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Aug 31, 2016

DealBook | Today's Morning News on August 31, 2016

The New York Times

 By Amie Tsang 
 
It’s just a drop in the bucket for Apple, with its cash pile of more than $230 billion. But the company nonetheless described the ruling by Europe that Ireland should recoup 10 years’ worth of back taxes, or about $14.5 billion, as a “devastating blow” to the rule of law.
Timothy D. Cook, Apple’s chief executive, defiantly scolded the competition commission of the European Union and contended that Apple was a good corporate tax citizen in Ireland. But do his arguments hold any water? We consulted the tax experts and Mr. Cook seems to have been technically truthful.
But he missed the point of the European Commission’s case, which was whether Apple took advantage of loopholes in Irish tax law.
Mr. Cook argues that Apple is the largest taxpayer in Ireland, the United States and the world. It is likely that is because of the company’s size, but it is hard to prove as its corporate tax information in the United States is private. And, as Steven M. Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, points out, the ruling  is not about how much the company has paid, but how much it should pay. “Tax systems are not a pay-what-you-want system,” he said.
Tronc’s ‘Just Say No’ Defense
Should a board continue to “just say no,” or should it give in to a hostile acquirer?
That’s the question being raised as Tronc continues to play coy with Gannett, which is rumored to have raised its offer for the company, the publisher of The Los Angeles Times and The Chicago Tribune.
Gannett must persuade Tronc’s board to accept the offer, but the board seems willing to defy its shareholders by refusing to consider. The “just say no” defense, which was validated in court and gave boards a wide latitude to reject bids, means shareholders have to abide by a board decision or unseat directors. It has been a successful approach, but it is also a gamble.
The risk here is that Gannett might go away, leaving Tronc to wither as Yahoo did after it fought off a bid from Microsoft, writes the Deal Professor. At least, if Michael W. Ferro Jr., the chairman, is just trying to push up Gannett’s bid price, he is doing a masterly job.
Alphabet Drives Onto Uber’s Turf
Google’s parent company, Alphabet, is broadening its car-pooling program and setting up a potential challenge with ride-hailing services like Uber and Lyft. Its program, Waze, is limited to employees of companies near Google’s headquarters in Mountain View, Calif. In the fall, it will expand to users in San Francisco.
The expansion, earlier reported by The Wall Street Journal, is another example of intensifying competition between the two companies. Uber has already waded into the arena of self-driving cars, an enduring area of interest for Google. And David Drummond, a longtime executive at Alphabet, recently stepped down from Uber’s board because of the overlap between the two companies.
Coming Up
• Canada publishes its second-quarter gross domestic product results, which are expected have been affected by a wildfire in Alberta and sluggish oil prices.
• Salesforce reports its latest quarterly results.
• Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, will discuss the role of the Fed and its board at St. Paul.
• At the Brookings Institution, Treasury Secretary Jacob J. Lew will discuss priorities for the United States at the Group of 20 Summit in Hangzhou.
Contact amie.tsang@nytimes.com

 
Deals
Breakingviews
Potash Corporation and Agrium Discuss Merger
By KEVIN ALLISON
Shares at both Canadian companies jumped after they confirmed early negotiations. A deal would put their combined equity value at around $28 billion.
Vista Equity Said to Explore Sale of Software Firm
By REUTERS
The private equity firm Vista Equity Partners is exploring a sale of Aptean and hopes to get more than $1 billion for the business software company, according to people familiar with the matter.
 
Banking
UBS Hired Psychologists to Help With Research Reports
By THE FINANCIAL TIMES
The bank now avoids using words like “risky” in its research because the term could be interpreted as a risk of failure of 10 to “80 something” percent to investors.
 
Venture Capital
C.I.A.’s Venture Capital Firm Operates in the Shadows
By THE WALL STREET JOURNAL
The firm, In-Q-Tel, provides only limited information about its investments, and some of its trustees have ties to funded companies.
 
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Legal and Regulatory
Students in the Medical Specialties program participate in a lab on the campus of Stevens-Henager College in Murray, Utah
College Group Sues U.S., Saying It’s Target of Political Agenda
By PATRICIA COHEN
The Center for Excellence in Higher Education says the Education Department is trying to put its colleges out of business by failing to classify them as nonprofit.
S.E.C. Awards $22 Million to Ex-Monsanto Executive Through Whistle-Blower Program
By REUTERS
The award was tied to an $80 million settlement between the Securities and Exchange Commission and Monsanto in February, according to the lawyer for the former executive.
The Billion-Dollar Ultimatum
By BUZZFEED
The legal system known as investor-state dispute settlement is written into a vast network of treaties that set the rules for international trade and investment. The threat of this system is so powerful that it often eliminates the need to actually bring a lawsuit.
Theranos Halts New Zika Test After F.D.A. Inspection
By THE WALL STREET JOURNAL
Theranos withdrew its request for emergency clearance of a Zika-virus blood test after federal regulators found that the company didn’t include proper patient safeguards in a study of the new test, people familiar with the matter said.
 
Business
Stephanie Pomboy, founder of MacroMavens, an independent economics consulting firm, thinks the optimists on Wall Street are in for another round of disappointment.
Economists Discuss the Predictions That Divide Them
By NELSON D. SCHWARTZ
The health of consumer spending, corporate profits and whether there will be a rebound in growth are some of the topics generating disparate views.
Incomes and Outcomes
How the Middle Class May Have Gotten a Raise
By QUOCTRUNG BUI
Through a combination of low prices and moderate wage gains, 2015 may have been a great year for median household incomes.
Police officers in Hangzhou, China. President Xi Jinping has ordered stringent security to ensure that the Group of 20 summit meeting goes smoothly.
China, Eager to Host Elite Club, Primps for G-20 Meeting
By JANE PERLEZ AND YUFAN HUANG
As it prepares for its biggest summit meeting yet, China is forcing residents out of nearby towers, idling factories and ordering workers to take vacation.
Sinosphere
A women’s egg being prepared for in vitro fertilization in Beijing. Because unmarried women are barred from assisted reproductive procedures in China, more are going to the United States and other countries to have their eggs frozen.
Chinese Women Head Overseas to Freeze Their Eggs
By CAROLYN ZHANG
Beijing allows only married couples to undergo fertility treatments, so many single women are looking abroad to give themselves more time to have children.