DealBook Today's Top Headlines on June 3, 2016: Chairman Puts His Brand on Tribune | Former Morgan Stanley Deal Makers Reunite Over Exchanges | T. Rowe Price Seeks a Solution to $190 Million Blunder.
Friday, June 3, 2016
TODAY'S TOP HEADLINES
By AMIE TSANG
CHAIRMAN PUTS HIS BRAND ON TRIBUNE Michael W.
Ferro Jr. has been a power player in Chicago for years and since he
became chairman at Tribune Publishing four months ago, he has been
determined to make it known that he is in charge and no one will take
that away from him.
he installed his close associates on the company board to make it less
attractive for Gannett to pursue its unsolicited takeover offer,
Leslie Picker and Sydney Ember report in DealBook. He also changed
the company's name to 'tronc,' which stands for Tribune online content,
and moved its stock listing to the Nasdaq to make it feel more like a
On the same day, a shareholder sued members of the board, including Mr. Ferro, for breaching their fiduciary duties in blocking the Gannett takeover.
Mr. Ferro is the latest wealthy businessman to think he has the right
ideas to save a struggling newspaper group after Jeff Bezos bought the
Washington Post and Sheldon G. Adelson bought The Las Vegas
Review-Journal. Tribune is not his first foray into the industry -
he bought The Chicago Sun-Times through Wrapports, a company he led
with Timothy P. Knight, a former publisher of Newsday. There, he
emulated a Silicon Valley atmosphere, creating an arcade game room and
providing free candy and ice cream. Mr. Ferro has also exhibited retro
approaches to running a business, commenting publicly on women's
Mr. Ferro was a tech entrepreneur until about a decade ago, He sold
Click Commerce, which made software to manage supply chains, to Illinois
Tool Works for about $300 million. I.T.W. had to write down the
investment two years later, but the deal made him a millionaire many times over. Mr. Ferro used his status to take seats on boards across Chicago.
Mr. Ferro persuaded the likes of John Canning, who founded the private
equity firm Madison Dearborn Partners, and Andrew McKenna, chairman of
McDonald's, to put capital into his new investment firm, Merrick Ventures.
Merrick quickly made a bet on Merge Healthcare. Mr. Ferro took a
controlling stake in the company, which made medical-imaging software,
and ousted the chief executive to install his own associate, Justin
Dearborn - a precursor to his installment of Mr. Dearborn as chief
executive at Tribune. Mr. Ferro's stature started to fade, however, when
regulators questioned Merge's related-party transactions. Still, Merge sold to IBM for $1 billion last year - a 900 percent return for Mr. Ferro.
Now it remains to be seen whether Gannett will walk away from its offer. There could also be another twist: Mr. Ferro has indicated his own interest in buying Gannett.
FORMER MORGAN STANLEY DEAL MAKERS REUNITE OVER EXCHANGESThe main
investment bankers involved in the merger between Deutsche Börse and the
London Stock Exchange worked at Morgan Stanley the last time the two
exchanges considered merging,
Anita Raghavan reports in DealBook.
Joseph R. Perella, a former head of investment banking at Morgan
Stanley, helped found Perella Weinberg Partners, which is leading the
banks representing Deutsche Börse. Simon Robey, who was
co-chairman of global mergers and acquisitions at Morgan Stanley, now
runs his own firm Robey Warshaw and is the main banker for the London
Intercontinental Exchange, which tried to upend the talks between Deutsche Börse and the London Stock Exchange, was helped by Caroline Silver, when she was head of Morgan Stanley's European financial institutions group. Ms. Silver is now at Moelis & Company.
When the two exchanges last considered combining, these boutique investment banks did not exist.
This decade-old Morgan Stanley diaspora illustrates how the market for
merger advice has changed, with boutique investment banks prospering as
companies turn away from the big global banks.
The links and friendships between the boutique banks and executives at
the exchanges meant Mr. Perella and Mr. Robey were both in line as
advisers when it came to considering the merger second time round.
Boutique and independent banks represented 30.5 percent of the $5.35 billion in completed merger fees in the first quarter of this year,
according to Thomson Reuters. Last year, of the $26.1 billion in fees
that were paid to Wall Street for merger deals, 31.3 percent went to
boutique and independent investment banks, compared with 23.8 percent in
The shift is particularly remarkable for Morgan Stanley, which
prided itself on taking a firm public and catering to all its banking
needs. It is still a powerhouse, ranking No. 2 in worldwide mergers and
acquisitions behind Goldman Sachs last year.
ON THE AGENDA Data on employment in May will be published by the Labor Department at 8:30 a.m.Lael Brainard, a Federal Reserve governor, will speak about the economic outlook and monetary policy at the Council on Foreign Relations at 12:30 p.m.
T. ROWE PRICE SEEKS A SOLUTION TO $190 MILLION BLUNDERT. Rowe Price Group could announce as early as next week a plan to reimburse clients who lost out when it accidentally voted in favor of the 2013 buyout of Dell,
The Wall Street Journal reports,
citing people familiar with the matter. There is no guarantee that the
compensation plan will be completed and the final form it could take it
still under discussion, these people said.
