Big changes at the top.Credit…Mike Blake/Reuters
A corporate turnaround artist’s new gig
Yesterday, DealBook broke the news that Starbucks had chosen Laxman Narasimhan as its next chief executive, a hire that puts the 55-year-old in line to run the world’s largest coffee chain and a global corporate giant. With unionization drives, rising inflation and other issues to contend with, that’s a venti-size job for anyone — but who, exactly, is Narasimhan?
He’s a veteran of American and British companies. Born in Pune, India, Narasimhan studied engineering and moved to the U.S. to attend the University of Pennsylvania’s Wharton School. He then joined McKinsey & Company, becoming a senior partner, before shifting in 2012 to PepsiCo, where he oversaw operations in regions including Latin America and Europe. In 2019, he was hired to lead Reckitt Benckiser, the British conglomerate that makes Lysol disinfectant and Durex condoms.
Narasimhan was tasked with cleaning up Reckitt, which had struggled with slowing sales and an ill-fated $16.6 billion takeover of the infant products maker Mead Johnson. He quickly moved to cut costs while investing in Reckitt’s supply chains and product research. He also sold underperforming divisions, and scrapped a potential breakup of the company.
Investors and analysts praised his turnaround work. “The business is now on a fundamentally firmer footing,” Jeremy Fialko, an analyst at HSBC, wrote in a research note yesterday. Reckitt has delivered four consecutive quarters of above-expectations organic sales growth, and in July, it raised its revenue outlook for this year. (In a sign of his perceived worth, Reckitt’s shares fell over 5 percent yesterday after the company disclosed he was leaving.)
Starbucks was drawn to his broad experience across industries and international borders, as well as his knowledge of technology and supply chains. “He’s a true operator and has the DNA of an entrepreneur,” Howard Schultz, the company’s longtime leader and interim C.E.O., told DealBook.
Narasimhan will gradually take the reins at Starbucks: He’ll join the coffee chain in October as “incoming C.E.O.,” but he won’t formally lead until April. During that transition, Schultz said, Narasimhan will get “immersed” in Starbucks’s culture by traveling to stores worldwide and even working behind the counter at some locations.
That slow-roll approach appears to fit with how he took on the Reckitt job: On a McKinsey podcast in 2020, Narasimhan said of starting his new role, “I recognized I needed to be humble about it and take some time to set an agenda.”
HERE’S WHAT’S HAPPENING
Gas prices fall as a key Russian pipeline prepares to restart. Natural gas appears ready to flow again through Nord Stream 1 tomorrow, after Russia shut it down for what it said was maintenance. But European leaders said they were worried about Moscow turning off gas flows in the winter.
Lukoil’s chairman dies after falling from a hospital window. Exactly how Ravil Maganov, who oversaw Russia’s second-largest oil giant, died is unclear: The state-owned Tass news agency said it was a suicide, while associates interviewed by Reuters said that was unlikely. Other Russian executives tied to the energy industry have died under suspicious circumstances since the Ukraine invasion.
The C.D.C. signs off on new coronavirus boosters. The decision means health workers could start administering the shots — tailored to counter the Omicron variant of the coronavirus — within days. But experts disagree on how long people should wait to get one after their last booster shot.
Britain’s competition regulator puts pressure on Microsoft’s bid for Activision Blizzard. The Competition and Markets Authority said the $75 billion deal represented a potential threat to gaming rivals like Sony and could hurt other video game markets. It demanded that Microsoft address its concerns by next week or face a lengthy investigation.
The F.T.C. loses on its home turf
The F.T.C. yesterday lost its bid in the agency’s administrative court to block the takeover of Grail, a maker of a test for early-stage cancer detection, by Illumina, a gene-sequencing company, for $8 billion. Grail formed as a separate company in 2016 inside Illumina and was later spun off. Last year, Illumina closed the deal while antitrust regulators in Europe and the U.S. were still scrutinizing it.
The ruling comes after an administrative law trial last year andmembers of Congress told President Biden, health regulators and the F.T.C. that resistance to the deal was delaying Americans’ access to potentially lifesaving technology.
Vertical mergers are rarely blocked. Illumina and Grail do not compete with each other directly, but the F.T.C. last year moved to stop the deal, claiming the acquisition “would substantially lessen competition in the U.S. multi-cancer early detection” because “Illumina is a near monopolist in next-generation DNA sequencing” and Grail’s competitors rely on Illumina technology. The merger would give Illumina incentive to thwart their efforts, the agency argued. But Illumina countered that the F.T.C. was incorrectly characterizing the test market and was pitting Grail against other test manufacturers with very different products.
What does all of this mean for antitrust? The opinion is not yet public, but a lawyer who reviewed it told DealBook that it was highly specific to the facts in this case and may not hurt the Biden administration’s wider campaign to crack down on corporate consolidation. The F.T.C.’s Bureau of Competition could also appeal the administrative law judge’s decision: Holly Vedova, the bureau’s director, said that it was “reviewing the opinion and evaluating our options.”
