What’s Behind Comcast’s Fox Announcement: DealBook Briefing
The cable giant was clearly banking on that with its announcement on Wednesday. The confirmation that it was in “the advanced stages of preparing” a higher bid served as a notice to Fox shareholders that they shouldn’t embrace Disney’s offer. Comcast has been working on making sure that other aspects of its potential bid, including payouts to Fox shareholders if regulators block its offer, at least match up to Disney’s proposal.
Reuters noted last week that the Murdochs ultimately may have to appoint a special board committee to consider the offer, given:
• how deeply the family was involved in negotiating the Disney deal, and
• how disproportionately the Murdochs may benefit from a lower-priced but all-stock Disney bid
For the time being, the Murdochs appear committed to the Disney offer, both from a financial and a legal perspective. From the Disney-Fox merger agreement, filed in December:
The stockholders have also agreed not to facilitate any effort or attempt by another entity to make an acquisition proposal for 21CF, including by refraining from discussing or providing information to any person in connection with such a proposal.
A spokesman for Fox declined to comment on Comcast’s announcement on Wednesday. But this is what Lachlan Murdoch, one of Mr. Murdoch’s sons and the company’s executive co-chairman, said on an earnings call earlier this month:
“We’re not going to kind of engage in a lot of speculation around this, but I can say that we are committed to our agreement with Disney and are working through the conditions to bring it to a closing. In addition, our directors, though, of course are aware of their fiduciary duties on behalf of all shareholders.”
Speaking of shareholders: Investors in Fox appeared only somewhat heartened by Comcast’s move, with shares in the media company up 1.4 percent. But shares in Comcast were down 1.8 percent, as investors in that titan continue to appear uncertain of the wisdom of a Fox bid. The latter set of investors won’t have a say, however, since Comcast doesn’t need their permission for an all-cash bid for Fox.
— Michael de la Merced
Comcast throws down the gauntlet
The cable giant said on Wednesday what we and others have reported: that it is in the “advanced stages of preparing” a counter bid for the 21st Century Fox assets that Walt Disney has agreed to buy for $52.4 billion.
From Comcast’s statement:
Any offer for Fox would be all-cash and at a premium to the value of the current all-share offer from Disney. The structure and terms of any offer by Comcast, including with respect to both the spinoff of “New Fox” and the regulatory risk provisions and the related termination fee, would be at least as favorable to Fox shareholders as the Disney offer.
As our colleague Brooks Barnes has pointed out, Comcast has been laying the groundwork for such a bid. The main factor weighing on that decision is whether AT&T prevails over the Justice Department in the legal battle over the Time Warner deal.
What’s happening: Comcast is trying to throw Disney and Fox off their game. The two companies are preparing to schedule a vote on their deal soon, and the cable giant clearly wanted to tell Fox shareholders not to rush to support that transaction.
— Michael de la Merced
Ackman builds a stake in Lowe’s
A day after Lowe’s named Marvin Ellison, the chief executive of J.C. Penney, as its next C.E.O., the WSJ reported that William Ackman’s Pershing Square Capital Management has taken a roughly $1 billion stake in the home-improvement retailer.
The WSJ reported that Mr. Ackman supports Mr. Ellison.
D.E. Shaw & Co. already has about a 1 percent stake in Lowe’s, and earlier this year, it got three directors on the retailer’s board.
Paddy Power Betfair strikes deal with FanDuel
Paddy Power Betfair, the British sports betting firm, has agreed to combine its business in the United States with the American fantasy sports company, FanDuel.
Under the terms of the deal
• Paddy Power Betfair will contribute $158 million in cash to the combined company.
• Paddy Power Betfair’s shareholders will own 61 percent of the combined company, while FanDuel’s investors will control 39 percent.
• Paddy Power Betfair will be able to increase its ownership to 80 percent after three years and 100 percent after five years.
The company said it had 1.3 million active users last year and generated $124 million in revenue.
The Supreme Court last week struck down a 1992 federal law that effectively banned commercial sports betting in most states. The decision opened the door to legalizing the estimated $150 billion in illegal wagers on professional and amateur sports that Americans make every year.
