In Business This Week: Headliner
Sanjay Kumar: Computer Associates' Deal Driver
Andrew Filipowski, CEO of Platinum Technology, once vowed he would never sell the software maker to sometime rival Computer Associates International. But that resolve melted away on Mar. 22 when he had dinner with CA President Sanjay Kumar.
Over pasta e fagioli at Paul's Italian Restaurant in Filipowski's hometown of Winston-Salem, N.C., Kumar explained why industry consolidation made it imperative that the two companies merge. Then he named a price Filipowski couldn't refuse. A week later, they announced a $3.5 billion deal--the largest in software history. "Flip and I were able to...set aside the competitive rhetoric we've thrown around," says Kumar.
Over the past 12 years, Kumar has helped engineer deals that have built CA into a $6 billion enterprise. Says Alec Ellison, a managing director at banker Broadview International: "Sanjay's great at waiting until the price is right." Kumar aims to cut costs and boost operating earnings by $700 million in the first 12 months after the deal.By Steve HammReturn to top
Comeback for Long-Term Capital?
FINALLY, THE BACKERS OF LONG-TERM CAPITAL MANAGEMENT HAVE GOTTEN SOME GOOD NEWS. The consortium of 14 banks and brokers that bailed out the Greenwich (Conn.) hedge fund last September by ponying up a total of $3.6 billion should be getting their money back sooner rather than later. On Mar. 30, LTCM announced that it posted 20% returns in the past six months and reduced its risk by 50%. If the markets stay strong, LTCM's backers-- including Chase Manhattan, Merrill Lynch, and Deutsche Bank--may get to see at least some of their $100 million to $300 million individual commitments returned to them well before the three-year terms of their loans. "This is very good news for everyone," says Richard Torrenzano, a spokesman for the consortium.EDITED BY KELLEY HOLLANDReturn to top
Price Hikes = Less Fizz for Coke
LAST YEAR, COCA-COLA FELT AN EARNINGS SQUEEZE as business in key overseas markets was hammered by the global economic crisis. And now, its bedrock North American business has gone flat, too. On Mar. 30, the Atlanta-based soda giant revealed that it expects case sales to fall 1% to 2% in the first quarter--a sharp downswing from the 1% to 2% rise that Wall Street was expecting. Most troubling to analysts is that Coke's total North American volume is now expected to rise only 2%--half what Wall Street was banking on. Coke officials attribute the slowdown to its efforts to push through its first price hike in five years--hikes that PepsiCo didn't match in many markets.EDITED BY KELLEY HOLLANDReturn to top
A Minivan Marriage Is on the Rocks
THE UNION OF RENAULT AND NISSAN APPEARS TO BE ENDING THE MINIVAN MARRIAGE between Ford and Nissan, which have co-produced the Nissan Quest and the Mercury Villager since 1992. Sources at both companies say their minivan strategies are parting ways. And Nissan President Yoshikazu Hanawa told Wall Street analysts on Mar. 29 that by 2004, he plans to end his relationship with Ford, according to the newspaper Nihon Keizai. Nissan wants to develop minivans with Renault, while Ford wants to engineer its own minivan for Mercury and may build a small minivan derived from its new Focus small car, sources say.EDITED BY KELLEY HOLLANDReturn to top