TOP STORIES -- Dec. 12-17
Unocal to Settle Human Rights Lawsuits
Unocal Corp. said it would settle landmark human rights lawsuits brought by 15 villagers from Myanmar who claimed it was responsible for forced labor, rapes and a murder allegedly committed by soldiers along the route of a natural gas pipeline in the Southeast Asian nation.
Terms of the deal are being negotiated, and neither Unocal nor lawyers representing plaintiffs would disclose details. In a statement, the two sides said the El Segundo-based energy company would pay plaintiffs an unspecified amount of money and fund programs to improve living conditions for people from the region surrounding the $1.2-billion pipeline and “who may have suffered hardships.”
The U.S. 9th Circuit Court of Appeals had been scheduled to hear arguments Monday on whether the case should go to trial. The suits were filed in 1996.
Unocal had said it shouldn’t be held liable for alleged abuses by soldiers assigned to guard the pipeline.
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Celebrex Is Said to Raise Risk of Heart Attack
The Food and Drug Administration warned physicians to begin looking for alternatives to the popular arthritis drug Celebrex because of new evidence that it doubles the chances of heart attacks and strokes. The same problem led to the removal of Vioxx, a similar drug, from the market in October.
The federal agency also said it might soon take other actions on Celebrex, including requiring stronger warnings and even withdrawing it from the market.
The FDA warning came hours after drug maker Pfizer Inc. announced that a study of Celebrex’s efficacy as a cancer treatment found evidence of increased cardiovascular risk.
But Pfizer said the cancer study was out of step with other evidence that Celebrex is safe.
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Oracle Wins Battle in Bid for PeopleSoft
The board of PeopleSoft Inc. agreed to sell the company to Oracle Corp. for $10.3 billion, capping a bitter 18-month fight.
The agreement was reached during the first direct negotiations between Oracle and PeopleSoft. The talks convened after PeopleSoft asked Oracle to raise its previous “best and final offer” by $2.50 a share to $26.50.
PeopleSoft’s concession heads off a court fight over its anti-takeover provisions.
After the purchase closes next month, database maker Oracle will become one of the largest producers of the software that powers back-office functions for large corporations, allowing it to compete against market leader SAP.
Oracle executives said they might cut $150 million or more of PeopleSoft’s annual research and development budget. Marketing and administration also would take substantial hits.
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Global Crossing Founder Will Avoid Charges
Global Crossing Ltd. founder Gary Winnick will be absolved by federal regulators for his role at the company that made him one of the richest men in Los Angeles -- and one of the most vilified executives in corporate America.
An attorney for the Beverly Hills financier said the Securities and Exchange Commission would not file charges against Winnick after a three-year investigation into the telecommunications provider’s accounting practices. Winnick was chairman of the company when it made controversial deals with other telecom providers in an effort to boost sales figures.
Winnick, who is running a private investment firm, declined to comment.
SEC Chairman William H. Donaldson joined two fellow commissioners in overruling the agency’s staff and deciding not to charge Winnick, according to people familiar with the matter. The SEC declined to comment.
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Federal Reserve Raises Key Rate to 2.25%
The Federal Reserve raised its benchmark short-term interest rate to 2.25% from 2%, the fifth quarter-point increase since June.
Policymakers’ post-meeting statement indicated that they were likely to keep tightening credit in 2005 at this year’s pace.
Wall Street had been all but certain of another rate increase after recent data that have mostly pointed to a growing economy. Stocks rallied modestly Tuesday after the increase, and long-term bond yields eased.
Although job growth was disappointing last month, analysts have been impressed by retail sales gains, industrial activity and business confidence. Also, a steep drop in oil prices since late October has bolstered optimism about consumer spending.
In its statement, the Fed repeated wording it used in November, saying, “Inflation and longer-term inflation expectations remain well contained.”
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Time Warner Settles AOL Fraud Charges
Time Warner Inc. agreed to pay $510 million to settle government charges of accounting fraud at its America Online unit, accused by regulators of inflating advertising revenue.
The agreement would be with the Justice Department and the Securities and Exchange Commission. It must be approved by SEC commissioners.
Under the settlement with the Justice Department, Time Warner agreed to pay $210 million and accept responsibility for the conduct of AOL executives who allegedly aided in securities fraud with some online partners.
The Justice Department said it would file a criminal complaint against the Internet unit, although it would defer prosecution while it continued an investigation.
On the SEC front, Time Warner would pay $300 million to settle a probe into AOL’s accounting of a $400-million payment received from Germany’s Bertelsmann.
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Sprint to Buy Nextel in $33.8-Billion Deal
Furthering the consolidation of the wireless industry, Sprint Corp. unveiled plans to acquire rival Nextel Communications Inc. in a cash-and-stock deal valued at $33.8 billion.
The new company -- to be called Sprint Nextel -- would have 38.5 million customers, compared with Cingular Wireless’ 47.6 million subscribers and Verizon Wireless’ 42.1 million.
For Nextel, the deal would save the company from having to spend as much as $3 billion on network upgrades so that customers could use their phones to send e-mail and other data at high speeds. Sprint and Nextel executives portrayed the deal as a merger of equals that would result in $12 billion in savings over three years.
If the transaction is approved by regulators and shareholders, the company will spin off Sprint’s local telephone business while retaining its long-distance customers.
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Governor Picks Two to Replace PUC Members
Gov. Arnold Schwarzenegger made his first appointments to the California Public Utilities Commission as the panel -- over the objections of its two departing members -- rejected a regulatory judge’s finding that Southern California Gas Co. contributed to natural-gas price spikes during the energy crisis.
Schwarzenegger nominated Silicon Valley businessman and fellow Republican Steve Poizner and San Francisco attorney Dian Grueneich, a Democrat, to the five-member PUC.
The nominees must be confirmed by the state Senate by the end of 2005. In the meantime, the two will take their seats in January, replacing Loretta M. Lynch and Carl Wood, who are seen as the commission’s chief advocates for consumer and environmental causes.
With the departure of Wood and Lynch, Schwarzenegger can expect a more friendly reception from the commission. The three other commissioners, though appointed by former Gov. Gray Davis, a Democrat, have generally backed Schwarzenegger’s energy initiatives.
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Symantec Agrees to Buy Veritas Software
Top Internet security firm Symantec Corp. said it would buy data storage company Veritas Software Corp. for $13.5 billion in stock, the second-highest price ever paid for a software maker. The deal would create the world’s fifth-largest software company.
Companies in the fragmented industry are consolidating as sales growth remains sluggish.
Symantec Chief Executive John Thompson said protecting corporate information from viruses and hackers -- his company’s forte -- was closely related to making complete backup copies of information, which is Veritas’ main business.
Veritas shareholders would get 1.12 shares of Symantec stock for each share of Veritas, leaving them with 40% of the combined company.
If shareholders of both companies approve the Symantec-Veritas deal, it could be completed by June.
For a preview of this week’s business news, please see Monday’s Business section.
