I.S.S. Weighs In Against MetroPCS’ Planned Merger With T-Mobile

An influential proxy advisory firm recommended late on Wednesday that shareholders of MetroPCS reject the cellphone service provider’s proposed merger with T-Mobile USA, adding pressure to a deal already under fire from several big investors.

The firm, Institutional Shareholder Services, largely agreed with major shareholders who have objected to both the debt that the merger would place on the combined company and the stake that MetroPCS shareholders would own of the new entity.

Those investors include Paulson & Company, MetroPCS’ biggest investor with a nearly 10 percent stake, and P. Schoenfeld Asset Management, which owns over 2 percent. (T-Mobile’s chief executive, John Legere, attacked both obliquely on Tuesday as “greedy hedge funds.”)

“The ultimate question for PCS holders, therefore, is whether this offer is sufficient compensation for putting control of their investment in the hands of another strategic, DT, under whose control T-Mobile has appeared to have so vastly underperformed,” I.S.S. wrote, referring to current T-Mobile parent Deutsche Telekom.

Representative for MetroPCS and T-Mobile wasn’t available for comment.

The recommendation by I.S.S., the biggest of the proxy advisers, can have a significant influence on major institutional investors, some of whom regularly vote based on the firm’s recommendations. But other investors are ignore its proclamations, and some deals have been approved over I.S.S.’ objections.

In its report, I.S.S. questioned the rationale of the merger, which would significantly bolster T-Mobile in its fight to become the country’s biggest low-cost cellphone service provider. Announced in October, the deal would give MetroPCS shareholders a 26 percent stake in the combined company and would pay them about $4.09 a share.

But the advisory firm questioned the rationale for joining with T-Mobile, which has historically struggled against bigger rivals like AT&T, which failed to buy the company for $39 billion two years ago, and Sprint.

I.S.S. Weighs In Against MetroPCS’ Planned Merger With T-Mobile

An influential proxy advisory firm recommended late on Wednesday that shareholders of MetroPCS reject the cellphone service provider’s proposed merger with T-Mobile USA, adding pressure to a deal already under fire from several big investors.

The firm, Institutional Shareholder Services, largely agreed with major shareholders who have objected to both the debt that the merger would place on the combined company and the stake that MetroPCS shareholders would own of the new entity.

Those investors include Paulson & Company, MetroPCS’ biggest investor with a nearly 10 percent stake, and P. Schoenfeld Asset Management, which owns over 2 percent. (T-Mobile’s chief executive, John Legere, attacked both obliquely on Tuesday as “greedy hedge funds.”)

“The ultimate question for PCS holders, therefore, is whether this offer is sufficient compensation for putting control of their investment in the hands of another strategic, DT, under whose control T-Mobile has appeared to have so vastly underperformed,” I.S.S. wrote, referring to current T-Mobile parent Deutsche Telekom.

Representative for MetroPCS and T-Mobile wasn’t available for comment.

The recommendation by I.S.S., the biggest of the proxy advisers, can have a significant influence on major institutional investors, some of whom regularly vote based on the firm’s recommendations. But other investors are ignore its proclamations, and some deals have been approved over I.S.S.’ objections.

In its report, I.S.S. questioned the rationale of the merger, which would significantly bolster T-Mobile in its fight to become the country’s biggest low-cost cellphone service provider. Announced in October, the deal would give MetroPCS shareholders a 26 percent stake in the combined company and would pay them about $4.09 a share.

But the advisory firm questioned the rationale for joining with T-Mobile, which has historically struggled against bigger rivals like AT&T, which failed to buy the company for $39 billion two years ago, and Sprint.

Once More Through the Revolving Door for Justice’s Breuer

Coming off a grueling four-year stint at the Justice Department, Lanny A. Breuer is poised to make a soft landing in the private sector.

Covington & Burling, a prominent law firm, plans to announce on Thursday that Mr. Breuer will be its vice chairman. The firm created the role especially for Mr. Breuer, a Washington insider who most recently led the Justice Department’s investigation into the financial crisis.

For Mr. Breuer, who will now shift to defending large corporations, Covington is familiar turf. He previously spent nearly two decades there.

“There’s a strong emotional pull to the firm,” Mr. Breuer, who departed as the Justice Department’s criminal division chief on March 1, said in an interview. “It’s my professional home.”

Mr. Breuer is expected to earn about $4 million in his first year at Covington. In addition to representing clients, he will serve as an ambassador of sorts for the firm as it seeks to grow overseas.

