under German law, it is required to make an offer for the entire company once it owns more than 30 percent of the shares.

The offer of 100.92 euros ($134.40) a share is the minimum amount Porsche can legally offer other shareholders and is well below Volkswagen"s most recent closing price of 117.70 euros. A Porsche spokesman said it was not seeking to acquire a majority stake in Volkswagen any time soon.

"We expect very few, if any, shareholders to sell us their shares at this price," the spokesman, Michael Baumann, said. "This gives us the freedom to move further without taking other special steps."

The move confirms, however, that Porsche is determined to tighten its grip on Volkswagen, with which it has deep historical links. The two companies cooperate in manufacturing sport utility vehicles, and two of Porsche"s most senior executives serve on Volkswagen"s board.

In a statement, Volkswagen"s chief executive, Martin Winterkorn, said he welcomed Porsche"s increased stake.

Analysts said Porsche was forced to cross this threshold sooner than it might have wished because of the recent rally in Volkswagen"s share price. Many analysts had expected it to wait until a European court issued a ruling on a German law that protects Volkswagen from hostile takeover bids.

The court is expected to strike down the law, which places a cap on the voting rights of shareholders at 20 percent, regardless of how many shares they own. If it does not, Porsche could find itself holding a large stake in Volkswagen without commensurate voting power.

"It"s clearly a high-risk approach, because Porsche doesn"t know exactly what is going to happen at the court," said Ferdinand Dudenhöffer, the director of the Center for Automotive Research in Gelsenkirchen.

Shares of Volkswagen have risen 37 percent this year, largely on speculation about Porsche"s intentions.

Porsche first acquired shares in Volkswagen in September 2005, saying it wanted to protect the independence of its partner. It has steadily increased its stake, occasionally ruffling Volkswagen"s other major shareholder, the state of Lower Saxony, which owns 20.5 percent.

The links between the two companies are longstanding, complex and personal. Ferdinand Porsche, the patriarch of the Porsche family, designed the Volkswagen Beetle at the behest of Hitler.

The chairman of Volkswagen"s supervisory board, Ferdinand K. Piëch, is a member of the Porsche family, which still controls the sports-car company. He was once chief executive of Volkswagen, and continues to exert influence over its day-to-day affairs.

Analysts regard Porsche"s growing stake in Volkswagen as a way for Mr. Piëch, an automotive engineer and billionaire industrialist, to reassemble the pieces of his grandfather"s empire.

If all of Volkswagen"s shareholders were to accept Porsche"s offer, Mr. Baumann said, the deal would be valued at about 35 billion euros ($46.6 billion). Porsche has lined up financing for that, though he made it clear that the carmaker does not intend to raise the offer beyond the current discounted level.

Porsche"s investment in Volkswagen has already shaken up the larger company. Last fall, Volkswagen dismissed its chief executive, Bernd Pischetsrieder, and replaced him with Mr. Winterkorn, a protégé of Mr. Piëch, who ran the company"s luxury car division, Audi.

Soon afterward, Volkswagen"s No. 2 executive, Wolfgang Bernhard, resigned. Mr. Bernhard, a former chief operating officer at Chrysler, had pushed a stringent cost-cutting program.

Since then, analysts say, Volkswagen has shifted its emphasis to high-quality engineering and design. These are hallmarks of Porsche, and of Mr. Piëch, when he was chief executive of VW.

"In the long-term, we"ll have to see how competitive Volkswagen will be in the market," Mr. Dudenhöffer said. "The risk is Piëch wants to do everything. He wants to buy control, and he"s reversing Volkswagen"s strategy."



Colombia ex-intelligence chief released on technicality
International | 2007/03/25 03:33

Colombian appellate judge Leonor Perdomo ordered the release of ex-intelligence chief Jorge Noguera Friday on the grounds that Noguera was "illegally and unconstitutionally being deprived of his freedom" because chief prosecutor Mario Iguaran had not personally issued an arrest request. Perdomo ruled that Iguaran has to personally request ex-intelligence chief's detention because Noguera was a public servant when the crimes were alleged to have been committed. Noguera, who was arrested on Thursday, is accused of murder and conspiracy for allegedly contracting with illegal paramilitary groups to assassinate political opponents. Iguaran disagreed with the ruling, stating that "think Colombia or the international community can tolerate the message that conspiring with criminals has any relation to one's functions as a public servant."

