Qualcomm Rejects Broadcom’s Takeover Bid: DealBook Briefing

Qualcomm Rejects Broadcom’s Takeover Bid: DealBook Briefing

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Here’s more from Qualcomm’s executive chairman, Paul Jacobs:

“It is the board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the company’s leadership position in mobile technology and our future growth prospects.”

The expected move means that Broadcom will have to convince shareholders of its target to change management’s mind — or run a proxy fight that replaces at least some of Qualcomm’s directors. The deadline to nominate directors is next month.

Shares in Qualcomm were up 1.4 percent in premarket trading, at $65.50. That’s still below Broadcom’s bid of $70 a share, suggesting that investors remain unsure of whether Broadcom’s takeover efforts will succeed.

Brookfield offers $14.8 billion for the rest of GGP.

Get ready for a potential battle to control one of America’s biggest mall operators.

Brookfield Property Partners, a real estate investment firm, confirmed on Monday that it has offered to buy the 34 percent of GGP that it doesn’t already own. That would make Brookfield one of the biggest publicly traded real estate companies in the world, with nearly $100 billion worth of assets.

GGP, formerly known as General Growth Properties, operates primarily upscale malls like Tysons Galleria in Virginia and Woodbridge Center in New Jersey. Along with other mall operators, it has been grappling with the decline in brick-and-mortar shopping, and has been trying to find new ways to repurpose its real estate.

Brookfield’s C.E.O., Brian Kingston, said this in a statement:

“We are excited about the opportunity to leverage our expertise to grow, transform or reposition GGP’s shopping centers, creating long-term value in a way that would not otherwise be possible.”

Brookfield first gained a stake in GGP when it helped the mall operator emerge from Chapter 11 bankruptcy.

In its own statement, GGP said that it was considering Brookfield’s bid.

Anheuser-Busch, the maker of Budweiser, is replacing the head of its United States subsidiary.

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Gene J. Puskar/Associated Press

What happens when 3G can’t do more deals?

That’s the question confronting the acquisitive investment firm — long celebrated for its deal-making savvy, Unilever excepted — and its portfolio companies as they run out of transformational acquisition targets. In fact, it raises concern about what all companies whose growth has come in large part from buying others can do when they run out of companies to buy.

Anheuser-Busch InBev, Kraft Heinz and Restaurant Brands International are all becoming too big to buy huge competitors. And they have largely implemented 3G’s favorite tactics, like zero-based budgeting, to trim costs.

Now they, and their financial backer, must prove that they can grow their businesses organically. Hence, why Anheuser-Busch is replacing the head of its United States subsidiary.

From Jennifer Maloney of the WSJ:

The management changes mark a new phase for the company’s U.S. operations, said Carlos Brito, chief executive of the Belgium-based behemoth. The first phase, after InBev’s 2008 takeover of Anheuser-Busch, was aimed at cutting costs and paying off debt. The second focused on expanding the portfolio with craft beers and growing higher-end brands such as Stella Artois and Michelob Ultra, Mr. Brito said.

General Electric’s logo displayed on the floor of the New York Stock Exchange. The company announced Monday that it would cut its quarterly dividend in half.

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Richard Drew/Associated Press

Putting G.E.’s self-help plan in context.

Here are some numbers to keep in mind about G.E.’s latest transformation. You can read the full plan here, and you can read the news release about the dividend here.

2009. That’s the last time G.E. cut its dividend.

$4 billion. That’s how much money the move is expected to save each year.

3. That’s how many businesses G.E. now plans to focus on: aviation, power and health care.

35%. That’s how much G.E. shares have fallen so far this year.

Shares in the conglomerate were down nearly 3 percent in early-morning trading on Monday.


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Toru Hanai/Reuters

Has the dysfunction at Uber finally ended?

After all, Uber, its investors and SoftBank’s Masa Son have struck enough compromises to move forward with a long-awaited deal that would allow early shareholders to cash out of the ride-hailing colossus. Those concessions included:

• Giving up special voting rights held by early shareholders like the investment firm Benchmark

• Benchmark suspending its lawsuit against Travis Kalanick

• Mr. Kalanick letting Uber’s other directors have a say over the board seats he controls if he ever needs to fill them again

From Greg Bensinger, WSJ:

“It’s a pretty great reset for the company,” said Bradley Tusk, a political strategist and investor in Uber. “Everyone staying in is focused on the possibilities of the future and everyone mired in the past and present can move on.”

What’s next: SoftBank and its partners can proceed with an offer to buy at least 14 percent of Uber’s shares — although they can walk away if they don’t hit that target. (We want to know whether SoftBank can raise its bid and extend the tender if, toward the end of the process, the Japanese conglomerate still looks like it will fall short of its goal.)

