Thursday, July 12, 0730 BST
The Boot
Sore egos are departing, not rushing in to Alliance Boots. Richard Baker, its chief executive, and Scott Wheway, its health and beauty retail director, were elbowed out on Wednesday in a boardroom putsch.
More on Alliance Boots here
Stefano Pessina, the executive chairman, and Kohlberg Kravis Roberts (KKR), the American private equity firm, are now in total control after their £11.1 billion takeover.
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The Times says that Mr Baker was offered a chief executive role but decided to leave since Mr Pessina would retain executive responsibilities. Mr Wheway, seen as a “rising star” by some observers, chose to leave to seek a chief executive-level position elsewhere.
Mr Baker’s blues will be salved by £10 million, which includes £6.5 million in share options that vested when the company was taken private, as well as one year’s salary and a full bonus.
Loan rangers
Apart from the bruises, the Boots buyout is giving bankers indigestion, says The Times. The availability of “covenant-lite” loans has all but evaporated in Europe, affecting the ability of those who financed the buyout to sell on the debt.
More here
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The newspaper says that during the past two weeks covenant-lite loans - so-called for their relaxed borrowing terms - have become almost impossible to acquire for all but AAA-rated borrowers.
Separately, The Daily Telegraph says that junk bonds suffered a second day of mauling on Asian, European and US markets as investors shun risky credit.
And in the US, turmoil in the sub-prime mortgage market prompted Moody’s Investors Service to warn that it might cut its credit ratings on $5 billion of collateralised-debt obligations. The Wall Street Journal says the signal is that sub-prime fallout is rippling through financial markets.
More here
Can-do
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Alcan and Rio Tinto are in the final stages of negotiating a friendly deal worth more than $30 billion for the Canadian metals group to be taken over by its London-listed rival.
More here
The Wall Street Journal and others say that an announcement could come as early as Thursday. But discussions could still fall apart, with CVRD, the Brazilian metals group, and BHP Billiton, its Australian peer, waiting in the wings.
Alcan has been searching for a buyer since Alcoa, the US aluminium company, launched a hostile $27.5 billion bid at the start of May. Alcan has rejected Alcoa’s bid as “inadequate” and said this week that it was in “negotiations with multiple third parties”.
The Financial Times says that a potential bidding war over Alcan would be the latest and most dramatic twist in a wave of consolidation that has been sweeping the global metals and mining sector.
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The Whole truth?
John Mackey, the man who opened Britain’s biggest organic health food shop in Kensington last month, used an alias to make anonymous postings on a Yahoo! forum defending Whole Foods, the retail chain he co-founded, and criticising Wild Oats Markets, a rival he later agreed to buy.
More here
The Wall Street Journal reports that Mr Mackey, 53, who co-founded Whole Foods in 1980 as a company embodying ethical values, used the name “Rahodeb” to make numerous filings for eight years until last August.
The revelations appear in filings from the Federal Trade Commission, which is investigating Whole Foods’s $565 million takeover of Wild Oats, which was agreed this year.
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Rahodeb’s filings, on a stock market forum, included one posted in January 2005 asking: “Would Whole Foods buy OATs? Almost surely not at current prices. What would they gain?”
Trading blows
The London Stock Exchange’s plan to merge with Italy’s bourse suffered a serious setback when the LSE’s biggest shareholder, Nasdaq, blocked its attempt to win approval for a massive share issue to fund the deal, says The Daily Telegraph.
More on LSE here
The US exchange has never publicly aired its views on the proposed €1.6 billion acquisition of Borsa Italiana and Nasdaq is thought to retain an open mind.
Nasdaq said on Wednesday that it would not be “responsible to give management the ability to write a blank cheque without a better understanding of the benefits to be gained from the issuance of new shares”.
But the FT says that the vote appears to be part of manoeuvring by the company - which failed in a hostile bid for LSE last year - to edge itself into talks with the LSE’s management. Bob Greifeld, Nasdaq’s chief executive, has formally requested a meeting with Clara Furse, his LSE counterpart, to discuss the merits of the Borsa transaction.
