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DealBook Today's Top Headlines - March 18, 2016: TransCanada to Buy Columbia Pipeline Group | Public Pension Promises Exceed Ability to Pay | Google Puts Boston Dynamics on Sale
Friday, March 18, 2016
TODAY'S TOP HEADLINES
By AMIE TSANG
TRANSCANADA TO BUY COLUMBIA PIPELINE GROUPTransCanada will buy the Columbia Pipeline Group for $10.2 billion after failing to obtain approval for its Keystone XL oil sands pipeline,
Ian Austen reports in DealBook.
Russ Girling, the chief executive of TransCanada, said that the all-cash deal was "a rare, attractive opportunity that will create one of North America's largest natural gas businesses." The completed deal would leave TransCanada with ownership of about 57,000 miles of gas pipelines.
Columbia, which is based in Houston, is regulated, eliminating the
possibility of sharp growth during expansionary times, but also easing pressure to cut fees in a depressed energy market.
Mr. Girling said the combined company would have contracts or revenue
of 23 billion Canadian dollars guaranteed by regulations.
TransCanada has been hurt by the Obama administration's decision not to
grant a permit for Keystone XL, which was intended to bring oil sands
production to refineries on the Gulf Coast. It has a backup plan for its
oil sands business in an all-Canadian pipeline called Energy East. But
like Keystone XL, Energy East has become a politically volatile project.
Gas recovered in the Northeast through fracking has been taking some markets from Canadian natural gas
that TransCanada delivers to North American customers. As natural gas
from fracking has grown more important, Columbia has reversed a pipeline
that traditionally moved gas from the Gulf Coast to the Midwest. That
line will now carry gas south from the Northeast.
PUBLIC PENSION PROMISES EXCEED ABILITY TO PAYResearchers at
Citigroup say that across the developed world, governments have promised
much more than they are likely to be able to pay to current and future
Mary Williams Walsh writes in DealBook. They also have not revealed the disparity to investors who bought government bonds and whose investments could be at risk, according to the Citigroup report.
Twenty countries in the Organization for Economic Cooperation and Development have promised their retirees $78 trillion and much of it is unfunded,
according to the study. The total is close to twice the national debt
of those 20 countries and the pension obligations are "not on government
balance sheets," Citigroup said.
"It's not going to be, for most cities and states, some enormous
collision or explosion," said Charles E. F. Millard, head of pension
relations at Citigroup.
He expects many of these countries to keep struggling, cutting services
and raising taxes.
The report recommends that governments disclose the amounts promised to retirees, but officials are loath to do that because they believe it will harm their credit ratings and drive up borrowing costs.
The issue of disclosure is particularly contentious in Washington where
Republican members of Congress are planning to introduce a bill that
would require states and local governments to measure their pension
obligations using the method used to price municipal bonds, rather than
ON THE AGENDAThe Federal Reserve Bank of New York's conference on supervising large and complex financial institutions will start at 9 a.m.James B. Bullard,
president of the Federal Reserve Bank of St. Louis, will give the
keynote speech at the European Central Bank's international research
forum on monetary policy at 2:30 p.m. Fox Business Network introduces Wall Street Week, a new program hosted by Anthony Scaramucci and Gary Kaminsky, at 8 p.m.
GOOGLE PUTS BOSTON DYNAMICS ON SALEBoston
Dynamics' videos of robots trudging through the snow and being pushed
over may have entranced viewers, but not enough to convince its human
owners that it would generate real revenue. Executives at Google's
parent company, Alphabet, have decided to sell Boston Dynamics as it is not likely to produce a marketable product in the next few years, Bloomberg News reports, citing two people familiar with the plans.
Possible buyers include Toyota's research institute and Amazon, which
makes robots for its fulfillment centers, according to the Bloomberg
Google bought Boston Dynamics during a spending spree in robotics about three years ago.
The initiative was led by Andy Rubin, who left the company in October
2014. After this the robot initiative was plagued by leadership changes,
failed collaborations and an unsuccessful search for a new leader.
Boston Dynamics executives were reluctant to work with Google's other
robot engineers, according to a person familiar with the group.
The tensions spilled into recorded meetings and emails published on a Google worker forum.
The documents were made available to Bloomberg News, which reported
that Aaron Edsinger, director of robotics at Google in San Francisco,
said he had been trying to create a low-cost electric quadruped robot
with Boston Dynamics, but there was "a bit of a brick wall around the
Li Ka-shing's Hutchison May Sell Stake in Phone Carrier ThreeIn a regulatory
filing, CK Hutchison said that if such a sale occurred, proceeds would
help fund its $15 billion purchase of another British phone operator,
O2, which regulators are reviewing.
SFR Said to Pay Up to $4.5 Billion for Bouygues Telecom AssetsThe French
billionaire Patrick Drahi is set to pay as much as €4 billion, or about
$4.5 billion, as part of a deal that will carve up Bouygues's
telecommunications unit, The Wall Street Journal reports, citing people
familiar with the matter.
Time for Credit Suisse to Rethink Its StrategyTidjane Thiam,
the chief executive of the Swiss bank, had a grand plan to change the
bank's focus, but events have overtaken him, Dominic Elliott writes in
2 Senate Democrats Introduce Bill to Curb Activist Hedge FundsThe bill, by
Senator Tammy Baldwin of Wisconsin and Senator Jeffrey A. Merkley of
Oregon, would shorten the number of days that activists have to disclose
newly acquired shares in a company.
China Start-Up Seeks I.P.O. in Australia as Early as 2016Juwai.com, a
property search engine that lists real estate around the world for
Chinese buyers, is raising funds from institutional investors and
strategic partners before selling shares in a public offering at the end
of the year or early 2017, Charles Pittar, the chief executive, said.
WiseTech I.P.O. Set to Be One of Australia's Biggest Technology ListingsWiseTech Global
said that it had lodged a prospectus with the country's securities
regulator for an initial public offering that could have it list with a
market value of more than 1 billion Australian dollars, or about $764.8
Fed Lawyer Who Helped Bail Out, and Regulate, Wall St. Will RetireThe lawyer,
Thomas C. Baxter Jr., who helped devise both Wall Street bailouts and
enforcement actions against banks that broke the law, plans to leave the
New York Fed in September.
Former Chicago Fed Employee Guilty of Theft of Secret DocumentsThe former
employee, Jeffrey Cho, 35, faces up to one year in federal prison for
taking 35 confidential financial documents from the bank as he was
leaving it for a new job.
Apple Encryption Engineers, if Ordered to Unlock iPhone, Might ResistThe potential
resistance adds a wrinkle to a very public fight over access to an
iPhone used by one of the San Bernardino attackers.
J. Walter Thompson Chief Resigns After Suit Accuses Him of BiasThe executive,
Gustavo Martinez, was accused of subjecting employees to racist and
sexist behavior in a lawsuit filed by the ad agency's chief
Toshiba U.S. Units Said to Be Under Investigation The Asahi
Shimbun newspaper reported that Toshiba was considering a $1.8 billion
writedown for Westinghouse, its nuclear power unit, while the company
confirmed that authorities were examining the accounting at its units in
the United States.
Convicted Libor Trader Says He Lost £1 Million of Own SavingsTom Hayes, the
former UBS trader serving an 11-year sentence for manipulating the
London interbank offered rate, known as Libor, gave evidence in a
hearing over how much Britain's Serious Fraud Office can confiscate as
the reported proceeds of crime.