T. Rowe had vocally opposed the deal and said it undervalued the 30
million Dell shares held by its mutual funds. But administrative errors
caused the firm to vote in favor of the deal, disqualifying it from
suing for more money. Other holders successfully sued and won
compensation. A judge ruled this week that Mr. Dell and his partners
underpaid by $6 billion. T. Rowe investors stand to miss out on about $190 million.
The misstep is rare and embarrassing - T. Rowe is one of the biggest managers of retirement assets in the United States. The company has begun a review of its internal voting procedures, The Journal reports, citing a person familiar with the matter.
T. Rowe blamed a back office error - its default stance in merger votes,
like many large investors, is to support management. Its computerized
system gave instructions to vote "yes" that were not manually overridden before the final vote, according to court filings.
The mistake is also partly attributable to the complexities of the
voting system and the deal itself. Ahead of the first scheduled vote in
July 2013, T. Rowe's governance chief, Donna Anderson, manually overrode
the default vote "for" the deal, court filings show. But when the deal
was renegotiated and the vote was postponed, T. Rowe's instructions were
Roger Enrico, PepsiCo Chief During 1980s 'Cola Wars,' Dies at 71He made
marketing deals with celebrities like Michael Jackson, Madonna, Cindy
Crawford and Michael J. Fox to try to gain market share from Coca-Cola.
Michael Lewis Explores Why People Tend to Go With Their GutsMr. Lewis
tackles that question in "The Undoing Project: A Friendship That Changed
Minds," which W.W. Norton & Company will release in December.
Pentair Said to Explore Sale of Valves and Controls BusinessPentair is
considering selling its slumping valves and controls business in a deal
that could fetch more than $2 billion, The Wall Street Journal reports,
citing people familiar with the matter.
Johnson & Johnson Is Urged to Slim DownThe health care
giant is criticized by many investors for its mediocre shareholder
returns and its lack of merger-and-acquisition activity, Robert Cyran
writes in Breakingviews.
A Big Merger May Flatten America's Beer MarketAnheuser-Busch
InBev's takeover of SABMiller could mean disaster for small brewers if
antitrust officials don't take action, Bob Pease writes in a New York
Bayer Said to Secure Financing For Monsanto Bid Bayer has
secured about $63 billion in financing from five banks for its proposed
acquisition of Monsanto, Bloomberg reports, citing people familiar with
Morgan Stanley to Rate Employees With Adjectives, Not NumbersThe Wall Street
firm said it was overhauling performance evaluations in several ways,
including discarding a numerical scale in favor of adjectives.
Fed Governors Indicate Bigger Bank Capital Requirements Looming The Federal
Reserve governors Daniel Tarullo and Jerome Powell, in separate public
comments, said the central bank would probably decide to require eight
of the largest United States banks to maintain more equity to pass the
central bank's annual "stress tests."
Swift Chief Expects More Hacking Surprises "We don't think
this is going to be solved overnight, so we'll be looking for a number
of quick wins to improve things in the near term," said Gottfried
Leibbrandt, the chief of Swift, the interbank messaging system.
Japanese Messaging App Said to Be Considering $2 Billion Tokyo Listing Line, which
operates Japan's dominant mobile messaging application, is considering
an initial public offering in Tokyo in July and a dual listing in New
York, The Wall Street Journal reports, citing people familiar with the
What to Expect From the May Jobs ReportThe average
monthly job gains in 2016 have so far fallen shy of the nearly 240,000
average of the last two years, slowing to 160,000 in April. The
consensus is that May's figure will be a comparable increase.
Saudi Oil Chief Tells OPEC Changes Are ComingThe message
came after the cartel decide to maintain high levels of production,
citing the recent rise in prices and signs that the global petroleum
glut might be easing.
U.S. Subpoenas Huawei Over Its Dealings in Iran and North KoreaOfficials are
questioning the Chinese telecom giant's exports to countries covered by
sanctions, amid a broader debate over global communications.
U.S. Accuses Dutch Citizen of Reaping Millions in Mail-Fraud SchemeA complaint
filed in Federal District Court in Brooklyn this week accuses Erik
Dekker and companies he owned of stealing up to $18 million a year since
at least 2012 by targeting older Americans.
In Sumner Redstone Affair, His Decline Upends Estate PlanningAs Americans
live longer, experts warn that the elderly are increasingly at risk from
those close to them taking advantage of their faltering minds, James B.
Stewart writes in Common Sense.
Former A.I.G. Chief Ordered to Face Civil Fraud TrialMaurice R.
Greenberg, the former chairman of insurer A.I.G., must stand trial on
civil fraud charges in New York, the state's highest court ruled on Thursday.
New York Drivers Group Sues Uber The New York
Taxi Workers Alliance, which represents 5,000 Uber drivers in New York
City, filed a lawsuit accusing Uber of depriving drivers of various
employment protections by misclassifying them as independent
Hillary Clinton Warns That Donald Trump's 'Thin Skin' Would Set Off War or Economic CrisisMrs. Clinton on
Thursday unleashed a new attack on Mr. Trump, saying that electing him
as president would be a "historic mistake."