DAVOS: Amidst Deal Making, a Minor explosion in hotel
Thu Jan 27, 2011 8:34am EST
DAVOS, Switzerland Jan 27 (Reuters) – Left-wing activists claimed responsibility for a minor explosion on Thursday at a hotel in Davos, close to where top executives and world leaders were meeting, but nobody was hurt.
Devin Wenig, CEO of Thomson Reuters’ Markets division, was in a breakfast meeting of senior executives at the hotel when the explosion happened.
“A huge boom went off. The whole ceiling lifted. Everyone was convinced it was a bomb,” he said. “It took a half hour to reassemble the meeting.”
Participants were later told that a boiler had exploded, he added. The Forum’s main programme was not disrupted.
“I can confirm that there has been an explosion in a storage room in the basement of the hotel,” Thomas Hobi, a spokesman for the local police said. “There has been minor damage but nobody was injured.”
Swiss prosecutors said they were investigating the explosion, implying that there might be a criminal motive, but they declined to give further details.
A Reuters photographer said a few police were patrolling outside the building and he could see a broken window but no other damage.
A group calling itself Revolutionary Perspective said in a statement on an activist website it had targeted the luxury Posthotel with a firebomb and said Swiss ministers and representatives of top bank UBS were staying there.
“Our fight against the dictatorship of capital is focused on the social alternative to capitalism: communism,” the group said in the statement.
A spokesman for the World Economic Forum (WEF) said police had made two bomb sweeps of the hotel after a threat posted online. The WEF said in a statement that the blast had been caused by a small firework at the back entrance of the hotel.
“The police is investigating this incident. The hotel is fully operational and accessible,” it said.
The luxury Posthotel is in the heart of Davos village, a few hundred metres (yards) from the WEF congress centre where hundreds of company heads, central bankers and politicians are meeting.
On Wednesday, Swiss police evacuated a building and removed a suspicious object in the town St. Gallen, 80 km north of Davos, after a threat from the same group, saying they wanted to target the opening of the WEF meeting. (Reporting by Silke Koltrowitz and Emma Thomasson; editing by Philippa Fletcher)
Davos Deal making Reflects “Global Economic Parody” – Power Shift to “Emerging Nations”
By Jacqueline Simmons and Serena Saitto
Jan. 26 (Bloomberg) — The balance of power among dealmakers is shifting, and this year’s World Economic Forum is proof: A record number of executives from emerging markets will attend the Alpine conference, a networking mecca for the global business elite.
About 365 corporate executives from Brazil, Russia, India, China and other emerging nations are slated to gather in Davos, Switzerland, this week. Those countries helped lead the world out of a recession and will drive growth this year, according to the International Monetary Fund, which estimates emerging markets may expand 6.5 percent in 2011, more than double the 2.5 percent rate for developed nations.
“It’s a reflection of where economic power and influence is starting to move,” said William Vereker, Nomura Holdings Inc.’s co-head of global investment banking, who is based in London.
Takeovers involving so-called BRIC countries surged almost 80 percent last year and accounted for a record 22 percent of the $2.23 trillion of global deals, according to data compiled by Bloomberg. Acquirers from BRIC nations announced $402 billion of takeovers, up 74 percent from 2009 and more than quadruple five years earlier, the data show.
Dealmaking between BRIC nations and western competitors will increase as countries such as China and India seek to secure natural resources to support their burgeoning economies, and while U.S. and European stalwarts such as Cisco Systems Inc., Procter & Gamble Co., General Electric Co. and Vivendi SA seek to tap those markets for growth.
“We are going to see a big turning point,” said Jeff Joerres, chief executive officer of Milwaukee-based Manpower Inc., the world’s second-biggest staffing firm, who is attending Davos as he weighs takeovers in India and China. “The emerging markets recovered faster out of the downturn and the western markets are relying on much of the emerging markets for their profits.”
