The news at a glance
Google: Back in business in China; Takeovers: BP seeking new infusions of cash; Insurance: AON buys benefits; Banking: BofA admits to ‘window-dressing’ consultant; Drugs: Layoffs at Merck follow a merger
Google: Back in business in ChinaChina has renewed Google’s license to do business there, ending a standoff that began in January “with Google’s unprecedented rebuke of China’s Internet censorship rules,” said David Barboza and Miguel Helft in The New York Times. With its new license, Google will continue to do what it has done since January, referring search requests from Chinese users to its uncensored search site in Hong Kong. But those requests will no longer be automatically redirected to Hong Kong; users will have to manually click on a link to the uncensored site, and may be unable to open search links that the government deems objectionable. That extra click is likely to reduce Google’s China search business.
The extra click “seems to have satisfied the Chinese authorities—and saved them some face,” said Ryan Singel in Wired. But the whole arrangement is a “fiction.” China can claim that Google bowed to its Internet-filtering demands, even though its citizens can gain access to unfiltered search results with one click. And Google can claim it resisted Chinese censorship, when it really just created an end-run around it.
Takeovers: BP seeking new infusions of cashTrading in BP shares surged this week amid mounting speculation that the beleaguered oil giant could be the object of a takeover bid, said Steve Goldstein in Marketwatch.com. The London Times reported over the weekend that ExxonMobil has sounded out federal regulators about mounting a takeover attempt of BP, and Chevron is also said to be eyeing the company. BP will only confirm that it is in talks to sell a $10 billion stake in its Alaska operations to Apache Corp., a Houston-based exploration and production company. That cash would help BP pay the mounting costs of cleaning up the massive oil spill in the Gulf, and thus stabilize the company’s stock price. Insurance: AON buys benefits consultantAON, the world’s biggest insurance broker, will buy Hewitt Associates for $4.9 billion “to expand its division advising companies on employee pay and benefits,” said Kevin Crowley and Andrew Frye in Bloomberg.com. Hewitt provides payroll and consulting services for about 3,000 corporate clients, and could see business spike because of employer uncertainty over the new health-insurance law.
Banking: BofA admits to ‘window-dressing’Bank of America has admitted to federal regulators that it made six transactions over three years “that incorrectly hid from view billions of dollars of debt,” said Michael Rapoport in The Wall Street Journal. The six transactions were repurchase agreements, or “repos,” a common Wall Street financing technique by which one firm swaps its securities for another firm’s cash, with a promise to repurchase the securities at a fixed price at a later date. BofA wrongly classified some repos as sales rather than borrowing, thus hiding its total indebtedness. It claims the misclassification was unintentional.
Drugs: Layoffs at Merck follow a merger Merck plans to lay off about 15,000 workers over the next two years and shutter 16 facilities worldwide to lower costs in the wake of its merger last year with Schering-Plough, said Natasha Singer in The New York Times. Merck estimates the cuts, including the closure of eight research labs and eight factories, will save the combined company $2.7 billion to $3.1 billion in costs in 2012. Drug companies have cut close to 100,000 jobs in the past two years, following a spate of mergers.