Blackstone Circles Dell

BLACKSTONE CIRCLES DELL  |  The Blackstone Group may yet emerge as a challenger to the proposed $24 billion buyout of Dell. With a deadline approaching at midnight Friday, the private equity firm is weighing whether to make an offer for all or part of the computer maker, though “some people close to Blackstone are skeptical that any offer will materialize,” DealBook’s Michael J. de la Merced reports. Still, among the parties that have looked at Dell’s books under a “go-shop” period run by a special committee of the company’s board, Blackstone is considered the likeliest to make an offer, people briefed on the matter said.

A Blackstone bid would have some important advantages. “The firm has talked to Southeastern Asset Management, a large shareholder in Dell, about the possibility of contributing its 8.4 percent stake toward a rival deal, the people briefed on the matter said. Southeastern has argued publicly and privately that it would favor a proposal that would allow all shareholders to continue being investors in Dell.” Earlier this year, Blackstone hired Dell’s chief in-house deal maker, David Johnson, who is seen as a main advocate behind Blackstone’s interest. Blackstone has also approached Mark V. Hurd, Oracle’s president and the former chief executive of Hewlett-Packard, about possibly leading Dell, although he did not appear interested, Mr. de la Merced reports.

There is a good chance that no rival will emerge to challenge the offer from Dell’s founder, Michael S. Dell, and the private equity firm Silver Lake. “If there is no rival bid, next week, Dell is expected to begin trying to persuade shareholders that the buyout offer on the table represents the highest price the company could fetch for its rapidly declining business.”

BROTHER OF RAJARATNAM IS INDICTED  |  Rengan Rajaratnam, a younger brother of the fallen hedge fund titan Raj Rajaratnam, was accused of being a pawn in his brother’s insider-trading conspiracy, as prosecutors announced charges on Thursday, DealBook’s Peter Lattman reports. “As alleged, Rengan Rajaratnam and his brother shared more than DNA; they also shared a penchant for insider trading,” said Preet Bharara, the United States attorney in Manhattan. Rengan Rajaratnam, 42, is thought to be living in Brazil and has not been arrested; federal authorities are using extradition laws to bring him to the United States.

“Though a much less influential player on Wall Street than his brother, Rengan is seen a seminal figure in the government’s broad inquiry into insider trading at hedge funds,” Mr. Lattman writes. “The origins of the investigation, which has led to 77 prosecutions of hedge fund employees and corporate executives, stretch back more than a decade. But a crucial breakthrough came in 2006 during an inquiry by the Securities and Exchange Commission into Sedna Capital, a small hedge fund run by Rengan.”

“During Raj Rajaratnam’s trial, prosecutors played for the jury several secretly recorded incriminating conversations between Raj and Rengan, who had by then joined his brother at the Galleon Group hedge fund. Prosecutors identified Rengan as an unindicted co-conspirator in the case.” Raj Rajaratnam, who was convicted nearly two years ago, is serving an 11-year sentence at a federal prison.

BURKLE’S FIRM IS SAID TO CUT FEES  |  It’s not often that a money management firm gives ground on fees. But after suffering steep losses in one fund, the Yucaipa Companies, the firm run by the billionaire Ronald W. Burkle, “has cut fees for investors in the portfolio,” Randall Smith reports in DealBook. “As part of the deal, Mr. Burkle agreed to forgo the firm’s annual management fee until the fund’s investors recoup their money, according to several people with knowledge of the matter. Such concessions reflect the broader pressure in the industry.”

Mr. Burkle, a former grocery chain owner, raised $450 million in 2008 in an effort to help underserved urban areas. But problems soon arose. Yucaipa invested $100 million in AFA Foods, a Pennsylvania-based ground beef processor, which ended up filing for Chapter 11 bankruptcy protection after the “pink slime” beef scare. Mr. Smith writes: “By the end of 2011, the fund showed losses of 40 percent, and was still down by 19 percent at the end of 2012, according to public pension reports and people familiar with the fund.”