Noguera, who ran the Colombian Department of Administrative Security resigned in October 2005 after he was tape-recorded while discussing plans to sell intelligence to paramilitary groups. Several of the people on Noguera's hit list were later killed, including university professor Alfredo Correa de Andreis, who was investigating the paramilitary groups at the time of his death in 2004.



Quake in central Japan kills one and hurts over 170
International | 2007/03/24 19:29

A powerful quake tore into a rural area of coastal central Japan on Sunday, killing at least one person as it toppled aging farmhouses and temples, set off landslides and caused a small tsunami. Some 160 people were injured.

The magnitude 6.9 quake struck at 9:42 a.m. (0042 GMT) off the Noto Peninsula on the Sea of Japan coast. The Meteorological Agency issued a tsunami warning urging an evacuation, but the alert was lifted after a 10-centimeter (6-inch) wave hit the shore, causing no damage.

The temblor was a shock to the region, which had not seen a major quake since 1933.

"The shaking was so violent, I freaked out. All I could do was to duck underneath the desk," said Yukiko Taka, 58, the owner of a traditional lacquerware shop in Wajima, the hardest hit town in Ishikawa prefecture (state). "It was so frightening."

Weaker quakes rattled the region through the day, including a magnitude 5.3 aftershock. No additional damage was reported.

The initial quake knocked down buildings, caused landslides, and cut power, water and transportation lines. The Noto airport was closed, and roads were snarled with residents leaving or concerned Japanese rushing to the area to see relatives.

A 52-year-old woman was crushed to death by a falling stone lantern, officials said, and at least 162 other people were injured, most of them hurt when they fell during the shaking or were hit by falling objects and broken glass.

Local authorities said they were thankful the death toll was so low.

"Perhaps our traditional homes were sturdy enough to survive the quake," said Masayuki Murozuka, an Ishikawa official. "I think it was also fortunate that the quake hit in midmorning so most people were fully awake, perhaps even finished breakfast by then."

Television footage of the quake showed buildings shaking violently for about 30 seconds. After the quake, buildings lay in heaps of rubble, and the windows of shops were shattered. Roof tiles cluttered streets with cracked pavement.

Fear of aftershocks and more landslides caused by the loosening of soil waterlogged by overnight rains continued to plague the quake zone -- and keep residents jittery.

"A fairly big aftershock hit just minutes ago and I jumped out the door," said Tomio Maeda, manager of convenience store Family Mart in Anamizu town. "It's scary, I guess it's not over yet."

In Tokyo, Chief Cabinet Secretary Yasuhisa Shiozaki said officials were doing their best to rescue victims and assess the extent of the damage.

About 30 soldiers had arrived to help with disaster relief, and military aircraft were examining the damage. Some 375 firefighters from seven other prefectures were also dispatched to help, the Fire and Disaster Management Agency said.

The quake also knocked down at least 45 homes in Ishikawa, and partially destroyed another 227, the FDMA said. Most of the injuries and damage were concentrated in Wajima, about 312 kilometers (193 miles) northwest of Tokyo.



Rat poison discovered in samples of pet food
Breaking Legal News | 2007/03/24 11:49

Investigators have found rat poison in the pet food suspected of killing 15 cats and two dogs, but they can't explain how it got there. Meanwhile, veterinarians and federal regulators predicted that many more pet deaths and illnesses will be linked to the 95 brands of wet pet food voluntarily recalled March 10 by its manufacturer.

"I think we're going to see hundreds if not thousands of cases," said Brad Smith, director of the veterinary teaching hospital at UC Davis. "It's going to take some time to sort this out."

