PRIVATE EQUITY

KKR HIRES FORMER MORGAN STANLEY EXECUTIVE FOR ASIA UNIT

Kohlberg Kravis Roberts & Company, which is raising more than $10 billion for a new buyout fund, hired David Liu, the former co-head of Morgan Stanley’s Asian private equity unit, to lead its investment activities in China.

Mr. Liu will be based in Hong Kong, where he worked for Morgan Stanley, KKR said yesterday in a statement. The New York-based firm in October named Deryck Maughan, former vice chairman of Citigroup Inc., to oversee its expansion in Asia.

Asia, led by India and China, attracted a record $17.2 billion of new private equity funds last year, almost three times the 2004 level, according to the Center for Asia Private Equity Research Ltd. That’s led to increased turnover of executives in the industry, including the departure of Morgan Stanley’s China chief executive officer Jonathan Zhu this month to buyout firm Bain Capital LLC, bankers familiar with the matter said. KKR is following rivals such as Warburg Pincus LLC and Carlyle Group into Asia. It opened offices in Hong Kong and Tokyo last year and plans to set up shop this year in Australia and possibly India.

Mr. Liu joined New York-based Morgan Stanley Private Equity in 1993. He grew up in China and graduated from Columbia University with a degree in electrical engineering.

– Bloomberg News

MEDICAL DEVICES

GUIDANT SAYS FAILURE RATE HIGHER THAN WAS THOUGHT

INDIANAPOLIS – Medical device maker Guidant Corporation expanded its pacemaker recall, saying yesterday that seals in some models failed at a higher rate than originally reported and that thousands of other devices could have the same problem.

The news came as Guidant waited to hear from Johnson & Johnson, which faces a deadline today to respond in its bidding war with Boston Scientific Corporation for the Indianapolis-based company.

Guidant told physicians that 145 cases have been reported out of 16,000 pacemakers that were part of a July recall, raising the failure rate from 0.17% to 0.51% to a new range of 0.31% to 0.88%. The failures occurred in a hermetic seal designed to keep out moisture. Guidant also said another batch of pacemakers might have a similar problem because of a manufacturing mix up that included faulty components with those that worked correctly. About 54,000 of those pacemakers were originally made, but only 19,300 remain implanted.

– Associated Press

HEALTH CARE

SCIENTISTS QUESTION BENEFIT OF WEIGHT-LOSS PILL WASHINGTON – Federal scientists questioned yesterday whether there would be any lasting benefit for overweight Americans in allowing over-the-counter sales of a weight-loss pill now sold only with a prescription. GlaxoSmithKline Consumer Healthcare seeks to sell a nonprescription version of orlistat, a drug marketed as Xenical, that overweight adults could use as a weight-loss aid. The Food and Drug Administration approved a prescription version of the fat-blocking pill made by Roche in 1999.

A joint FDA advisory committee was to vote on whether to recommend approval late yesterday. The agency usually follows the recommendations of its outside panels of experts. Currently, the FDA has not approved any nonprescription weight-loss drugs for sale. In six-month clinical trials, obese people who took orlistat lost on average 5.3 pounds to 6.2 pounds more than did those who were given dummy pills. Glaxo wants people to use it for only six months at a time, but as an over-the-counter item, its use could not be policed. However, the pill’s effect ends once its use is stopped, Dr. Julie Golden, a medical officer in the FDA’s division of metabolism and endocrinology products, said.

– Associated Press

SUPERMARKETS

ALBERTSON’S TO BE BOUGHT, SPLIT UP

A consortium consisting of SuperValu Incorporated, CVS Corporation, and an investment group led by Cerberus Capital Management L.P. agreed to acquire Albertson’s for roughly $9.6 billion, bringing an end to a tumultuous sale process.

Under the cash and stock deal, Albertson’s shareholders will get $20.35 in cash and a fixed exchange ratio of 0.182 shares of SuperValu stock for each Albertson’s share. The value of the SuperValu stock, based on a $32.65 average stock price using the 20-day trading average of the closing price of SuperValu stock through January 20, is $5.94, bringing total consideration per share to $26.29.

SuperValu said the acquisition will triple its retail operations, making it the second-largest supermarket company in America with 2,656 stores after it adds about 1,124 stores.

– Dow Jones Newswires

IN BRIEF

Natural gas fell as much as 7.8%, pushed lower by mild weather that’s expected to leave supplies at near-record levels at the end of winter … A 20-year-old hacker pleaded guilty yesterday to surreptitiously seizing control of hundreds of thousands of Internet-connected computers, using the zombie network to serve pop-up ads and renting it to people who mounted attacks on Web sites and sent out spam … The founder of HealthSouth Corporation Richard Scrushy pressured a UBS banker for a secret $250,000 political donation to help an Alabama governor, according to two FBI witness reports unsealed in a criminal bribery case.

– Bloomberg News and Associated Press