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Mothercare Focuses on Turnaround After Destination Maternity Drops Bid

New York Times DealBook - 2 hours 13 min ago
The British company repeatedly rebuffed the American operator of A Pea in the Pod and Motherhood Maternity stores. Late Friday, Destination Maternity said it was abandoning its takeover efforts.
Categories: Transactions

India’s Rupee Bond Market Booms on Economic Optimism

Wall Street Journal MoneyBeat - 4 hours 28 min ago
Agence France-Presse/Getty Images

Foreign investors are loading up on rupee bonds again.

After being net-sellers of nearly $8 billion of rupee debt last year, foreign investors have bought more than $13 billion of the bonds this year, according to data from National Securities Depository Ltd.

Around $9 billion of this money has come in the last three months, helping send Indian bond prices higher.

Yields, which move inversely to prices, have fallen from around 9.1% in early April on the benchmark 10-year government 2023 bond, to around 8.67% Friday.

Even at these levels, yields on rupee debt is still attractive. Ten-year U.S. treasury bonds, for example, were recently only offering around 2.5%.

If interest rates in developed countries stay low, India’s economy improves and the rupee remains stable, Indian bonds could rally further.

“There is more juice to come,” said Krishnamoorthy Harihar, treasurer at FirstRand Bank in Mumbai.

Foreign institutional investors have already snapped up close to the $20 billion maximum amount of Indian government rupee bonds they are allowed to buy. Last week the Reserve Bank of India allowed them to buy another $5 billion in government bonds with some conditions.

Long-term foreign investors like sovereign wealth funds have a separate quota, of around $5 billion of government bonds.

“This is already finding buyers,” said Ritesh Jain, chief investment officer of Tata Asset Management Ltd. in Mumbai.

Global investors are showing that they are ready to take on more risk recently and they believe that the worst may be over for India’s economy.

They are optimistic India’s new government which came to power in May, will take steps to cut wasteful spending and revamp the economy.

The government has said that it will hold its budget deficit at 4.1% of gross domestic product, versus a target of 4.6% last year.

India’s current-account gap has narrowed to 1.7% of GDP in the year ended March 31, compared to 4.8% in the previous year. The large current-account gap had spooked foreign investors last summer and sent the Indian rupee crashing to a record low of 68.80 for one U.S. dollar.

The currency has recovered and has been trading near 60 rupees to the dollar in recent months. A stable currency is attractive to investors who don’t want to be exposed to currency fluctuations.

The improving economic and political environment bodes well for Indian debt in the coming years, investors say.

“It’s a matter of time before yields start declining” further, said Dhawal Dalal, head of fixed income at DSP BlackRock Investment Managers Pvt.

Some investors and economists said one thing that could spoil the bond rally is a sudden surge in inflation.

Monsoon rains so far this year have been below average which could push up food prices. Meanwhile a jump in building due to growing economic optimism, could send the prices of construction material higher.

Rising inflation could hurt bond prices over the next six months as it would mean the RBI will be unable to lower the country’s key interest rate, said Mr. Jain of Tata Asset Management.

But over the next three years, he believes yields are headed lower.

“There is a secular bull market starting in India in bonds in the next six months,” said Mr. Jain.

Categories: Transactions

Morning MoneyBeat Europe: Fed Policy Likely to Top Investor Intrays

Wall Street Journal MoneyBeat - 4 hours 39 min ago

Good Morning Europe

Forecasters are tipping a cautious start to the trading week in Europe, as well they might given that things might not really get going until late Wednesday when we’ll get August’s monetary policy call from the Fed.

There’s not much on the data schedule to inspire investors in the runup to that, so their focus meantime will probably remain on corporate earnings, with plenty of sidelong glances at Gaza and Ukraine. The latter conflict is still cited as one reason for European mainboards’ underperformance of their U.S. counterparts, along with nagging fears that Europe might already have seen its best growth for this cycle.

However the Asian session has been buoyed by a healthy increase in Chinese corporate profits.

By David Cottle

Market Snapshot: U.S. stocks (Friday close) DJIA down 0.7%, Nasdaq down 0.5%, S&P 500 down 0.5%. Nikkei now up 0.4%. September FTSE & S&P both down 0.1%. Brent crude down 45 cents at $107.94. Gold up $4.60 at $1307.08. EUR/USD now at $1.3428. USD/JPY at ¥101.82. Ten-year T-note yields 2.48%, Bund 1.15% and Gilt 2.57%.

