Last week, four companies – Sunrise Communications, Vision Express, GrandVision and Générale d’Optique – launched their shares on exchanges in the European market. Investors responded eagerly, with several offerings, such as Sunrise and GrandVision, being oversubscribed multiple times and shares moving to substantially higher levels in their debuts.
2015 Starts Strong in Europe with Four Major I.P.O.s
Staples Proposes Merger with Office Depot: Merging the 3 Largest Office Supply Retailers
In an effort to compete with giants like Wal-Mart and Amazon, Staples announced its plan to purchase Office Depot in a $6.3 billion dollar deal. Staples is currently the world’s largest office supply chain store, posting annual revenues of $23.1 billion in 2013 [read performance summary here]. Office Depot posted revenues of $11.24 billion in the same year. Together, Staples and Office Depot control more than 70 percent of the office supply market.
Zoetis Appoints New Board Member from Activist Investor Ackman’s Hedge Fund Firm
On February 4, 2015, Zoetis (ZTS), an animal healthcare company, announced the appointment of William F. Doyle, through the hedge fund firm Pershing Square Capital Management LP, as its new board member, expanding its board to ten members. Doyle is a former McKinsey & Co. consultant and former Johnson & Johnson executive. He also attended Harvard Business School with Pershing Square’s founder and CEO, William Ackman. Pershing Square is expected to add a second member to Zoetis’ board in the near future.
Consolidation in the Reinsurance Industry
Reinsurance is used by insurance companies to transfer some of their risk to other parties. The company willing to accept the risk is known as the reinsurer and the company transferring the risk is known as the “ceding company”. The reinsurer agrees to indemnify the ceding company against some of the primary insurance risks underwritten by the ceding company under one or more insurance contracts. The ceding company pays a premium to the reinsurer and in return it will receive a payment if specified event occurs. Examples include extensive damage from flooding and earthquakes.
UBS Dark Pool Leads to $14.5 Million in Settlement Paid to SEC
Dark pools are private exchanges or forums for trading securities that primarily facilitate large block trades by institutional investors. Dark pools offer the efficiency (in the form of liquidity) of trading on a public exchange, but allow the transactions to remain secret—neither the price nor the identity of the firm is disclosed—until the trade is filled. The lack of transparency in dark pool trades allows large trades to be made by institutional investors without influencing the market and adversely affecting the price. Private banks and brokerages generally operate dark pools, which are subject to more relaxed public disclosure requirements than public exchanges. But that is not to say that dark pools are not subject to federal securities laws, as evidenced by the SEC investigation of and charges brought against Swiss banking-giant UBS.
Court Looks to Obscure Law: Trust Indenture Act of 1939
When some bondholders purchased debt in casinos operated by Caesars Entertainment, they felt comfort in the guarantees of the parent company that it would stand behind the debt payments, even if something were to go awry. When Caesars found itself in financial distress, the company abruptly eliminated its guarantees, leaving bondholders to turn to an obscure Depression-era law: the Trust Indenture Act of 1939 (The Act). The Act was originally devised to protect bondholders from abusive tactics, such as back-room deals that stripped bondholders of their rights.
Facebook Aims to Retaliate Against DLA Piper and Other Firms
On Monday, October 20th Facebook filed charges against DLA Piper along with several other firms and attorneys that had represented Paul Ceglia in an earlier suit opposing Facebook. The October 20 lawsuit, filed in the New York Supreme Court, is based largely on facts pertaining to a 2010 action in which Ceglia sued Facebook.
SolarCity Corp. Issues Bonds To Raise Money For More Clean Energy
SolarCity, whose stocks are traded on NASDAQ, operates in the area of installation and deployment of energy efficiency products and services. It is the biggest firm in the US operating in residential solar systems solutions alongside Sungevity and Vivint Solar.
Amazon Faces Tax Hurdle in India
Amazon’s expansion plans of $2bn into its e-commerce business in India has faced some major regulatory obstacles with the government in the southern state of Karnataka, where its local operations are headquartered. The company is accused of violating India’s FDI (Foreign Direct Investment) regulations by trying to make a “backdoor entry” into India’s retail business. Karnataka tax authorities have stopped Amazon from selling products from its warehouse by cancelling licenses of third-party merchants storing their products in Amazon’s warehouse near Bangalore.
Court Finds CFIUS Violated Ralls Corporation’s Due Process Rights
On July 15, 2014, the United States Court of Appeals for the District of Columbia remanded Ralls Corporation’s (Ralls) precedent-setting case against the Committee on Foreign Investment in the United States (CFIUS or the committee) and President Obama to district court for the enforcement of Ralls’s right to due process.1 Ralls had argued,inter alia, that CFIUS and the president had unconstitutionally deprived it of its right to property by forcing it to divest that property for national security reasons. The court found that the president had not provided process sufficient to satisfy the Fifth Amendment, and that Ralls was entitled to (a) notice of the official action, (b) review of the unclassified portions of the evidence relied upon by the president in his decision and (c) the right to respond to that evidence. Separately, the court found that the district court also had incorrectly dismissed a number of Ralls’ other claims against CFIUS as moot, and remanded those additional claims for a hearing on the merits. The court’s decision may add a new layer of uncertainty to CFIUS processes, impact both applicants’ rights and committee procedures, and increase the number of tactical decisions involved in preparing for a CFIUS review.