Biz Watch

Calling for AT&T
Mergers are like buses: you wait ages for one, and then three show up. Hostile bids — Comcast's for Disney, Sanofi's for Aventis — are reviving the mergers

INDICATORS Blue Sky for Jumbo Deal European and U.S. regulators green-lighted the merger of Air France and Dutch carrier KLM, creating the world's largest airline and encouraging further consolidation. Alitalia also wants to join forces with Air France. Privatizing Posthaste Royal Mail's 300-year-old state monopoly on Britain's postal services will end in April when it starts delivering bulk mail collected by courier Business Post. Germany's Deutsche Post is one of several companies looking for a similar slice of its business. Breaking Windows? Already scrambling to close a security flaw in its latest operating-system release, Microsoft was investigating how some 15% of its Windows 2000 source code was leaked to file-swapping Internet sites, making it potentially vulnerable to hackers and rivals. You Can't Afford It, Madam K Louis Vuitton's New York City store unveiled retail tracking software that recalls customers' likes, how quickly they pay and which ones are serial returners.

and acquisitions sector. So far this year, U.S. companies have announced deals worth five times as much as during the same period last year. But the real cliffhanger involves AT&T Wireless, the U.S.'s troubled No. 3 carrier. It wants to merge, and Arun Sarin, chief executive of British mobile giant Vodafone, has said he wants to bid. Assuming it could outbid the No. 2 player, Cingular (which upped its bid last week), Vodafone would be buying a firm that's losing market share. The bid deadline was Friday, but no one would confirm a Vodafone offer; some say AT&T's 22 million customers come at too high a price. ABN Amro analyst Jamie Mariani calls the merger idea "nonsense,'' arguing that the $35 billion price tag, plus $8 billion in AT&T debt, would obliterate any benefits. And to make a deal Vodafone would have to wriggle out of its noncompete accord with Verizon, the U.S. leader, by agreeing to dump its 45% of Verizon stock. AT&T should pick a suitor by month's end.

A Pourboire for the Chefs
Maybe there is such a thing as a free lunch. Even as it struggles to contain its ballooning budget deficit, the French government last week wrote a 31.5 billion check to a famously well-fed group: the nation's restaurant owners. It was billed as just deserts after President Jacques Chirac failed to convince other European Union nations to lower the value-added tax on restaurant meals from the current 19.6% to 5%. The move illustrates the clout of the food lobby and its leader André Daguin, a former two-star Michelin chef. They claimed they could create 40,000 new jobs if they got the tax break on social-insurance costs — and hinted that many might vote for the extreme-right National Front if Chirac didn't deliver. Other groups who argue they need the money more, including scientific researchers, cried foul, but the restaurants won out. Now all the government needs to figure out is where to find the money.

The Bottom Line
	Without a doubt, the Channel Tunnel would not have been built if we had known about these problems.
		RICHARD SHIRREFS, Eurotunnel CEO, on the Chunnel operator's ?1.9 billion loss in 2003, ongoing debt and low traffic