Microsoft has reached an agreement to acquire the handset and services business of Nokia for about $7.2 billion, an audacious effort to reshape itself for a mobile era that has largely passed it by, Nick Wingfield reports in The New York Times. Microsoft and Nokia said 32,000 Nokia employees would join Microsoft as a result of the all-cash deal, which makes the Finnish mobile phone pioneer the engine for Microsoft’s mobile efforts.
The deal also gives Microsoft a potential successor to Steven A. Ballmer, Microsoft’s chief executive, who will retire within 12 months: Stephen A. Elop, a former Microsoft executive who was running Nokia until the deal was signed, will rejoin Microsoft after the transaction closes.
“This agreement is really a bold step into the future for Microsoft,†Mr. Ballmer said by phone from Finland. “We’re excited about the talent capabilities it will bring to Microsoft.â€
VERIZON SEALS $130 BILLION VODAFONE DEAL Â |Â Verizon Communications agreed on Monday to take full control of its wireless unit for $130 billion, in a bet that the American desire for cellphones and broadband services was still far from being sated, Michael J. de la Merced and Mark Scott report in DealBook. The deal, more than a decade in the making, allows Verizon to take advantage of receptive debt markets and its own strong stock to buy out its longtime partner, Vodafone of Britain. It also leaves Vodafone flush with cash to reinvest in its own businesses and buy competitors.
While the roughly 100 million Verizon Wireless customers probably will not see any immediate changes in service, the telecommunications industry is very much in flux, with new competitors like SoftBank of Japan in the market and new opportunities for wireless services emerging, DealBook writes. In light of those trends, Verizon deemed it essential to gain control of its biggest business, which in the most recent quarter accounted for $20 billion of the company’s nearly $30 billion in revenue. Among the company’s plans is bundling mobile broadband services with wired offerings like high-speed, fiber-optic connections.
“There’s a big phase of growth in the U.S. telecom market,†Lowell C. McAdam, Verizon’s chief executive, said in an interview. “The timing was perfect for us.†Under the terms of the deal, Verizon agreed to pay $58.9 billion in cash and an additional $60.2 billion worth of its shares to Vodafone, the latter of which will be distributed to Vodafone’s shareholders.
The banks helping to arrange and finance the transaction are eager to take part in a bonanza of fees, Mr. de la Merced reports. Advisers to Verizon could earn $110 million to $125 million, while bankers for Vodafone could reap $100 million to $118 million, according to estimates from Freeman & Company. In addition, with roughly $60 billion in financing, bankers could enjoy well over $150 million in fees for arranging the debt.
A LOOK BEHIND MCKINSEY’S SUCCESS  | The management consulting firm McKinsey & Company has been the go-to strategy adviser for the world’s top companies. “So why has its advice, at times, turned out to be so bad?†Andrew Ross Sorkin writes in the DealBook column. “It often goes unmentioned, but McKinsey has indeed offered some of the worst advice in the annals of business.â€
“A thought-provoking new book called ‘The Firm: The Story of McKinsey and Its Secret Influence on American Business,’ which comes out next Tuesday, offers a fascinating look behind the company’s success,†Mr. Sorkin writes. “The book, by Duff McDonald, chronicles McKinsey’s rise, but also raises an important question about it that is applicable to the entire netherworld of consultants, advisers and other corporate hangers-on: ‘Are they worth it or not?’â€
ON THE AGENDA Â |Â The ISM manufacturing index for August is out at 10 a.m. Data on construction spending in July is out at 10 a.m. H&R Block reports earnings after the market closes.
MADOFF TRUSTEE ADDS DETAILS TO SUIT  | J. Ezra Merkin, a prominent Wall Street financier who had earned a fortune investing his clients’ money with Bernard L. Madoff, “willfully blinded†himself to numerous indications that Mr. Madoff was a con man, according to new claims in a lawsuit filed on Friday in Federal District Court in Manhattan by the trustee for victims of Mr. Madoff’s fraud. The filing includes details of a 2003 meeting between Mr. Merkin and a research company in which Mr. Merkin admitted that he did not fully understand Mr. Madoff’s business and questioned its legitimacy, Peter Lattman reports in DealBook.
“Despite Merkin’s knowledge that Madoff was running a Ponzi scheme, that Bernard L. Madoff Investment Securities was a fraud, and that Madoff could not have achieved his incredible returns, Merkin never pressed Madoff for an explanation but instead participated in Madoff’s fraud,†wrote the trustee, Irving L. Picard, in the amended complaint, which updated an action originally filed in 2009.
