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In Business This Week: HEADLINER: THOMAS RYAN
SHOPPING FOR GROWTH FACTOR
Two decades ago, Thomas Ryan was filling prescriptions at a CVS drugstore. By late last year, he had risen to vice-chairman of CVS and CEO of its pharmacy business, overseeing 1,408 drugstores. Ryan, 44, wants more. On Jan. 27, CVS and rival Revco, with 2,600 stores, confirmed they are discussing a merger.
Ryan's plan faces fewer hurdles than the RiteAid-Revco combination proposed last year. Then, the FTC barred the deal on antitrust grounds. Such concerns are less of a problem for CVS and Revco because the two have built their businesses in separate regions of the country. CVS, with $5.5 billion in 1996 sales, operates mostly in the Northeast. Revco, which is expected to post 1996 revenues of $5.9 billion, reaches from Ohio to Florida.
Revco won't come cheap to CVS. Its stock price has risen 71% in the past six months, to about $37, on a rash of industry buyouts. And Merrill Lynch analyst Gary Vineberg, notes that Revco's annual sales-per-square foot are about $335, just 60% of CVS's. Most likely, Ryan has a prescription for what ails Revco.By Susan Jackson EDITED BY THANE PETERSONReturn to top
FORD TURNS ON JOHNSON CONTROLS
FORD MOTOR'S PRO-LABOR stance is giving one of its biggest suppliers a pain. When the United Auto Workers struck two Johnson Controls plants on Jan. 28, the automaker said it wouldn't buy seats for its popular Expedition sport-utility made by replacement workers. No surprise there. Not only was Ford especially conciliatory in labor contract talks last fall, it is said to have encouraged Johnson Controls last summer to recognize the union at the two plants. Now, Johnson Controls is being squeezed by the UAW for higher wages--and pressured by Ford to settle. "We want this darned thing resolved," says Ford Chief Financial Officer John Devine.EDITED BY THANE PETERSONReturn to top
CAN'T LOG ON TO AOL? HAVE A FREE MONTH
AMERICA ONLINE ON JAN. 29 took a step toward solving a growing number of legal problems. The online service announced that it had cut a deal with 37 states to compensate consumers who have complained that the system, overloaded since the company went to flat $19.95-per-month pricing in December, too often leaves them unable to log on. Disgruntled users can get either one month of free access or a prorated refund based on online time during the past two months. AOL also promised to stop advertising immediately. The deal does not settle the slew of lawsuits filed recently by irate AOL customers.EDITED BY THANE PETERSONReturn to top
MY, WHAT A BIG AX AT AMEX
IT WAS GOOD NEWS/BAD NEWS at American Express. Buried within its strong earnings report on Jan. 27, in which operating income soared 13%, to $433 million on $4.3 billion in revenues, AmEx announced it will lay off 3,300 employees, about two-thirds of whom work in the overseas travel-related services division. Chairman Harvey Golub says the move is necessary to pave the way for both new products and jobs. But some on the Street were surprised by the magnitude of the cuts--about 5% of the workforce--and question whether AmEx will be able to maintain its traditionally high level of international customer service.EDITED BY THANE PETERSONReturn to top