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Jun 20, 2016

DealBook Today's Top Headlines - June 20, 2016: Energy Transfer and Williams Near a Reckoning | Goldman Sachs Heads to Main Street | Emails Reveal Bitter Silicon Valley Feud

 
Monday, June 20, 2016
TODAY'S TOP HEADLINES
By AMIE TSANG
ENERGY TRANSFER AND WILLIAMS NEAR A RECKONING Kelcy L. Warren, the chief executive of Energy Transfer Equity, has been scrambling to find a way out of a $38 billion merger with Williams Companies and his time is swiftly running out, Julie Creswell and Leslie Picker report in DealBook.

The deal is now worth only about $20 billion and has led to three lawsuits filed by Williams against his company and one filed against him personally. Williams shareholders will vote in a week on the merger and the two sides will meet on Monday in a Georgetown, Del., courtroom, where lawyers will analyze the fine print of their merger agreement.

Energy Transfer is hoping that Vice Chancellor Sam Glasscock III of the Delaware Court of Chancery will find any violations of the agreement that may have occurred are enough to kill the deal. The ruling is expected before the shareholder vote.

If the judge rules for Williams, the only way out for Energy Transfer would be to write a large settlement check.

It would be easy to cast the troubled merger as yet another result of the collapse in energy prices, but the deal was also driven by hubris - the ambition of an empire builder who coveted his prize so much he left little or no room for anyone to wiggle free.

When Mr. Warren started Energy Transfer, pipeline companies were viewed as more stable than drilling companies. The contracts are typically long term and the business is generally insulated from swings in energy prices. But the company expanded into other activities. "One cannot live on organic growth alone," was a favorite phrase of Mr. Warren's.

By early last year, Mr. Warren had cobbled together a 71,000-mile network of pipelines and announced plans to buy Williams in a cash-and-stock deal worth $38 billion. By Christmas, he had buyer's remorse. The free fall in energy prices and concern among investors over how Energy Transfer would pay for the $6 billion cash portion of the deal caused his own company's stock to collapse.

He ordered his advisers to find any way out of the deal and the judge will decide whether he went too far in trying to preserve his empire.
GOLDMAN SACHS HEADS TO MAIN STREET You used to need $10 million to become a customer at Goldman Sachs, but now you can get in with just a dollar, Nathaniel Popper reports in DealBook.

GS Bank, started in April, promises "peace-of-mind savings" and "no transaction fees." It is aimed squarely at ordinary Americans - the sort of clientele the company scrupulously avoided during its first 147 years in operation.

Goldman, which previously favored tycoons and plutocrats, is hunting for new businesses, just like other marquee banking companies. Regulations have squeezed deal-making activity and the bond trading desks that generated most of Goldman's precrisis profits now only make a fraction of what they did before.

Goldman has also been preparing to introduce 401(k) accounts, loans for people saddled with credit card debt and new investment funds that can be purchased by anyone with an E-Trade account. All of these services will be offered online only, saving Goldman on the expense of traditional branches and tellers.

Goldman executives have been debating whether they want to end up to with something resembling a full-service online bank, they could still back off if the initial experiments fail.

So far, interest has been strong. Stephen Scherr, the chief of strategy for Goldman, said the bank had opened tens of thousands of new accounts in its first few weeks, in addition to the 150,000 it acquired from GE Capital.

Its 50-person call center in Cedar Rapids, Iowa, was unprepared for the surge of interest. And soon after the bank's debut, a columnist at The Wall Street Journal wrote about the problems he encountered trying to open an account.

The bank's moves have prompted some head-scratching in the industry as it has so little experience in retail banking. It also faces the challenge of persuading Americans to use a bank that has been maligned as a symbol of Wall Street greed. The bank would have to pull in huge numbers of people to make even a tiny difference to its annual revenue. Goldman's big test comes later this year when it starts offering relatively small loans of around $15,000 to $25,000.
ON THE AGENDA The third symposium on Ending Too Big To Fail starts at 10 a.m. in Washington, D.C. Facebook's annual shareholder meeting starts at 2 p.m. The 2016 SelectUSA Investment Summit, focused on "The Innovation Advantage," starts at 8:15 a.m. in Washington, D.C.
EMAILS REVEAL BITTER SILICON VALLEY FEUD Emails made public by a Delaware court show how the tension between Meg Whitman, the chief executive of Hewlett Packard, and Frank Quattrone, a top Silicon Valley investment banker, erupted over HP's purchase of Aruba Networks last year, The Wall Street Journal reports.

