Translate

Search This Blog

Search Tool




Asian Markets at Close Report

European Markets at Close Report

Jun 3, 2016

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.


On Thursday, 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 dot-com-era start-up.

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 physical appearances.

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 EXCHANGES The 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 Stock Exchange.

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 2005.

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 BLUNDER T. 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 effectively vacated.
DEAL NOTES
Roger Enrico in his office in 1985. He was credited with marketing Pepsi as distinct from Coke.
Roger Enrico, PepsiCo Chief During 1980s 'Cola Wars,' Dies at 71 He made marketing deals with celebrities like Michael Jackson, Madonna, Cindy Crawford and Michael J. Fox to try to gain market share from Coca-Cola.
The author Michael Lewis explores the groundbreaking research of two psychologists, Daniel Kahneman and Amos Tversky, into decision making and judgment.
Michael Lewis Explores Why People Tend to Go With Their Guts Mr. Lewis tackles that question in "The Undoing Project: A Friendship That Changed Minds," which W.W. Norton & Company will release in December.
MERGERS & ACQUISITIONS »
Pentair Said to Explore Sale of Valves and Controls Business Pentair 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 Down The 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 Market Anheuser-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 Times op-ed.
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 the matter.
INVESTMENT BANKING »
Former Deutsche Bank Traders Charged in Libor Case The former traders are the latest Wall Street workers to be ensnared in the government's crackdown on interest rate manipulation.
Morgan Stanley's headquarters in New York.
Morgan Stanley to Rate Employees With Adjectives, Not Numbers The 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.
For the latest updates, go to NYTimes.com/DealBook
ADVERTISEMENT
I.P.O./OFFERINGS »
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 matter.
LEGAL/REGULATORY »
A construction site in Orlando, Fla. The average monthly job gains in 2016 have so far fallen shy of the nearly 240,000 average of the last two years.
What to Expect From the May Jobs Report The 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 Arabia's oil minister, Khalid al-Falih, speaks to reporters before the start of Thursday's OPEC meeting.
Saudi Oil Chief Tells OPEC Changes Are Coming The 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.
Huawei, a major supplier of telecommunications equipment, reported revenue of about $60 billion in 2014.
U.S. Subpoenas Huawei Over Its Dealings in Iran and North Korea Officials 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 Scheme A 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.
Sumner Redstone, center, at a 2012 charity event with, from left, Manuela Herzer and Sydney Holland, both ex-lovers who have figured in a battle over his care.
In Sumner Redstone Affair, His Decline Upends Estate Planning As 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 Trial Maurice 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 contractors.
Hillary Clinton spoke about national security on Thursday in San Diego.
Hillary Clinton Warns That Donald Trump's 'Thin Skin' Would Set Off War or Economic Crisis Mrs. Clinton on Thursday unleashed a new attack on Mr. Trump, saying that electing him as president would be a "historic mistake."