Watch For: U.S. Pending home sales.

What you may have missed from MoneyBeat:

The Snag in Shutting Russian Borrowers Out: Western efforts to freeze Russian companies out of U.S. financial markets with fines on banks that help fund sanctioned firms has one crucial hitch: most Russian borrowers are in no hurry to raise new debt.

What ‘Sky Europe’ Means for BSkyB’s Future: British Sky Broadcasting Group PLC’s $9 billion agreement to buy most of Sky Deutschland and all of Sky Italia from 21st Century Fox could have implications for a far bigger media-consolidation play, Fox’s $80 billion pursuit of Time Warner Inc. But what’s the path forward for BSkyB itself?

U.K. GDP Exceeds Pre-Crisis Peak – The Numbers: The latest gross domestic product figures show the U.K. economy is on track to be one of the fastest-growing major advanced economies this year. Here are the numbers.

Welcome End to U.K.’s GDP Obsession: Rejoice! By growing 0.8% in the second quarter, the U.K. economy is finally bigger in real terms than it was at its pre-crisis peak six years ago.

Get Set For Higher FX Costs, Says Deutsche Bank: Manipulation investigation? Check! Tediously low volatility? Check! Now the currencies industry has a third challenge to deal with: regulation.

Two Up, One Down in Citi’s Equities Reshuffle: Citigroup Inc. has shuffled its top bench of equities traders following a raft of senior departures in recent weeks.

Royal Bank of Scotland Earnings: The Five Key Takeaways: Royal Bank of Scotland clearly couldn’t wait to share the good news. The bank’s shares zoomed up on Friday, toppping the FTSE 100 after the U.K. bank reported earnings – a week early – showing operating profit rose, bad debts were lower and cost savings on track.

Overnight Action

U.S. Push for Gaza Truce Yields Little: After six days of exhaustive meetings and stops in Cairo, Tel Aviv, Jerusalem, Ramallah and Paris, Secretary of State John Kerry came home Sunday with only a few fitful hours of peace in Gaza that proved fleeting.

Oil Prospectors Shift Back to Wealthy Lands: After decades focusing on less-developed nations, big oil companies are piling back into wealthy countries with political stability that provides more-predictable cash flow.

Deutsche Zeroes In on Wealth Management : Deutsche Bank co-CEO Anshu Jain has in the past two years made it a top priority to get the lender’s investment bank and wealth-management business to work to each other’s benefit.

Categories: Transactions

Tiny Luxembourg Wants a Piece of China’s Offshore Currency Market

Wall Street Journal MoneyBeat - Sun, 07/27/2014 - 21:58
The Grand Duchy of Luxembourg, dotted with ancient castles and churches, is campaigning to be a global hub for trading in China’s currency.
Bloomberg News

The small nation of Luxembourg already boasts a financial sector that has benefited from the Grand Duchy’s proximity to some of Europe’s largest economies. Now, the country of just half a million people wants to be at the heart of a new trend in global finance: the rising use of China’s currency outside its home market. As the WSJ’s Margot Patrick reports:

“The internationalization of the renminbi is one of the major events, if not the major event, since the creation of the euro in terms of monetary events. It’s potentially huge, so we want to be positioned for that market,” Luxembourg Finance Minister Pierre Gramegna said in an interview.

Like their rivals from London, Paris, Frankfurt and other financial centers, Luxembourg fund managers, regulators and politicians have made major overtures to attract China’s financial clout to the country. Even Crown Prince Guillaume, the 32- year-old heir to the Grand Duchy, has joined in, accompanying a December delegation to China.

 

Officials at the Luxembourg Stock Exchange keep enamel pins pairing the Luxembourg and Chinese flags to wear at events celebrating yuan-denominated bond listings, which hit 30.6 billion yuan in volume when Bank of China Ltd. raised 1.5 billion yuan in May. At the Association of the Luxembourg Fund Industry, information packs and wall posters have been translated into Mandarin. Local legal and accounting firms and even the financial regulator, the CSSF, say they are hiring Chinese speakers.

 

Their efforts are paying off. On one trade mission to China this month, for instance, a delegation from Luxembourg presented its hosts with commemorative stainless-steel €5 coins bearing the image of a blast furnace similar to one installed in Wuhan by a Luxembourger a century ago. At the end of the meetings, China signed a clutch of agreements that should lead to the establishment in Luxembourg of a yuan clearing bank and bring more China-related funds, bonds and stocks to the country.