The cautious view: Not everyone is convinced that peace has descended upon Uber just yet. “Trust but verify,” an unidentified person told Kara Swisher of Recode.

More in Masa news: Tim Culpan of Bloomberg Gadfly thinks the SoftBank founder has set himself up as “the savior of overpriced start-ups.”


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Al Drago for The New York Times

The latest front in the tax battle: private equity.

The newest version of the House bill may have done little to meaningfully affect carried interest, but buyout firms are planning to fight back against limits on the deductibility of corporate debt payments. That would make the core business of private equity — buying and selling companies, in deals financed to some degree with borrowed money — much more difficult.

From Madison Marriage, Javier Espinoza and Sam Fleming in the FT:

“There is no particular logic to the reforms. This is really frightening,” said one London-based private equity manager with international holdings, including in the U.S.

Where we now stand: The House is set to vote on its tax plan by the end of the week. Lawmakers in the House and the Senate are scrambling to counter economic models showing that both proposals would ultimately add to the national debt, according to the NYT.

Don’t cut our taxes: More than 400 millionaires and billionaires, from George Soros to the founders of Ben & Jerry, are sending a letter to Congress this week opposing the Republican plans. “This makes no sense,” Bob Crandall, a former American Airlines C.E.O. and a signatory of the letter, told the WaPo.

Some Republican lawmakers have conceded that — contrary to statements by President Trump and party leaders — not all Americans will see their taxes lowered, and some will see their obligations rise, according to the WaPo.

Tax notes

• Critics of the interim commissioner of the I.R.S., David Kautter, have pointed to his work in the private sector helping clients avoid paying billions in taxes. (The Daily Beast)

• In a video, Senators Elizabeth Warren and Al Franken, both Democrats, reached this conclusion about what companies would do with tax cuts: “More money for the investors!” (Ms. Warren’s Twitter)

• California lawmakers and activists think their state is being deliberately punished by congressional Republicans. (NYT)

• One Democratic donor, Stephen Cloobeck, the C.E.O. of Diamond Resorts International, threatened to cut off his support of the party if they didn’t stop criticizing the rich. (Twitter)

President Trump met in Manila on Monday with President Rodrigo Duterte of the Philippines.

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Doug Mills/The New York Times

Trump’s two messages to Asian partners.

On the one hand: Let’s band together to stop North Korea. On the other: Find your own way on trade. (But could his pronouncements be drowned out by his latest Twitter invectives against Kim Jong-un and critics of the Trump administration?)

A boon for Canadian lobster: While Mr. Trump takes a tough line on new trade pacts, foreign partners are wary of agreeing to those terms — leaving room for competitors like Canada to sign deals quickly. )

Some good news for bankers.

Item #1, from Ryan Tracy and Christina Rexrode, WSJ:

The Trump administration has a strong message for the country’s bankers: You’re not the villain anymore.

President Trump’s newly minted financial regulatory team — growing in size with recent confirmations — is sounding a friendlier tone than its predecessor, which restricted the industry following the 2008 bank bailouts.

Item #2, from Telis Demos, WSJ:

For the first time in four years, year-end bonuses for bankers in 2017 are set to grow over the prior year, according to consulting firm Johnson Associates Inc. Over all, incentive pay is expected to rise by 5 percent to 10 percent, Johnson’s survey found.

Randall Stephenson, the chairman and chief executive of AT&T.

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Mike Cohen for The New York Times

What role is politics playing in the Time Warner deal?

Executives at the two companies privately worry that the Trump administration wants CNN to be sold to get the deal done. Justice Department officials dispute that, although they have asked for the sale of either Turner Broadcasting, which includes CNN, or DirecTV.

On Air Force One this past weekend, Mr. Trump denied intervening in the government’s decision-making process, saying, “I do feel you should have as many news outlets as you can — especially since so many are fake.”

But the WSJ has reported that when Jared Kushner met with a top executive at Time Warner earlier this year, Mr. Kushner said that CNN should fire 20 percent of its staff because the cable channel was wrong in its analysis of the 2016 election.

A group of senators, led by Amy Klobuchar, Democrat of Minnesota, has asked the Justice Department whether the president had pressured its antitrust division.

What now for media consolidation? There are a lot of proposed (and potential) combinations in the industry, and Michael asked on Friday if what’s happening with the Time Warner deal could chill that merger talk.


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Brynn Anderson/Associated Press

Roy Moore presents a dilemma for the G.O.P.

