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Mar 18, 2016

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
TRANSCANADA TO BUY COLUMBIA PIPELINE GROUP TransCanada 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 PAY Researchers 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 retirees, 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 actuarial numbers.
ON THE AGENDA The 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 SALE Boston 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 report.

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 division."
Delaware's Chief Justice Speaks Out on Big Mergers and Investors The justice, Leo Strine Jr., is critical of the pending merger-and-breakup of Dow Chemical and DuPont.
The newsroom of The Orange County Register in Santa Ana, Calif.
Tribune Publishing Wins Auction for Orange County Register Shortly after the results were announced, the Justice Department said it would seek to block the sale on monopoly grounds.
Li Ka-shing's Hutchison May Sell Stake in Phone Carrier Three In 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 Assets The 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 Strategy Tidjane 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 Breakingviews.
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William Ackman's hedge fund has been hit by market turmoil. But one observer says activists often succeed in their objectives.
Despite Turbulence, Shareholder Activism Is Forecast to Stay Strong Roger C. Altman, executive chairman of Evercore, said activist campaigns were often successful, as boards have become "risk averse."
2 Senate Democrats Introduce Bill to Curb Activist Hedge Funds The 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 2016, 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 Listings WiseTech 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 million.
Fed Lawyer Who Helped Bail Out, and Regulate, Wall St. Will Retire The 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 Documents The 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's headquarters in Cupertino, Calif. Apple's employees' concerns provide insight into a company culture that still views the world through the anti-establishment prism of its co-founders Steven P. Jobs and Steve Wozniak.
Apple Encryption Engineers, if Ordered to Unlock iPhone, Might Resist The potential resistance adds a wrinkle to a very public fight over access to an iPhone used by one of the San Bernardino attackers.
Gustavo Martinez
J. Walter Thompson Chief Resigns After Suit Accuses Him of Bias The executive, Gustavo Martinez, was accused of subjecting employees to racist and sexist behavior in a lawsuit filed by the ad agency's chief communications officer.
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 Savings Tom 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.

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