 

Meanwhile, three of China’s six biggest banks have set up European headquarters in the area locals call Luxembourg city’s “mini Wall Street,” and two more announced plans in the past few weeks.

Read the full story on WSJ.com

Categories: Transactions

Multibillion-Dollar Dispute Over Guidant Seems Headed for Trial

New York Times DealBook - Sun, 07/27/2014 - 20:36
The dispute dates back to a 2004 bidding war, ultimately won by Boston Scientific. Johnson & Johnson is seeking $5.5 billion in damages.
Categories: Transactions

Equinox Fitness Is Buying Rest of Millennium’s Gyms

New York Times DealBook - Sun, 07/27/2014 - 20:29
The $110 million deal is for the remaining gyms owned by Millennium Partners, and it expands Equinox’s empire to 73 locations worldwide.
Categories: Transactions

Hospira and Danone in Talks on $5 Billion Inversion Deal

New York Times DealBook - Sun, 07/27/2014 - 20:26
If completed, the deal could be considered a “spinversion,” in which a foreign company spins off a unit to an American buyer that then reincorporates overseas.
Categories: Transactions

Morning MoneyBeat Asia: U.S. Stocks Retreat From All-Time Highs; Visa, Amazon Weakness a Major Drag

Wall Street Journal MoneyBeat - Sun, 07/27/2014 - 19:00

Market Snap: At the New York close on Friday, for the week: S&P 500 up 0.01% at 1978.34. DJIA down 0.8% at 16960.57. Nasdaq Comp up 0.4% at 4449.56. Treasury yields mixed; 10-year down to 2.469%. Nymex crude oil up 0.1% at $102.09. Gold down 0.5% at $1,303.10/ounce.

How We Got Here:  U.S. stocks suffered broad declines, with the Dow industrials posting their biggest slide in a week, amid disappointing news from companies such as Visa and Amazon.com.

Friday’s decline left the broad S&P 500 within 0.1% of where it started the week, reflecting investors’ ambivalence as corporate profits continue to grow but stocks’ march into record territory has left valuations on the pricier side of historical averages.

Money managers are also watching for any hints on when the Federal Reserve might raise interest rates, stepping back from an accommodative stance widely believed to have helped fuel stocks’ multiyear rally.

The Dow fell 0.8% on a weekly basis, while the Russell 2000 index of small companies’ shares posted its third-straight weekly decline.

“We think it’s prudent to take some risk off the table,” said Michael Fredericks, a portfolio manager on the $8.5 billion BlackRock Multi-Asset Income Fund. “Stocks have gotten more expensive. There’s an increased risk that the market’s perception of when the Fed will raise rates will shift, and be a negative for stocks.”

Amazon.com tumbled 9.6%, its biggest daily slide in three months, after the retailer posted a wider-than-expected quarterly loss, even as revenue rose 23%.

Japanese stocks closed at a six-month high on Friday, as a weaker yen buoyed the market at the end of a positive week for Asian stocks.

Coming Up: Samsung is expected to report earnings Thursday. The world’s biggest maker of smartphones, televisions and memory chips by revenue warned earlier this month that second-quarter operating profit likely fell 24%. At the time, the company cited stiff competition in the mid- to low-end handset market as well as a slowdown in the overall smartphone market. Investors, though, will want to hear what the company has to say, if anything, about its plans for its $60 billion in cash holdings.

From The Wall Street Journal

U.S. Push for Gaza Truce Yields Little: After six days of exhaustive meetings and stops in Cairo, Tel Aviv, Jerusalem, Ramallah and Paris, Secretary of State John Kerry came home Sunday with only a few fitful hours of peace in Gaza that proved fleeting.


New Poverty Formula Proves Test for India:
India is wrestling with an important question: How do you count the poor if you can’t agree on the definition of poverty?

Hospira Bidding for Danone Medical-Nutrition Unit: Hospira has emerged as a bidder for Danone’s medical-nutrition unit in a deal that could be worth about $5 billion and mark the latest in a flurry of so-called inversion deals.


Luxembourg Covets the Yuan:
The small nation is seeking to be at the heart of a new trend in global finance: the rising use of China’s currency outside its home market.

J.P. Morgan Questioned for Conflicts of Interest: Regulators have questioned J.P. Morgan Chase executives in recent months about whether the firm steers private-banking clients to its own investment products, according to people familiar with the matter.