Now that Alabama’s governor has ruled out delaying the Dec. 12 special election, Mr. Moore appears to be locked in as the Republican nominee for the Senate there. Should he lose — not a given — Republicans would have just a one-seat majority in the Senate, imperiling their ability to move legislation. Senate Republicans have largely abandoned Mr. Moore, although the White House hasn’t at this point.

At the same time, a stream of accusations has hit statehouses from California to Florida, according to the NYT.

In Hollywood

• Louis C.K. has been dropped from FX Networks, which has a production deal with his Pig Newtown company and from Universal’s “The Secret Life of Pets 2.” (Deadline, Variety)

• Gal Gadot, the star of “Wonder Woman,” won’t participate in a sequel to the hit movie if Warner Brothers doesn’t remove Brett Ratner, the Hollywood director and producer accused of sexual misconduct, as a financier of the film, according to an unidentified source. (NY Post)

• Andrew Kreisman, a producer of CW shows like “The Flash” and “Supergirl,” has been suspended following accusations of sexual harassment. (Variety)

How men in the workplace are responding: Some are forming all-male texting groups to discuss harassment issues and others are wondering whether flirting or hugging is acceptable. (NYT)

A message to male techies: “World War II is a reminder that, when freedom hung in the balance, inclusion kept us safe,” the author Liza Mundy writes in an NYT Op-Ed, pointing to the large number of female code-breakers during that war. (NYT)

Jerry Jones, the owner of the Dallas Cowboys.

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Mark Tenally/Associated Press

A serious breach opens between N.F.L. owners.

As owners debate how to speed contract negotiations with Roger Goodell, while Jerry Jones of the Dallas Cowboys threatens to sue if that happens, we have to ask: Can the league find unity again?

There are many issues to contend with, including player protests, declining TV ratings, and the debate about concussions. The fissure between Mr. Jones and the other owners could prevent the league from coming together on efforts to address all those. “This is not the way we do things in the N.F.L.,” Arthur Blank of the Falcons told Mr. Jones on a call last week, according to Sports Illustrated.

What N.F.L. owners will discuss today: Mr. Goodell’s most recent proposal, which includes annual compensation of $49.5 million, the lifetime use of a private jet and lifetime health insurance for his family, according to ESPN, citing an unidentified person.

The Tesla hype machine has been reactivated.

Elon Musk wants you to stand by for breaking news. Aaron Levie of Box summed up Silicon Valley’s reaction: “I’m going to go out on a limb and say there probably have never been semi truck announcement viewing parties before this Thursday.”

But we’d be remiss if we didn’t point out Tesla’s stock performance over the past month:

A longtime Tesla skeptic, @Diogenes, retweeted Mr. Musk’s post and snarkily commented, “Squirrel!”

Both Barron’s and the NYT Magazine asked this weekend whether Tesla was in danger of being usurped by the car companies it was meant to disrupt.

In more auto news

• “Can Ford Turn Itself into a Tech Company?” (NYT)

• Arizona has quietly made itself the hub for testing self-driving cars. (NYT)

The Speed Read

• In her final column for the NYT, Gretchen Morgenson looks back over two decades and remembers one Wall Street firm’s celebration after it won an arbitration case: The firm’s general counsel “told me that the menu had featured a photograph of me, placed inside a red circle with a slash through it.” (NYT)

• Brookfield Property Partners has made a $14.8 billion offer to buy the shares of the mall owner GGP that it doesn’t already hold, according to people familiar with the matter. (WSJ)

• The Securities and Exchange Commission’s inspector general, Carl Hoecker, whose job is to root out malpractice at the agency, is the subject of complaints by several whistle-blowers. (WSJ)

• Whitefish Energy Holdings had a contract that allowed it to bill the Puerto Rican public power company much more than the usual rate for emergency work, which has led to scrutiny of all other contracts involving Puerto Rico. (NYT)

• To realize his dream of privatizing Aramco, Saudi Arabia’s crown prince needs to show potential investors that his recent purge of the kingdom’s elite is the first step on the road to a brave new country, rather than just a purge of opponents, Julian Lee says. (Bloomberg Gadfly)

• With the sense that governments can no longer be relied on to prop up asset markets, is it time for investors to leave the party? (The Telegraph)

Each weekday, DealBook reporters in New York and London offer commentary and analysis on the day’s most important business news. Want this in your own email inbox? Here’s the sign-up.

You can find live updates of DealBook coverage throughout the day at nytimes.com/dealbook.

Follow Andrew Ross Sorkin @andrewrsorkin, Michael J. de la Merced @m_delamerced and Amie Tsang @amietsang on Twitter.

We’d love your feedback as we experiment with the writing, format and design of this briefing. Please email thoughts and suggestions to bizday@nytimes.com.

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