The Securities and Exchange Commission (SEC) fined Computer Sciences Corporation $190 million for “manipulating financial results” and concealing significant problems with one of its largest contracts. Civil charges were also brought against eight former executives of the company. The SEC’s inquiry into Computer Sciences lasted more than four years and largely focused on accounting fraud. Computer Sciences Corp. agreed to this penalty, which was primarily a response to financial statement fraud that took place from 2009 to 2012.
Uber, “I’ve a Feeling we’re Not in Kansas Anymore”
You’ll be out of luck next time you want to hail an Uber down the yellow brick road in Kansas.
Tuesday, May 5, 2015 was the last day Uber operated in the state thanks to a legislative override of Governor Sam Brownback’s veto of the Kansas Transportation Network Company Services Act. The Kansas House of Representatives overruled the veto by a 96-25 vote and a 34-5 vote in the Kansas Senate. The legislation requires drivers pass a local and national criminal background check conducted by the Kansas Bureau of Investigation (FBI) before they are allowed to operate as a driver of a transport network company (TNC). The new law further requires “the vehicle must be covered under primary automobile insurance that provides at least $1 million for death, bodily injury, and property damage, besides meeting other conditions.”
Late-Stage Protection for Investors Can Inflate Start-Up Valuations
Acquisitions of unicorns, i.e. young tech companies valued at over $1 billion, were a hallmark of 2014. These acquisitions continue to be surprising both in their enormity and frequency. For example, Facebook Inc. acquired the messaging group WhatsApp Inc. for a whopping $19 billion, and then also acquired virtual reality company Oculus VR Inc. for $2 billion. Google Inc. acquired smart-thermometer marker Nest Labs Inc., and other investments, for $3.2 billion. Microsoft Corp. acquired Minecraft game maker Mojang AB for $2.5 billion.
New Zealand Approves Staples-Office Depot Merger, Challenges Remain at Home
On February 4, 2015, Staples, Inc. announced its global acquisition of Office Depot, Inc. Staples’ Chairman and CEO, Ron Sargent, announced:
“We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint. These savings will dramatically accelerate our strategic reinvention which is focused on driving growth in our delivery businesses and in categories beyond office supplies.”
Staples has offered $6.3 billion to forge the deal with an expectation of creating a retail chain worth $39 billion in revenue and with thousands of stores. Staples is financing the deal with a $3 billion ABL credit facility and a $2.75 billion six-year loan from Barclays and Bank of America Merrill Lynch.
Madoff’s Accountant Avoids a Prison Term
Accountant, David G. Friehling admitted in federal court that he had produced the rubber-stamp audits that allowed Mr. Madoff to conceal his enormous $65 billion Ponzi scheme from regulators for more than two decades. Federal Judge Laura Taylor Swain in Manhattan sentenced Mr. Friehling to only a year of home detention and an additional year of supervised release. This light sentence reflects Mr. Friehling’s extensive cooperation with federal prosecutors.
Pending Regulatory Approval Charter’s Acquisition of Time Warner Positions the Company for the Future
Charter Communications, a cable and telecommunications company, recently announced that it would acquire Time Warner Cable in a $55 billion deal. Along with Time Warner, Charter also plans to acquire Bright House Networks in an additional $10 billion deal. While Bright House is a much smaller provider, Charter and Time Warner are the second and third largest cable television providers in the United States. Charter CEO Tom Rutledge claims the combined companies will provide customers with improved internet speeds and more competitive pricing.
Shell’s Purchase of BG Will Test the Transparency and Assertiveness of China’s Young Antitrust Regime
Shell announced a $70 billion acquisition of Britain’s BG group. But it is liquefied natural gas (“LNG”)—not oil—that drove the historic deal. The two energy giants will surpass ExxonMobil as the biggest player in this volatile and niche market.
The Oil Merger of the Decade: Shell to Buy BG Group
According to a statement by BG Group, Royal Dutch Shell is considering a “super-merger” with BG to expand its gas production, which would mark the biggest merger of the year.
Cryan, Former Tullet Prebon Broker Pleads Not Guilty to Manipulating Libor in the UK
Noel Cryan, an ex-broker of the Tullet Prebon Group, a British brokerage firm, entered his plea at Southwark Crown Court in London, pleading not guilty against criminal charges for conspiring to manipulate Libor.
FedEx Looks to Become Major European Player with TNT Express Acquisition
FedEx has agreed to acquire European shipping and delivery competitor TNT Express (TNT). The $4.8 billion deal must still receive approval from European regulators, a status that UPS failed to achieve when its proposed acquisition of TNT was blocked by these same regulators in 2013. UPS was unable to satisfy regulator’s antitrust concerns because of their “dominant” position in the European ground shipping market. Substantial similarities between UPS and TNT’s business offerings led to regulators’ concern that the deal would result in a significant decrease in competition and an increase in prices for consumers.