The move is his latest turn through Washington’s revolving door, the symbolic portal connecting government service and private practice. Mr. Breuer, who began his career as an assistant district attorney in Manhattan and later represented President Bill Clinton during his impeachment hearings, is joining Covington for the third time.

Like Mr. Breuer, Covington operates at the nexus of Washington and Wall Street. It has represented several financial clients facing federal scrutiny, including the New York Stock Exchange, JPMorgan Chase and the former chief executive of IndyMac.

Such relationships could arouse suspicion among consumer advocates. Mary Jo White, who has been both a federal prosecutor and a defense lawyer, faces similar questions as she prepares to run the Securities and Exchange Commission.

But another school of thought holds that the revolving door instills prosecutors with valuable knowledge of Wall Street. And under ethics rules, Mr. Breuer cannot work for Covington on any case he handled at the Justice Department and must wait two years before facing off with the agency.

“What people dismissively talk about as the revolving door allows people to be better public servants and private litigants,” he said. “I believe I was a better assistant attorney general because of my deep experience in the private sector.”

Mr. Breuer’s Justice Department tenure came at a critical period: the aftermath of the financial crisis.

While critics of Wall Street blamed Mr. Breuer for not bringing cases against the banks and executives at the center of the crisis, they praised him for the prosecution of R. Allen Stanford, who was sentenced to 110 years in prison for a Ponzi scheme, and for the criminal case against BP in response to the Gulf of Mexico oil spill. His biggest victory came last year, when a Japanese subsidiary of UBS pleaded guilty to manipulating the London interbank offered rate, or Libor. It was the first unit of a big global bank to plead guilty in two decades.

“We’re proud to welcome him home,” said Timothy C. Hester, Covington’s chairman.

Once More Through the Revolving Door for Justice’s Breuer

Coming off a grueling four-year stint at the Justice Department, Lanny A. Breuer is poised to make a soft landing in the private sector.

Covington & Burling, a prominent law firm, plans to announce on Thursday that Mr. Breuer will be its vice chairman. The firm created the role especially for Mr. Breuer, a Washington insider who most recently led the Justice Department’s investigation into the financial crisis.

For Mr. Breuer, who will now shift to defending large corporations, Covington is familiar turf. He previously spent nearly two decades there.

“There’s a strong emotional pull to the firm,” Mr. Breuer, who departed as the Justice Department’s criminal division chief on March 1, said in an interview. “It’s my professional home.”

Mr. Breuer is expected to earn about $4 million in his first year at Covington. In addition to representing clients, he will serve as an ambassador of sorts for the firm as it seeks to grow overseas.

The move is his latest turn through Washington’s revolving door, the symbolic portal connecting government service and private practice. Mr. Breuer, who began his career as an assistant district attorney in Manhattan and later represented President Bill Clinton during his impeachment hearings, is joining Covington for the third time.

Like Mr. Breuer, Covington operates at the nexus of Washington and Wall Street. It has represented several financial clients facing federal scrutiny, including the New York Stock Exchange, JPMorgan Chase and the former chief executive of IndyMac.

Such relationships could arouse suspicion among consumer advocates. Mary Jo White, who has been both a federal prosecutor and a defense lawyer, faces similar questions as she prepares to run the Securities and Exchange Commission.

But another school of thought holds that the revolving door instills prosecutors with valuable knowledge of Wall Street. And under ethics rules, Mr. Breuer cannot work for Covington on any case he handled at the Justice Department and must wait two years before facing off with the agency.

“What people dismissively talk about as the revolving door allows people to be better public servants and private litigants,” he said. “I believe I was a better assistant attorney general because of my deep experience in the private sector.”

Mr. Breuer’s Justice Department tenure came at a critical period: the aftermath of the financial crisis.

While critics of Wall Street blamed Mr. Breuer for not bringing cases against the banks and executives at the center of the crisis, they praised him for the prosecution of R. Allen Stanford, who was sentenced to 110 years in prison for a Ponzi scheme, and for the criminal case against BP in response to the Gulf of Mexico oil spill. His biggest victory came last year, when a Japanese subsidiary of UBS pleaded guilty to manipulating the London interbank offered rate, or Libor. It was the first unit of a big global bank to plead guilty in two decades.

“We’re proud to welcome him home,” said Timothy C. Hester, Covington’s chairman.

