1. business and industrial
2. energy
3. coal

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BY SHAYNDI RAICE
AND INTI LANDAURO
The boards of cement giants
Holcim Ltd. and Lafarge SA met
separately on Tuesday to try to
save their proposed $44-billion
tie-up, and discussions on both
sides hinged on the future of one
man: Lafarge Chief Executive
Bruno Lafont.
Executives, board members
and key shareholders at Switzerland-based Holcim have balked
at moving ahead with the
merger—one of Europe’s biggest
recent deals—if Mr. Lafont, 58
years old, assumes the CEO role
of the new company, as originally planned.
Holcim is also demanding new
financial terms. France-based
Lafarge previously said it was
open to tweaking financial
terms, but that it won’t go further. A Lafarge spokesman said
executives were surprised by
Holcim’s objection to Mr. Lafont,
and they accuse Holcim of trying
to change the terms of the
merger without paying a price.
On Tuesday, Lafarge directors
met and discussed a possible new
role for Mr. Lafont in the combined entity, according to people
familiar with the matter. They
also discussed other potential
CEO candidates for the postmerger company, though the
board hasn’t ruled out insisting
that Mr. Lafont be the chief executive of the combined company, as
originally agreed when the merger
deal was announced in July.
Holcim, whose directors also
met Tuesday, is open to Mr. Lafont staying with the company in
a new capacity, said people familiar with the matter.
In July, the two sides trumpeted a merger of equals, in
which Mr. Lafont would take the
CEO job and Holcim’s current
chief executive, fellow Frenchman Bernard Fontana, would assume the chairmanship of the
combined company. Mr. Lafont
has long cut a figure in French
business circles as a savvy deal
maker, orchestrating in 2007, for
instance, the purchase of Egyptian cement maker Orascom for
€8.8 billion ($9.3 billion.)
The Lafarge-Holcim merger
was Mr. Lafont’s boldest move,
aimed at bolstering Lafarge in
the wake of a world-wide construction slowdown, particularly
in Europe. He won respect from
the Holcim side in successfully
navigating the considerable regulatory hurdles facing the deal,
and for moving quickly to sell off
assets to prevent antitrust issues, according to people familiar with the matter.
But amid that deal making,
the performance of the two companies diverged, raising questions inside Holcim about Mr.
Lafont’s stewardship, according
to people familiar with the matter. The two sides had promised
Please see CEMENT page B2
THE WALL STREET JOURNAL.
****
Wednesday, March 18, 2015 | B1
Chanel’s Fashion Emergency: The Euro
BY JASON CHOW
AND NADYA MASIDLOVER
PARIS—French fashion house
Chanel said Tuesday it would increase prices in Europe on some
of its prestigious handbags while
slashing them in China in a bid
to eliminate a growing price gap
between Europe and Asia caused
by the weakened euro.
Chanel said the price changes
would take effect on April 8 and
are required to eliminate a flourishing gray market for travelers
who have been taking advantage
of the vast price differential,
buying handbags in Europe and
reselling them in China.
“This measure is intended to
reduce price differentials across
countries, which have widened
considerably further to the recent depreciation of the euro,”
Chanel said.
The move could be the first of
Louis Vuitton Speedy 30
PRICE
Paris
New York
Beijing
Gucci Jackie canvas shoulder bag
The price gap has also inspired a growing parallel market, with traveling shoppers reselling their handbags online on
sites like Taobao, a Chinese site
that is similar to eBay, at prices
that are higher than the retail
price in Europe but still cheaper
than those in China.
The regional variances in
prices has created a headache
for many brands that are managing global networks of stores in
the midst of wild currency
swings. After a stretch of rapid
growth in Asia, many brands
have been forced to rethink their
strategy, slowing or halting new
store openings as shoppers, especially from China, make the
most of trips abroad to splurge
rather than spend back at home.
Currently, the price gap is
large enough for a Chinese shopper to justify the trip to Europe.
Please see CHANEL page B2
In the Bag
Exchange rates have exacerbated a price differential for
luxury handbags in Europe,
the U.S. and Asia, often
encouraging a gray market,
particularly in China.
Chanel 11.12 Classic flap bag
$1,000
$2,000
$3,000
Sources: the companies Photo: Getty Images
many price adjustments in the
luxury industry after the deep
slide in the euro against the dollar and other currencies has led
the price of high-end accessories
to vary greatly between New
York, Paris and Beijing. While
$4,000
$5,000
$6,000
THE WALL STREET JOURNAL.
handbag prices have always been
higher in markets outside of Europe, the current gap is far beyond the historical norm.
For consumers from mainland
China—an important market for
the luxury industry—a weak
euro, in addition to hefty Chinese import duties, has made
the price differential so large
that it has prompted shoppers to
buy their luxury goods, especially handbags, while traveling
in Europe.
Jeff Swensen for The Wall Street Journal
Cement
DealHinges
On Lafarge
CEO’sRole
CYBERSECURITY | B3
By his own account, coal is the destiny of Robert Murray, who holds the only voting shares in Murray Energy Corp. and has said he would keep them until he is ‘incapacitated.’
The Last Man Betting on U.S. Coal
While most abandon the fuel, 75-year-old Robert Murray spends big to consolidate mines
BY TIMOTHY PUKO
AND JOHN W. MILLER
The king of American coal is
75 years old, has had four
strokes and broken his neck
three times, but Robert Murray
is still gobbling up mines.