Europe is also expanding its review of mergers. In July, the E.U.’s General Court ruled that the bloc’s antitrust commission had the authority to examine the deal even if the market concentration at issue “did not have a European dimension” because it was referred for review by a member state. It was the first decision on new standards adopted last year, potentially opening an era of more aggressive review by the bloc. Illumina is appealing the decision. Whether the new U.S. ruling could influence consideration in Europe remains to be seen, but the American and European authorities have cooperated on this case and may keep playing off each other.
Biden faces a legal fight over student loans
President Biden’s student loan forgiveness plan, which was announced last week, would cancel as much as $20,000 in debt per borrower for millions of Americans. The initiative has excited liberal Democrats, divided moderate Democrats and has been demonized as irresponsible by Republicans.
It might not happen. In the past week, financial services trade groups, private lenders, scholars and think tank experts have been trying to determine if the White House initiative is legally sound, reports The Times’s Alan Rappeport. Loan servicers are among those who would sue, legal experts say, on grounds that they could lose revenue from the executive action. Some attorneys general have hinted they are planning a legal challenge.
The administration says it’s on “very strong legal ground.” The pandemic, the administration said, gives it the power to invoke a 2003 law that allows the education secretary to “alleviate hardship” because of a national emergency.
Others say the administration’s defense is somewhere between “sloppy” and “dubious.” Tying the loan forgiveness now to the pandemic is a stretch, they say. “Blanket student loan forgiveness is undoubtedly an act of economic and political significance, and the likelihood it is upheld within the president’s authority is dubious,” said Lanae Erickson, a senior vice president for social policy, education and politics at the Third Way, a center-left policy think tank.
“When it’s at its worst, it’s like sitting on the tarmac with a jet engine in front of you. But the jet never leaves.”
— Mike Lugiewicz, who lives less than 100 yards away from a cryptocurrency mining data center in North Carolina, and is no fan of its computers’ constant noise.
If only there had been an edit button sooner …
Twitter users, many of you are about to get your wish: an edit button. It won’t necessarily mean the end of fat-finger flubs, unfortunate typos, customer-service spats gone wrong or covfefe-size head-scratchers, but it could save politicians, executives and the rest of us from serious embarrassment.
The social network said yesterday that it had started testing the correction ability internally, with the aim of gradually offering it to other users “in the coming weeks.”
Here’s how it works. Users will see a button to edit a tweet, but you’ve got to be quick on the draw: The function expires 30 minutes after the tweet is sent. “Think of it as a short period of time to do things like fix typos, add missed tags, and more,” Twitter explained in a blog post. As always, you could simply delete a regrettable missive and hope nobody caught it, much less recorded it for posterity.
Inspired by the big news, we thought it timely to share some memorable gaffes and #fails. Here are three of our favorites:
American Red Cross gets #slizzerd. In 2011, Twitter users puzzled over a late-night tweet from the nonprofit group’s account that someone named Ryan had fetched a couple of bottles of Dogfish Head beer. “When we drink we do it right #gettngslizzerd,” the tweet concluded. P.R. pros applauded what came next: The organization deleted “the rogue tweet” and then joked, “rest assured the Red Cross is sober and we’ve confiscated keys.” Impressed, Dogfish Head encouraged its followers to participate in Red Cross blood drives.
Kenneth Cole’s Arab Spring bombshell. During the pro-democracy uprising in Egypt in 2011, the fashion brand unwisely weighed in. “Millions are in uproar in #Cairo. Rumor is they heard our new spring collection is now available online,” read a tweet from its official account, linking to its online store. After an outcry, Kenneth Cole apologized, tweeting, “We weren’t intending to make light of a serious situation. We understand the sensitivity of this historic moment -KC.” (Cole himself drew criticism two years later for joking about the conflict in Syria.)
Affirm jumps the gun. In February, the online payments company tweeted that it had just completed “another great quarter” and shared highlights of its financial results. There was just one problem: Affirm wasn’t scheduled to report just yet. The company deleted the tweet, but the damage was done. Its stock sank.
THE SPEED READ
Private equity giants are divided over whether to invest in oil and gas companies. (WSJ)
The hedge fund Haidar Capital gained nearly 30 percent last month by betting shrewdly on central bankers’ efforts to tame inflation. (Bloomberg)
Shell’s C.E.O., Ben van Beurden, will reportedly step down next year. The company racked up record profits last quarter, but faces pressure from activist investors to decarbonize. (Reuters).
Miriam Adelson, a major Republican donor and the widow of Sheldon Adelson, has drastically slowed her political giving this year. (Bloomberg)
U.S. prosecutors have reportedly asked Binance, the giant cryptocurrency exchange, to provide internal documents about its anti-money-laundering protections. (Reuters)
A federal labor official recommended that Amazon’s bid to overturn a unionization vote at one of its Staten Island warehouses be rejected. (NYT)
Best of the rest
“Does This Fisherman Have a Right to Be in a Billionaire’s Backyard?” (NYT)
Kanye West criticized Adidas and Gap, raising the possibility that he might seek to end his clothing partnerships with the companies. (WSJ)
A woman faces federal charges for trying to catfish and extort the unnamed C.E.O. of a publicly traded company. (Bloomberg)
Inside the strange economy of musicians who profit from children asking Alexa to play poop-themed songs. (BuzzFeed)
Thanks for reading! We’ll see you on Tuesday.
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