Fox’s Invitation to Time Warner: 21st Century Fox is prepared to offer shareholders of Time Warner board representation as part of its bid to acquire the media company, according to a person familiar with the matter.


Reliance Power to Buy Three Hydroelectric Plants From Jaypee:
India’s Reliance Power Ltd. said Sunday that it will buy the Jaypee Group’s hydroelectric-power business for an undisclosed amount.

As S&P Gains, Strategists Trail Behind: Wall Street market forecasters have been caught flat-footed by stocks’ rally this year. But even if they raise their predictions, many believe that the bulk of this year’s gains are in the past.

From MoneyBeat

In China, Warnings Flash Despite Better Data: Chinese economic statistics have improved lately, but rising debt and other warning signs suggest optimism is premature.


When Advisers Charge You to Fire Them:
Even a “fiduciary” investment adviser may still be able to treat clients in ways that might surprise you. Many advisers impose termination fees on clients who leave the firm within a set period, effectively charging clients for firing them.

Ace Greenberg: Giant in Finance and Philanthropy: Alan “Ace” Greenberg, put much of his money to work in philanthropy.


SEC Warning to Investors: Be Vigilant About Social Media, Fraud:
The SEC warned investors Friday to be careful of fraudsters who use social media to manipulate stock prices and spread false information.

Why Cynk Didn’t Sink 100%: This wasn’t your typical 36,000%-percent gain. Cynk Technology briefly was worth more than $6 billion earlier this month after its shares jumped to $21.95 in mid-July from 6 cents in early June. That caught the attention of the Securities and Exchange Commission, which suspended trading over concerns about the accuracy of available information and potentially manipulative transactions.

Categories: Transactions

Chinese Data Don’t Add Up

Wall Street Journal MoneyBeat - Sun, 07/27/2014 - 11:02
The headquarters of the People’s Bank of China in Beijing.
Reuters

When Monte Burnham, the president of Birmingham, Ala.-based Foundry Manufacturing Solutions, recently visited Tianjin, China, he was pleasantly surprised to find its air more breathable than during his previous stay.

“Then I realized, the smelters weren’t running,” recalled Mr. Burnham, referring to the northern port city’s giant steel plants, which until recently had been delivering economic growth rates as high as 16% to Tianjin province.

The downturn in steelmaking activity in places like Tianjin is a direct cause of a 30% year-to-date decline in the international iron-ore price, a matter of concern for miners in ore-rich nations such as Australia and Brazil following a similar price drop in the prior year. It also suggests that multinational companies and others should temper their enthusiasm over recent improvements in economic data.

China’s second-quarter growth came in at a 7.5% annual rate, up from 7.4% in the first quarter, bringing it in line with the government’s full-year target. That, along with reports such as Thursday’s stronger-than-expected preliminary purchasing managers index from HSBC, has fueled talk of China’s “stabilization,” an apparent end to the unsettling slowdown of the past year.

Such optimism is premature, and not only because of the perpetual suspicion surrounding the accuracy of China’s statistics. The economy still has to work through tens of millions of square feet of unoccupied apartment space— symbolized by the notorious “ghost cities” in places like Inner Mongolia—and hundreds of billions of dollars of unused factory capacity, most of it debt-financed.

Already, data outside of China are flashing warning signals. Urging caution for investors who have revived bets on the Australian dollar, Mitsubishi UFJ economist Brendan Brown points to the Baltic Dry Index of bulk shipping costs for raw materials, which is down 35% from a year earlier and at its lowest level in 18 months. While that in part reflects a glut of shipping capacity left over from the 2008 global crisis, it is also a sign of weak Chinese demand for commodities.

So, how is China achieving 7.5% growth if it is powering down steel plants and letting copper stockpiles build up? With debt.

Despite official instructions to banks to curtail lending to overstretched developers and municipalities, loans are still increasing at rates twice as fast as the economy—and those numbers exclude a so-called shadow-banking lending system estimated at more than $5 trillion, or 80% of gross domestic product.

“That doesn’t make sense,” says PNC Financial economist Bill Adams. “Eventually, sustainability concerns will either cause Chinese policy makers to slow credit growth or investor risk aversion will cause less credit to flow through the trust companies” that manage the shadow lending programs.

A big question is what happens to bad debts when the treadmill comes to a halt. Despite rhetoric about opening up the financial system to market pressures, there is clearly reluctance in Beijing to let lenders suffer losses.

