Good morning. I’m back from a week of skiing in Utah, and wondering whether next spring I should try a warmer spot – maybe Cuba? That’s where President Obama is this morning, along with Marriott CEO Arne Sorenson and AirBnb CEO Brian Chesky. The hospitality industry is clearly first in line to take advantage of new business opportunities on the island.
While a triumph for Obama, this has to be a bittersweet trip for Sorenson. On Friday, Starwood snubbed the Marriott CEO by announcing it planned to accept a higher $13 billion bid to be acquired by Anbang Insurance of China, breaking its deal with Marriott. Sorenson has until March 28 to sweeten his offer. Moreover, Starwood beat Marriott out of the gate in signing an agreement to manage three landmark hotels in Cuba, including the Hotel Inglaterra. Marriott also received approval from the Treasury to do business in Cuba, but Sorenson said “there is still work to do before any agreement is reached.” AirBnb, of course, beat both hoteliers: it already lists rentals in Cuba for U.S. travelers. Yesterday, it received approval to open listings to non-U.S. travelers as well.
Also on the Cuba trip : Paypal CEO Dan Schulman, who is trying to turn the former eBay unit into a global payments platform, and Xerox CEO Ursula Burns.
Separately, my colleague Pattie Sellers has gotten a first look at Erin Callan’s new book, Full Circle, A memoir of leaning in too far and the journey back. Remember Callan? She was the CFO of Lehman Brothers before it collapsed in 2008. The book recounts how Callan tried to commit suicide on Christmas Eve of 2008, shortly after her ouster. Sellers says the book is a kind of counterpoint to Sheryl Sandberg’s Lean In, which urges women to be confident in pursuing their careers. Callan’s book warns of the dangers of overconfidence.
More news below
• Sherwin-Williams to buy Valspar
U.S. paint company Sherwin-Williams agreed to acquire Valspar for about $11.3 billion in an all-cash transaction that represents a roughly 41% premium to Valspar’s stock price over the past 30 days. The deal will accelerate Sherwin-Williams’ growth plans by expanding into the Asia-Pacific region, Europe, the Middle East and Africa, as well as adding new business opportunities in the packaging and coil segments. The firms expect the deal will close by the end of the first quarter of 2017.
• What caused Valeant’s 90% plunge
Valeant Pharmaceuticals had long been a darling of Wall Street, but now, the company is warning it could soon have a problem with its creditors. What went wrong? A lot. In a fall from grace that has threatened the reputations of a number of investors who have stuck with the company, Valeant’s decline first began in August when some politicians called on Valeant to disclose why it aggressively raised the price of two heart drugs. A number of woes have occurred the past several months, including a Securities and Exchange Commission investigation and a decision to restate results for 2014 and 2015.
• Affymetrix sticks with Thermo Fisher bid
U.S. gene-testing company Affymetrix’s board rejected a $1.5 billion bid by Origin Technologies, saying it would stand by a $1.3 billion merger deal with Thermo Fisher Scientific. Origin, made up of a group of former Affymetrix executives, made the offer on Friday as they sought to detail the Thermo Fisher deal. Affymetrix claims Origin is a shell entity with no assets to make a deal – saying that firm’s funds fall short of what would be required to complete the deal.
• Tribune loses bid for California newspapers
Freedom Communications, the bankrupt publisher of two California newspapers, said it would accept a $51.8 million takeover bid from Digital First Media instead of a higher offer from Los Angeles Times owner Tribune Publishing. While Tribune had offered $56 million, the Department of Justice on Thursday filed a lawsuit aimed at blocking that deal, saying the acquisition would lessen competition. If Tribune had acquired Freedom, it would have controlled 98% of newspaper sales in Orange County and 81% of English-speaking newspaper sales in Riverside, the Justice Department said. As a result of the blocked bid, Freedom had to pick a different winning bidder.
Around the Water Cooler
• Winfrey steers her own turnaround
A lot of press attention the past few months has focused on Oprah Winfrey’s ties to Weight Watchers. But the media mogul is steering a turnaround and her own OWN cable network, which is pivoting to focus less on self-improvement talk shows and more on increasingly ambitious dramas, with Winfrey taking a bigger role in its creative decisions. OWN, which first debuted in 2011, initially struggled to attract an audience. But the network increased its audience last year, even as many peers suffered a drop in viewership. The network’s challenge is to maintain that momentum even as the rise of Web video threatens cable channels.
The Wall Street Journal (subscription required)
• Amazon’s drone advocacy
Amazon has emerged as one of the tech industry’s most outspoken players in Washington as the e-commerce giant pushes officials to allow new uses for commercial drones. The New York Times reports Amazon has spent millions on this effort and meets regularly with lawmakers and regulators. While some drone makers say Amazon may be pushing too hard, too fast, the money Amazon spent on lobbying in 2015 nearly doubled to $9.4 million compared with the year before – an indication of how important it sees this business opportunity. While Amazon’s lobbying lags that of the biggest tech lobbyist, Google’s parent Alphabet, the online retailer’s spending grew at a faster pace than any other tech company.
The New York Times (subscription required)
• Another young-adult flop at the box office
The poor performance of the third “Divergent” film over the weekend continues the string of disappointing box-office returns for films based on young-adult book adaptations. “Divergent,” which failed to top the box office with an estimated $29 million haul in the U.S. and Canada, also badly missed the mark by the predecessor film by Lions Gate Entertainment, a movie called “Insurgent” which scored a $52.3 million opening. YA-fatigue could be partly to blame: after the successful “The Hunger Games” series, several films aimed at that demographic haven’t performed well. Those with science-fiction plots have done particularly badly.
• Legal marijuana sales projected to hit $23 billion
Adult use and medical marijuana sales are expected to triple from this year’s levels to reach nearly $23 billion by 2020, a cannabis-focused data-analysis firm has projected. The industry, which generated $5.7 billion in sales last year, has become a semi-legal business as Colorado, Alaska, Oregon, Washington state and Washington, D.C. have all legalized adult recreational use. Meanwhile, 23 states and the District of Columbia permit some form of medical use. That’s all despite the fact that marijuana remains an illegal drug at the federal level. Most of the industry’s sales are for medical purposes but by 2020, only 47% is expected to come from that portion of the market.