- Faked Documents May Be at Core of Apple Case
- Private equity firms form group amid M&A boom
- The Biggest Private Equity Firms Are Turning Their Focus to Asia
- While Contributing to Problem, Blackstone Chief Frets About It
- Mergers About to Get Even Hotter in 2007, Selig, Yeary Say
- Merrill brokers get plum
More headlines below
- Gold May Rise as Investors Seek Alternative to Dollar
- SEC Slows Flow of PIPE Deals to a Trickle
- Buyout Bonanza Compels Firms To Pile On Debt
- Capitalize on Hedgies’ Demand for Muni Bonds
- Refco exits Chapter 11, to wind up businesses
- Lazard Taps France Official For Managing-Director Post
- Bisys considering management buy-out
- News Corp. May Pay Liberty $300 Million If Deal Fails
- UnitedHealth Reports Formal SEC Stock-Option Probe
- Ford CEO’s Visit to Toyota Signals Push for Solutions
- Anadarko to Sell Fields to Exco for $1.6 Billion
- S&P Cuts Big-Spending Times’ Credit Rank
- Home Depot’s Dilemma
Faked Documents May Be at Core of Apple Case – Law.com
It must be some consolation for Apple Computer that the company’s annual report is going to be published during the slowest news week of the year.
Given the uncomfortable admissions about its past stock options practices — and the cost to the company — that Apple will have to make in the delayed SEC filing due by Friday, less public attention is probably a good thing.
But the lull is unlikely to last long. According to people with knowledge of Apple’s situation, federal prosecutors are looking closely at stock option administration documents that were apparently falsified by company officials to maximize the profitability of option grants to executives.
The faked documents were revealed in a three-month internal probe — conducted by Quinn Emanuel Urquhart Oliver & Hedges — that concluded in October, said individuals familiar with the case who requested anonymity because it remains the subject of criminal and civil government investigations…..
Private equity firms form group amid M&A boom – Reuters
Eleven major private equity firms on Tuesday said they have formed a trade group, the Private Equity Council, as the industry becomes a more powerful force in the nearly $4 trillion world of mergers and acquisitions.
The firms comprising the Washington, D.C.-based group are: Apollo Management, Bain Capital, the Blackstone Group, the Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co., Madison Dearborn Partners, Providence Equity Partners, Silver Lake Partners, Texas Pacific Group and Thomas H. Lee Partners.
In a joint statement, the firms said the Council will become an industry advocate and a resource for people seeking to understand private equity’s role in the global economy….
The Biggest Private Equity Firms Are Turning Their Focus to Asia – New York TImes
After the extraordinary growth in private equity deals in the United States and Europe, Asia is emerging as the next frontier. The top firms are already poised to take advantage.
That, at least, is the view of David Bonderman, a co-founder of the Texas Pacific Group, who at a recent conference here referred to an “explosion” in the size of deals in Asia. Despite a surge in the number of homegrown private equity firms, he predicted that just 10 global firms, Texas Pacific among them, would end up leading the Asian market.
“It’s going to be a global market dominated by the same global players who dominate the marts in America and Europe,” he said.
For such firms, Asia offers a rich bounty. This year, private equity firms committed $28.9 billion through the first nine months of the year to investments in Asian companies outside Japan — a 78 percent increase from a year earlier, according to Dealogic, a financial data provider…..
While Contributing to Problem, Blackstone Chief Frets About It - Wall Street Journal
Inequality is on the rise in the U.S. That trend has got Stephen Schwarzman worried. The buyout baron, chief executive of Blackstone Group, thinks increased inequality could have political repercussions. He’s right — but the deal mania of Blackstone and its competitors is a part of the problem.
When private-equity firms take over companies, they usually try to cut labor costs. They often abolish pension plans, throw out unions, freeze wages and make workers pay the full cost for health benefits. The relentless drive for further cost reductions makes workers’ jobs insecure. And a worker sacked by a buyout employer is likely to earn less in his or her next job.