On Wednesday, construction company Huatong Road & Bridge Co. somehow found the funds to make a bond payment that it had earlier warned it would miss. With China’s second-ever corporate default averted, investors could for now set aside fears of a wave of bankruptcies. But any student of finance knows that postponing defaults will build up bigger problems in the future.

PNC’s Mr. Adams believes the government will find resources to restructure banks’ nonperforming loans once those problems can no longer be postponed, though this inevitably means the financial sector’s much-ballyhooed liberalization will have to wait. The real pain will be felt in economic, rather than financial, terms, he says.

Essentially, an end to credit flows will compound the economic effect from companies’ curtailing their use of retained earnings to fund capital expenditure, a category of investment financing that is now proportionally less than a quarter what it was during 2010 and 2011. Together, this could drive China’s economic growth rate down to 6% by 2016, says Mr. Adams, who blames such data for his recent conversion from bull to bear.

“It used to be that the China bears mostly cited anecdotes and bulls mostly cited statistics,” Mr. Adams says. “Now a bear doesn’t need 100 photos of ghost cities—the outlook from the statistics has weakened.”

– Follow Michael J. Casey on Twitter: @mikejcasey.

Categories: Transactions

SEC Charges Hedge Fund Adviser for Prohibited Transactions and Retaliating Against Whistleblower

Editor's Note: The following post comes to us from David A. Vaughan and Catherine Botticelli, Partners at Dechert LLP, and is based on a Dechert legal update authored by Mr. Vaughan, Ms. Botticelli, Brenden P. Carrol, and Aaron D. Withrow.

The U.S. Securities and Exchange Commission (SEC or Commission) issued a cease and desist order on June 16, 2014 (the Order) against Paradigm Capital Management, Inc. (Paradigm) and its founder, Director, President and Chief Investment Officer, Candace King Weir (Weir). [1] The Order alleged that Weir caused Paradigm’s hedge fund client, PCM Partners L.P. II (Fund), to engage in certain transactions (Transactions) with a proprietary account (Trading Account) at the Fund’s prime broker, C.L. King & Associates, Inc. (C.L. King). Paradigm and C.L. King were allegedly under the common control of Weir. The Order further alleged that, because of Weir’s personal interest in the Transactions and the fact that the committee designated to review and approve the Transactions on behalf of the Fund was conflicted, Paradigm failed to provide the Fund with effective disclosure and failed effectively to obtain the Fund’s consent to the Transactions, as required under the Investment Advisers Act of 1940 (Advisers Act).

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Categories: Governance

Remembering Alan ‘Ace’ Greenberg

Wall Street Journal MoneyBeat - Sat, 07/26/2014 - 12:29
Bloomberg News

Alan “Ace” Greenberg, the executive who helped turn Bear Stearns into one of the world’s biggest—and riskiest—securities firms, died of complications from cancer Friday at the age of 86.

Here are some remembrances:

Alan Schwartz, former Bear Stearns CEO and current executive chairman of Guggenheim Partners:

He was a legend in the business and he had an enormous impact on my career and my life. There will never be another one like him. I worked for him for many years and learned the right way to be and the right way to act from him more than anyone else.

I first met him when I was interviewing for the job at Bear Stearns in 1978. My first impression of him at that time was that he was larger than life.

I even lived with him for a while. It was in 1978 when he asked me to move back from Dallas to New York to work in the research department. He said: ‘stay at my place, until you find a place to live.’ I probably stayed there for about three months. So instead of staying at a hotel during that time, I stayed as his guest. It was a wonderful experience.

Joseph Perella, chairman of Perella Weinberg Partners:

Normally I wouldn’t want to do or say anything just because someone famous on Wall Street died. But when someone extends themselves to me like Ace did to be helpful and encouraging, I felt like I needed to. Ace was a special guy that represented the best of old Wall Street.

When Bruce Wasserstein and I left First Boston to start out our own company, Mickey Tarnopol [a former banker and vice chairman at Bear Stearns] and Ace, the two greatest guys at Bear Stearns, invited us out to dinner to offer to help in any way they could. They invited us to Christ Cella, it’s an old NY Italian steakhouse. This was in 1988.

At that point, Ace wasn’t recruiting us. We were hell-bent to start our own firm. We were not even 30 days old when they asked us to dinner. I told Ace that we were planning one thing, and that was to sell 20 percent of the firm to a Japanese company for $100 million. Ace looked at us in a way as if to say “If you say so –good luck. More power to you if you can do that.” And you know what? We did it. That dinner was in later February or early March and we made the sale in July. I called up Ace after the sale and said “I told you we were going to do it.”

