The troubled Texas utility Energy Future Holdings â€' which, as TXU, was private equity’s biggest-ever buyout â€' filed for bankruptcy on Tuesday, Julie Creswell and Michael J. de la Merced write in DealBook. After months of on-again, off-again talks between the company, its owners and creditors, Energy Future Holdings went into Chapter 11 protection with a plan meant to avoid months in bankruptcy court in what will be one of the biggest Chapter 11 filings in history.
Energy Future will probably be split between its regulated electricity arm, Oncor, and its unregulated power-generation business. The talks had long been stymied by an array of issues, including whether such a split would create a tax bill of more than $7 billion.
This is certainly not the ending the Wall Street private equity firms, including Kohlberg Kravis Roberts, TPG Capital and the private equity arm of Goldman Sachs, had in mind in 2007 when they acquired TXU Corporation in an audacious $45 billion deal. The firms’ investments are expected to be all but be wiped out in the bankruptcy.
PFIZER’S BID TO MOVE ABROAD  | Pfizer no longer wants to be an American citizen, David Gelles and Michael J. de la Merced write in DealBook. On Monday, Pfizer â€' the maker of best-selling drugs like Lipitor and Viagra and a symbol of business prowess in the United States for more than a century â€' proposed a $99 billion acquisition of its British rival AstraZeneca that would allow it to reincorporate in Britain.
The deal would allow Pfizer to escape the corporate tax rate in the United States and “tap into a mountain of cash trapped overseas, saving it billions of dollars each year and making the company more competitive with other global drug makers,†Mr. Gelles and Mr. de la Merced write. For its part, Pfizer says that its main reason for the deal is broadening its portfolio of drugs and saving money through combined operations with AstraZeneca. Still, a deal would allow Pfizer to follow dozens of other large American companies that have already incorporated abroad through acquiring foreign companies.
These types of corporate moves do not sit lightly with lawmakers on Capitol Hill, who on Monday blamed the current tax code for providing an incentive for American companies to move abroad, where tax rates are lower. For companies that have already begun the process of moving abroad through these types of deals, known as inversions, the result will be hundreds of millions of dollars in annual tax savings, and an equivalent amount of money lost to the United States Treasury.
BANK OF AMERICA’S $4 BILLION MISTAKE  | Bank of America disclosed on Monday that it had made a significant accounting error in the way it calculated a crucial measure of its financial health, another bump in the road for the sprawling bank, Peter Eavis and Michael Corkery write in DealBook. The mistake, undetected for several years, led the bank to report recently that it had $4 billion more capital than it actually held.
After Bank of America disclosed the error, the Federal Reserve required the bank to suspend a share buyback and a planned increase in its quarterly dividend. The reporting of the accounting error will most likely add fire to the debate over whether banks are too big to fail and too complicated to manage.
The error also raises questions about the quality of Bank of America’s own accounting employees, who did not detect the mistake, which stemmed from Bank of America’s acquisition of Merrill Lynch, the Wall Street giant, during the financial crisis. The bank will now have to go back to the Fed to try and resolve the issue and regain permission to make some payouts.
ON THE AGENDA  | The Federal Reserve’s policy-making committee convenes for its two-day meeting. February’s Standard & Poor’s/Case-Shiller home price index is released at 9 a.m. The consumer confidence index is out at 10 a.m. Twitter reports earnings after the market closes. Herbalife holds its annual shareholder meeting at 10:30 a.m. Pacific time. The N.B.A. holds a news conference at 2 p.m. about its investigation of the Los Angeles Clippers owner Donald Sterling. Bernard L. Madoff turns 76.
On the Hill: The Senate Banking Committee holds a hearing at 10 a.m. on the Johnson-Crapo housing reform bill. The committee will also vote on the nomination of Stanley Fischer for vice chairman of the Federal Reserve. Mary Jo White, chairwoman of the Securities and Exchange Commission, testifies at 10 a.m. before the House Financial Services Committee on the S.E.C.’s agenda, operations and budget request.
FRANCE PLAYS AN AGGRESSIVE HAND  | Shortly after news leaked last week that General Electric was working on a deal to buy part of the French industrial giant Alstom, France’s economic minister, Arnaud Montebourg, demanded an explanation from Alstom’s chief executive. Why would Alstom, the pride of France, be negotiating to sell its energy business to the American conglomerate without first informing the government? Mr. Montebourg has since made it clear that he would rather see G.E.’s German rival, Siemens, win the bidding for Alstom’s energy business, Liz Alderman and David Jolly write in DealBook.
Ms. Alderman and Mr. Jolly write: “On a day when many European heads of state were preoccupied with economic sanctions on Russia, the French government’s intimate involvement in a corporate takeover battle spoke volumes about France’s continued efforts to shield its economy. It was only the latest in a series of efforts by the Hollande administration to protect iconic French companies as the nation struggles to regain its industrial might.â€
The deal-brokering came two months after France’s president, François Hollande, sought to convince international investors that France was “open for business.†And it raised questions about whether the government was out of step with globalization. For its part, France’s Socialist government said it was reacting normally. In demanding that the interests of the public be paramount over the shareholders’, Ms. Alderman and Mr. Jolly write, the government is upholding the tradition of dirigisme, an interventionist approach that historically has informed French economic thinking.