Bank of America Seeks Up to $1.5 Billion for China Construction Bank Stake  | Bank of America is following other Wall Street banks in seeking to cash out of what have been very profitable investments in China’s sprawling and state-controlled banking industry. DealBook »
Yankee Candle Is Said to Be Sold for $1.75 Billion  | The private equity firm Madison Dearborn Partners has agreed to sell the scented candle company Yankee Candle to the Jarden Corporation, a consumer products maker, according to The Wall Street Journal, which cites unidentified people familiar with the matter. WALL STREET JOURNAL
Takeover Bid for Chinese Food Company Rebuffs Short-Seller Attack  | Shares in the China Minzhong Food Corporation, targeted last week by the California short-seller Glaucus Research Group, surged 112 percent after the company received a $576 million takeover offer from Indofood Sukses Makmur. DealBook »
Rakuten of Japan Is Said to Be Buying a Video Site for $200 Million  | The Japanese e-commerce giant Rakuten is purchasing Viki, a premium video site, Rakuten’s chief executive told Kara Swisher of AllThingsD. The price is $200 million, according to the report, which cites unidentified people with knowledge of the situation. ALLTHINGSD
Cumulus Media to Buy Dial Global, a Radio Syndicator  | The $260 million deal could heighten the competition in radio against Clear Channel Communications. NEW YORK TIMES
A Lesson for Boardroom Battles  | A proxy battle involving an Israeli company listed in the United States could serve as a lesson for how the proxy access rule could be used as a weapon in boardroom battles, Steven M. Davidoff writes in the Deal Professor column. DealBook »
Barclays to Sell Retail Bank in United Arab Emirates  | “Following a strategic review, Barclays has decided to refocus its efforts in the U.A.E. on its key strengths in corporate and investment banking and wealth and investment management,†Barclays said in a statement on Tuesday. REUTERS
Barclays Rights Offering May Coincide With Lehman Anniversary  | Barclays is set to begin a roughly $9 billion rights offering in two weeks, “possibly on the fifth anniversary of its takeover of the U.S. operations of Lehman Brothers, people familiar with the matter said on Monday,†Reuters reports. REUTERS
A Suicide Clouds a Top Banker’s Image  | Josef Ackermann’s resignation from the Zurich Insurance Group after the suicide of the chief financial officer “interrupted a career spent fearlessly shaking up the European business world and advocating American-style standards of corporate performance,†The New York Times writes. NEW YORK TIMES
A Sign of Confidence Among London’s Financial Firms  | With London’s financial services companies looking to hire in investment banking and trading, job vacancies increased 16 percent last month, according to the recruitment firm Astbury Marsden, Bloomberg News reports. BLOOMBERG NEWS
Anglo Irish Bank’s Art Collection on the Block  | The sale of the collection will pave the way for the sale of the bank’s other assets, The Financial Times reports. FINANCIAL TIMES
Barclays Hires Former Morgan Stanley Equity Strategist in Japan  |Â
BLOOMBERG NEWS
Three Investment Veterans Plan to Raise a New Fund  | Three investment professionals formerly of the Blackstone Group, Temasek Holdings and Goldman Sachs “are raising a maiden fund targeting $300 million on behalf of their new firm Zoyi Capital, according to a person familiar with the situation,†The Wall Street Journal reports. WALL STREET JOURNAL
Qatar Fund Said to Have Big Hiring Plans  | By hiring senior bankers and other executives, Qatar’s sovereign wealth fund is looking to lessen its reliance on Europe, Reuters reports. REUTERS
DealBook »
Activist Looks to Shake Up Board of Billabong  | Coastal Capital International, a Billabong investor, is pushing for shareholders to vote on removing most of the Australian company’s directors, The Wall Street Journal reports. WALL STREET JOURNAL
Twitter’s Finance Chief Said to Talk With Banks Over I.P.O.  | Mike Gupta, Twitter’s chief financial officer, is talking to banks about handling the company’s initial public offering, Bloomberg News reports. “Twitter is awaiting third-quarter financial results before deciding whether to file the I.P.O. paperwork with regulators this year or next, said people who asked not to be identified because the plans are confidential,†the report continues. BLOOMBERG NEWS
In Silicon Valley, Wall Street-Style Excess  | “It feels as if the promise of the tech world â€" its utopian ideals and democratic aspirations â€" has dissolved into much more selfish pursuits of power and wealth,†Jenna Wortham writes in a column in The New York Times. NEW YORK TIMES
Former Chinese Railroad Official Indicted on Bribery Charges  | A former high-ranking Chinese railroad official, whose daughter’s employment at JPMorgan Chase is a focus of an antibribery investigation in the United States, has been formally indicted on bribery charges in a Beijing court. DealBook »
With Summers Expected at the Fed, Stimulus Easing Is Seen  | “The spreading expectation that President Obama will name Lawrence H. Summers to lead the Federal Reserve Board appears to be working against the central bank’s efforts to stimulate the economy,†The New York Times reports. “The jitters even have some analysts betting that a Summers nomination could lead to slower economic growth, less job creation and higher interest rates than if the president named Janet L. Yellen, the Fed’s vice chairwoman.†NEW YORK TIMES
As Comptroller, Thompson Gave Work to Donors  | William C. Thompson Jr., who was New York City’s comptroller until 2009, “reaped political gains from those he awarded city business,†The New York Times writes. NEW YORK TIMES
Basel Committee Eases Rule on Derivatives  | Reuters writes: “Global regulators have eased the impact of new rules designed to make the $630 trillion derivatives market safer as they seek to avoid too-tight controls on the sector that some banks argue could harm economic recovery.†REUTERS
Former Goldman Trader Fined $500,000  | A former Goldman Sachs trader who pleaded guilty in a criminal case earlier this year to fabricating huge positions to protect his bonus agreed on Friday to pay a $500,000 fine in a related civil matter. DealBook »
Tax Haven Closes for Wealthy Americans  | A tax deal reached between Switzerland and the United States on Thursday effectively put an end to the status of the small Alpine country as a tax haven for wealthy Americans. DealBook »
