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In Business This Week: HEADLINER
JAN LESCHLY: THIS ONE DIDN'T CLEAR THE NET
Jan Leschly is on the defensive. Following the acrimonious Feb. 23 collapse of merger talks between SmithKline Beecham and Glaxo Wellcome, Leschly, a tennis pro turned SmithKline CEO, is under pressure from investors to get a deal.
Leschly nixed the Glaxo deal after a Feb. 20 meeting with Glaxo CEO Richard Sykes in which, a former SB insider says, the exec discovered that the proposed combination was "not a merger, but a takeover." But investors were upset that the deal had come apart: They knocked SmithKline's value down by $6.6 billion.
SmithKline is profitable--earnings rose 17%, to $2.7 billion, in 1997--but it ranks ninth in prescription-drug sales, down from third in 1989. And while its investments have turned up many leads for new drugs, SmithKline lacks the R&D funds to pursue all of them.
Roche Holdings, Schering-Plough, Warner-Lambert, and Britain's Zeneca are all possible partners. Now, Leschly, 57, has to prove he can fight back from two sets down. EDITED BY KELLEY HOLLAND By Julia FlynnReturn to top
MESSY ACCOUNTS AT WASTE MANAGEMENT
GARBAGE IN, GARBAGE OUT. That's one way to look at Robert "Steve" Miller's harsh assessment of "serious accounting errors and errors of judgment" at Waste Management. On Feb. 24, the interim chairman and CEO of the big hauler, who took the reins on Oct. 29, restated five years of earnings and announced $2.9 billion in aftertax write-offs. Waste, reeling from brutal competition, had been overstating the value of its assets and understating its environmental liabilities. The company has initiated talks with the Securities & Exchange Commission about the past accounting, though no formal investigation is under way. With the big cleanup behind him, Miller insists the future is brighter: "There is growth in our core business, though it's not Silicon Valley."EDITED BY KELLEY HOLLANDReturn to top
CURTAINS FOR NEW CENTURY
IT WAS SUPPOSED TO BE A model for providing news online and a way for newspapers to protect their turf against the likes of Microsoft. Instead, New Century Network became a money pit and a source of infighting among the nine partners--including The New York Times, The Washington Post, Gannett, and Knight-Ridder. So on Feb. 25, less than a year after the launch, the site went dark. The idea had been to post the best stories from 140 newspapers on a single site. But the partners wrangled constantly and ultimately lost $27 million. EDITED BY KELLEY HOLLANDReturn to top
DRUG DEALS THE FTC MAY NOT SWALLOW
CREATING MORE EFFICIENT health care is a top priority in Washington. But Federal Trade Commission staffers fear that proposed mergers among the top four drug wholesalers might be a bit too efficient--a prescription for higher prices and slower deliveries. Sources close to the case say FTC staff will recommend that the board block Cardinal Health's proposed merger with Bergen Brunswig and McKesson's buy of AmeriSource Health. These companies control 82% of the $66 billion industry. The FTC's decision could come on March 3.EDITED BY KELLEY HOLLANDReturn to top