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Back In Their Good Graces


In Business This Week: HEADLINER: ALBERT COSTELLO

BACK IN THEIR GOOD GRACES

The heat was on Albert Costello. The chairman and CEO of W.R. Grace hadn't delivered a promised spin-off of the company's kidney dialysis unit, National Medical Care. Grace's stock was stalled. Some investors were growing frustrated with a manager one said was "invisible to the Street."

Then came Baxter International's public airing of a $3.8 billion bid for se National Medical on Feb. 2. But Costello had a deal of his own. On Feb. 5, Grace unveiled a surprise agreement to combine NMC with a dialysis-supplies business owned by Germany's Fresenius. Grace shareholders would own 44.8% of the new company, plus some preferred shares; Grace itself would get $2.3 billion.

Baxter refused to back off. "We believe that our offer is substantially higher," said CFO Harry Kraemer Jr. in a Feb. 6 conference call. But Baxter needs to up its bid to at least $4.2 billion, Grace execs say, adding that Baxter had lowballed earlier bids. And the pressure seems to be off Costello--for now. "Everything I've told [investors], I've delivered on," he says. "I really want to get on with the damn business."EDITED BY KEITH H. HAMMONDS By Gail DeGeorgeReturn to top

A FRUIT FREEZE? PERISH THE THOUGHT

FEAR NOT, TANGELO LOVERS. The South got a bracing blast of winter, but most crops pulled through. As temperatures dropped below freezing on Feb. 1, citrus growers broke out smudge pots to warm their groves, and fruit and vegetable farmers gave their produce a protective layer of ice to fight off freeze damage. Georgia's peaches and pecans escaped the cold spell unscathed. Meanwhile, Florida Citrus Mutual, a growers' organization, expects a reduction in orange-juice yield, but only "moderate" price increases. Indeed, after spiking to $1.32 a pound on Feb. 1, juice futures settled back to $1.20 on Feb. 7. Even if damage turns out worse than expected, "there will be fewer oranges left on the tree, so we'll get more money," figures Orlando grower Jerry Chicone.EDITED BY KEITH H. HAMMONDSReturn to top

ANHEUSER GIVES UP SNACKS

SO MUCH FOR BARROOM synergy: Putting beer and snacks under the same roof only left Anheuser-Busch with soggy chips. After shopping its perpetually money-losing Eagle Snacks division since October, Anheuser announced on Feb. 7 that it will close the unit and take a massive $206 million aftertax write-off. "It's extraordinary to take a great trademark and see it die," says PaineWebber analyst Emanuel Goldman. Anheuser will sell four plants to Frito-Lay, the industry giant that helped force Eagle's demise.EDITED BY KEITH H. HAMMONDSReturn to top

EXPORTS TO ASIA TRIM THE TRADE GAP

THANKS TO A ROLLING EXPORT surge, the U.S. merchandise trade deficit shrank 27.5% in November, the fifth straight monthly decrease in the trade gap. That's welcome news for the Clinton Administration, which is getting hammered about the issue on the campaign trail. The big bright spot: exports to Japan, which grew at four times the rate of imports. Exports to China were up 25% in 1995 through November, compared with an 18% increase in imports. Such export strength makes further shrinkage in the deficit likely. Even so, the deficit for the year, in goods alone, stands at a record $162 billion.EDITED BY KEITH H. HAMMONDSReturn to top


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