Financial Times Europe - 02.11.2019 - 03.11.2019

2 November/3 November 2019 ★ FTWeekend 11

COMPANIES. WEEK IN REVIEW

I

was not a latte papa. After my first

child was born on a snowy evening

in Brooklyn six years ago, I salted

the stoop, gingerly carried her

inside, and spent four weeks

monitoring her breathing. It was a

magical time. And then it was a relief to

get back to work.

Future fathers will not have the same

opportunity to catch up on sleep at

their desks. Fund managerStandard

Life Aberdeen his week announcedt

that it would offer nine months’ leave

to all UK staff, regardless of their sex

and no matter what leave their partner

was taking. Insurer Aviva started

offering six months to both new

mothers and fathers two years ago.

In the US, tech roups have been atg

the forefront in offeringsubstantial

paternity leave. Three o ft ive months is

common in Silicon Valley.

The push for paternity leave is not

new. It has been a fight in the courts, in

politics andin companies since the

1970s. A European plan in the 1980s to

grant three months’ paternity leave

was described in the FT as the latest

“radical” policy from the “perennially

progressive social affairs directorate”.

Opinions have shiftedbut the

acceleration of change is dramatic. I

did take an additional month off when

my wife returned to work after her

three months’ leave, but even this now

looks woefully insufficient. In many

companies, men taking anything less

than several months off work will soon

be as much of a throwback as those

who fail to attend their child’s birth.

For a long time, the argument

concentrated on allowing men to bond

with their babies and take on a bigger

share of childcare.The focus now is on

what it might mean for inequalities in

the workplace, including the gender

pay gap. More paternity leave makes it

easier for more women to work full-

time — as well as reducing, or at least

equalising, any career setback for

taking time off.

When fathers do more childcare,

there will be less stigma around

parental leave, such as that described

in a legal complaint against WeWork

this week. An ex-chief of staff to ousted

CEO Adam Neumann claimed he

disparaged her maternity leave as

“vacation” and “retirement” before she

was demoted and ultimately fired.

WeWork has pledged to “vigorously

defend itself” against the charge.

The option of shared leave is

necessary but not sufficient. Even in

Sweden, home of thelatte papa, men

did not immediately take advantage of

their right to generous shared parental

leave when it was instituted in 1974.

Take-up improved as more time was

allocated specifically to fathers. Now,

three months of the leave is reserved

for men, and more of them take it.

Looming demographic disasters have

helped change attitudes. Japan’s

environment minister says he might

take paternity leave next year an—

important signal in a country battlinga

low birth rate and low representation

of women in senior corporate roles. At

a conference this week in South Korea,

which faces similar challenges, an

OECD economist advised the country

to make paternity leave mandatory.

Even in the US, a declining population

adds to the pressure for change.

Absent state intervention, it will be

years before equality is achieved. Large

companies, blessed with chief people

officers and a yearning for publicity,

can outbid each other to offer more

paternity leave, but it is a frightening

trend for small companies. For

employees, though, it is a positive at

work and at home. Even for the men.

[email protected]

Paternity leave is

a positive for staff

at work and home

The focus

is on what

it might

mean for

inequalities

in the

workplace,

including

the gender

pay gap

A decade ago Carlos Tavares made

approaches to US car group Chrysler

about a merger with Japan’s Nissan,

where he was a senior executive.

On Thursday he returned to finish

the job.

Now chief executive of France’s

PSA, the Portuguese businessman has

presided over the remarkable revival

of the near-bankrupt owner of

Peugeot and Citroën, as well as the

2017 acquisition of Germany’s Opel to

strengthen the group.

PSA executives are“working

towards” a €45bn merger with Fiat

Chrysler, forged from the ashes of the

bankrupt US company, in a

collaboration that owes much to the

car-loving Mr Tavares.

Even by the standards of the

petrolheadswho occupy the

industry’s C-suite offices, he is a

fanatic. His first job out of university

was as a test driver for Renault.

Sitting in Peugeot’s Paris

headquarters, which recently moved

from the Champs-Elysées to a

cheaper site on the city’s outskirts, he

said this year that he did not mind

when he retired s long as he coulda

still race.

He has demonstratedendurance

on the track. During one 24-hour

race, when mechanical problems

brought his car to a shuddering halt,

he repaired the fault, jumped back

behind the wheel and carried on to

the finishing line.

Persistence has proved crucial in

his pursuit of the transformative

merger with FCA, where he isin the

final straight.

Only a few months ago it looked like

the tie-up had run out of road after

the Italian-American group opened

discussions with Renault instead.

“There was a chill wind that

morning” in the Tavares camp, said

one person familiar with the matter,

when it emerged that FCA and

Renault were in talks.