Years later in 1993, when I departed Wasserstein Perella, before I began working at Morgan Stanley , I was unemployed during the summer and I was trying to decide what to do next in life. During the summer, Ace called me up to invite me and my wife to come to the Hampton Classic Horse Show with his wife. He was interested in having me come to work at Bear Stearns.

It was the first and only time I’ve been to the Hampton Classic. Ace said to me at the show: “If you make the right decision you’ll come to work with Bear Stearns.” He was dead serious. He was a good salesman.

Ace came from a school of thought where when he said something, he did it – it didn’t need to be in writing.

I’ve been on Wall Street for 42 years. Mickey and Ace, these are two guys that are well loved. When you link Mickey to Ace people will smile.

Ace and I, we saw each other time to time at Deepdale Golf Club, he was a member.

Like I said, Ace represented the best of old Wall Street. He was in the market every day. He had a great sense of the market.

J.P. Morgan 's Jamie Dimon and Mary Erdoes (in a memo to employees):

Today we mourn the loss of a true industry icon, Ace Greenberg.

It’s hard to imagine a financial services industry without Ace. In many respects, he epitomized the American dream, rising from a clerk to the corner office during his 65 years with the firm. Whether he was building Bear Stearns into an industry powerhouse or wowing the trading floor with his penchant for magic, Ace’s personality permeated everything he did. His intelligence and wit were only surpassed by his generosity and thoughtfulness.

JPMorgan Chase is no doubt a better place for having had Ace as a part of it, and while there will never be another Ace Greenberg, the example he set will certainly live on through all of us that had the opportunity to learn from him.

Our thoughts and prayers are with his family.

Warren Spector, a former senior Bear Stearns executive who now chairs a film-production company:

He was a great leader and set a great example. He was a real champion of people who had to work hard. A lot of people made their careers by getting a helping hand from Ace Greenberg at Bear Stearns.

He was insistent that everyone at Bear Stearns give back, and it carried through everything he did.

Author Mark Singer, who ghost wrote Mr. Greenberg’s autobiography, “The Rise and Fall of Bear Stearns”:

I worked with him in the sense that I ghost wrote his memoir. I had also written a New Yorker article about him 10 years before. With Ace, it was like this: who you saw, was who you got. He was an honest and honorable person.

He was very business-like. A long phone conversation with him was about 45 seconds.

What was unusual about him, maybe this is the characteristic of a trader – he was definitely a trader at heart – he wasn’t emotional about things. As a trader, he never showed fear, he never got over enthusiastic.

He was very philanthropic. He made employees donate a portion of their income to charity.

What happened to Bear Stearns, I don’t associate that with Ace. If he was running the show, I don’t think it would have happened.

He was very old-school. He came from a ‘Man’s Man’ era – for better or worse. Obviously there are some downsides to that.

He certainly saved Bear Stearns when he began working there, he turned the place around.

His enthusiasm in life had nothing to do with making money. He loved fishing, hunting –he hunted with a bow and arrow –and played bridge. He lived his life with joy.

He was a man of few words. While working with him, I would try to draw out details from his life for the book. For example, if we were talking about such and such a meeting with lawyers I would ask him if there were paintings on the walls and what the view was out the window. He would say to me: “What difference does it make? Just write the damn book!”

We worked on the book for about a year and a half. We talked all the time. He was on speed dial.

I knew about him forever and ever. I’m also from Oklahoma—where he is from . Ace grew up on the same block as my father and uncles. My editor at the New Yorker thought we would be a good match so he assigned me to the story.

Ace would take me to dinner at Rao’s in East Harlem. I could only get in there with Ace. Nobody can get in there. Ace could only get in once per month.


–Sara Jerving, Michael Rapoport and Emily Glazer

Categories: Transactions

Timely Notice of Merger’s Effective Date Reduces Litigation Risks in Delaware

Editor's Note: The following post comes to us from Jon E. Abramczyk, Partner and Member of the Corporate and Business Litigation Group at Morris, Nichols, Arsht & Tunnell LLP, and is based on a Morris Nichols publication. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

Following a merger (or consolidation), Section 262 of the Delaware General Corporation Law (“DGCL”) requires notice to be sent to any stockholder of record who has demanded appraisal informing that stockholder that the transaction was accomplished. For long-form mergers approved pursuant to a stockholder vote (i.e., under Section 251(c) of the DGCL), Section 262(d)(1) requires notice of the effective date of the merger to be sent within 10 days of the merger becoming effective. For mergers approved pursuant to Sections 228, 251(h), 253 or 267 of the DGCL (e.g., mergers approved by written consent, certain mergers following a tender or exchange offer, short-form mergers between parent and subsidiary corporations and short-form mergers between a non-corporation parent entity and its subsidiary corporation) the notice of the effective date is governed by Section 262(d)(2), which sets its own timing requirements.