The race is earnest. Telefonica SA last year raised its bid for Vivo Participacoes SA three times to 7.5 billion euros ($10.3 billion) to gain control of Brazil’s biggest wireless operator. PepsiCo Inc. in December agreed to buy a controlling stake in Russia’s Wimm-Bill-Dann Dairy & Juice Co. for $3.8 billion. Including debt, PepsiCo is paying 19.8 times Wimm-Bill- Dann’s earnings before interest, taxes and depreciation and amortization in the past 12 months, double the median multiple for similar deals since 2001, according to Bloomberg data.
Deals may get an additional boost as valuation gaps narrow between markets. China’s Shanghai Composite Index trades at 17.3 times earnings, the cheapest relative to the Standard & Poor’s 500 Index since November 2008, weekly data compiled by Bloomberg show. The Bombay Stock Exchange’s Sensitive Index in India is valued at 17.2 times, the least expensive since June 2010 relative to the S&P 500. Brazil’s Bovespa index trades at 13.9 times earnings and Russia’s Micex index is valued at 9.5 times, lower than the S&P 500’s ratio of 15.6, the data show.
The number of takeovers of BRIC targets jumped 66 percent last year from 2005, with more than 4,150 announced acquisitions, Bloomberg data show. The fourth quarter of 2010 was a record for deals involving BRIC nations with $156.8 billion in takeovers.
Would-be buyers should bear in mind that emerging markets still present risks, according to Nouriel Roubini, the New York University economist who predicted the 2008 global financial crisis.
“A lot of the long-term growth is already priced in countries like Brazil,” Roubini said in an interview at the World Economic Forum. Corporate governance and accounting standards still aren’t as strong as in the developed markets, he added.
Conversations at Davos this year are likely to be defined by how companies cope with the changing economic realities, said Jose Sergio Gabrielli, CEO of Petroleo Brasileiro SA, Brazil’s state-controlled oil producer and Latin America’s biggest company with a $224 billion market value. Reliance Industries Ltd. Chairman Mukesh Ambani, OAO Lukoil CEO Vagit Alekperov, and China Mobile Ltd. Chairman Wang Jianzhou are also among BRIC attendees.
“The most pressing topic will be the slowdown of the most developed countries versus the sustainable growth of the BRIC countries,” Gabrielli said.
The combined gross domestic product of the seven biggest developing economies will surpass that of the Group of Seven, the world’s largest industrialized markets, in 2032, according to a Jan. 7 PricewaterhouseCoopers LLP report. China will overtake the U.S. as the world’s largest economy that year, the report said.
Petrobras, based in Rio de Janeiro, raised about $70 billion last year in the world’s largest share sale as it seeks to double output within a decade by tapping offshore fields. The company has been in talks to buy Eni SpA’s stake in Portugal’s Galp Energia SGPS SA, a partner in deepwater exploration. The stake is valued at about 4 billion euros.
“All of the energy and natural resource companies have the tools to move forward and to look at where and how to invest,” said Arielle Malard, a Paris-based Rothschild & Cie. partner who focuses on emerging markets and first attended Davos in 1992. Companies in Brazil, Russia, India and China hold $240 million of cash on their balance sheet on average, up from $143 million at the end of 2007, the peak for M&A. That compared with $665 million for Western nations last year, Bloomberg data show.
China accounted for the most M&A volume in BRIC nations last year at $200 billion, up 33 percent from 2009, the data show. India was the fastest growing, with $72 billion of announced deals, more than triple a year earlier. Vedanta Resources Plc, the U.K. metals producer controlled by Indian billionaire Anil Agarwal, agreed to buy a majority stake in Cairn India Ltd. for $9.6 billion to gain access to the country’s biggest onshore oil field.
Emerging markets will play a major role in M&A in the next five to seven years, estimates Yury Spektorov, a partner at Bain & Co. in Moscow and member of the firm’s M&A practice. That’s why conversations at Davos will be different this year.
“Before, the discussions focused on surviving the crisis and now people are thinking about how they are going to develop and grow,” Spektorov said.
–With assistance from Michael Tsang, Shin Pei and Christine Harper in New York. Editors: Jennifer Sondag, Katherine Snyder.
To contact the reporters on this story: Jacqueline Simmons in Paris at firstname.lastname@example.org; Serena Saitto in New York at email@example.com;