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Sep 13, 2016

DealBook Today's Morning News - September 13, 2016: An Unnoticed Fraud, a Balanced Merger and a Deal for Chips

The New York Times 

Tuesday, September 13, 2016


  By Amie Tsang

Let’s start the day by going through the Wells Fargo fraudulent accounts scandal, by the numbers:
5,300 — the number of Wells Fargo employees engaged in creating sham accounts for customers.
$1.5 million — the fees customers were charged for these unwanted accounts.
$124.6 million — the amount, according to Fortune, that the executive who oversaw the group of rogue employees is receiving as a payout.
$185 million — the amount that Wells Fargo was fined for the fraudulent accounts.
And consider this: There is, to say the least, some disconnect between the Wells Fargo that tried to be a trusted bank and the Wells Fargo where thousands of employees engaged in rampant sham deals.
The deceit may have been small in dollar amounts, but what does it say about the bank that these practices were so pervasive?
Andrew Ross Sorkin considers this and other questions raised by the episode and argues that if Wells Fargo is going to “take responsibility” for what happened, it has to answer the many questions raised by such blatant and widespread corruption.
A Balanced Mix for a Fertilizer Giant
The merger of Agrium and Potash, a deal with no premium, appears not to have set shareholders’ hearts on fire as both stocks slipped after the announcement.
And farmers will be concerned about the effect of the deal on fertilizer prices.
“I don’t think the rank-and-file farmers are excited,” said Wade Barnes, the chief executive of Farmers Edge, an agriculture technology company.
But unlike other recent industry mash-ups, it lacks the whiff of exuberance, Breakingviews argues. This deal looks almost prosaic compared with the Dow and DuPont tie-up, or Bayer’s efforts to court Monsanto.
As long as antitrust issues do not spoil the mix, there could still be plenty of upside for shareholders.
Quotation of the Day
“It feels like the entire industry is for sale.”
— Orlando Bravo, a managing partner at the private equity firm Thoma Bravo, which is raising funds to pursue more technology deals.
Japanese Chip Maker to Buy Intersil of U.S.
Chip makers cannot seem to cut costs sufficiently, so the scramble to consolidate continues.
Renesas Electronics Corporation of Japan has agreed to buy Intersil, a California-based chip maker, for $3.2 billion, part of a run of deal making in the semiconductor industry.
It came after Analog Devices agreed to buy Linear Technology Corporation, and SoftBank bought ARM Holdings.
Renesas makes microcontrollers, chips that are embedded in everything from televisions to cars, where they control functions like power steering and windshield wipers. Many of its customers are in the automobile industry. Intersil specializes in chips that manage the power supply in electronic devices.
Coming Up
• Data published by the Census Bureau is expected to show that incomes are rising.
• John Shrewsberry, the chief financial officer at Wells Fargo, will speak at the Barclays Global Financial Services Conference in New York.
Contact amie.tsang@nytimes.com

 
Deals
Global Infrastructure Partners to Buy Stake in Spanish Utility
By BLOOMBERG
Global Infrastructure Partners has agreed to buy a 20 percent stake in Gas Natural of Spain for $4.3 billion from the Repsol and Criteria Caixa.
 
Banking
HSBC Adds Former C.E.O. of Singapore’s DBS Bank to Board
By CHAD BRAY
Jackson Tai, who was also a longtime JPMorgan Chase banker, is the fourth new director to join the bank’s board this year.
Carlyle Said to Stop Talks Over Barclays Africa
By BLOOMBERG
Discussions between Carlyle and Atlas Merchant Capital about a joint bid for Barclays’ Africa unit have stalled, according to people with knowledge of the matter. Carlyle executives are concerned that Barclays might be reluctant to sell to a consortium that includes Robert Diamond, who used to be chief executive of the bank, one of the people said.
Amber Cooney said that if she planned carefully, she could use points and rewards offered by premium credit cards to earn free vacations.
Value-Seekers Warm to a $450 Annual Credit Card Fee
By STACY COWLEY
Cards that were once more about elite service are now emphasizing their bottom-line value proposition — even when it comes with a hefty annual fee.
Morgan Stanley Loses Brokers
By THE WALL STREET JOURNAL
More than a dozen Morgan Stanley employees have left the bank’s wealth management unit to begin their own practice, the latest group of financial veterans to leave a big traditional brokerage firm for an independent investment advisory firm.
Karl Roessner, who had been general counsel of E-Trade, will become chief executive.
E-Trade Names New C.E.O. in Management Shake-Up
By LIZ MOYER
The chief executive, Paul Idzik, will be replaced by Karl Roessner, and Michael Curcio, the company’s former president, is returning as chief brokerage officer.
 