But when those discussions

collapsed, Mr Tavares was back in the

game. If all goes to plan, he willhead

the fourth-largest carmaker.

Known for his cost control, no

change is likely in his parsimonious

approach, which extends to his

personal life. He has bought used

brake discs for his racing cars before

taking them home in his van, heshuns

luxury hotels and chauffeured cars,

and insists on using budget airlines.

When he visitsplants, he makes a

point of buying sandwiches from a

localshop.

Analystsdescribe him as theworst-

dressed automotive CEO; he prefers

standard suits over tailored outfits.

Max Warburton, Bernstein’scar

sector analyst, describes him as “the

world’s most frugal auto executive”.

This austerity might seem to put

him at odds with John Elkann, the

Italian who controls FCA’s largest

shareholder Exor.

Mr Elkann’s natural warmth with

Renault chairman Jean-Dominique

Senard — the pair thrashed out merger

plans in French at their respective

châteaux — was not present at first

with Mr Tavares, a block on earlier tie-

up talks.

But a rapport has developed —

some suspect through necessity, as

both car groups need to join forces to

cope with the big changes taking place

in the industry.

“When John looks at Carlos, he sees

something that he has seen

somewhere before,” said a person

close to Mr Elkann, in a nod to

former Fiat chief Sergio

Marchionne.

It was Mr Elkann who in 2004

plucked Mr Marchionne from

obscurity to run the business, the big

break from which he built an

automotive empire.

Mr Tavares is known for giving his

workers freedom to act and take

initiatives, something people across

the industry point to when trying to

explain his success in turning round

first Peugeot and then Opel. Those who

fail to justify the trust he places in

them, however, are often given short

shrift.

His career has haddifficult

moments. In 2013 he was fired from

Renault after saying in an interview

that he did not want to wait for his

then boss, Carlos Ghosn, to retire, as he

had his eyes on a chief executive

position himself, perhaps at General

Motors or Ford.

Now, barring any hiccups, he is

poised to catapult past both Detroit

carmakers.

While some analysts suggest that

PSA is effectively buying FCA, with

governance tilted towards Paris, others

suggest that FCA hasthe best of the

deal ecause they have bagged Mrb

Tavares asboss.

One banker said: “Are FCA buying

Carlos Tavares? Maybe. Would it be

the same transaction without him?

Definitely not.”

Peter Campbell and David Keohane

Coveted global reach is within frugal PSA chief’s grasp

He drives

a van,

dresses in

standard

suits, flies

on budget

airlines,

shuns costly

hotels and

dines on

sandwiches

Sacked from Renault in 2013 for

lèse-majesté — he said did not want

to wait for Carlos Ghosn to retire —

Carlos Tavares then turned round

Peugeot and is working on a €45bn

Fiat Chrysler merger —Benoît Tessier/Reuters

UnderthehoodOne-francdealpavedwayforLVMH’sluxurysuccess

Ackmanalert

3 Bill Ackman, pictured, warned thatSoftBank

risked having to write off allits investment in

WeWork, which it bailed out after the US company

went from a prospective IPO giving it a valuation of

$47bn to scrambling

for a bailout in just

twomonths.

“I think WeWork

has a pretty high

probability of being a

zero for the equity, as

well as for the debt,”

the hedge fund man-

ager told an investor

conference in New

York. “I think this

looks like putting good money after bad, and Soft-

Bankshouldhavewalkedaway.”

3 Tiffanyconfirmed it was reviewing a $14.5bn all-

cash takeover bid from LVMH. T he brand known for

duck-egg blue boxes andengagement rings aids

LVMHhad made an unsolicited offer of $120 a share,

valuing the shares at $14.5bn and the company at

$14.9bn,includingnetdebt.See Under the Hood

3 Boeingpushed to limit expensive training for

pilotsofits737Maxjet,despiteacknowledgingthata

failureofitsanti-stallsystemcouldbe“catastrophic”

if they did not respond in 10 seconds, according to

documentsreleasedbyCongress.

The documents were amongevidence released by

the House transportation committee during a hear-

ing with Dennis Muilenburg, Boeing’s chief execu-

tive, who was testifyingabout two accidents involv-

ingtheaircraftthatkilled346people.

‘WeWork has a pretty high

probability of being a zero for the

equity and for the debt. This looks

like putting good money after bad’

Arnault has become Europe’s richest man at the group’s helm but his appetite for acquisitions is still strong

A symbolicfranc. That is allBernard

Arnault paid for Boussac, a near-

bankrupt textile company,in 1984.

From this tiny acquisition, Mr

Arnault built LVMHinto thelargest

luxury group by revenues and

became Europe’s richest man in the

process. LVMH’s €46.8bn sales last

year were more than three times

those ofnearest rival Kering.

