DealBook Today's Top Headlines - June 23, 2015: An Early Winner in the 'Brexit Vote' | A Risky Bet on the Panama Canal | VW Shareholders Vent
Thursday, June 23, 2016
TODAY'S TOP HEADLINES
By AMIE TSANG
AN EARLY WINNER IN THE 'BREXIT VOTE'The gambling
markets in Britain have been the closest thing to clarity in the face of
the confusion created by the vote on Britain's membership of the
Peter S. Goodman reports in The New York Times.
Although polls have shifted and shown just how divided the electorate is, gamblers have held firm, showing that people were putting their money on sticking with Europe. What has created unease in other parts of the world has become an exploitable asset for bookmakers.
"The betting is just massive," said Mike Smithson, the founder
and editor of PoliticalBetting.com, a website that is like a Bloomberg
data terminal for people who wager on political events. He characterized
the referendum as "the biggest political betting event of all time,
On Tuesday and Wednesday alone, the vote attracted wagers worth more than 3 million pounds, or about $4.4 million. About three-quarters of that landed on remain, Mr. Smithson said.
William Hill, the largest bookmaker in Britain, assumes the betting industry will collectively count wagers of more than $29 million before the results are in.
There would be no instant change. The government would have to
invoke an unused provision of the European Union's governing treaty -
Article 50 - which sets out the withdrawal process.
It sets a two-year deadline for a negotiated departure. It is not
entirely clear whether Prime Minister David Cameron would stick to his
stated plan to invoke it immediately if the country votes to leave. He
could face pressure to delay starting the two-year period from those in
his party who favor leaving.
Their thinking is that before starting the clock, Britain should start
informally negotiating a new trade deal with the European Union. They
suggest that Britain would lose considerable leverage in negotiating a
new trade deal once it was outside the bloc and that it could get a
better trade deal as a part of a negotiation that encompasses all
aspects of the new cross-channel relationship.
Many have misgivings about the prospect of disentangling Britain from four decades of European integration. "The long-term ghastliness of the legal complications is almost unimaginable,"
Sir David Edward, a former judge at the European Court of Justice and
professor emeritus at Edinburgh University, told a committee of the
House of Lords.
A RISKY BET ON THE PANAMA CANALThe Panama
Canal's new locks will be on display this weekend, when heads of state
congregate to see a Chinese container ship become the first commercial
vessel to make the passage from the Atlantic to the Pacific.
A new canal needs enough water, durable concrete and locks big enough to safely accommodate larger ships. A Times investigation has found that the Panama Canal fails on all three counts.
The low bid for the project - a billion dollars less than the nearest
competitor's - made it precarious from the outset, according to a
confidential analysis commissioned by the insurer for the four-nation
consortium that built the new locks. "This is a high-risk situation," wrote the analysts from Hill International in 2010.
As the project developed, it was mired in infighting, political firestorms and severe concerns about its physical structure.
The canal has made Panama, a country with few natural resources, crucial
to global economics. It became a major banking, trading and airline
hub, not to mention a transit zone for drug dealing and money
The consequences will be wide-ranging if the canal does not deliver.
American grain and soybean farmers and producers of liquefied natural
gas may find it harder to sell to Asian customers. Asian manufacturers
may forsake the struggling ports on America's East Coast, or they, and
ultimately consumers, will shoulder the added cost of going the long way
round, through the Suez Canal.
The canal's success may also be undercut by the slowdown in global trade, especially from China.
Read The Times investigation into the problems that struck the $3.1 billion expansion project here.
ON THE AGENDAThe Global Entrepreneurship Summit starts at midday Eastern Time in Silicon Valley. The Federal Reserve will publish the results from its latest stress tests on banks at 4:30 p.m.Robert Kaplan,
the president of the Federal Reserve Bank of Dallas, will speak at a
meeting of the Money Marketeers of New York University at 5:30 p.m.
VW SHAREHOLDERS VENT"They have been rewarded for failure,"
said Hans-Christoph Hirt, co-head of Hermes EOS, a firm that represents
large institutional investors. Volkswagen shareholders had no shortage
of things to complain about on Wednesday,
Jack Ewing reports in The New York Times.
Management bonuses, sagging profits and an emissions scandal have made
shareholders increasingly restive. Many are unsatisfied with a failure
to adequately explain who was responsible for the emissions scandal and
managers' refusal to fully give up bonuses even after the company's first loss in more than two decades.
But the top management faces little threat to its authority as influence lies largely in the hands of a few large shareholders.
