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Power Sheet – April 1, 2016

The fight for Starwood is apparently over, but the story of what happened has yet to be told. We’ve been following this saga since Wu Xiaohui, CEO of China’s mysterious Anbang Insurance Group, disrupted a friendly deal for Marriott International to buy Starwood Hotels and Resorts just a few weeks before shareholders were scheduled to vote on it last Monday. Wu offered to pay a higher price than Marriott was paying; Marriott CEO Arne Sorenson then topped Wu’s bid; Wu topped Sorenson – and then late yesterday withdrew his offer. It appears that Sorenson’s last offer, which the Starwood board under chairman Bruce Duncan had accepted, is now good enough to buy Starwood. Unless some entirely new bidder jumps in.

But what really happened and why? Starwood had not accepted Wu’s latest offer; the company said it was discussing it with Anbang. Maybe the two sides couldn’t agree on terms separate from the price. Or maybe the Chinese government quashed the deal. It certainly seemed odd that this insurance company was making such rich all-cash offers, and you couldn’t help wondering if its investors were just trying to move their money out of the country and out of the yuan. Xi Jinping’s government would not have liked that.

Assuming a Marriott-Starwood deal actually closes, Sorenson’s leadership challenges will be only beginning. Investors fear that he’s paying too much; Marriott stock rose when Anbang topped his offer a few days ago, and it fell when Anbang withdrew from the auction yesterday. Sorenson will have to lead a massive integration while finding more synergies and cost reductions than he budgeted for in making the original deal last fall.

Most of the media are reporting that Sorenson won the bidding war. But in fact we don’t know yet. No deal is a victory if it’s so expensive that it fails to create value for the acquirer’s shareholders. Sorenson has been a terrific leader of Marriott so far. He’ll need everything he’s got as he assembles and leads the world’s largest hotel company.

A quick note:

I was intrigued by PepsiCo’s promotion Wednesday of Al Carey to a new position running the company’s beverage and snack businesses in North America. Some analysts immediately made him the frontrunner to succeed CEO Indra Nooyi. Speculating on Nooyi’s successor has been a popular game since at least 2011, when she was under heavy pressure from activist investor Nelson Peltz to separate the snack business (Frito-Lay) from its beverage business. When I spoke with several PepsiCo executives back then, many of them made similar remarks, unprompted, along the lines of “People in this company would walk through walls for Al Carey.” Yet he wasn’t on anyone’s list of potential successors, probably because he’s four years older than Nooyi; she’s now 60, and he’s 64.

One can easily construct scenarios in which it would make sense for Carey to become CEO. But in light of the age difference, odds are that this inspiring leader won’t be a CEO, which seems a shame.

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What We’re Reading Today

Anbang pulls bid for Starwood 

Anbang Insurance chairman Wu Xiaohui was reportedly frustrated that Starwood Hotels and Resorts hadn’t accepted his latest, $14-billion offer. His withdrawal sets the stage for Arne Sorenson‘s Marriott International to finalize the Starwood merger. Anbang broke up a Starwood-Marriott deal with a higher offer three weeks ago. Marriott countered, and Anbang made its $14-billion bid earlier this week. Fortune

Trump meets with RNC heads

In a surprise meeting, Donald Trump spoke with Republican National Committee Chairman Reince Priebus in an apparent attempt to mend fences. The meeting comes after Trump rescinded his pledge to support the eventual GOP nominee, a gaffe about abortion, his campaign manager’s arrest, and polls showing that he’s falling behind in the Wisconsin primary next Tuesday. Trump tweeted afterward that he looks to unite the party. Politico

GE wants off the ‘too big to fail’ list 

CEO Jeff Immelt has divested just over half of GE Capital’s assets and intends to sell more. Now the company has asked the Financial Stability Oversight Council to end its designation as a systemically important financial institution. That change would lighten government oversight and reduce capital requirements. The request comes a day after a federal judge ruled that MetLife shouldn’t be considered systemically important, as the FSOC had designated it. NPR

Myanmar creates post for Aung San Suu Kyi  

Democracy activist Aung San Suu Kyi, whose party won control of parliament last year, is constitutionally barred from being president. But a proposed law would make her, in effect, prime minister. If the bill is passed by parliament’s lower house and signed by the president, she would oversee four executive departments: foreign affairs, the president’s office, education, and energy. The Guardian

Building a Better Leader

Tech companies race to secure new H1-B visas 

The 85,000-visa quota will likely run out in a few days as companies and universities seek overseas talent. Tech firms are among the biggest competitors for visas. WSJ

This company shuts down for a week every year…

…to encourage creativity. By hosting a hackweek, Spredfast challenges employees to ‘think big.’ Fortune

Bank of America extends maternity and paternity leave

It increases from 12 weeks to 16 weeks. Tampa Bay Business Journal

Big Bets

Theranos’s machines often failed tests

The Centers for Medicare and Medicaid Services concluded after inspections of Theranos’s lab that many of the devices didn’t pass the company’s own accuracy requirements. Researchers found that the blood testing devices on which Elizabeth Holmes‘s company built a $9-billion valuation failed 29% of quality checks. It’s the latest finding that casts doubt on the company’s technology. WSJ

Tesla unveils the Model 3 to fanfare and…

…at least 137,000 pre-orders, though the car won’t be produced for another year. The $35,000 vehicle is critical to Elon Musk‘s plan to sell 500,000 cars a year by 2020. The success of the electric car, which can go over 200 miles on one charge, will determine whether Tesla is a major threat to incumbent carmakers. CNBC

World’s wealthiest banker charged with corruption  

Brazilian authorities claim Joseph Safra bribed officials to reduce his tax bill. Prosecutors allege that he paid officials $4.2 million to cut the tax on his income from Banco Safra, a top Brazilian bank. Fortune

Up or Out

Kleiner Perkins promotes John Doerr to chairman. Re/code

UPS names Juan Perez CIO, replacing the retiring Dave Barnes. WSJ

Oliver Bussmann has left his role as UBS Global CIO. Finextra

Sidecar co-founder Jahan Khanna will become Uber’s product lead for the Vehicle Solutions growth team. General Motors bought Sidecar in February. Fortune

Fortune Reads and Videos

Deutsche Bank, JP Morgan pulled into investigation…

…of the Malaysian state investment fund 1MDB. Goldman Sachs is also part of the investigation. Fortune

AirBnB will warn Paris hosts…

…if they’re running afoul of city regulations on the number of days one can rent a home. Fortune

‘Hack the Pentagon’ has begun

The Defense Department is offering $150,000 to hackers who discover vulnerabilities in its public-facing sites. Fortune

April Fools day is a good time to sort out what’s real… 

…from what’s a joke. Unicorns, Google, and Pfizer, we’re looking at you. Fortune

Happy Birthday

Supreme Court Justice Samuel Alito turns 66 today.  Biography

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Produced by Ryan Derousseau