August 28, 2007
Will Nasdaq Have Trouble Selling LSE Stake?
Nasdaq may have problems selling its 31% stake in the London Stock Exchange, valued at about $1.63 billion. It's the familiar problem -- who wants to own a significant minority stake in a company when those in control have no interest in selling? Nasdaq tried for a year to merge with LSE, but now has turned its sights to the Nordic exchange operator OMX AB and faces serious competition from the Borse Dubai. On the other hand, LSE is a "trophy property," and a number of possible buyers have expressed interest. WSJ, Browsers, but No Buyers, for an LSE Stake.
Another Law Firm Merger
Law firms Dewey Ballantine and Leboeuf Lamb announced that they are merging. The new firm will be called Dewey & LeBouef and will be the 14th largest law firm, with about 1300 lawyers and about $1 billion in revenues. NYTimes, 2 Big Law Firms Announce Merger .
Refco Creditors Trust Brings Third Suit Against Advisers, Insiders
Trusts representing creditors of defunct commodities firm Refco brought their third law suit against accounting and legal advisors. This one, filed in New York State, seeks more than $500 million in damages from Ernst & Young, Grant Thornton, law firm Mayer Brown, and Refco insiders. The complaint alleges that the advisers assisted the insiders in persuading foreign exchange customers to turn over their funds to the broker-dealer unit and then used the money in other operations. NYTimes, Refco Trusts Sue on Behalf of Currency Clients.
Rating Firms in the Hot Seat -- Again
Five years after Sarbanes Oxley, the big three rating agencies -- S&P, Moody's, and Fitch -- are in the hot seat for their role in the subprime crisis. Just as in the case of Enron and Worldcom, the firms did not downgrade their ratings in the face of the weakening market, although in this recent instance they did issue warnings about the deteriorating state of the bond market. Critics cite three factors: the fact that the rating agencies are paid by the firms that issue the securities; rating firms advise firms in the packaging of the loans, working with them to achieve the desired rating; finally, a fear by the rating agencies that downgrading the ratings would exacerbate troubles in the markets. Meanwhile, the rating firms assert that they acted appropriately and on a timely basis and are working hard to generate good will. WPost, Ratings Firms Defend Assessment of Loan Securities.
August 27, 2007
Cox as AG?
Will SEC Chair Christopher Cox be the next U.S. Attorney General? The New York Times identifies him as a front-runner, after Michael Chertoff. NYTimes, Embattled Attorney General Resigns.
NYSE Will Issue More Frequent Short Interest Reports
Effective September 2007 NYSE member firms and NYSE Arca member firms are required to increase the frequency of short interest reporting from once a month to twice a month. NYSE Group, Inc. will also increase Short Interest reporting announcements for both markets accordingly. The information provides some indication of market sentiment toward NYSE-listed securities. NYSE Information Bulletin.
Topps Postpones Shareholder Vote on Buyout
Topps rescheduled its shareholders meeting, originally scheduled for August 30, until Sept. 19, for the shareholders vote on the proposed cash-out merger wtih Tornante-MDP (partly owned by Michael Eisner) at $9.75. Last week rival bidder Upper Deck withdrew its offer, and Topps said it wants more time "to communicate with investors about the proposed $9.75 all cash merger with Tornante-MDP, which the Executive Committee believes would provide stockholders with full and fair value for their shares." Topp said that if the voting occurred as originally scheduled, the merger would likely not achieve the necessary shareholder vote for approval. Two proxy advisory firms recommended against the buyout. WSJ, Topps Postpones Shareholder Vote On Proposed Buyout by Tornante.
Acer and Gateway Agree on Buyout
Taiwan-based Acer announced that it has reached agreement to acquire Gateway for $710 million. The acquisition will take the form of a cash tender offer for all shares at $1.90 per share. The deal will make Acer the third largest computer manufacturer after Dell and Hewlett-Packard. WSJ, Acer's Gateway Purchase Vaults It Ahead of Lenovo.
Home Depot Announced Renegotiated Terms of Sale of Unit
In a deal that has been closely watched as a bellwether of the times, Home Depot announced that it had renegotiated the price to sell its wholesale supply unit at $8.5 billion, down nearly $2 billion from the original price, after tough negotiations with the banks and private equity firms, who insisted on new terms because of the credit squeeze. The private equity firms agreed to supply more equity, and Home Depot also agreed to hold about 12.5% of the unit's equity and guarantee some of the debt issued by banks to finance the deal. WSJ, Home Depot Hit As Credit Crunch Squeezes Deals; NYTimes, Home Depot Unit Sees Price Plunge in a Tight Market.
Study Shows Auction IPOs Don't Catch on Abroad
Auction IPOs have not caught on in the US, although proponents assert that they produce higher prices for the sellers and give small investors a fairer chance to invest in IPOs. According to a recent study by a finance professor at Notre Dame, auction IPOs have been tried in 20 countries but ultimately the traditional IPO book-building process prevails as the more successful model. See WSJ, Bid to Shake Up IPOs Falls Short.