Descendants of Ferdinand Porsche, inventor of the Beetle, own a majority
of the voting shares, while the state of Lower Saxony owns a fifth and
the sovereign wealth fund of Qatar holds 17 percent.
Just 11 percent of the company's stock is held by outside
shareholders and holders of Volkswagen preferred shares, the most
actively traded, are entitled to dividends but cannot vote.
At the annual shareholders meeting on Wednesday,
many filed motions to block the management board's actions, but it was a
foregone conclusion that the critics would not be able to muster
anywhere near enough votes to succeed.
Hans Dieter Pötsch, the chairman of the supervisory board, started with a
speech repeating the company's assertion that top executives were not
aware of the gravity of the emissions problem.
A motion to remove Mr. Pötsch as chairman of the annual meeting was
rejected by shareholders holding 98.8 percent of the voting shares.
Manfred Klein, a shareholder who argued in favor of the motion, said
that Mr. Pötsch had a conflict of interest because he was the chief
financial officer during the period when the emissions deceit took
The session nevertheless forced top managers to confront shareholders just days after German prosecutors said they had begun an investigation into Martin Winterkorn, the former chief executive, and Herbert Diess, the executive in charge of the Volkswagen brand.
Tesla's Plan to Buy SolarCity Has Major FlawsTesla's stock fell more than 8 percent on Wednesday,
as investors viewed the deal as a bailout of SolarCity, one that could
sink both companies, Steven Davidoff Solomon writes in Deal Professor.
Qatari Investment Group Acquires Parisian Fashion House BalmainThe sale to
Mayhoola for Investments, a private investment group linked to Qatar's
royal family, will fund the expansion of the label's accessories
McDonald's Receives Bids for China Stores McDonald's has
received more than half a dozen bids for its stores in China and Hong
Kong, including offers from Beijing Tourism Group, Sanpower and
ChemChina, in an auction that could fetch up to $3 billion, Reuters
reports, citing people familiar with the matter.
G.E. Sells French Consumer Credit Unit to Private Equity Firm General
Electric received a binding offer from the private equity firm Cerberus
Capital Management for its French consumer credit unit, GE Money Bank,
as part of its efforts to exit the finance sector.
Cloud Management Company Hires Goldman for I.P.O. Okta, the cloud
identity management company valued at $1.2 billion in its latest round
of private fund-raising, hired Goldman Sachs to lead either an initial
public offering or an outright sale, Reuters reports, citing people
familiar with the matter.
Fullerton Health Seeks to Tap Interest in Health Care in AsiaFullerton
Health, which provides health care to corporate clients like Singapore
Airlines, is preparing for an initial public offering that could value
the company at $1 billion.
Technology Start-Ups Pledge to Increase Diversity in the U.S. Only 3 percent
of venture-backed start-ups were led by women and just 1 percent were
led by African-Americans, while female entrepreneurs start companies
with only half as much capital as their male counterparts, according to
Megan Smith, the chief technology officer in the Office of Science and
Corinthian Colleges Used Recruiting Incentives, Documents ShowThe disclosure,
found in internal documents in a suit filed by employees of the defunct
for-profit education company, could help former students get loans
Former Chief of Bangladesh Bank Blames Global System for TheftIn an
interview, the former chief, Atiur Rahman, defended his own conduct and
said other institutions were responsible for an $81 million digital
heist in February.
Fiat Chrysler Moves Up Gearshift Repairs After Actor's DeathThe death of
the actor Anton Yelchin, which might be linked to a faulty gearshift in
the Jeep Grand Cherokee, might have accelerated the repair schedule.
Court Puts Sumner Redstone's Plan to Replace Directors on HoldThe plan by
Sumner Redstone to replace five directors at Viacom is on hold until it
can be determined if he is mentally competent to make those decisions, a
Delaware court said on Wednesday.
Facebook Shareholder Vote Produces Odd ResultsA vote on the
company's governance was a brainteaser that suggested that institutional
investors are more inclined to tick boxes than follow their heads,
Jennifer Saba writes in Breakingviews.
UBS Gives I.R.S. Records on U.S. Citizen's Account in SingaporeUBS ended a
legal fight with the Internal Revenue Service, agreeing to hand over
records on an American client's account in Singapore as the authorities
seek to move beyond Switzerland in their fight against offshore tax
Medicare and Social Security Trustees Warn of ShortfallsA report could
add a note of fiscal reality to a presidential campaign that has given
scant attention to the fiscal challenges of an aging population.