Business News

In Business news this week: Czech investment firm PPF enters a major new joint-venture with the Generali insurance firm, Billa is to take over the Czech Republic's Delvita supermarkets in June, a new bill to regulate relations between supermarket chains and suppliers has failed to get past its first reading in parliament, and the Czech National Bank raises its economic-growth forecast.

Joint venture announced between Generali and PPF.

Italy's largest insurer has announced that it is going to take a majority stake in a joint-venture with the PPF investment group, owned by the Czech Republic's richest man Petr Kellner. Under the deal, Generali will pay 30 billion Czech crowns or roughly 1.4 billion US dollars for a 51-percent stake in a venture with PPF, which owns leading Czech insurer Ceska Pojistovna. The Czech firm will hold the remaining 49-percent. The new entity will control Ceska Pojistovna as well as Generali's assets in the central European region. The deal values Ceska Pojistovna at over a hundred billion Czech crowns or 4.8 billion dollars while Generali's assets are calculated to be 42 billion Czech crowns. The new group will have 9 million customers and is set to become the leading insurer in central and eastern Europe.

Billa to take over Delvita supermarkets in June

It was announced on Thursday that the Billa supermarket chain is to take over the Czech outlets of rival Belgian retailer Delvita at the beginning of June. Billa, owned by the German REWE-group is to pay 2.8 billion Czech crowns or 135 million US dollars for 97 Delvita supermarkets around the Czech Republic. Billa already operates 83 outlets in the country. Delvita is the fourth retail chain to leave the Czech market in the last two years. Previously, Julius Meinl, Edeka and Carrefour all decided to leave the country, where competition for retails chains is becoming increasingly tough.

Bill regulating relationship between retail chains and suppliers blocked by Parliament

A proposed new bill aiming to regulate the relationship between retail chains and their suppliers was rejected by MPs on Friday at its first reading in parliament. The proposed law sought to prevent supermarkets with a dominant position in their sector from abusing their economic power by imposing unduly tough conditions on suppliers in return for stocking their goods. Most MPs in the Civic-Democrat-led coalition government voted against the proposal. Nevertheless, Civic Democrat minister for agriculture Petr Gandalovic said that the government was aware that something needed to be done to regulate relations between large supermarkets and their suppliers. Many MPs said the law contained a number of legislative errors. It has now been sent back to its proponents for redrafting. Earlier this week a purchasing manager in the Tesco supermarket chain was charged by anti-corruption police with demanding a bribe of 1.6 million crowns or roughly 75,000 USD from an entrepreneur seeking a supply contract with Tesco.

Czech National Bank raises economic-growth estimates

The Czech National Bank has raised economic growth forecast for the coming year. The bank expects GDP to rise in 2007 by 4.9 to 6.5.percent, up roughly half a percentage point on its previous estimates. Besides any unforeseen economic developments at home and abroad, the bank says the biggest threats to this forecast are fluctuations in the crown's exchange rate with the euro and the government's planned reform of public finances. The governor of the Czech National Bank Zdenek Tuma said it was still impossible to evaluate the effect of the reforms because it was unclear what precise form they would take until they had been passed by parliament. The Czech Chamber of Deputies is due to discuss public-finance reform in August or September.