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Disney Considered Buying BuzzFeed, but Balked at $1 Billion Price  | Disney’s interest in the fast-growing digital media company BuzzFeed, part of a routine effort to identify acquisition targets, faded after BuzzFeed provided a high valuation. DealBook »
Alibaba Buys Stake in Chinese Web TV Company for $1.2 Billion  | The e-commerce giant Alibaba’s deal for a minority stake in Youku Tudou extends a recent frenzy of acquisitions in China’s fast-growing technology sector. DealBook »
Merger Talks of 2 Mining Giants Devolve Into Dueling Statements  | Barrick Gold and Newmont Mining had appeared eager to strike a deal, but merger talks turned into a war of words. DealBook »
Forest Labs to Buy Furiex Pharmaceuticals  | The deal, for up to $1.46 billion, expands Forest Laboratories’ position in gastroenterology as it prepares to be acquired for $25 billion by Actavis. DealBook »
Why Pfizer Needs to Do More to Win AstraZeneca  | If the British drug company AstraZeneca cannot make Pfizer go away, it can certainly make it pay, Neil Unmack of Reuters Breakingviews writes. DealBook »
Bank of America’s Bad Accounting  | If a new accounting rule had been in effect, it appears that the bank would not have made the mistake that led it to withdraw its capital plan. DealBook News Analysis »
Deutsche Bank Returns to Profit as Legal Costs Ease  | Deutsche Bank, Germany’s largest, said it made a profit in the first quarter of the year as it avoided the huge litigation expenses that characterized the end of 2013. DealBook »
Santander Profit Rises 8% on Improving Economy and Loan Charges  | The Spanish bank Santander reported that net income of $1.8 billion outpaced its earnings in the period a year earlier but was slightly below expectations. The nonperforming loan rate fell for the first quarter since 2007. DealBook »
Charges in Libor Case for 3 From Barclays  | Britain’s Serious Fraud Office said the three men, all former employees of Barclays in New York, would face charges of conspiracy to defraud. DealBook »
Arle Capital to Buy Supplier of Plastic Bank Notes  | The private equity firm Arle Capital Partners agreed to acquire the Innovia Group, a company set to supply materials for Britain’s new plastic bank notes, for about $690 million. DealBook »
Managing Partner of Leonard Green to Step Down  | Peter J. Nolan will become a senior adviser at Leonard Green & Partners, a private equity firm based in Los Angeles, and will continue to serve on the boards of several of its portfolio companies. DealBook »
Time to Broaden the Definition of Insider Trading  | William A. Ackman’s actions in the bid for Allergan have raised questions about how well the insider trading rules have protected investors. White Collar Watch »
Buffett Bites Back  | Warren E. Buffett said that abstaining on Coke’s executive compensation plan had sent a loud message that Berkshire Hathaway did not approve, Joe Nocera writes in a New York Times Op-Ed. NEW YORK TIMES
Hedge Funds Betting Against Small Caps  | Large speculators like hedge funds are betting $2.8 billion this month that the small-cap Russell 2000 Index will decline, Bloomberg News writes. BLOOMBERG NEWS
I.P.O. Linked to Football Player Opens for Trading  | Stock linked to Vernon Davis, the San Francisco 49ers tight end, opened for trading on Monday on an exchange operated by Fantex, a start-up. DealBook »
Brazilian Telecom Firm Oi Raises $3.7 Billion in Offering  | The share offering is part of the company’s merger plans with Portugal Telecom. DealBook »
Amadeus Capital Partners Leads Funding Round for Brazil’s Bidu  | The $8.9 million funding round is the British venture capital firm Amadeus Capital Partners’ first investment outside Europe, the United States and Israel and is the first of several investments it anticipates in Latin America. DealBook »
Surviving the Silicon Valley Gold Rush  | “Starting a company has become the way for ambitious young people to do something that seems simultaneously careerist and heroic,†Gideon Lewis-Kraus writes in Wired. But, he adds, a founder’s life can be fearful and distraught. WIRED
Owners to Invest $800 Million More in Shanghai Disneyland  | The Walt Disney Company announced a deal on Monday to increase spending by $800 million on its coming huge resort in Shanghai, The New York Times writes. Disney and the Shanghai Shendi Group, a consortium of state-owned companies, had already committed to spend $4.7 billion on the theme park resort, which is scheduled to open at the end of 2015. NEW YORK TIMES
Prominent Justice Dept. Official Is Latest to Join Law Firm  | Mythili Raman, who led the Justice Department’s criminal division until last month, is the latest former senior official to join Covington & Burling. DealBook »
G.A.O. Report Sees Deeper Bank Flaws in Foreclosures  | When regulators ended a review of foreclosures last year, most banks had not finished examining their practices, according to a draft report by the Government Accountability Office. DealBook »
Revenues at the Top 100 Law Firms Rose 5.4% Last Year  | The top partners at the group of 20 “super rich†law firms fared particularly well in 2013, according to the latest rankings from The American Lawyer. DealBook »
At Meeting, Fed Likely to Cut Bond Buying Again  | The Federal Reserve’s policy wing is expected to reduce its monthly bond purchases by $10 billion, to $45 billion, staying on track to end the purchases this fall, The New York Times reports. NEW YORK TIMES
U.S. Announces More Sanctions Against Russia  | The Obama administration ordered travel bans and asset freezes for seven Russian officials, including two said to be in President Vladimir V. Putin’s inner circle, and froze assets for 17 companies, The New York Times reports. NEW YORK TIMES
