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The Morning Ledger: Companies Use Deals to Acquire New Skills |
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Coca-Cola Co. bought coffee-shop chain Costa last year. The deal illustrates how companies are using M&A to enter new markets, not just to expand existing lines. PHOTO: YUI MOK/ZUMA PRESS
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Good day. Companies increasingly are looking outside their comfort zone for acquisition targets as they seek to propel growth and stave off digital disruption, according to a report by Bain & Co., CFO Journal reports.
Growing scope: Companies struck strategic deals worth $3.4 trillion globally in 2018, the consulting firm said. Of those, 51% were classified as “scope deals” that gave the company something new, such as new capabilities or access to new markets. It was the first time in at least four years that such deals outpaced what Bain refers to as “scale deals,” which merely boost the buyer’s share of an existing market.
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New tricks, chasing growth: Companies are seeking to add capabilities as they contend with disruption to their business models, particularly from new technologies. They also are finding it harder to maintain or increase their pace of growth. The median annual revenue growth rate for some of the world’s largest public companies has declined to 5.9% in 2018 from 9.7% in 2005, according to Bain, which analyzed companies in the S&P 500 and four other international stock indexes.
Quicker to buy: “Rather than trying to build that [new capabilities] internally, which has a mixed record of success, they are instead looking to buy it from outside,” said Peter Horsley, a partner at Bain and one of the report’s authors. “In many cases it can be quicker and it can guarantee that you’ve got access to the best-in-class capabilities.”
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Data provider Markit will release preliminary readings of its U.S. manufacturing and services purchasing-managers’ indexes for January at 9:45 a.m. ET.
Officials at the European Central Bank end their first monetary policy meeting of the year on Thursday, with no changes expected. ECB President Mario Draghi is hosting a news conference after the publication of the policy decision at 7:45 a.m. ET.
After a punishing 2018, airline stocks are finally starting to catch up with the broader market. The next round of earnings results could help determine how long that rebound lasts.
Southwest Airlines Co., Alaska Air Group Inc. and American Airlines Group Inc. are scheduled to report quarterly results Thursday.
Intel Corp. is scheduled to report fourth-quarter earnings after the market closes Thursday. WSJ’s Jay Greene has what you need to know.
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Vertex Pharmaceuticals Fires Executive for Conduct Violation |
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Boston-based Vertex Pharmaceuticals Inc. said Wednesday that it fired a high-ranking executive for unspecified personal behavior that violated the drugmaker’s code of conduct.
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The company, which makes treatments for cystic fibrosis and infectious diseases, said in a statement that Ian Smith, its chief operating officer and interim chief financial officer, had been terminated, effective immediately. Vertex said the dismissal was unrelated to its financial performance.
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Carlos Ghosn, shown in 2005, has been detained in Japan since November on financial misconduct charges. PHOTO: ERIC FEFERBERG/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Renault SA Chief Executive and Chairman Carlos Ghosn resigned Wednesday night, ending the reign of a star executive who reshaped the car industry. The French car maker’s board is meeting Thursday to replace Mr. Ghosn.
Ford Motor Co.’s fourth-quarter operating income dropped 28% amid worsening losses in China and Europe, underscoring the pressure on the auto maker’s strong U.S. business to keep producing.
The percentage of S&P 500 companies whose chief executives also serve as chairman reached 45.6% in 2018, the lowest percentage in at least a decade, according to data compiled for The Wall Street Journal.
The world’s biggest makers of shampoo, detergent and packaged food will test selling their products in reusable containers, adopting a milkman-style model to address mounting concerns about plastic waste.
Verizon Communications Inc.’s beleaguered media group is laying off 7% of its staff and is focusing on fewer areas to revive its fortunes. Online publisher BuzzFeed is planning to cut about 15% of its workforce.
United Technologies Corp., which is preparing to break itself apart, reported a 73% jump in fourth-quarter profit as the conglomerate benefited from lower tax rates and a newly acquired aerospace business.
European planemaker Airbus SE has warned that it could move wing-building out of the U.K. if there is a no-deal Brexit, the BBC reports.
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Administrator Confirms 920 Job Cuts at Patisserie Holdings |
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A total of 920 jobs have been cut at defunct U.K. cafe chain Patisserie Holdings PLC, the administrator of the business said Wednesday. KPMG LLP said 72 loss-making stores, concessions and a bakery have been closed, while 122 outlets will continue operating.
Patisserie Holdings said Tuesday that it went into administration after it failed to reach an agreement for the continuation of bank facilities that had kept it afloat. The administrators are searching for a buyer for the business.
“Since our appointment less than 24 hours ago, we have been pleased with the level of interest we have received in the business, and so remain hopeful of achieving a positive outcome,” KPMG partner David Costley-Wood said.
—Nina Trentmann
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Huawei’s very structure makes the company a potential tool for espionage, according to U.S. security officials. PHOTO: HOW HWEE YOUNG/SHUTTERSTOCK
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Liang Hua, the chairman of embattled telecom giant Huawei Technologies Co. is pushing back against U.S. claims his company conducts espionage for the Chinese government, contending that Huawei is being unfairly targeted without any proof. Meanwhile, Huawei phone sales surged by about 50% in 2018, Bloomberg reports.
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Gossamer Bio Inc. has filed to go public using a rare workaround that would let it wriggle into the public markets without the U.S. Securities and Exchange Commission’s explicit green light in the midst of the partial U.S. government shutdown.
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Several advocacy groups are urging the U.S. Federal Trade Commission to seek a breakup of Facebook Inc. as it weighs possible penalties against the social media company for privacy violations.
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Antigovernment demonstrations are among developments that have clouded Europe’s political path to economic recovery. PHOTO: IROZ GAIZKA/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Gloomy economic forecasts set the tone at the World Economic Forum in Davos, Switzerland, as Europe’s recovery appears to be running out of steam and its politics shaken by the growing strength of nationalists.
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The Trump administration’s top economist said that the U.S. economy may not grow at all in the first quarter if the partial government shutdown continues.
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British employers have offered staff the biggest pay rises in 10 years in early 2019, a survey of companies suggested on Thursday, adding to signs that historically low unemployment is beginning to translate into faster wage growth, Reuters reports.
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Passing through. Many rental-real-estate owners stand to benefit from new tax benefits for partnerships and other pass-through businesses, but writers, physical therapists and owners of baseball teams don’t.
Unchecking the penalty box. The U.S. Internal Revenue Service is waiving penalties for some taxpayers who withheld too little when tax tables changed last year.
No tax holiday at the IRS. The U.S. Treasury said more than half of IRS employees would work during tax-filing season, despite the federal government shutdown.
Don’t take a number. The federal government shutdown has stopped the IRS from issuing some new employer identification numbers, a key step in many business deals.
Investors can’t bank on taxes. Profits at big banks benefitted from the 2017 tax overhaul, but no longer.
High rates, not high taxes. High earners and celebrities in the U.S.—from Jack Benny to Gen. Dwight Eisenhower—have long avoided paying the top tax rate, WSJ tax columnist Laura Saunders writes.
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PTC Inc., the Boston-based software and services company, said Chief Financial Officer Andrew Miller will retire in fiscal 2019. Mr. Miller will remain in his current role until a successor is in place.
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Mr. Miller joined PTC in February 2015 as executive vice president and CFO. Prior to that, he served as CFO of Cepheid Inc. from January 2012. PTC has launched a search for his replacement.
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