ON THE AGENDA  |  Tiffany reports earnings before the market opens. Josh Lerner, a professor at Harvard Business School who does research on venture capital and private equity, is on Bloomberg TV at 7:15 a.m. Senator John McCain, Republican of Arizona, who grilled JPMorgan executives over the bank’s trading loss, is on Bloomberg TV at 8 p.m.

UPSTART BROKERAGE FIRM DRAWS SCRUTINY  |  LPL Financial has grown rapidly to become the nation’s fourth-largest brokerage firm, after Wells Fargo, Morgan Stanley and Merrill Lynch. But it also has a growing list of regulatory problems, The New York Times’s Nathaniel Popper writes. “The low-cost model that has aided LPL’s explosive growth has brought with it shortcomings that point to the difficulties regulators face in overseeing far-flung financial advisers.”

“As LPL has expanded, state and federal authorities have censured the company and its brokers with unusual frequency. LPL brokers have been penalized for selling complex investments to unsophisticated investors, for speculative trading in customer accounts, and, in a few cases, for outright stealing from clients.”

Mergers & Acquisitions »

BP to Buy Back Shares After TNK-BP Sale  |  BP plans to return about $8 billion to shareholders, Reuters reports.
REUTERS

JPMorgan Ranked Highest for M.&A. in First Quarter  |  JPMorgan Chase worked on all four of the biggest deals announced so far this year, Reuters writes.
REUTERS

Citigroup Banker Says It’s Too Early to Toast a Revival in M.&A.  |  In kicking off a conference at Tulane University, Mark Shafir, co-head of global mergers and acquisitions at Citigroup, says that while the factors for a recovery in deal-making are in place, there are enough potential problems that the market is lagging behind where it should be.
DealBook »

T-Mobile Deal for MetroPCS Receives Final Regulatory Approval  |  T-Mobile USA passed its last regulatory hurdle to its acquisition of MetroPCS, after the Committee on Foreign Investment in the United States gave its approval for the deal. Now, the cellphone carriers just need to convince investors.
DealBook »

Owner of Gucci Is Changing Its Name  |  PPR, the French company that owns brands like Gucci and Puma, will call itself Kering, a name that is “supposed to evoke the idea of caring and signal a new chapter in the company’s development,” Bloomberg News writes.
BLOOMBERG NEWS

Sweetening the Deal  |  M.&A. bankers and lawyers telling a public relations firm that specializes in deals that they expect to see more merger activity makes for sweet echo-chamber music, Jeffrey Goldfarb of Reuters Breakingviews writes.
DealBook »

INVESTMENT BANKING »

Credit Suisse Chief Executive Gets a Pay Raise  |  Brady Dougan of Credit Suisse made $8.22 million in 2012, an increase of more than one-third from the previous year, Reuters reports.
REUTERS

Behind the Derivatives Gibberish, Risks Run Amok  |  Since a Senate report on JPMorgan Chase’s multibillion-dollar trading loss became public last week, much attention has focused on what Jamie Dimon, the chief executive, knew and the extent to which the bank intentionally deceived regulators. “I was struck by the sheer incompetence and stupidity documented in the report,” Floyd Norris writes in The New York Times.
DealBook »

Citigroup Defends Controversial Pay Plan  |  Citigroup said in a proxy filing that a profit-sharing plan, which shareholders rejected last year, helped retain top executives, Bloomberg News reports.
BLOOMBERG NEWS

In Europe, Issuance of Junk Bonds Rises  |  The growth is driven by investors in search of yield.
WALL STREET JOURNAL

PRIVATE EQUITY »

Buyout Firms Join Forces for BMC Software  |  K.K.R. and TPG Capital have formed a consortium, while Bain Capital and Golden Gate Capital have separately teamed up, as it seems increasingly likely that BMC Software will be taken private in a deal that could be worth more than $6 billion, according to Reuters, which cites unidentified people familiar with the matter.
REUTERS

