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CEO Daily: Tuesday, 21st February

Good morning.

The quick collapse of Kraft Heinz Co.’s $143 billion bid for Unilever over the weekend has sparked lots of analysis about what went wrong. Some say Kraft, which is backed by the Brazilian private equity firm 3G and by Warren Buffett, was surprised by Unilever CEO Paul Polman’s vehement opposition to the deal. Buffett has a well-known aversion to hostile bids. Others cited cultural differences between the two companies.

I think Julian Birkinshaw of the London Business School has it right when he says this one represented not just a culture clash, but a clash of two distinctly different models of capitalism. The Kraft Heinz model focuses ruthlessly on providing profits to owners by slashing costs, as my colleague Geoff Colvin chronicled in this Fortune cover story last month. Polman believes his obligation is not just to owners, but to society as a whole, as Vivienne Walt showed in this story in the most recent issue of our magazine. Both stories are required reading for anyone trying to run a business in today’s world.

Which model is right? Birkinshaw argues we need both: “Take the 3G model to extremes, and people become narrow, short-term, and greedy. Take the Unilever model to extremes, and people become unfocused, comfortable, and complacent.” Polman can no longer afford to be complacent; he now faces the challenge of showing he can deliver shareholders greater value than the Kraft Heinz bid promised. That won’t be easy; the stock dropped 8% Monday after the bid collapsed.

Separately, Bill Gates told Quartz he’s sympathetic to the idea of putting a tax on robots, to raise money to retrain people displaced by automation.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

Trump Taps McMaster as NSA

President Donald Trump appointed Lieut. General Herbert McMaster as his National Security Adviser, filling the position vacated by Michael Flynn. McMaster is a veteran of both Iraq wars and a noted critic of U.S. strategy in Vietnam. He was listed as one of Time magazine’s 100 most influential people in 2014, partly because of his willingness to buck the system. Sen. John McCain, who had led the criticism of Flynn, called it an “outstanding” choice. Elsewhere, The Wall Street Journal reported that “at least two candidates” had turned down the job because the President wouldn’t cede control over staffing.   Fortune

Uber Hires Holder to Address Sexism Claims

Uber hired former Attorney-General Eric Holder to look into the claims of sexual harassment and gender discrimination at the company. A viral blog post by a former engineer revived long-standing concerns about the company’s aggressively male culture, which the post characterised as systematically defended by Uber’s human relations department. CEO Travis Kalanick, himself the author of more than one ill-judged public comment about women in the past, called the episode “abhorrent.” Fortune

HSBC’s Problems Go Beyond Trade

Shares in HSBC, Europe’s largest bank, fell over 6% in early trading Tuesday after it wrote $3.2 billion off the value of its private bank, which has figured prominently in a series of lawsuits over money-laundering since 2009. The results also reflected slowing growth in the key Greater China market. HSBC’s  efforts to sweeten the pill to investors expanding its share buyback by $1 billion also fell flat, because analysts had expected a bigger expansion. CEO Stuart Gulliver warned that the environment for trade finance, a key revenue generator, had become “more complex.” Fortune

China Squashes Wanda’s Bid for Dick Clark

Wanda Group’s plans to buy Dick Clark Productions, the company behind the Golden Globe awards and Miss America pageants, appears to have collapsed, a victim of China’s crackdown on big-ticket foreign acquisitions. The associated capital outflows of such deals have put unwelcome downward pressure on the renminbi in recent months. The deal would have been Wanda’s first foray into television production, adding to acquisitions in the movie business in recent years. It’s not clear from the reports why Wanda, a fairly sophisticated and experienced international player by Chinese standards, couldn’t have financed the deal through an offshore vehicle that wouldn’t have troubled the currency regulators. Fortune

Around the Water Cooler

New Low for Milo

Simon & Schuster, the publisher owned by CBS Corp., has cancelled the publication of a book by alt-right journalist Milo Yiannopoulos after comments he made were interpreted as condoning pedophilia. Yiannopoulos, who was himself sexually abused as a child, strenuously denied that interpretation in a Facebook post. The American Conservative Union also rescinded an invitation to speak at its Conservative Political Action Conference. The book, Dangerous, also disappeared from Amazon, where it had been no. 83 on the marketplace’s best-seller list. It’s not clear what will happen to Yiannopoulos’ $250,000 advance.  WSJ, subscription required

There’s Gold in Them Thar Stocks

Two of the world’s biggest mining groups, BHP Billiton and Anglo American, reported better-than-expected results, underlining a broad-based recovery in industrial commodity prices after a year of dramatic cuts. BHP, which last year abandoned plans for annual increases in its dividend, raised its payout after returning to profit in the first half of its 2017 fiscal year. Anglo, having also swung back to profit last year, said it wouldn’t sell any more assets just to strengthen its balance sheet. It now expects to keep 30 mining operations instead of the 16 it envisaged a year ago. WSJ, subscription required

Popeyes — A Consolation Prize for 3G

Popeyes Louisiana Kitchen, the fried chicken house beloved of Beyonce, is close to being bought by Restaurant Brands Inc., the owner of Burger King and Tim Horton’s, according to Reuters. Reuters expects the deal to value Popeyes at around $1.7 billion. RBI’s biggest shareholder is 3G, the Brazilian private-equity group that was the driving force behind Kraft Heinz’s unsuccessful bid for Unilever last week. Reuters said RBI will be looking to broaden Popeyes’ footprint with a view to exploiting the growing market share of chicken in the fast-food space.

GM’s U.K. Workers May Regret Voting for Brexit

Last year, the districts around GM’s two plants in the U.K. both voted to leave the EU. Those plants are now looking acutely vulnerable to closure if Peugeot owner PSA gets its way and buys Opel. The risk of border tariffs and other non-tariff barriers radically change the economics of keeping those plants in a complex European supply chain. Ominously, PSA has already agreed to honor all of Opel’s deals on investments and job guarantees in Germany. It has made no such commitment to the U.K. factories. Fortune

Summaries by Geoffrey Smith Geoffrey.smith@fortune.com;

@geoffreytsmith