The technique has worked very well — for investors. Deal makers have earned billions from restructuring corporate America. That has made them Wall Street statesmen, the sort of thinkers who are supposed to worry about broad social issues such as the growing disparity of wealth and income in the US. Mr. Schwarzman says, "The middle class in America hasn’t done as well in the last 20 years as people at the high end, and I think part of the compact in America is everybody has got to do better."…..
Mergers About to Get Even Hotter in 2007, Selig, Yeary Say – Bloomberg
As hot as the mergers market is now, it’s about to get hotter.
All the variables are in place for acquisitions in 2007 to surpass this year’s record $3.6 trillion. U.S. stocks are trading close to the cheapest price-to-earnings levels in a decade, data compiled by Bloomberg show. Yields on junk bonds used to finance takeovers also are near 10-year lows, according to Merrill Lynch & Co. Leveraged buyout firms have $1.6 trillion to spend, Morgan Stanley estimates.
“There hasn’t been a period I’ve seen in my career when all of those factors that influence M&A activity have been as strong,” said Stefan Selig, the global head of mergers and acquisitions at Charlotte, North Carolina-based Bank of America Corp.’s securities unit. Selig, 43, started at First Boston Corp. in 1984, working for Bruce Wasserstein and Joseph Perella.
Bank of America, Morgan Stanley, Deutsche Bank AG and JPMorgan Chase & Co. all forecast that takeovers may climb at least 10 percent next year. An increase of that magnitude would boost fees from advising companies and buyout groups to a record $24 billion, according to estimates based on Bloomberg data….
Merrill brokers get plum – New York Daily News
Merrill Lynch has sweetened the bonus program for its 15,700 financial advisers, allowing brokers to receive payouts equal to up to 30% of the revenue they bring in, according to sources at the company.
Wall Street firms are scrambling to replace their traditional transaction-based commission model with the steadier revenue of fee-based businesses, and their bonus programs generally reflect that priority.
Merrill’s new 2007 Focus on Growth bonus program, however, is meant to reward brokers who bring lots of revenue into the firm whatever the source, as long as they continue to grow their fee-based business, the sources said….
Gold May Rise as Investors Seek Alternative to Dollar – Bloomberg
Gold may climb for the second-straight week as investors avoid dollar-denominated assets and purchase the precious metal.
Thirteen of 34 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Dec. 21 and Dec. 22 advised buying gold, which rose 0.5 percent last week in New York to $622.30 an ounce, the first gain in three weeks. Nine respondents said to sell the metal, and 12 were neutral.
Investment in the StreetTracks Gold Trust, a $9 billion exchange-traded fund linked to the price of the metal, has more than doubled in value this year and the number of shares outstanding jumped 78 percent. Gold is up 20 percent and heading for its sixth straight annual gain, while the dollar has fallen 8 percent against a basket of six major currencies…..
SEC Slows Flow of PIPE Deals to a Trickle – Wall Street Journal
Pipes are getting clogged in the nation’s capital.
Staffers at the Securities and Exchange Commission are increasingly reluctant to sign off on transactions involving "private investments in public equity," or PIPEs, a popular way for public companies to raise cash quickly. The reason: the deals are getting so big and complex that it is causing concern that shareholders aren’t aware of the potential risks.
Offerings like these have boomed because they let companies quickly access cash from sophisticated investors, such as hedge funds. This year, a record $27.7 billion of PIPE deals were placed through Dec. 22, according to PlacementTracker, up about 38% from 2005. Buyers in these private transactions receive unregistered securities (typically stock, or debt that can be converted into stock) with the expectation that the issuing company will later obtain SEC approval to register them — allowing the securities to be resold to the public. In recent months, however, the SEC has blocked scores of companies from registering shares sold in PIPE deals….
Buyout Bonanza Compels Firms To Pile On Debt – Wall Street Journal
Behind the terms of Harrah’s Entertainment Inc.’s agreement to be acquired by two private-equity firms last week were some potentially important signals about where the current buyout boom is going.