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Categories: Governance

Ace Greenberg: Giant in Finance and Philanthropy

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 17:16
Bloomberg News

Alan “Ace” Greenberg, put much of his money to work in philanthropy.

The former head of Bear Stearns and the longtime Wall Street executive died of complications from cancer in New York on Friday at the age of 86. Over the years, Mr Greenberg made large contributions to charities and instilled in his employees the importance of donating. He died of complications from cancer in New York on Friday at the age of 86.

Mr. Greenberg grew up in Oklahoma City in an upper middle-class Jewish family, and took pride in his roots. For decades he was highly involved in UJA-Federation of New York, a philanthropic organization for the Jewish community to help people in need.

He hosted the group’s annual charity launch event from 1988 until 2011 at his home in New York, raising hundreds of millions of dollars, said Eric S. Goldstein, CEO of UJA-Federation of New York.

“There’s probably no single philanthropist who was more closely identified with UJA-Federation than Ace,” he said. “He was a philanthropic giant for us who through force of personality and conviction inspired people to give incredibly generously.”

Mr. Goldstein, who attended several of the launch events, said Mr. Greenberg would “hold court,” sitting in a big stuffed chair in the front of the room where he’d introduce speakers ranging from former New York City Mayor Michael Bloomberg to Henry Kissinger to Barbara Walters. Mr. Goldstein said Mr. Greenberg would then announce his gift and “highly motivate others to reach deep.”

He also brought his philanthropic mindset to the office.

Senior managing directors at Bear Stearns were required to donate 4% of their after-tax compensation to any sort of philanthropic organization.

“He set the tone that it’s really important to give back,” said Barry Sommers, a former Bear Stearns executive who is now Chief Executives of Chase’s consumer bank.

Mr. Sommers recalls first interacting with Mr. Greenberg during one of his town hall chats about donating to charities that brought together Bear Stearns employees.

“I was fortunate to have a chance to work beside a legend,” Mr. Sommers said. “He was an incredible leader and created a great culture but as a person, he had a balance of caring about everybody in the office, being philanthropic, being a family man. He showed you could do it all.”

Mr. Greenberg remained involved in UJA-Federation up until this year. He met with Mr. Goldstein about two weeks ago at his corner J.P. Morgan office on Park Avenue after Mr. Goldstein was named CEO of UJA-Federation.

“To the very last, he was an enormous presence in our community,” Mr. Goldstein said.

Categories: Transactions

In Rescue Deal, K.K.R. Provides Financing to Troubled Sand Maker

New York Times DealBook - Fri, 07/25/2014 - 16:44
The private equity giant will provide $680 million of financing to Preferred Sands, a company that had been on the verge of bankruptcy.
Categories: Transactions

SEC Warning to Investors: Be Vigilant About Social Media, Fraud

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 16:34
Associated Press

The Securities and Exchange Commission warned investors Friday to be careful of fraudsters who use social media to manipulate stock prices and spread false information.

The warning came on the same day that purported social network Cynk Technology Corp. started trading again after SEC’s mandated two-week trading halt in the stock came to end. The agency stopped trading earlier this month amid concerns of “potentially manipulative transactions” in the stock after shares went from 6 cents to above $20 in less than a month.

In an investor alert, the SEC warned of the pitfalls associated with false information spreading quickly through social media. The SEC didn’t mention Cynk in its alert.

“While social media can provide many benefits for investors, it also presents opportunities for fraudsters. Through social media, fraudsters can spread false or misleading information about a stock to large numbers of people with minimum effort and at a relatively low cost,” the SEC said on Friday. “They can also conceal their true identities by acting anonymously or even impersonating credible sources of market information.”

The SEC said fraudsters may use social media as a tool to spread false and misleading information that can sway a company’s stock price. Social media can also be utilized in a negative way to help fraudsters promote “pump-and-dump” schemes.

“Investors who learn of investing opportunities from social media should always be on the lookout for fraud,” the SEC said.