Hedge Fund Titan Buys Hamptons Property for $60 Million

Steven A. Cohen is known for his rapid-fire trading style, moving in and out of stocks with dizzying speed at his hedge fund SAC Capital Advisors.

He seems to be taking a similar approach to his real estate.

Mr. Cohen reached a deal last week to pay $60 million for an oceanfront property on Further Lane in East Hampton, on Long Island, according to a person with direct knowledge of the sale. The home, which was only listed for sale late last week, is down the road from one that he already owns. At the same time, he has put on the market his duplex apartment in the Bloomberg Tower on the east side of Manhattan. this person said. His asking price: $115 million.

News of Mr. Cohen’s real estate activity surfaced a day after reports that he purchased Picasso’s “Le Rêve” for $155 million from the casino owner Stephen A. Wynn. The acquisition is one of the priciest private art deals ever completed. Meanwhile, he has quietly offered up other works from his vast collection up for sale, according to several dealers.

Mr. Cohen’s conspicuous consumption comes amid continuing scrutiny of his business practices. SAC is at the center of the government’s broad investigation into insider trading at hedge funds. Earlier this month, Mr. Cohen, 56, signed off on two settlements in which the fund agreed to pay federal securities regulators a $616 million penalty to resolve accusations of illegal conduct at SAC.

On Thursday morning, Judge Victor Marerro of Federal District Court in Manhattan is set to hold a hearing to consider the terms of the agreement, which requires his approval. SAC has resolved the cases without admitting nor denying wrongdoing, a settlement technique used by the government that has come under criticism from some judges for being too lenient.

Mr. Cohen, 56, is not expected to attend the settlement hearing, but if Judge Marrero signs off on the agreement, the $616 million will effectively come out of Mr. Cohen’s pocket. The fine is being paid by the SAC management company, of which Mr. Cohen owns 100 percent. SAC investors will not absorb any of the cost of the government penalty.

The $616 million would put only a modest dent in Mr. Cohen’s net worth, which is said to be nearly $10 billion, according to the Bloomberg Billionaires Index. He is one of a handful of hedge fund managers who have redefined wealth on Wall Street. Investors like John Paulson of Paulson & Company, which made a fortune betting against the mortgage market, and Carl C. Icahn, the activist investor currently bidding for Dell, have recently earned billions of dollars in a single calendar year.

Many of them have homes in the Hamptons, a favorite summer getaway of the Wall Street crowd. Mr. Cohen first put down roots there in 2007, when he bought a home on Further Lane for about $18 million, one of the Hamptons most desirable addresses for its sweeping views of the Atlantic Ocean.

Yet Mr. Cohen’s current home is not on the water, but situated behind an oceanfront property owned by James Chanos, another hedge fund manager. (Other neighbors on his street have included the comedian Jerry Seinfeld and the art dealer Larry Gagosian.)

Now Mr. Cohen can claim an ocean view. A couple of doors down from his other house, his new 10,000-square foot home sits on seven acres with a tennis court and pool. “High ceilings, antique oak and limestone floors, barn-style double-height family room, media room, large oceanview master suite plus six additional bedrooms,” said the listing.

The $60 million purchase is among the most expensive real estate sales ever transacted on Long Island’s South Fork. It is unclear whether Mr. Cohen is selling his first Further Lane house.

Ed Petrie, a real estate broker at Sotheby’s International Realty who had the exclusive listing, declined to comment. Jonathan Gasthalter, an SAC spokesman, also declined to comment.

At the same time Mr. Cohen has added property in the Hamptons, he has decided to unload one in New York, listing his duplex at in the Bloomberg Tower on Lexington Avenue for $115 million. A charter resident of the building, which also goes by the name One Beacon Court, he paid about $24 million in 2005 for the 10,000-square foot property on the 51st and 52nd floors. His neighbors there have included the Beyonce, the pop singer, and Marc Dreier, the disgraced former corporate lawyer serving a 20-year sentence for fraud.

Mr. Cohen, whose primary dwelling is a home in Greenwich, Conn., featuring an ice-skating rink and a two-hole golf course, still owns real estate in New York. Last year, he purchased a property in the West Village on Washington Street for $38.8 million.

If Mr. Cohen got the $115 million that he is asking for his Bloomberg Tower pad, it would be the priciest sale to date of a Manhattan apartment. Two duplexes at One57, a 1,004-foot tower now under construction in Midtown, are under contract with unnamed buyers for $90 million. If consummated, those deals will surpass the $88 million sale of a penthouse at 15 Central Park West owned by the financier Sanford I. Weill to the daughter of a Russian billionaire.