I.P.O.s
I.P.O. Could Value Nets, a Danish Payment Processor, at $4.8 Billion
By CHAD BRAY
The company was acquired by a consortium of private equity investors about two-and-a-half years ago from a group of Nordic banks.
 
Hedge Funds
Former Valeant-Focused Analyst Starts New Hedge Fund
By THE WALL STREET JOURNAL
Rory Priday, who was the main researcher on Valeant during his time at Ruane, Cunniff & Goldfarb, has started an investment firm that manages a $75 million private hedge fund, according to a filing.
U.S. Seeks Scalps in Och-Ziff Investigation
By THE FINANCIAL TIMES
Prosecutors in the United States are expected to insist that a subsidiary of Och-Ziff, a $39 billion listed hedge fund, pleads guilty to violating anticorruption law, according to people familiar with the inquiry.
Starboard Value, Taking Stake in Perrigo, Looks to Make Another Big Investment Pay
By MICHAEL J. DE LA MERCED
The hedge fund that prodded Yahoo into selling its core business has urged the American drug maker to take steps to bolster its sagging stock price.

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Legal and Regulatory
Lael Brainard, a Federal Reserve governor, is speaking to the Chicago Council on Global Affairs.
Fed Official Says She Favors ‘Prudence’ in Raising Interest Rates
By BINYAMIN APPELBAUM
The remarks by Lael Brainard, a proponent of continuing the Fed’s stimulus campaign, reinforce expectations that the Fed won’t raise rates this month.
White Collar Watch
Polishing Financial Results Looks Good, but Can Lead to Fraud
By PETER J. HENNING
Cases involving American Realty Capital Partners and Fiat Chrysler show how manipulating reported results can end up misleading investors.
Guidepost Solutions, a Corporate Monitor, Hires State Regulator
By BEN PROTESS
Daniel Burstein, who helped oversee enforcement actions against big banks in New York State, will lead Guidepost’s financial institutions practice.


Business
Saudi Arabia has offered to buy the LyondellBasell oil refinery on the ship channel in Houston. Valero and two Canadian companies are also interested.
Saudi Bid on a Houston Oil Refinery Is a Big Strategic Bet
By CLIFFORD KRAUSS
Despite political tensions with the United States, Saudi Arabia sees another American investment as a way to help counter weakness in the oil industry.
A self-driving car at Ford’s campus in Dearborn, Mich. It uses radar and lidar, a kind of radar using laser beams, to identify obstacles.
Ford’s Driverless Car Plan: Embrace Tech and Go Slow
By NEAL E. BOUDETTE
The automaker detailed its use of laser-based technology and distanced itself from companies like Tesla, which has taken a different approach to driverless cars.
How the Sugar Industry Shifted Blame to Fat
By ANAHAD O’CONNOR
Newly discovered documents show that the sugar industry paid scientists in the 1960s to shape the debate around heart disease, sugar and fat.
A screenshot of Swift Playgrounds, an educational app from Apple to teach young people how to code.
Apple Offers Free App to Teach Children Coding (iPads Sold Separately)
By NATASHA SINGER
The educational program is aimed at middle school students, but critics say the fact it requires a tablet makes it unavailable to lower-income families.
The rockets, named New Glenn after John Glenn, the first American to orbit the Earth, are almost as large as the Saturn V rocket that NASA used from 1966 to 1973.
Meet New Glenn, the Blue Origin Rocket That May Someday Take You to Space
By DANIEL VICTOR
“Our vision is millions of people living and working in space, and New Glenn is a very important step,” said Jeffrey P. Bezos, the billionaire founder of Amazon and Blue Origin.