HEDGE FUNDS »

A Close Look at SAC’s Strategy  |  The Wall Street Journal describes the strategy of SAC Capital Advisors, the hedge fund that recently struck a big insider trading settlement with the Securities and Exchange Commission, as “large investments, built up quickly.”
WALL STREET JOURNAL

To Boaz Weinstein, Betting Against JPMorgan’s Trade Was ‘Easy’  |  Boaz Weinstein, the founder of Saba Capital, reflected on Thursday about the ramifications of JPMorgan Chase’s infamous “London Whale” trade that cost the bank billions of dollars.
DealBook »

Peltz Said to Build Stakes in PepsiCo and Mondelez  | 
TELEGRAPH

I.P.O./OFFERINGS »

Restaurant Operator Owned by Bain Said to Consider I.P.O.  |  Skylark, a Japanese restaurant company that Bain Capital acquired in 2011, “is considering an initial public offering in Tokyo as early as next year, two people with knowledge of the matter said,” Bloomberg News reports.
BLOOMBERG NEWS

VENTURE CAPITAL »

New Enterprise Associates Looks to China  |  The venture capital firm New Enterprise Associates plans to invest a portion of a new $2.6 billion fund in Chinese companies, especially in healthcare and information technology, The Wall Street Journal reports.
WALL STREET JOURNAL

Music Streaming Attracts Technology Giants  |  Companies like Google, Amazon and Apple are looking to expand in the online music business, Reuters reports.
REUTERS

LEGAL/REGULATORY »

Options Running Out for Cyprus  |  Reuters reports: “Cyprus’s finance minister left Moscow empty-handed on Friday after Russia turned down appeals for aid, leaving the island to strike a bailout deal with the European Union before Tuesday or face the collapse of its financial system.”
REUTERS

With Deadline for Bailout Set, Mood in Cyprus Darkens  | 
NEW YORK TIMES

Limited Impact Seen if Cyprus Were to Exit Euro  |  For Europe’s financial system, “the losses resulting from a Cypriot banking collapse and the country’s return to its former currency would be minimal compared with the havoc that Greece would have created had it not been bailed out,” The New York Times writes.
NEW YORK TIMES

Standard Chartered Chairman Retracts Comments on Sanctions Settlement With U.S.  |  John W. Peace, chairman of the British bank Standard Chartered, on Thursday retracted statements about the bank’s recent settlement with American authorities over violations of sanctions laws, saying his earlier comments were “wrong.”
DealBook »

In Europe, iPhone Sale Deals Draw Antitrust Scrutiny  |  The New York Times reports: “European Union regulators are examining the contracts Apple strikes with cellphone carriers that sell its iPhone for possible antitrust violations after several carriers complained that the deals throttled competition.”
NEW YORK TIMES

European Antitrust Chief Is Urged to Rein In Google  |  The New York Times reports: “With the European antitrust inquiry into Google’s search engine practices entering a third year, a group of 11 Web companies sent a joint letter to the top antitrust official in Europe on Thursday, asking him to compel Google to change its business practices to ensure that smaller rivals are not unfairly harmed.”
NEW YORK TIMES

After Report on JPMorgan Trade, a Call for Rule-Making  |  The Senate report and hearing last week on JPMorgan Chase’s disastrous trading losses “should steel the resolve of regulators who must complete rules under the Dodd-Frank reform law,” The New York Times editorial board writes.
NEW YORK TIMES

In London Whale Trade, JPMorgan’s ‘Silent Partner’  |  “Even when officials at the U.S. Office of the Comptroller of the Currency knew that JPMorgan had misled the public, they did nothing to make the company set the record straight. The regulators didn’t merely keep quiet while JPMorgan spread falsehoods. Their silence made them complicit,” Jonathan Weil writes in a column in Bloomberg View.
BLOOMBERG VIEW