In the deal announcement, Peter Jackson, chief executive of Paddy Power Betfair, said: “Together with our substantial financial firepower, we believe we are now well placed to target the prospective U.S. sports betting opportunity.”
FanDuel and DraftKings, a rival fantasy sports company, called off their proposed merger a year ago after federal regulators sued to block it. The pair had agreed to merge in late 2016 after a turbulent year in which values of both plummeted as several attorneys general questioned the legality of their games.
Deutsche Bank reportedly plans to lay off 10 percent of its work force
The Wall Street Journal, citing anonymous sources, reports that the German bank has considered plans to cut nearly 10,000 jobs.
Deutsche Bank has been wrestling with how to turn around its fortunes for months, and its senior management has struggled to come up with a compelling course of action to put things right.
The WSJ said that the new plan could take many months to execute, with redundancies spilling into 2019.
Uber will start providing some medical coverage to European contractors
The ride-hailer has long resisted the financial burden of providing its drivers and couriers with health care benefits. But under the leadership of Dara Khosrowshahi, that appears to be slowly changing.
The Financial Times reports that, in Europe, Uber will now offer those workers things like sick pay, compensation for injuries because of accidents, one-off payments to help cover maternity or paternity leave, and payment if they’re summoned for jury duty. Reuters notes that it’s a broadening of a scheme that was already in place in France.
The figures aren’t huge. Uber will pay just £1,000 for maternity and paternity leave. Sick pay only stretches to a maximum of £450 for couriers, or £1,125 for drivers.
Even so, it could prove expensive for Uber—which, remember, still isn’t profitable—as the benefits will apply to 150,000 people, according to the company. That could cost the company many millions of dollars.
Don’t expect it to roll out the same perks globally just yet. The hit of providing such coverage to all of its drivers — there are 3 million worldwide — would be huge and wouldn’t help the company’s push toward profitability as it eyes a potential I.P.O.
— Jamie Condliffe
The Dodd-Frank cuts are more symbolic than they appear
The House passed legislation yesterday that would lighten regulation of most of the nation’s banks, freeing thousands of lenders from a post-crisis clampdown.
Republicans say it would help bolster the U.S. economy. But the rollback’s original authors, Senator Mike Crapo and the former National Economic Adviser Gary Cohn, designed a relatively restrained initiative from the beginning, according to Ryan Tracy and Andrew Ackerman of the WSJ:
Both agreed such legislation would be worth doing, even though the strategy would leave behind other GOP priorities. They didn’t, for instance, try to reorganize the Consumer Financial Protection Bureau, a move backed by Republicans but opposed by Democrats.
Barney Frank himself told CNBC that Congress’ move “does not in any way weaken” the Obama-era banking rules.
Still, there is reason to worry that continued deregulation could pose problems for the financial industry down the line, Peter Eavis writes.
One other potential effect: more bank mergers.
What Congress’ revolt against the ZTE talks could achieve
Both Republicans and Democrats voted for legislation yesterday that could put limits on White House efforts to ease penalties on the Chinese telecom company. Senators voted for an amendment that would require the Trump administration to certify that ZTE didn’t break any laws over the past year before it let the company off the hook.
So far, the pushback appears to have prompted President Trump to slow his roll. He said yesterday that there’s no deal yet over ZTE, and that he wants to impose at least $1 billion in fines.
The current U.S. penalties are having an effect. ZTE is reportedly suffering from roughly $3 billion in losses because of the Trump sales ban.
Elsewhere in the China trade talks: Mr. Mnuchin said that Chinese steel and aluminum would still be subject to tariffs. Yet while Morgan Stanley economists think that China may buy $90 billion in additional U.S. goods in the coming years, local authorities in China are encouraging their farmers to grow more soybeans.
How Mark Zuckerberg gamed his E.U. Parliament hearing
The Facebook C.E.O. faced tough questions from European lawmakers yesterday. His interrogators made it clear that they want to rein in the social network by making it more accountable to users, or even breaking up the firm.