Court papers show how that Ms. Whitman refused to negotiate with Mr. Quattrone's firm, which was advising Aruba, and insisted on another bank being brought in. An Aruba investor argued that Ms. Whitman's influence in the selection of advisers created a conflict that resulted in an unfair price.

Both HP and Aruba said the deal was fair.

Qatalyst, Mr. Quattrone's firm, is not a party to the lawsuit and declined to comment, but its spokesman told The Journal that, "Qatalyst has represented clients across the table from HP in the past and expects to do so in the future."

Mr. Quattrone is one the biggest matchmakers in Silicon Valley, but there were tensions between him and Ms. Whitman. His longtime partner, George Boutros, advised Yahoo on abortive merger talks with eBay, when Ms. Whitman was chief executive there, The Journal reports, citing discussions in an email and people familiar with the matter. Qatalyst also advised Autonomy, the software maker, on its $11 billion sale to HP. The company took an $8.8 billion write-down and accused Autonomy of inflating its results.
MERGERS & ACQUISITIONS »
Two Abu Dhabi Banks Confirm Discussions of a Merger A combination of National Bank of Abu Dhabi and First Gulf Bank would create one of the largest banks in the Middle East and Africa.
INVESTMENT BANKING »
Swiss Private Banks Sharpen Focus on Southeast Asia Swiss private banks are looking to capitalize on a retreat by global banks from Southeast Asia and pushing deeper into the region as they seek to extend their range beyond Singapore to tap wealthy clients in less developed markets.
Morgan Stanley Lures Star Lawyer to Lead British Unit Morgan Stanley is set to name Mark Rawlinson, a longtime corporate partner at the law firm Freshfields Bruckhaus Deringer, as its new chairman of investment banking in Britain in an unusual move to lure a star deal maker from the legal industry.

For the latest updates, go to NYTimes.com/DealBook
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PRIVATE EQUITY »
Francisco Partners and Elliott Said to Be Near Deal for Dell Software The buyout firm Francisco Partners and the private equity arm of the hedge fund Elliott Management are in advanced talks to buy Dell's software division for more than $2 billion, Reuters reports, citing people familiar with the matter.
Robert F.X. Sillerman, an entrepreneur, bought 80 percent of Muhammad Ali's G.O.A.T. company in 2006. He later sold the rights to Ali's image, which has since ended up with the Authentic Brands Group.
Businesses Explore New Ventures to Cash In on the Muhammad Ali Brand Companies like Porsche, Under Armour and Toyota have all made deals with Authentic Brands, the company that owns the rights to Mr. Ali's image.
I.P.O./OFFERINGS »
Shanghai Brokerage Firm Seeks to Raise Up to $1.2 Billion Orient Securities, the brokerage firm based in Shanghai, is seeking as much as $1.2 billion in a first-time share sale in Hong Kong, according to the terms of the deal obtained by Bloomberg.
VENTURE CAPITAL »
Sara Montoya, 21, center, at California State University at Fullerton this month, said she used the app Nurx for birth control because she felt uncomfortable visiting a doctor.
Birth Control via App Finds Footing Under Political Radar Apps and websites that use telemedicine and other methods to offer prescriptions have sprung up with little of the furor expected in issues involving reproductive health.
LEGAL/REGULATORY »
Raghuram G. Rajan, governor of the Reserve Bank of India, has faced criticism from the country's ruling party.
India's Central Bank Chief to Step Down Raghuram Rajan, who as governor of the Reserve Bank of India has been popular with investors but faced opposition from India's ruling party, said he would leave when his term ends in the fall.
Gregory Selden is the chief plaintiff in a class-action discrimination suit that is testing Airbnb's clause that requires its customers to agree to waive their right to sue or join in any class-action lawsuit.
Airbnb Vows to Fight Racism, but Its Users Can't Sue to Prompt Fairness Airbnb tells users they must agree to waive the right to sue, or to join in any class-action lawsuit or class-action arbitration, as a condition of using the service.
Mario Schlosser, right, chief executive of Oscar Health, and Joshua Kushner, a founder. The company was started in 2012, just in time to offer plans to people buying insurance under the new federal health care law.
Start-Ups Struggle to Insure Individuals State marketplaces were expected to draw millions of individual customers to an array of start-up insurers. But the market is smaller than those companies hoped.
Diversity Crisis Forces Fund Houses to Act Companies including Aberdeen Asset Management, Schroders and Allianz Global Investors have joined forces in an attempt to address accusations that the asset management market is an old boys' club that promotes and protects the interests of white, middle-age men.