Power Sheet – October 28, 2015


My four favorite leaders of the week so far (and it’s only Wednesday morning):

Produced by Ryan Derousseau

Stefano Pessina, 74-year-old billionaire CEO of Walgreens Boots Alliance, which yesterday agreed to buy Rite-Aid for $9.4 billion, not counting assumed debt. Pessina has spent his career building an empire, starting from his family’s pharmaceutical wholesaler in Naples. Unlike some assemblers of corporate giants, he has put significant sums of his own money at risk in his deals and today owns about 15% of Walgreens Boots Alliance. The usual pattern in mega-mergers is that the target company’s stock goes up and the buyer’s stock goes down – because buyers so often overpay. But in this case, even though Pessina paid a fat 48% premium to Rite-Aid’s pre-deal share price, both stocks went up. Whether he overpaid remains to be seen, but it’s refreshing that Wall Street thinks he did not. Oh, and I like that he lives in Monte Carlo, enabling one to call him a Monegasque, a deluxe word that one rarely gets to use.

Jimmy Morales, president-elect of Guatemala. We’ve got outsider candidates in the U.S. but no one like Morales, a TV comedian who ran on the disarming slogan “Not corrupt, not a thief.” He won in a landslide Sunday with 67% of the vote. Now he must govern, and though he hasn’t yet been inaugurated, he has belatedly begun announcing policy positions. The first is that he won’t appoint retired army officers to any cabinet post other than defense minister – a logical anti-corruption step in a country where the army has been implicated in deep-rooted government corruption for the past 50 years. His story has been a happy one so far, but there’s nothing funny, and there’s a lot that’s dangerous, about actually fighting corruption in a thoroughly corrupt environment.

-REI chief Jerry Stritzke, who will close all his company’s 143 stores on Black Friday, the biggest shopping day of the year. This is terrific leadership in every way. The free publicity is already worth way more than whatever revenue REI is giving up. His message to consumers – instead of hurling yourself into a mad frenzy of spending, enjoy the great outdoors – expresses a value that everyone can embrace while obviously serving his company’s interest. The move emphasizes that REI is a cooperative, owned by customers, and needn’t serve outside investors. And while employees won’t be working on Black Friday, Stritzke will pay them for it. Sheer genius.

-House Speaker John Boehner, who has negotiated a near-certain deal to fund the government and raise the debt ceiling for almost two years. He thus takes the issue off the table for the presidential election and eliminates a guaranteed migraine for his presumed successor, Paul Ryan. The deal infuriated conservative members whose opposition forced Boehner to announce his resignation earlier, but now that he’ll be gone at the end of this week, he really doesn’t care. If all goes as expected, the deal will be a generous parting gift to Ryan, though Boehner, with his political career over, was under no obligation to do anything.

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What We're Reading Today

The Fed meets while the world waits

The Federal Reserve began its two-day session on Tuesday, debating whether to increase interest rates for the first time since 2006. Investors don't expect a rate raise today, but business people worldwide are hoping that Chairwoman Janet Yellen will provide clear guidance on when an increase is likely. USA Today

FDA calls Theranos vials an "uncleared" device

The notice by the Food and Drug Administration explains why Theranos cut back use of its blood sample vials for all but one test. The FDA gave notice to Elizabeth Holmes's company after a surprise inspection that began in August. It accused Theranos of shipping an "uncleared medical device" across state lines. The FDA told Theranos to address 14 points, and the company has promised to address 13 of them, which General Counsel Heather King said the company has “addressed and corrected,” within a week. WSJ

Jack Dorsey silent on Twitter's poor earnings call

New CEO Dorsey remained quiet during Twitter's earnings call after the company announced that new users increased by only four million, and U.S. users didn't increase at all this year. CFO Anthony Noto and COO Adam Bain took most of the questions. The answers didn't much comfort investors, and the stock dropped  more than 12% shortly after the call.  Fortune

House votes to reopen the Ex-Im Bank

The Export-Import bank, which provides export financing, could get a second life as the House voted overwhelmingly to revive it. General Electric CEO Jeffrey Immelt cited the bank's closing as a factor in recent decisions to move some U.S. manufacturing operations abroad. Such moves prompted moderate Republicans and Democrats to begin funding the bank again. Likely new House Speaker Paul Ryan, however, voted against the measure. The bill now moves to the Senate, where it's fate is unclear. NYT

Building a Better Leader

The company with a $70,000 minimum wage...

…has doubled profits since announcing the pay increase in April.  Fortune

A day in the life of Chase Card Services's Eileen Serra

The CEO makes time for exercise and dinner with her daughters by not getting much sleep during the week. MarketWatch

The retirement pay gap

The top 100 CEO retirement packages have a combined value of $4.9 billion, which is equal to the combined retirement savings of 41% of Americans.  USA Today

Deals & Mergers

A-B InBev, SABMiller extend merger talks

The discussions between Carlos Brito's Anheuser-Busch InBev and Alan Clark's SABMiller to merge the world's No. 1 and No. 2 brewers faced a deadline of 5pm London time today. The two sides agreed to extend the talks for another week as the process of arranging financing and performing due diligence has taken longer than expected. CNBC

Walgreens to buy Rite-Aid for $9.4 billion

The deal, which will increase Walgreens' footprint by half, will help the company price drugs lower, in an attempt to fight off Walmart and online pharmacies. It's the first major move in Stefano Pessina's tenure as CEO; he took the helm in July. Reuters

The Air Force taps Northrop for new bomber

Northrop Grumman CEO Wes Bush and his company beat out a Boeing and Lockheed Martin team to win an $80-billion contract to build America's next stealth bomber. The design, highly classified, reportedly allows autonomous flight. Fox News

Up or Out

Barclays has named James Staley, a former JP Morgan banker, as its next CEO. NYT

Shutterfly CFO Brian Regan will depart the company to join private equity firm Spectrum Equity. Fortune

Fortune Reads and Videos

Volkswagen posts a $3.9-billion loss

Reflecting non-cash charges for expected costs of the emissions scandal, it's the company's first quarterly loss in over 15 years. Investors see hope that VW can survive the scandal. Fortune

The top up-and-coming women

These leaders could find their way onto a 40-under-40 list very soon. Fortune

Apple's China revenues jump 99%

Tim Cook said he wouldn't know there were "economic issues at all in China” by looking at Apple's results there.  Fortune

IBM in talks to buy the Weather Channel's digital assets 

The deal would give Ginni Rometty's company access to the Weather Channel's forecasting unit. Fortune

Birthday Wishes

Microsoft co-founder Bill Gates turns 60 today.  Biography

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