Banks Seek to Overturn Judge’s Ruling in Critical Mortgage Case

The nation’s largest banks, facing a torrent of lawsuits over shoddy mortgage securities, are pushing to overturn a series of tough ruling in an important case.

In a rare move, 15 banks â€" including Bank of America, Citigroup, JPMorgan Chase and UBS â€" filed a motion in Federal District Court in Manhattan late Tuesday night to throw out a series of decisions by  Judge Denise Cote, accoring to a copy of the court filing. In doing so, the financial institutions are aiming to broaden the amount of evidence they can gather in the hopes of quashing the lawsuit.

The rulings, the banks argue, are so “gravely prejudicial” that the firms had no choice, a step that was not “taken lightly.”

The case could have costly implications.

In 2011, the Federal Housing Finance Agency, which oversees the housing giants, Fannie Mae and Freddie Mac, accused the banks of duping them into purchasing $200 billion of mortgage securities that ultimately imploded during the financial crisis. On Wall Street, the lawsuit is considered a critical litmus test for how successful the banks will be in staunching their losses from the mortgage litigation.

The banks have been aggressively trying to derail the lawsuit. In November, Judge Cote denied requests by the banks to toss out the lawsuit altogether.

Now, the banks are trying to reverse her rulings that limit the amount of so-called discovery they can collect, including depositions and internal documents. The decisions, according to the court filing, unfairly constricts the banks, undercuts their ability to fight the lawsuit and is “grossly inequitable.”

In a May 2012 order, Judge Cote ruled that the banks could take a total of only 20 depositions â€" or interviews â€" from current and former employees at Fannie Mae, Freddie Mac and the Federal Housing Finance Agency. The limited scope of the interviews leaves the banks, the court filing claims, without a full understanding of Fannie and Freddie’s operations.

By comparison, the Federal Housing Finance Agency can gather 400 depositions, under the judge’s ruling. Her decision also prevents the banks from gathering additional information from a major unit within the mortgage finance firms that evaluated home loans before they were packaged and diced into the complex investments.

“This structure creates an extraordinarily uneven playing field that deprives petitioners of the right to confront the claims against them, while giving F.H.F.A. a distinct advantage,” the banks’ filing says.

Judge Cote reaffirmed the rules governing discovery in a separate order filed last month. In that order, the judge reiterated that “defendants as a group may take 20 depositions of F.H.F.A.” Even the Federal Housing Finance Agency proposed a more generous deposition cap of 40 total, the banks argue.

The banks assert in the court filing that the limitations will hobble their defenses while unfairly allowing the housing agency to plow ahead with its case. The decision, the filing says, will ultimately force the banks to settle the case.
Judge Cote did not respond to repeated requests for comment.

The move is the latest effort by big banks to put the mortgage mess â€" and the related legal headaches â€" behind them.

In recent years, the banks have been overwhelmed with a raft of lawsuits filed by federal and state authorities, as well as private investors. The lawsuits center on a dismal chapter in banks’ histories when Wall Street sold billions of dollars of subprime mortgages that soured, causing the banks and investors to incur vast losses.

In the latest salvo, Citigroup agreed earlier this month to pay $730 million over accusations that the bank deceived investors in securities backed by mortgage loans. Citigroup did not admit wrongdoing.

The lawsuits show no signs of abating. In October, federal prosecutors in Manhattan accused Bank of America of fraud, claiming the firm’s subprime lender Countrywide Financial churned out loans at such a fast clip that quality controls were almost entirely flouted.

Analysts say the mortgage-related litigation is among the greatest threats to the industry’s profit. In the fourth quarter, Citigroup’s profit was eroded by a $1.3 billion legal bill.

I.R.S Videos Come Under Fire

An Internal Revenue Service “training and leadership” video based on “Gilligan’s Island,” the campy 1960’s television show, has emerged.

Full of plastic palm trees, feather boas and fruit, the spoof is intended to educate I.R.S. employees on processing the annual flood of federal tax returns. But while it indicates that the tax agency was inspired by Wal-Mart to introduce an automated check-processing system, it is prompting some senior lawmakers to question whether I.R.S. has lost its mooring.

The 16-minute video, made in 2011, features middle-aged I.R.S. employees in the roles of the marooned crew, complete with canned laughter and costumes (Mary Ann sports blue-ribboned ponytails; Gilligan, a white sailor’s hat; and Mrs. Howell, shiny evening dresses.)