Menu Foods, the Canadian-owned pet food maker, expanded its recall Friday to all cans and pouches of the recalled brands of "cuts and gravy" foods regardless of when they were manufactured. The first recall was limited to pet foods made after Dec. 3.

The discovery of rat poison in pet food was announced Friday by New York state food safety experts who analyzed samples of the commercial pet food provided by the manufacturer.

The substance, aminopterin, is not licensed for use as a rat poison in the United States, but it is used for that purpose in other counties.

The drug is used in cancer research, and it formerly was used to induce abortions in the United States, scientists said.



Bush to veto vote for withdrawal from Iraq
Political and Legal | 2007/03/24 11:48

President Bush accused the Democratic-led Congress of wasting taxpayers‘ time picking fights with the White House instead of resolving disputes over money for U.S. troops and the firings of the U.S. attorneys. He urged them to accept his offer to allow lawmakers to interview his advisers about the dismissal of eight federal prosecutors — but not under oath — and provide documents detailing communications they had about the firings with outside parties.

"Members of Congress now face a choice: whether they will waste time and provoke an unnecessary confrontation, or whether they will join us in working to do the people‘s business," Bush said. "We have many important issues before us. So we need to put partisan politics aside and come together to enact important legislation for the American people."

Democrats said it was time to heed the mandate of their election sweep last November, which gave them control of Congress. Passage marked their most brazen challenge yet to Bush on a war that has killed more than 3,200 troops and lost favor with the American public.

"By choosing to make a political statement and passing a bill they know will never become law, the Democrats in Congress have only delayed the delivery of the vital funds and resources our troops need," Bush said. "The clock is running. The Secretary of Defense has warned that if Congress does not approve the emergency funding for our troops by April 15, our men and women in uniform will face significant disruptions — and so will their families."

Bush said that to get the votes needed to pass the bill, House Democrats included billions of dollars in domestic and pork barrel spending for local congressional districts, including $74 million for peanut storage and $25 million for spinach growers, that has nothing to do with the war.



EU parliament to consider criminalizing IP infringement
Intellectual Property | 2007/03/24 10:46

The European Parliament Legal Affairs Committee Thursday adopted a report on draft legislation designed to curtail increases in design piracy by imposing criminal penalties on commercial-scale IP infringement. The committee cited alleged links between pirated goods and organized crime to justify penalties which include fines of up to €300,000 ($400,000 US) and up to 4 years imprisonment. The committee struggled with the resolution for years trying to determine its scope before settling on only punishing commercial infringers; previous versions of the legislation included criminalization of personal and non-profit infringement. The draft legislation will now be considered at a European Parliament plenary in April.

The criminal penalties instituted by the legislation are made possible by a landmark European Court of Justice ruling which established that the EU has the right to lay down criminal penalties in the individual member states. The legislation has sparked an outcry in the IT industry, because the draft includes an "aiding and abetting" clause that imposes harsh penalties if infringed material is found anywhere on an IT network. Simultaneously, music industry insiders are concerned that the law might not go far enough in punishing personal infringement and basically legalizes file sharing.



Judge issues permanent injunction against Vonage
Venture Business News | 2007/03/24 10:43

A federal judge on Friday issued a permanent injunction against Internet phone carrier Vonage (VG) for use of rival Verizon Communications' (VZ) patents.

Judge Claude Hilton said an injunction, which followed a jury decision that Vonage had infringed on three Verizon patents, is required because simply providing monetary damages "does not prevent continued erosion of the client base of the plaintiff."

Hilton said he will not enter the injunction for another two weeks while he considers Vonage's request to stay the injunction. Vonage is requesting a stay of either 120 days or until its appeal is heard.

But Verizon lawyer Dan Webb said any of Vonage's business difficulties should not be a factor in determining a stay. Webb said a stay will cause irreparable damage to Verizon because Vonage will continue to lock up the marketplace of Voice over Internet Protocol, or VoIP.

Webb said New York-based Verizon has already lost hundreds of thousands of customers to its competitor. Webb said Vonage officials have spent $425 million advertising their product "so they can lock up this emerging market and we can't get a toehold in it."



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