Cynk shares dropped $11.90, or 85%, to $2.10 on Friday. Even so, the stock is still up more than 2,600% for the year.

Categories: Transactions

Podcast: The Optimism Intervention

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 15:27

In the latest edition of MoneyBeat Week, our Friday podcast, the crew differs on what earnings season has been telling us about the U.S. economy and discusses the latest attack by hedge-fund manager Bill Ackman.

Paul Vigna

We start by talking about Mr. Ackman’s failure to land a knock-out punch on Herbalife Ltd., the nutritional supplement company he’s shorting.

Then we get a preview from our colleague Paul Vigna of a post he’s working on about second-quarter earnings. He’s not impressed by what he’s seen.

“I don’t see in these earnings reports any evidence that the economy is accelerating on its own,” he says.

That prompts us to attempt an optimism intervention. It doesn’t take.

Grab a set of headphones and take a listen to MoneyBeat Week right now. Or catch us on iTunes along with other Journal podcasts in the WSJ What’s News section.

Categories: Transactions

Train Reading: Tax Inversions for Humans?

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 15:14

Sunni Islamist insurgents destroy religious shrines as part of their crusade – WSJ

Wall Street legend Ace Greenberg passes away at 86 – WSJ

If corporations can be people, can people be corporations? And then do a tax inversion? – Catherine Rampell, via Washington Post

Corporatism not capitalism is to blame for inequality – Edmund Phelps, via Financial Times

Even if they want to, Herbalife’s executives shouldn’t sue Bill Ackman – MoneyBeat

A musical interlude: The Housemartins; Happy HourYouTube

Succinct summation of the week’s events – Big Picture

Which TV shows are winning the summer? – AdAge

Categories: Transactions

Goldman Turns Cautious on Stocks, Bonds

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 15:03
Bloomberg News

Goldman Sachs is advising clients to stay cautious on stocks and bonds in the short-term.

In a report circulated late Friday, Goldman said worries over a rising interest rate environment could lead to tougher times in bond and stock markets. The report, a collaboration between the firm’s global economics, strategy and commodities teams, said Goldman shifted to neutral on stocks over the next three months.

“A sell-off in bonds could lead to a temporary sell-off in equities,” Goldman said. “This makes the near-term risk/reward less attractive despite our strong conviction that equities are the best positioned asset class over 12 months, where we remain overweight.”

U.S. stocks maintained losses in the final trading hour as the Goldman note circulated across trading desks. The Dow Jones Industrial Average dropped 123 points, or 0.7%, to 16960. The S&P 500 fell 10 points, or 0.5%, to 1978.

The call comes after Goldman’s U.S. equity strategy team last week went from bear to bull on U.S. stocks. In a research note last week, the firm boosted its S&P 500 year-end price target to 2050 from 1900.

Friday’s note corroborates that view, although it suggests more short-term caution while maintaining an optimistic long-term view.

“We would see any sell-off over the next few months as an opportunity to increase exposure [to stocks] again also on a short-term basis,” Goldman said.

In corporate credit, Goldman moved to “underweight” over the next three and 12 months: “given already tight levels, rising government bond yields are likely to dominate the returns, especially for US [investment grade] credit where spreads are the lowest.”

On a macro basis, Goldman predicts sustained economic growth and higher bond yields over the next several years.

“Growth has improved substantially,” the firm said. “Most of the acceleration we had expected is now behind us, but we expect growth to be sustained at current or slightly higher levels, with the US growing at around 3% through 2017. We think the likelihood of a rise in government bond yields has increased and see this as a key aspect of the near-term macro outlook.”

–Chris Dieterich contributed to this post.

Categories: Transactions

Remembering Ace Greenberg, Through Good Times and Bad

New York Times DealBook - Fri, 07/25/2014 - 14:53
DealBook looks back at the career of Alan C. Greenberg, who led Bear Stearns through its rise and fall, in his words and others'.
Categories: Transactions

Alan ‘Ace’ Greenberg

Wall Street Journal MoneyBeat - Fri, 07/25/2014 - 14:51

To mark the death today of Alan “Ace” Greenberg, head of Bear Stearns when it was one of the biggest and most daring investment banks, we look back at this Page One article from his glory years in 1982. “You could put him in an empty room and lock him up, and he’d think of some way to make money.” Today in WSJ History.

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The Wall Street Journal, Jan. 18, 1982 (PDF)

The Wall Street Journal, Jan. 18, 1982 (Text)

Categories: Transactions

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