Observer - US

Merger blues for Gene Kahn?

What does Gene Kahn, the former chief executive of May Department Stores, think of the group's decision to be acquired for $11bn by arch-rival Federated Department Stores?

He is probably incensed, Wall Street retail experts tell Observer. Kahn held merger talks with Federated a number of times after becoming chief executive in 1998. Each time the discussions broke down over management issues.

Kahn also fought hard last year to ensure that May outbid Federated to acquire Marshall Field's, the renowned mid-western chain of department stores. So to see Marshall Field's end up in Federated's hands, under the leadership of Terry Lundgren - the chief executive with whom he wrangled most often during his tenure - must be gutwrenching.

But then again, by abruptly resigning in January, Kahn must have known that he was unwittingly inviting a fresh approach from Federated. Lundgren certainly wasted no time.

Pleasantries aside

Most hedge fund managers are shrinking violets, preferring to operate behind the scenes rather than in the glare of the public spotlight. But not Leon Cooperman.

Cooperman, who spent 25 years at Goldman Sachs before setting out on his own to form Omega Advisors, a New York-based hedge fund with about $3.5bn in assets, never hesitates to speak up. He is particularly vociferous when he thinks investors are being short-changed. Omega is one of the biggest investors in MCI, the US telecommunications group that rose from the ashes of WorldCom.

As a result, Cooperman has become one of the sharpest thorns in the side of Michael Capellas, the MCI chief who wants to sell the company to Verizon for $6.75bn despite a higher offer from Qwest.

Cooperman and a group of other dissident shareholders believe the MCI board should re-open negotiations with Qwest, which is offering $8bn in cash and paper for MCI.

In a pointed exchange during a conference call with investors to discuss MCI's latest results, Capellas welcomed a question on the subject of Qwest's bid from the Omega Advisors' principal. He referred to his antagonist as "Mr Cooperman", clearly hoping to make amends for a previous embarrassing gaffe on CNBC when he called him "Mr Cooper".

"Just call me Lee", the hedge fund manager shot back. "All my friends do."

Backlash benefits

Sometimes backlash can backfire. Azim Premji, chairman of WiPro, one of India's biggest IT and outsourcing companies, says the election-year furore over US jobs moving overseas has turned out to be a good thing for his company.

Premji last year became the poster boy for outsourcing. He was a frequent guest on cable television programmes - most famously as the target of populist outrage from CNN's Lou Dobbs.

But Premji says it all amounted to good "brand-building".

"We're indebted to Lou Dobbs," Premji says of the CNN anchor, whose crusade included a name-and-shame list of companies engaged in outsourcing, which he published on his website.

Premji argues that Dobbs's website serves as an endorsement of the practice rather than a condemnation.

True or not, Premji says Dobbs's relentless criticism of the practice - which won the anchor recognition as the Organisation for the Rights of America's Workers' Person of the Year - has not stood in the way of profit and revenue growth at WiPro. In fact, outsourcing is no longer just for the largest corporations - he is beginning to do business with mid-sized companies eager to send jobs overseas.

Ukraine strain

"Don't mention Ukraine" has been the catchphrase in Brussels since western-looking Viktor Yushchenko swept to power on the back of a public uprising last year, raising the thorny issue of European Union membership.

Those running the EU do not wish to countenance the country joining for fear of annoying Russia and inflaming euroscepticism in France. (The European Commission's official position is that the EU's door is "neither open nor closed".)

So eyebrows were raised last week when a commissioner almost said that that Ukraine could join "by around 2015" - the same time as troublesome Turkey.

The fateful sentence was in a speech by Danuta Hübner, the regional affairs commissioner, who comes from Poland, Ukraine's biggest European champion.

Yet the speech at Hübner's alma mater, Sussex University, though circulated and quoted, was never made - or so claims her spokeswoman.

She says the speech was changed because the audience "was not interested. They wanted to hear about the constitution, the budget and regional policy" - and so the script was changed at the last minute. She denies that Hübner's colleagues warned her off.

Whatever the truth, Observer would still put money on Ukraine 2015.

Chez Breton

Thierry Breton, France's new finance minister, on Monday promised to seek "continuity" with the policies of his two most recent predecessors: the scandal-hit Hervé Gaymard and presidential wannabe Nicolas Sarkozy.

But at least Breton, whose unkempt mop of curly black hair marks him as the maths teacher he once was, has the sense to learn one lesson from Gaymard: don't move house.

The humble cobbler's son was forced to resign in a scandal over the palatial flat he rented at the taxpayer's expense to house his eight-strong brood. Multimillionaire Breton has only three children and plans to stay in the house he owns in Paris's 14th arrondissement.

observer@ft.com

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