This growth has been propelled

by Mr Arnault’s voracious appetite

for dealmaking.He was drawn to

Boussac because it owneda jewel

he wanted: luxury group Christian

Dior. From therehe used Christian

Dior as the cornerstone on which he

has followed up with 40 or so more

acquisitions.

Only rarelyhas Mr Arnault

missed out on a prized target. His

biggest defeat came 20 years ago

when retail businessman François

Pinault emerged victorious against

him in a long-running and

acrimonious battle for control of

Italian luxury brand Gucci. Mr

Pinault used Gucci as a linchpin to

build his own luxury empire: Kering.

Earlier this week LVMH went in

pursuit of another high-end brand,

US jeweller Tiffany & Co. If

successful, the $14.5bn deal would

mark Mr Arnault’s largest-ever

acquisition and push LVMH further

into hard luxury, giving it a portfolio

to rival that ofRichemont.

Age does not appear to have

dimmed 70-year-old Mr Arnault’s

hunger for deals. He told the FT

earlier this year: “We are still small.

We’re just getting started... We

are number one, but we can go

further.” Harriet Agnew

3 Increasing concern over the health effects of vap-

ing prompted Altria to write down its investment in

Juul, the e-cigarette company, by $4.5bn. The

tobaccogroup,parentofMarlboro wnerPhilipMor-o

ris USA, valued its stake in Juul at $12.8bn at the end

of June but said at its third-quarter results that it had

bookedthechargeonthestart-up.

3 Facebookdropped its year-long appeal against a

£500,000 fine imposed by the UK’s data watchdog

for its failure to protect users’ information in the

CambridgeAnalyticascandal.

The payment comes at a time of renewed scrutiny

ofFacebook’sroleinthedemocraticprocess.

3 Deutsche Bank’s fixed-income business suffered a

13 per cent drop in revenues, deepening the chal-

lengeforchiefexecutiveChristianSewing.Thethird-

quarter fall at the unit, which includes bond and cur-

rencytrading,wasinsharpcontrastwiththeaverage

11percentgainachievedbyitsrivalsonWallStreet.

3 Soho House, the hotel and members’ club chain,

was valued at $2bn after raising $100m to help dou-

ble itsfootprint to 50 venues over the next “three to

four” years. The expansioncomes despite the group

failing to turn a profit and fearsit was taking on too

much debt. At the end of last year the group’s debt

hadgrownbyjustoverafifthyearonyearto£417m.

3 Orsted, thelargest offshore wind developer,

warned that its wind farms would produce less

power than expected in what it suggested was an

“industry-wide” issue that will intensify as more off-

shorewindfarmsarebuilt.

3 TheBarclay brothers, who own The Ritzandthe

Telegraphnewspaper,areclosetopumpinghalfabil-

lion pounds into theirempire even as they review

assetsforsale.

Carlos Tavares

Chief executive, PSA

BEST OF

BUSINESS

*Excludes ‘other activities’ and eliminations **Acquisitions that LVMH continue to own Source: Bloomberg; company; FT research FT visual journalism: Patrick Mathurin; Chris Campbell

    

Fashion and leather goods

Other

Perfumes and cosmetics

Selective retailing

Watches and jewellery

Wines and spirits

bn



The Tiany takeover

approach would mark

one of LVMH’s largest

acquisitions, expanding

its interests in jewellery

and increasing exposure

to the US

Acquires TAG Heuer

and Zenith to compete

in luxury watches

Doubles the size

of its watches and

jewellery business

by taking a

controlling stake in

Bulgari, the Italian

jewellery house

Buys French

business newspaper

Les Echos from

Pearson

Acquisitions

by business

area**

LVMH revenues*

To bolster its fashionware,

LVMH acquires a 

stake of Italian fashion

brand Emilio Pucci

Acquires La Samaritaine,

a luxury department

store in Paris

LVMH business areas

Pushes further into

luxury experiences

with the bn

acquisition of Belmond,

a London-based hotel

and travel group

In the mid-s LVMH’s sales were

split evenly across fashion, beauty

and wine and spirits. Today, group

revenues have grown  times as it

has broadened its high-end oerings

from luxury experiences to Swiss

watches











$47bn

Onetime WeWork

valuation. It has

since scrambled

for a bailout

$14.5bn

Value of

LVMH’s all-cash

takeover bid

for Tiffany

Corporate

person in

the news

The Top Line

Tom

Braithwaite

NOVEMBER 2 2019 Section:Companies Time: 11/20191/ - 18:46 User: andrea.crisp Page Name:CONEWS2, Part,Page,Edition:EUR , 11, 1