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 RECKONINGKelcy 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
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.
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
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 AGENDAThe 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 FEUDEmails 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
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.
Swiss Private Banks Sharpen Focus on Southeast AsiaSwiss 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
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
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
Businesses Explore New Ventures to Cash In on the Muhammad Ali BrandCompanies like
Porsche, Under Armour and Toyota have all made deals with Authentic
Brands, the company that owns the rights to Mr. Ali's image.
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.
Birth Control via App Finds Footing Under Political RadarApps and
websites that use telemedicine and other methods to offer prescriptions
have sprung up with little of the furor expected in issues involving
India's Central Bank Chief to Step DownRaghuram 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.
Airbnb Vows to Fight Racism, but Its Users Can't Sue to Prompt FairnessAirbnb 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.
Start-Ups Struggle to Insure IndividualsState
marketplaces were expected to draw millions of individual customers to
an array of start-up insurers. But the market is smaller than those
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.