But lawmakers were exasperated because the format of the hearing — where questions were asked one after another, all before Mr. Zuckerberg responded — left little time for detailed answers. So he wheeled out responses similar to those he gave to Congress, and the whole thing lasted less than two hours. (The C.E.O. needed to catch a flight to Paris.)
Facebook will provide many answers to officials’ questions in writing, giving the company plenty of time to carefully craft its responses.
Breaking up Facebook: Activists in the U.S. want the F.T.C. to follow in Europe’s footsteps.
The company’s new power brokers: A recent managerial reshuffle will give some senior execs more authority.
The political flyaround
• The C.E.O. of Columbus Nova, the Russia-linked investment firm tied to Michael Cohen, had hoped that the Trump associate could open up business opportunities — but was ultimately disappointed. A business partner of Mr. Cohen’s, known as the Taxi King, is cooperating with prosecutors.
• A deep dive on how the Republican donor Elliott Broidy and his business partner, George Nader, courted Middle Eastern princes by promising access to the White House. (AP)
• President Trump said that he will propose additional tax cuts before November, but didn’t give any details. (Reuters)
Why would Barclays acquire Standard Chartered?
The FT reports that Barclays has been considering such a deal — which would be big, given Standard Chartered’s £25 billion market value. But it’s not clear what the strategic benefits would be, aside from gaining entrance into new geographic markets:
“What would you put on page one of the deal announcement?” asked one City of London veteran. “I’m not sure there are many synergies.”
Elsewhere in deals
• This year could break records for deal-making, with $2 trillion of M.&.A. announced so far. (CNBC)
• G.E. is reportedly exploring a sale of its insurance business, which is a source of huge accounting write-downs. (Reuters)
• Australia’s Santos rejected a $10.9 billion takeover bid by the investment firm Harbour Energy. (FT)
• Elliott Management’s reported next target: ThyssenKrupp of Germany, and in particular its C.E.O. (Bloomberg)
• Eddie Lampert may be wreaking havoc on investors who are betting against Sears’s debt. (Bloomberg)
Amazon’s A.I. work with law enforcement draws criticism
The company began pushing a facial recognition system to police departments as a means of identifying suspects in photos and video shortly after the tool was launched in 2016. The American Civil Liberties Union has complained, saying that law enforcers could use the technology to follow innocent citizens, such as protesters.
The larger point: The use of facial recognition technology is largely unregulated in America. But because such systems aren’t always accurate — and can often be biased — the A.C.L.U. wants more detailed rules about the technology’s use.
Our take: Don’t expect that kind of regulation anytime soon.
The tech flyaround
• Emmanuel Macron promised to make France a haven for start-ups, but has rhetoric outstripped reality? (NYT)
• Neither companies nor regulators are really ready for the E.U.’s new data privacy rules. (Verge)
• Almost three-quarters of American drivers say they would be too scared to ride in an autonomous car. (AAA)
• Consumers love Netflix. Cable companies? Not so much. (Ars Technica)
• J.C. Penney’s C.E.O., Marvin Ellison, is decamping to Lowe’s, raising questions about the fate of the embattled department store chain. (DealBook)
• Univision has reportedly picked Vincent Sandusky, who spent much of his career at Telemundo, as its next C.E.O. (WSJ)
• UBS named Sam Kendall, who currently leads its global equities business, as the next head of its Americas investment banking unit. (GlobalCapital)
• Goldman Sachs has hired Max Ritter from Morgan Stanley as its head of Latin America M.&A., a newly created role. (Bloomberg)
The speed read
• Cfius, the U.S. panel that reviews deals for national security concerns, is reportedly struggling to vet all the tech know-how leaking out of America into China. (Politico)
• You might think that 10-K filings are dull. You’re wrong. (Bloomberg)
• The F.B.I. may have overstated how troublesome encryption is during its investigations. (WaPo)
• A former Valeant executive has been convicted over using a kickback arrangement to defraud the drugmaker. (NYT)
• China is trimming tariffs on imported cars to 15 percent of their wholesale value. (NYT)
• As big banks have shunned cryptocurrencies, small lenders have taken advantage. (WSJ)
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News credit : Nytimes