Blackstone Group LP, the world’s largest alternative asset manager, has announced plans to divest its merger advisory business. The recently announced plans will spin off Blackstone’s financial advisory business with the split expected to be finalized in 2015. Blackstone’s decision to spin off the firm’s oldest division came as somewhat of a surprise in the industry, as Wall Street firms have generally been reluctant to split in the past.
Conflicts of Interest Spur Blackstone’s Divestiture of Merger Business
RBC Ordered to Pay $75.8 Million in Conflicts Lawsuit
The Royal Bank of Canada was ordered to pay $75.8 million in damages to former shareholders of Rural/Metro for failure to disclose conflicts of interest during a buyout. Rural/Metro is a Scottsdale, Arizona based company that provides ambulance and firefighting services to about 700 communities in 21 states. New York-based private equity firm Warburg Pincus bought out Rural/Metro for $17.25 per share following recommendations from RBC investment bankers. Rural/Metro shareholders sued over the buyout, alleging that the company accepted an improperly low offer from Warburg due to advice from conflicted RBC bankers.
2014—The Year of Big Deals and Big Failures
Last week, Illiad, a French telecommunications company, announced that it would end its four-month pursuit of T-Mobile, a U.S. wireless provider. This failed, $15 billion-deal ranks among the ten biggest failed deals of 2014 and is just the latest example in a series of failed transactions.
FOREX Market Scandal: Is “Too Big to Fail” Also “Too Big to Prosecute?”
The first LIBOR scandal caused severe commotion in the banking industry after it unveiled the lack of scrutiny banks exercised with respect to the determination of daily interest rates. However, the international banking industry is now facing a potentially bigger scandal than the first LIBOR interest rate catastrophe. This time, the epicenter of the scandal is the FOREX market.
Long-term Investors Raise Concerns over JOBS Act Market Effects
It has been a little over two years since Congress passed the Jumpstart Our Business Startups Act (“JOBS Act”), modifying certain securities regulations to make it easier for companies with less than $1 billion of total gross revenue – emerging growth companies (“EGCs”) – to pursue initial public offerings (“IPOs”) and gain access to capital on the market. Under Title 1, EGCs covered by the JOBS Act only have to release two years of audited financial statements (instead of the standard three), disclose the pay packages of their three top-paid executives (instead of the standard five), initiate the IPO process confidentially and are exempt from the internal controls audit required by Section 404(b) of the Sarbanes-Oxley Act.
HP to Split: Joining the Wave of Tech Spinoffs
Adding to the recent wave of spinoffs in the tech industry, Hewlett Packard Co. (“HP”), the nation’s largest technology company, is splitting up.
SIDECAR: Small Startup With Big Ideas, a Leading Innovator in Ridesharing Technology
Botox Maker Bloodied but Unbowed in Hostile Takeover Attempt
In recent months, Valeant Pharmaceuticals has teamed up with Bill Ackman and his company, Pershing Square Capital Management, for an aggressive courtship of Allergan, the maker of Botox. This hostile takeover attempt has been particularly contentious, with ongoing litigation over multiple issues.
eBay Spinning Off PayPal
On Tuesday, September 30, 2014, eBay’s 12 directors announced that they would be breaking up the company and spinning off PayPal as a separate publicly traded company. The highly anticipated split is expected to take place sometime during the second half of 2015.
Burger King Buys Out Tim Hortons
On August 26, Burger King Worldwide, Inc. (“Burger King”) and Tim Hortons Inc. (“Tim Hortons”), a Canadian-based multinational fast casual restaurant, announced that an agreement was reached under which the two companies would create a new global entity in the quick-service restaurant sector.