End of the load
Twice a day the “Chatham Van” leaves Lloyd’s of London laden with four tonnes of claims-related paperwork for processing. But its chief executive says that the Van will make its last journey next year as the oldest, and largest, insurance market struggles to modernise.
More here
Richard Ward, the chief executive, has threatened to force Lloyd’s underwriters to handle every part of an insurance claim electronically unless their adoption of modern processes is improved.
He says that failure to make headway would represent a “significant risk” to the market’s efficiency.
Mr Ward insists that he will meet his target of moving the market all-electronic by Christmas, with persistent Luddites forced to set aside more capital to cover their risks.
Sally’s dally
It was the most expensive press release Sallie Mae, the US student loan giant, will ever make: more than a $100 million a word as its shares tanked in response to an extraordinary statement, says the Financial Times.
More here
The student loan provider felt it had to tell the world that its prospective buyers - the private equity firm JC Flowers, Bank of America and JPMorgan Chase - might pull out because of legislative proposals that could cut subsidies to lenders.
But the FT’s Lex column says that the whole episode is extremely odd from start to finish. Why scare the horses with a statement that does not appear to add much to the sum of human knowledge?
The $25 billion acquisition contained a clause allowing the bidders to walk away if the final legislative outcome turned out to be worse than the scenarios Sallie Mae had disclosed in previous filings. Curiouser and curiouser.
MARKETS
FTSE 100 (Wednesday close): down 15.80, or 0.2%, at 6,615.10
Dow (close): up 76.17, or 0.6%, at 13,577.87
S&P 500 (close): up 8.64, or 0.6%, at 1,518.76
Nasdaq (close): up 12.63, or 0.5%, at 2,651.79
Nikkei (latest): up 64.93, or 0.4%, at 18,114.44
Hang Seng (latest): up 283.87, or 1.3%, at 22,890.89
Sterling (latest): $2.0314
Oil (latest): West Texas crude up 6 cents at $72.62
Gold (latest): up 90 cents at $663.00
NEW YORK
Wall Street rebounded from Tuesday’s steep fall as the market regained optimism over corporate profits.
More on US markets here
Shares of Yum Brands, the owner of KFC and Pizza Hut, rose more than 5 per cent after the fast-food company reported higher quarterly earnings and raised its profit forecast for the year.
Energy companies were among the top gainers in the S&P 500 index, with Exxon Mobil, the biggest oil company, leading the advance after Lehman Brothers increased its share price target.
The Dow Jones industrial average rose 0.56 per cent, the broad-based S&P 500 gained 0.57 per cent and the technology-laden Nasdaq increased 0.48 per cent.
ASIA
Leading companies advanced, driving benchmarks in South Korea and Hong Kong to records, on takeover speculation in the metals industry and higher commodity prices.
More on Asian markets here
Rio Tinto, the No 3 miner, rose to a new high on reports that it is in the final stages of negotiating a deal with Alcan.
Samsung Electronics led gains in South Korea after an interest rate increase reinforced confidence in the nation’s economic recovery. China Mobile rose in Hong Kong after Citigroup recommended that investors buy the stock.
The Morgan Stanley Capital International Asia-Pacific Index and Japan’s Nikkei were both up 0.4 per cent in intraday trading. All regional benchmarks were ahead.
Paul Larter
paul.larter@thetimes.co.uk
AGENDA
Kensington Group
Xploite
FINALS
Capital Pub Company
Chapelthorpe
Forest Support Services
Scott Wilson Group
AGMs
EMAP
FirstGroup
AVEVA Group
Man Group
Mano River Resources
Pactolus
TRADING STATEMENTS
Experian
Spectris
ECONOMICS
UK RICS June house price survey (0001)
UK Q2 British Chamber of Commerce quarterly survey (0930)
Keep up with the business news and comment as it happens at www.timesonline.co.uk/business