Harrah’s last Tuesday accepted a $17.1 billion buyout offer from Texas Pacific Group and Apollo Management that would involve the casino operator’s taking on around $10 billion in new debt, nearly doubling down on $10.7 billion in existing obligations. Harrah’s, which generates around $2.5 billion in cash flow each year, will end up with total debt that is more than eight times that amount, a ratio "that is high by any standard," says Adam Cohen, an analyst at debt-research firm CreditSights.
Analysts look closely at a company’s ratio of debt to cash flow — as measured by operating earnings before charges like interest, tax, depreciation and amortization — for a sense of whether it is taking on more debt than it can handle…..
Capitalize on Hedgies’ Demand for Muni Bonds – TheStreet.com
Demand for the dullest of assets — yes, that’s right, municipal bonds — has gotten a recent boost from hedge funds.
These private investment partnerships are using muni bonds to juice their investment returns, which aren’t as stellar as they were a few years ago. But hedge funds aren’t just buying the bonds and collecting interest.
Rather, they are employing various arbitrage strategies to profit from the difference between the yields paid by longer-dated muni bonds and other, shorter-dated securities. One such strategy involves using the bonds as collateral in trusts that issue variable-rate notes….
Refco exits Chapter 11, to wind up businesses – Reuters
Refco Inc. on Tuesday said it has emerged from Chapter 11 protection from creditors, ending one of the most complex U.S. bankruptcy cases and allowing the company to wind up its businesses.
Refco, which was once a major futures and commodities broker, and 23 affiliates filed for court protection on Oct. 17, 2005, a week after revealing that former chief executive Philip Bennett hid $430 million of debt, and two months after raising $583 million in an initial public offering of stock.
Bennett has pleaded innocent to fraud charges and is scheduled to stand trial in March.
The expected payouts represent a small fraction of the $16.8 billion that creditors had claimed they were owed. Robert Drain, a U.S. bankruptcy judge in Manhattan, approved Refco’s reorganization plan on Dec. 15….
Lazard Taps France Official For Managing-Director Post – Wall Street Journal
Lazard Ltd. hired former French treasury official Jean-Louis Girodolle as managing director, a move that highlights the continuing brain drain from the public to private sector in France.
Investment banks in France have frequently tapped the French public elite, seen as packed with bright, experienced, underpaid people with a key knowledge of the ways of the French state.
In turn, civil servants are attracted by the banks’ pay packages, which the state can’t match, but also by brighter career paths, which the state seems unable to secure for their most talented people, observers say…..
Bisys considering management buy-out – Financial Times via MSNBC
Bisys, the US fund administration company that recently settled SEC fraud charges, has been considering a management buy-out.
The group a few months ago hired Bear Stearns to evaluate the viability of a sale of the company, and is leaning towards a buy-out, according to those familiar with the discussions.
Bisys in September paid $21m to settle charges by the Securities and Exchange Commission that the company had secretly arranged to kick back part of its fees to 27 fund groups in exchange for getting the funds’ administration business. The deals spanned the five years from 1999 to 2004…..
News Corp. May Pay Liberty $300 Million If Deal Fails – Bloomberg
News Corp., the media company controlled by Rupert Murdoch, will pay Liberty Media Corp. as much as $300 million if the companies’ $11 billion asset swap involving DirecTV Group Inc. falls apart.
The breakup fee is $100 million if News Corp. shareholders reject the deal and Murdoch family interests aren’t counted in the vote, according to a regulatory filing today by the New York-based company. Other events, including reversal of News Corp. board backing of the deal, trigger a $300 million fee.
News Corp. last week agreed to buy back shares held by Liberty Media in exchange for News’s 38 percent stake in DirecTV and other assets including $550 million in cash. The accord ends the threat to Murdoch’s control of News Corp. posed by Liberty Chairman John Malone’s 16.3 percent stake in News Corp…..
