In Business This Week: HEADLINER
JOHN STAFFORD: AMERICAN HOME STILL WANTS TO COHABIT
That's strike two for American Home Products Chairman John Stafford. On Oct. 13, American Home and Monsanto called off their planned $35 billion merger. The move comes less than a year after AHP's deal fell apart with SmithKline Beecham. In a terse joint statement, AHP and Monsanto said the deal was "not in the best interest of their respective stockholders."
Contrasting styles probably played a role as well. Stafford, 60, exercises tight financial controls while Monsanto Chairman Robert Shapiro has been spending big to build up the company's biotech agriculture and pharmaceutical businesses. "Monsanto and American Home are [at] opposite ends of the spectrum," says J.P. Morgan Securities analyst Carl Seiden.
Will Stafford try again? There's talk in the industry that SmithKline chief Jan Leschly may be preparing to exit, which could lead to new talks between SmithKline and AHP. A SmithKline spokesman says Leschly has no plans to resign. But others are also looking for deals. DuPont, for one, wants to build up its pharmaceuticals business.EDITED BY KELLEY HOLLANDReturn to top
BANKAMERICA GETS BURNED
NATIONSBANK AND BANK-AMERICA had months to scrutinize each other while their merger was pending, but BankAmerica still had some surprises on its books. On Oct. 14, just two weeks after the merger closed, Bank-America said it would charge off $372 million in the third quarter to cover an old BofA investment in D.E. Shaw, a New York trading and investment firm. That, and losses in emerging markets, pushed down profits from operations by 50%, to $893 million. Even after the charge, BankAmerica says it has a $1 billion investment in Shaw and another $400 million in hedge-fund exposure. What's more, the bank says it will "restructure" its relationship with Shaw by buying $20 billion in fixed-income securities--and "related hedge positions"--from its partner. Says a BofA spokesman, "We are still very enthusiastic about the potential for the franchise."EDITED BY KELLEY HOLLANDReturn to top
BELL ATLANTIC'S PACIFIC EXPOSURE
RING-RING: ASIA MELTDOWN CALLING. On Oct. 13, Bell Atlantic surprised Wall Street by revealing the depth of its exposure to problems in Asia. The Baby Bell, which serves New England and mid-Atlantic states, had invested in Asia in the early 1990s. Now, it plans to take a $545 million charge to write down its investments in Thailand's TelecomAsia and Excelcomindo in Indonesia. Bell Atlantic will also take a $500 million charge for an early retirement program. The charges will likely eliminate earnings for the third quarter.EDITED BY KELLEY HOLLANDReturn to top
A PARTIAL VICTORY FOR SEA TURTLES
THE WORLD TRADE ORGANIZATION ruled on Oct. 13 against a U.S. import ban on shrimp caught in nets that also ensnare endangered sea turtles. But the case will not stop the U.S. or others from trying to enforce such environmental rules. Indeed, the WTO panel which went against the U.S. on technical issues, upheld the right of countries to waive WTO rules to protect health, safety, or the environment. Now, the U.S. can rewrite the rule, negotiate with plaintiffs, or pay compensation.EDITED BY KELLEY HOLLANDReturn to top