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JUNE 4, 2007
Edited by Harry Maurer Immigration: The Great Debate The Senate on May 21 hunkered down for two weeks of discussion of a landmark proposal to reform immigration policy. The plan would toughen border security, give some 12 million immigrants a path to citizenship, create a temporary-worker visa, and require employers to check the legal status of all employees against a federal database. Dozens of lawmakers have lined up with ideas for rewriting the 347-page political compromise, which has drawn the ire of key business factions, labor, and other interest groups. Even if the Senate plan can muster a majority, the House may shoot it down. House Democratic Caucus Chairman Rahm Emanuel (D-Ill.) vows to block any legislation that doesn't win over at least 60 Republican votes. That could be a tall order for the Bush Administration, which lately lacks the political capital to drive hard bargains. See "A Troubled Immigration Reform Proposal"
LBO Artists Calling Private equity seems to set a record every week: This time it's the biggest telecom LBO ever. No. 5 wireless carrier Alltel (AT ) said on May 20 that TPG Capital and Goldman Sachs Capital Partners (GS ) would buy it for $27.5 billion. The new investors want Alltel to continue growing via acquisitions. The sale requires shareholder and regulatory approval, and new bidders could ring up.   Kerkorian's MGM Moves He's the ultimate corporate poker player. Kirk Kerkorian, the Los Angeles billionaire who owns 56% of casino giant MGM Mirage (MGM ), announced on May 21 that he wants to buy two of the company's premiere properties, the Bellagio in Las Vegas and the $7 billion CityCenter resort still under development next door. Kerkorian's public filing also revealed that he's evaluating "strategic alternatives" for his MGM stake. Sensing the company might be up for sale, investors bid MGM stock up 27% in a day. Microsoft Goes Shopping In the past, Microsoft (MSFT ) always seemed to take half-measures in its competition with Google (GOOG ). But that was then. On May 18, Microsoft closed its biggest deal ever, agreeing to buy online marketing powerhouse aQuantive (AQNT ) for $6 billion, a heady 85% premium. The deal gives the software giant the ability to sell ads, place them, and hand marketers the tools to measure ad performance. See "Microsoft's Big Online Ad Buy" Surprise At Siemens Austria-born Peter Löscher was known in U.S. pharma circles as heir apparent to Merck (MRK ) CEO Richard Clark. But in Germany he was, in the words of the daily Handelsblatt, "a perfect nobody." So it came as a shock when Siemens' (SI ) board on May 20 chose Löscher, 49, to be the first outsider to serve as CEO of the electronics giant. Job One: cope with a spreading bribery scandal that contributed to the departure of CEO Klaus Kleinfeld. See "Siemens Taps Merck Exec as New CEO" Adios, Plastics It's where Jack Welch started his career, but there's no room for sentiment in these matters. With profits falling and competitors rising, General Electric (GE ) sold off its plastics unit to Saudi Basic Industries for $11.6 billion on May 21. The move is part of GE's drive to focus on faster-growing businesses and woo investors. A big chunk of the proceeds will go to stock buybacks. Executive Suite Two troubled companies reshuffled their management decks. On May 20 pharma giant Pfizer (PFE ), beset by stagnant earnings and a dearth of exciting new products, announced the exits of research chief John LaMattina and CFO Alan Levin. On May 22, Sallie Mae (SLM ) CEO Thomas Fitzpatrick quit as the student loan provider prepares to be taken private. He'll be replaced by C.E. Andrews, currently CFO. Wolfowitz: It's Over After twisting in the wind for weeks following allegations about a promotion and pay raise for his companion, Paul Wolfowitz resigned as head of the World Bank on May 17. See "More Problems After Wolfowitz" Rx For Trouble? Looks as if another top drug could threaten users' health. The New England Journal of Medicine reported on May 21 that GlaxoSmithKline's (GSK ) Avandia, a diabetes remedy that racked up $3 billion in sales last year, may boost the risk of heart attack. The research came from Cleveland Clinic's Dr. Steven Nissan, who blew the whistle on Merck's Vioxx. Glaxo stock sank 8% the day the news broke, but some specialists pooh-poohed the study. See "Diabetes Drug Study in Doubt" Clear Channel Says Yes… Radio goliath Clear Channel (CCU ), a hyper-aggressive media dealmaker over the past decade, finally seems to have sold itself off. On May 18 the board approved a $19.35 billion buyout led by Thomas H. Lee Partners and Bain Capital. What did it take? A 20 cents-per-share hike over the previous offer (to $39.20) and an option to own a stake in the newly privatized outfit through so-called stub equity. Shareholders must still give their O.K. …And So Does EMI Who'll call the tune at record label EMI (EMIPY )? After seven years of an on-again, off-again merger dance, the British company on May 21 agreed to a $4.74 billion buyout from private equity firm Terra Firma Capital Partners. But Warner Music (WMG ), EMI's longtime suitor, may return with a counterbid, according to industry insiders. Rainwater Sells Morgan Stanley (MS ) grabbed more buildings on May 22 when a unit agreed to buy Crescent Real Estate Equities (CEI ) for $6.5 billion including debt. Crescent, founded by legendary investor Richard Rainwater, owns a mixed bag of properties in the South that haven't turned in stellar results of late. That may be why Morgan offered only a small premium. Trade Maneuvers Of The Week On May 18, Beijing made a mini concession to the nations it does business with, slightly widening the trading band on the yuan to allow it to appreciate. Two days later, China announced it would plunk down $3 billion for a stake in private equity power Blackstone Group as a step in diversifying its $1.2 trillion hoard of foreign reserve holdings away from U.S. Treasuries in search of higher returns. The timing of both moves was no accident: Chinese Vice-Premier Wu Yi began talks with Treasury Secretary Henry Paulson on May 22, and Washington has been shouting for years that the yuan is grossly overvalued. Paulson will push hard for more concessions from Beijing to tame its astounding trade surplus and tackle abuses in counterfeiting and copyright piracy. Blackstone, for its part, joined the parade of private equity deals this week by making a $7.8 billion offer for data processing outfit Alliance Data Systems on May 21. See "China's $3 Billion Bet on Blackstone"
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