On September 6, 2012, European Central Bank (ECB) President Mario Draghi announced a bond-buying program in an attempt to lower the borrowing costs of struggling Eurozone countries (e.g., Spain and Italy) and to prevent the potentially worst-case scenario of a currency breakup. The program, called Outright Monetary Transactions (OMT), targeted government bonds with maturities of one to three years and longer-dated debt with a remaining maturity of that length. Draghi emphasized that the ECB would not have seniority status on the debt and purchases would be fully sterilized, meaning a neutral impact on the overall money supply.
Pershing Square Holdings Ltd. IPO
On Monday, October 13, Pershing Square Holdings Ltd., a fund managed by activist investor Bill Ackman, held its initial public offering on EuroNext Amsterdam. The offering, priced at $25 per share, raised $2.73 billion in capital for Pershing Square Holdings, raising its total assets to $3.07 billion and its value to $6.2 billion. Ackman’s Pershing Square Capital Management LP – the parent company of Pershing Square Holdings Ltd. – follows other hedge funds including Brevan Howard Asset Management LLP and Third Point LLC in selling shares of individual funds.
#Transparency: Twitter’s Fight to Disclose Information about Federal Surveillance Activities
The latest salvo has been fired in the war between U.S. communications providers and the federal government regarding restrictions on how companies may disclose information about big brother’s surveillance of their customers.
New Treasury Rules Prompt AbbVie to Abandon Inversion Plans
Following the U.S. Department of Treasury’s recent announcement to reduce the tax benefits of corporate inversions, the Chicago-based pharmaceutical company AbbVie has advised its shareholders to reject the proposed acquisition of Dublin-based drug maker Shire. AbbVie’s proposed $54 billion acquisition would have been the largest inversion deal in U.S. history.
Conflicts of Interest Spur Blackstone’s Divestiture of Merger Business
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.
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.