Good morning. David Meyer here in Berlin, filling in for Alan.
Lucky Strike and Camel maker British American Tobacco is making big cutbacks. Around 2,300 jobs are going, and its managerial layer is about to end up 20% lighter.
Why? Traditional cigarette sales are declining, as people turn to alternatives such as e-cigarettes. So BAT, five months into the leadership of Jack Bowles, is trying to “simplify its business” with a new structure that places greater emphasis on vaping, tobacco heating and oral tobacco products.
Bowles: “My goal is to oversee a step change in New Category growth and significantly simplify our current ways of working and business processes, whilst delivering long-term sustainable returns for our shareholders. This is a vital first move to help achieve these goals.”
On one level, the timing of this move does not appear optimal, coming as it does just after the Trump administration announced a looming ban on flavored e-cigarettes. The prohibition follows a spate of mysterious lung illnesses and even deaths in the U.S. that are being linked to vaping, plus the ongoing controversy over young people taking up the practice.
(An interesting side-note: The “vaping sickness” does not appear to have manifested in Europe, though that could be due to a lack of proper reporting mechanisms.)
But what choice does BAT have? A declining market is a declining market, and in this case few people would see that decline as a cause for great sorrow—the jury may be out on the long-term health effects of vaping, but they’re deeply unlikely to be worse than those of traditional cancer sticks. The company’s investors certainly reacted positively to Bowles’ refocusing news, bumping the share price up as much as 2.6%.
BAT may be sailing into choppy waters, but sail it must.
And speaking of toxic industries, do take note of this call by leaders of 145 companies (including Levi Strauss, Twitter and Uber) for the Senate to pass significant gun-control reforms. This isn’t just a case of CEOs taking a political stance; by doing so en masse they seem to be anticipating and potentially diluting the inevitable backlash.
More news below.
Global markets are up on the news that the U.S. will delay by two weeks the tariff increases it has in store for Chinese products. The Trump administration's move follows China's decision to waive tariffs on selected U.S. goods. The expressions of good will may have something to do with both countries' weak economic data. CNN
As markets wait for the European Central Bank to unveil an anticipated stimulus plan today, some unwelcome news on the industrial output front: production in the Eurozone fell by more than expected in July—its second month of contraction. On the plus side, June's production drop has been revised, ending up at 1.4% rather than 1.6%. Reuters
Oracle co-CEO Mark Hurd is taking a leave of absence for health reasons. Founder and CTO Larry Ellison will step in to handle his responsibilities. Oracle's stock dropped in extended trading following the news. CNBC
OxyContin maker Purdue reached a tentative settlement yesterday that would involve a structured bankruptcy and the payout of as much as $12 billion, a quarter of which would come from Sackler pockets. But states such as Connecticut, Iowa, New York and Wisconsin aren't on board, so even if the deal is finalized, it doesn't end the matter. AP
AROUND THE WATER COOLER
The U.K. government is reportedly cool on the idea of Hong Kong Exchanges & Clearing buying the London Stock Exchange, because of the importance of the latter to the British financial infrastructure. U.S. regulators are apparently also likely to express concerns over the deal, should it proceed, as the London exchange has employees in major American hubs. But will it proceed at all? Initial signs say no. Wall Street Journal
The Hong Kong IPO of brewing giant AB InBev's Asia Pacific unit is apparently back on. A couple months back, AB InBev scrapped its plan to raise up to $9.8 billion in the flotation. Now "people with knowledge of the matter" say the IPO is scheduled for later this month, with the aim of raising around $5 billion. Reuters
The Pentagon is reportedly drawing up a list of Chinese firms with military ties, in order to stop them getting their hands on sensitive U.S. tech and to keep them out of American military supply chains. Financial Times
One of the world's more flamboyant CEOs, Zozo's Yusaku Maezawa, is stepping down as he sells his 30% stake to Yahoo Japan in a deal worth $3.7 billion. The online fashion retailer has recently seen its share price fall dramatically following experiments with things like custom-fit clothing. Internationally, the former punk drummer is best known for signing up to be SpaceX's first moon tourist and paying $110 million for a Basquiat. BBC
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.