Shari Redstone Prevails Over CBS in Delaware Court Ruling: DealBook Briefing
CBS had sued Ms. Redstone to prevent her from interfering with a board vote to limit her voting power. A half-hour before the hearing, she rewrote the broadcaster’s bylaws to regain control. It was a sudden boiling point in the cold war over CBS’s reluctance to merge with its corporate sibling, Viacom.
What could happen when Chancellor Bouchard rules, as soon as today:
• He blocks Ms. Redstone’s bylaw amendment; CBS’s board proceeds to neuter its controlling shareholder; a big new precedent is set.
• He lets Ms. Redstone’s bylaw change stay; CBS’s insurrection is defeated; and the fate of its board and its C.E.O., Les Moonves, becomes cloudy. (Ms. Redstone has said she doesn’t want to oust the board.)
• Something else we haven’t thought of. Stay tuned.
The bigger picture: Jim Stewart notes that the battle casts a spotlight on dual-class stock structures:
Should CBS ultimately prevail in what would be a highly unusual attempt to dilute a controlling shareholder, a bevy of dual-class companies will no doubt be scrambling to rewrite their bylaws. The conflict is magnified in this instance because Ms. Redstone is the controlling shareholder in both parties to the proposed merger.
Kushners are near a deal for troubled 666 Fifth Avenue
The company controlled by the family of the White House adviser Jared Kushner is close to receiving a bailout of its financially troubled flagship building by a company with ties to the government of Qatar, according to executives briefed on the deal.
Charles Kushner, head of the Kushner Companies, is in advanced talks with Brookfield Properties over a partnership to take control of the 41-story aluminum-clad tower 666 Fifth Avenue in Midtown, according to two real estate executives who have been briefed on the pending deal but are not authorized to discuss it. Brookfield is a publicly traded company, headquartered in Canada, one of whose major investors is the Qatar Investment Authority.
Mr. Kushner and his son Jared, President Trump’s son-in-law and one of his key advisers, bought the office tower, which is between 51st and 52nd Streets, 11 years ago for a record-setting $1.8 billion. But the building today only generates about half its annual mortgage payment, and 30 percent of the 41-story tower is vacant.
In late 2016, Mr. Kushner and his son were close to a much different kind of deal with Anbang, a giant Chinese insurance company with ties to the country’s ruling elite, and with a billionaire from Qatar, Hamad bin Jassim Al-Thani. That plan involved demolishing the existing building at 666 Fifth and erecting a $7.5 billion luxury super tower.
— Charles V. Bagli
Wells Fargo altered information on documents
The Wall Street Journal reports that some information on documents related to corporate customers was improperly altered.
From the WSJ:
“The employees in Wells Fargo’s so-called wholesale unit, which is separate from its retail bank, added or altered information without customers’ knowledge, according to the people familiar with the matter. The information added varied from social security numbers to addresses to dates of birth for people associated with business-banking clients, the people said.”
“The behavior took place in 2017 and early 2018 as Wells Fargo was trying to meet a deadline to comply with a regulatory consent order related to the bank’s anti-money-laundering controls, the people said.”
The altering of the information comes as Wells Fargo deals with revelations over the past two years that Wells Fargo employees were creating fake accounts using customers’ identities, were forcing borrowers to buy unnecessary auto insurance, and were overcharging mortgage fees. The Federal Reserve earlier this year restricted its growth until it demonstrates it is complying with bank regulations.
Walmart’s online sales rebound a bit
For investors, there was perhaps no number in Walmart’s earnings report that mattered as much as the giant retailer’s e-commerce sales, or more specifically the growth of those sales.
Walmart said this morning that its digital sales grew 33 percent in its fiscal first quarter and that it expects online sales to grow 40 percent for the year.
Why does it matter? Walmart has long grappled with how to keep up with Amazon. In recent years, Doug McMillon, Walmart’s chief executive, has embarked on an ambitious strategy to remake the retailer for the digital age. Walmart is spending $16 billion — its biggest deal ever — for a 77 percent stake in India’s largest online retailer, Flipkart, a bet on both e-commerce and emerging markets. That deal followed Walmart’s purchase of the e-commerce site Jet.com for $3.3 billion and its acquisition of Bonobos for $310 million nearly a year ago. Walmart also dropped “Stores” from its name late last year to reflect its focus on e-commerce.
But the transformation has had its bumps. After three quarters of more than 50 percent growth, e-commerce sales increased just 23 percent in the fourth quarter. Jet was supposed to be Walmart’s answer to Amazon, but analysts said Jet’s growth had slowed in the fourth quarter. And Walmart said it would focus on driving new customers through its main Walmart.com site.
Cover-up fears led to the leaking of Michael Cohen’s records
Who was the source behind documents showing that AT&T and Novartis had paid President Trump’s personal lawyer? A law enforcement official worried that two “suspicious activity reports” regarding Mr. Cohen were missing from a Treasury database. Here’s what he told Ronan Farrow of The New Yorker:
“That system is a safeguard for the bank. It’s a stockpile of information. When something’s not there that should be, I immediately became concerned.”
More on Mr. Cohen: President Trump disclosed paying Mr. Cohen over $100,000, raising questions about whether he should have said so last year. The head of a Qatari investment fund said Mr. Cohen had demanded $1 million in exchange for access.