UnitedHealth Reports Formal SEC Stock-Option Probe – Bloomberg
UnitedHealth Group Inc., the biggest U.S. health insurance company by sales, reported a formal Securities and Exchange Commission probe of the stock-options practices that led to the departure of William McGuire as chief executive officer.
Regulators issued the formal order of investigation Dec. 19 after notifying UnitedHealth in April 2006 of an informal inquiry, the Minnetonka, Minnesota-based company said today in a regulatory filing. UnitedHealth said it will continue to cooperate with the SEC.
A formal order must be approved by the SEC’s commissioners and gives the agency’s investigators the power to subpoena documents and compel witnesses to testify. McGuire, 59, was forced to resign last month after an independent probe found he may have manipulated the dating of options worth hundreds of millions of dollars. McGuire agreed last month not to exercise his own options, once worth as much as $1.6 billion…..
Ford CEO’s Visit to Toyota Signals Push for Solutions – Wall Street Journal
A trip to Japan last week by Ford Motor Co.’s Alan Mulally indicates the new chief executive may look to rival Toyota Motor Corp. in his search for answers for the ailing auto maker.
Mr. Mulally and Mark Fields, president of Ford’s Americas operations, met in Tokyo with Toyota Chairman Fujio Cho and other executives. People familiar with the matter described the talks as initial and broad-based and played down their significance, with one person close to Toyota saying the Japanese auto maker has "enough on [its] plate" without a Ford alliance.
Industry observers consider a takeover unlikely because of the problems plaguing the Dearborn, Mich., auto maker as well as the Ford family’s control of the company. Still, word of the meeting comes amid sweeping changes in the global auto industry, and talks involving purchasing alliances and technology-sharing agreements have proliferated as auto makers grapple with rising competition and global overcapacity. The talks were reported yesterday in Japan’s Nihon Keizai Shimbun newspaper…..
Anadarko to Sell Fields to Exco for $1.6 Billion – Bloomberg
Anadarko Petroleum Corp., the U.S. oil and natural-gas producer that bought Kerr-McGee Corp. earlier this year, sold fields in Louisiana to Exco Resources Inc. for $1.6 billion to help cut debt.
Exco, which went public in February with billionaire hedge fund manager T. Boone Pickens as its largest shareholder, will almost double its oil and gas reserves. Anadarko is selling assets to pay off debt after buying Kerr-McGee and Western Gas Resources Inc. in August for a combined $22.5 billion.
Anadarko, based in The Woodlands, Texas, is selling the fields to focus on projects that are more attractive, Chief Executive Officer Jim Hackett said in a statement today. The fields are tapped by about 350 wells, and 96 percent of the proved reserves on the properties are in production, Exco said…..
S&P Cuts Big-Spending Times’ Credit Rank – New York Post
The New York Times had its credit rating cut another notch yesterday after Standard & Poor’s downgraded the newspaper giant’s debt for the second time this year.
S&P lowered the company’s long-term corporate credit rating to BBB+-three levels above junk territory-from A-.
The ratings agency said the outlook remains "negative," which means another downgrade is likely in the next two years…..
Home Depot’s Dilemma – Wall Street Journal
When private-equity firms announce yet-another acquisition of a public company, analysts sometimes wonder why the companies themselves don’t pre-empt such moves by putting more debt on their balance sheets to create value for their shareholders.
But such balance-sheet maneuvers aren’t so easy, as Home Depot Inc. recently demonstrated. The home-improvement giant’s mid-December announcement of a planned share buyback of up to $4 billion, funded by $5 billion in new debt, has alienated bondholders while leaving shareholders — miffed by lackluster share performance — far from satisfied. That is because the buyback seems smallish compared with the company’s market value of more than $79 billion.
Home Depot’s debt-fueled buyback also didn’t do much to address shareholder frustrations about corporate-governance issues related to stock options and the hefty compensation package awarded to Chief Executive Robert Nardelli…..