This week, he said his
closely held Murray Energy
Corp., based in St. Clairsville,
Ohio, would pay $1.4 billion for
a controlling stake in Foresight Energy LP, which has extensive coal operations in the
Illinois basin and was founded
by longtime rival Christopher
Cline.
Mr. Murray’s big bet would
create the nation’s No. 3 coal
producer—after Peabody Energy Corp. and Arch Coal
Inc.—highlighting his faith in a
fuel under pressure from lower
natural-gas prices and new
emissions regulations.
The deal would give the
coal magnate, who relishes his
battles with unions, environmental regulators and Presi-
dent Barack Obama, personal
control of nearly 90 million
tons of coal production annually—enough to supply 4% of
the U.S.’s yearly electricity
needs. Coal now fuels less than
40% of the country’s power,
down from 49% in 2007.
By his own account, coal is
Mr. Murray’s destiny. “Dammit,
it’s all I know,” he said in an interview late last year.
Shares in Mr. Murray’s
company, which employs 7,500
people and runs 12 mines in
five states, are split evenly
among Mr. Murray, his wife
and three sons. But Mr. Murray
holds the only voting shares,
and has said he will keep them
until he is “incapacitated.”
Mr. Murray built up his
company through aggressive
deal making. A year ago, with
Foresight’s shares treading water after an initial public offering, it made its first approach
to Mr. Murray, said a person
familiar with the matter.
“No question right now Bob
is Mr. Coal,” said Bob Hodge of
IHS Global Energy. “And with
this deal, he’s supreme commander of coal.”
To do the deal, the two
companies are settling a lawsuit that Murray Energy filed
last year alleging that Foresight used confidential information to buy land and mineral
rights near a Murray mine in
Illinois. Murray Energy executives plan to dismiss the lawsuit when they close the deal,
Please see MURRAY page B2
Seeking a Cure for Holy Grail: Pain Pills Without the High
Corporate Activism
Last year, scientists enlisted
40 recreational drug users to
test one of the hottest questions
in pharmaceutical research: Is it
possible to develop a strong
painkiller that doesn’t make people high?
The participants, who acknowledged a history of illicit
drug use, received three different injections—an experimental
painkiller from Cara Therapeutics Inc., an older painkiller and
saline. After each, the researchers checked participants’ vitals
and asked a series of questions:
How high do you feel? How much
do you like this drug? Would you
want to take it again?
Answers to studies like these
will help determine whether
pharmaceutical companies can
develop new analgesics that
don’t cause euphoria or lead to
abuse—an urgent need amid a
growing crisis of painkiller misuse.
Prescription pain relievers are
a $57 billion global market, according to IMS Health, taken by
cancer patients, chronic backpain sufferers and people recovering from surgery. But abuse of
This lab in Salt Lake City is an early testing ground for new painkillers.
painkillers has soared in recent
years, prompting stricter U.S.
Drug Enforcement Administration regulations that make some
medications tough to prescribe
and refill. Prescription painkill-
ers contributed to 16,000 overdose deaths in the U.S. in 2013,
roughly quadruple the number in
1999, according to the U.S. Centers for Disease Control and Prevention.
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the purpose of the modern
corporation—which managements are losing mightily—this
would at least be a stubby billy
club.
Mr. O’Kelley and his idea
are worth discussing for a
number of reasons, notably because he is the chief executive
and co-founder of a hot New
York advertising technology
firm called AppNexus. The
company is currently valued at
$1.2 billion, and most indications are that it will go public
before too long.
What if AppNexus were to
take the unexpected route and
go public with a modern tenure-voting plan?
Mr. O’Kelley wouldn’t comment on any IPO, but as someone who builds and invests in
companies, he said the idea
has deep appeal: “My father is
a corporate law professor, and
he’s seen companies in different forms of distress. He counseled me for years, saying,
‘Don’t go public. And if you
have to go public, protect
Please see VOTES page B4
Jim McAuley for The Wall Street Journal
BY JEANNE WHALEN
ot unlike unearthing a
lost herbal remedy,
Brian O’Kelley recently
rediscovered an ancient treatment for cases of raging corporate activism. It’s called tenure voting.
First deployed in the 1980s
and since fallen
out of vogue, it’s
a simple concept
with intriguing
consequences for
U.S. companies.
THE GAME Under tenure
DENNIS K. voting, investors
who hold their
BERMAN
shares a set period of time receive additional votes. A company could, for instance,
reward a vote per year, every
year, for five years of holding
its stock.
In theory, this should reward long-term shareholding
and investment while providing a bulwark against shorttermers who roam the markets, looking to force buybacks
or an untimely company sale.
In the ongoing war to define
Getty Images
BUSINESS & TECH.
Biotech startups from Cara
Therapeutics to Nektar Therapeutics and pharmaceutical giants including Pfizer Inc. and
Biogen Idec Inc. are developing
new classes of painkillers, often
based on different mechanisms
than traditional opioids like morphine. Industry experts believe a
safer painkiller could achieve annual sales totaling many billions
of dollars.
Finding one is “a Holy Grail of
pain research,” said Stephen
Waxman, a professor of neurology at Yale University School of
Medicine and a senior researcher
at Veterans Affairs Connecticut
Healthcare System.
The most widely abused analgesics today are opioids, such as
morphine, oxycodone or hydrocodone. They work by activating
mu-opioid receptors on the surface of cells in the brain, spinal
cord and other organs, which are
responsible for modulating pain
perception. Activating these receptors triggers a release of dopamine in the brain, which can
cause euphoric effects in many
people, doctors say.
Some companies, including
Cara Therapeutics and Trevena
Please see PAIN page B2
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