Trump officials’ trade divide
It seems to be getting more personal: Peter Navarro, a hard-line trade adviser, reportedly bickered with Steven Mnuchin over the China negotiations. (Mr. Navarro briefly appeared unlikely to participate in a meeting with Beijing’s top economic negotiator, Liu He.)
More officials have voiced concern about easing sanctions on ZTE, including the F.B.I.’s director, Christopher Wray. Meanwhile, the U.S.’s top trade negotiator, Bob Lighthizer, reportedly told Democrats that he is pessimistic about reaching a Nafta deal this week. And the U.S. is starting to discover how hard it is to wean companies off Chinese imports. (The reverse is true, too.)
Meanwhile, European leaders appear more united in their negotiations with the administration over Iran sanctions, with a top official, Donald Tusk, tweeting, “With friends like that, who needs enemies.” Their challenge: Companies like Total are already preparing to withdraw from Iranian deals.
A reminder: ZTE’s punishment was for violating Iran sanctions — one reason Bloomberg Opinion argues it’s too important to bargain away.
The political flyaround
• The Senate voted to block the repeal of net neutrality, but the House is unlikely to follow. (NYT)
• Robert Mueller’s team said it wouldn’t try to indict President Trump, according to Rudy Giuliani. The secret origins of the F.B.I.’s Russia investigation. The Senate Judiciary Committee released documents on that 2016 Russia meeting in Trump Tower.
• Britain has a new compromise idea on the E.U. customs union. (Bloomberg)
• How Crown Prince Mohammed bin Salman and his brothers profited from state-linked business, including a deal with Airbus. (WSJ)
Mark Zuckerberg is going to Brussels
He’ll testify before the European Parliament, a reflection of global concerns over privacy — but don’t expect a replay of the congressional hearings. This will be behind closed doors, with transcripts published afterward.
Meanwhile, Ireland’s data protection commissioner, Helen Dixon, and her 140 employees are preparing to oversee tech giants. How much can they do? (A separate data question: Did some of Cambridge Analytica’s Facebook haul end up in Russia?)
Elsewhere in tech: Apple is reportedly considering a Northern Virginia outpost. Silicon Valley’s grow-at-all-costs ethos now shapes non-tech companies like MoviePass. What Brian Chen found by downloading his Google data. The killing of a young female passenger has prompted Didi Chuxing to overhaul its service. Tencent and Ant Financial showed the financial might of Chinese internet titans. The S.E.C. ran a fake I.C.O.
The deals flyaround
• WeWork has expanded its education arm by acquiring MissionU. (Axios)
• The investment vehicle run by the owner of the Houston Rockets has agreed to buy the food delivery start-up Waitr for $300 million. (Bloomberg)
• Takeda Pharmaceuticals’s C.E.O. said higher R.&D. costs and a squeeze from governments and insurers drove his deal for Shire. CVC Capital Partners has halted talks to buy the Italian drug maker Recordati.
• TPG has reportedly reinvested in the security software maker Tanium at a $5 billion valuation. (Reuters)
• Your next hedge fund’s name may well involve booze or Nantucket. (Bloomberg)
Steve Jurvetson’s board seat at Tesla is under pressure
The venture capitalist isn’t up for re-election, but the proxy adviser Glass, Lewis said it was concerned by “the fairly extraordinary length” of his leave of absence as a director. He stepped back amid a sexual misconduct investigation at his former investment firm, DFJ. The complaint: That reduces oversight of Elon Musk.
Elsewhere in workplace misconduct: A lawyer ridiculed Steve Wynn’s claim that he can’t have ogled dancers because he’s legally blind. Walt Disney may reportedly allow back John Lasseter, the senior animation executive accused of misconduct. The L.A. Times suspended its Beijing bureau chief, Jonathan Kaiman, amid allegations of sexual misconduct.
Why an investment firm is teaming up with a labor union
The $50 billion GCM Grosvenor is expected to announce this morning that its infrastructure business will team up with North America’s Building Trades Unions to make sure that “responsible contractors,” including union members, will be part of the process for its investments.
Sean McGarvey, the union’s president, said, “GCM Grosvenor’s responsible contractor policy is as good as any we have seen for workers and communities, if not better.”
• Lachlan Murdoch is in line to be C.E.O. of a vastly smaller “new Fox” if the Disney deal goes through. (NYT)
• Joe Sullivan, the Uber cybersecurity executive ousted reportedly for helping cover up a data breach, will become CloudFlare’s chief security officer. (CNBC)
• Bain Capital Ventures hired Sarah Smith, an early employee at Facebook and the answer site Quora, as its first female partner. (Bain Capital Ventures)
• Kenneth Muller, a private equity specialist, has left Morrison & Foerster for Kirkland & Ellis. (American Lawyer)
The speed read
• A Canadian-American council recommended steps to improve access to capital for female entrepreneurs. (Investissement Québec)
• A British retailer was accused of levying a “fat tax” by charging more for larger clothing sizes. (NYT)
• Sinclair continues to circle Sean Hannity. (Politico)
• Stan Lee has sued Pow! Entertainment, which he helped found, for $1 billion, alleging fraud. (Hollywood Reporter)
• The Robin Hood Foundation won’t say what its latest gala raised. (Bloomberg)
• Are you apologizing incorrectly? (Bloomberg Opinion)
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News credit : Nytimes