At one point, “Mary Ann” recalls that “years ago, I was in a Wal-Mart, and the lady took my check and zipped it through this machine and handed it back, and I stood there kind of amazed. I wondered why we couldn’t move forward and deposit checks just like Wal-Mart did when I had been there.” She continues, “lo and behold, we decided to test that process and technology.”

An earlier training video modeled on “Star Trek” featured I.R.S. employees costumed as Captain Kirk, Dr. Spock and the rest of the U.S.S. Enterprise crew combating tax fraud on an alien planet called “Notax.”

The I.R.S. has stepped up scrutiny of wealthy taxpayers in recent years, with those earning $10 million or more now facing a 27.4 percent audit rate. While that is slightly below 2011’s rate of 29.9 percent, it is still up sharply from 18.4 percent in 2010 and just 10.6 percent in 2009.

The agency suffers from perennial criticism that it does not handle taxpayers’ questions efficiently or consistently. “Gilligan” seemed to admit as much, saying in the video that stumped agency employees were “embarrassed” to use a thick internal manual known as the P & R Guide, or Probe and Response, “because it gave the impression that we did not know the answers.”

Asked about the videos, Michelle Eldridge, an I.R.S. spokeswoman, said that “Gilligan’s Island” was an introduction to a 12-hour video course used to train 1,900 employees over 400 sites. The six-minute “Star Trek” video, made in 2010, was used as an introduction in a training conference.

Both films were shot in at an I.R.S. film-production studio in New Carrollton, Md., and cost a total $60,000 in taxpayer dollars. Ms. Eldridge said that “Gilligan’s Island” had saved the agency more than $1.5 million in training costs.

More than 120 official I.R.S. videos, all available on YouTube, have more than five million views, including 1.4 million this tax-filing season.

Some recent views came from the office of Senator Charles Grassley, a Republican from Iowa and senior member of the Senate Finance Committee.

“To the extent the “Gilligan’s Island” video tries to address better accuracy, it might be more justifiable than the “Star Trek” video,” said Mr. Grassley, a critic of the I.R.S. “The space video doesn’t seem to have any training value…it appears the I.R.S. wasted taxpayer money.”

Ms. Eldridge conceded that the Star Trek video “did not reflect the best stewardship of resources.”

A Potential Potemkin Fight Over Dell

Even losers could emerge as winners from the Dell takeover battle. Blackstone Group, Silver Lake Partners, the Dell board and founder Michael S. Dell could stand to benefit from the impression of a hard-fought auction. A Potemkin fight, if that’s what it turns out to be, just may not help shareholders quite so much.

It’s what Wall Street calls “the optics” of the deal. For the buyout firms, a backdrop for the $24 billion Dell sale is an antitrust lawsuit that a judge earlier this month narrowed but allowed to proceed. Shareholders of acquisition targets from 2003 to 2007 accuse Blackstone, TPG and other private equity shops of conspiring to drive down prices by agreeing not to outbid each other.

One potentially damaging piece of evidence is an email from none other than Blackstone’s president, Hamiliton E. James Jr. to George Roberts, a co-founder of Kohlberg Kravis Roberts & Company: “We would much rather work with you guys than against you. Together we can be unstoppable but in opposition we can cost each other a lot of money.”

While the Dell deal will have no direct bearing on the case, Blackstone’s counterbid seems to undermine such allegations. The 11thth-hour offer for the PC maker is a rarity. Go-shop periods almost never lead to a higher bid. In the context of helping to shift perceptions about private equity firms being in cahoots, even Silver Lake might welcome Blackstone’s approach.

New suitors could also help Dell’s board avoid a J Crew stigma. In the clothier’s 2010 sale, the board succumbed to a leveraged buyout hand-stitched by Chief Executive Millard S. Drexler. After being kept in the dark for over six weeks that Mr. Drexler and the lead director’s private equity firm, TPG, were teaming up on a bid, independent directors used a go-shop period as a governance fig leaf.

Similarly, if Mr. Dell winds up working with Blackstone, or even negotiates in good faith with the firm, he could come out looking better than Mr. Drexler, who only grudgingly agreed to work with other potential buyers.

Blackstone, or even Carl C. Icahn, may succeed with their bids, but it’s just as likely all the maneuvering won’t bring a better deal for Dell investors. Others involved will at least come away keeping up appearances

Jeffrey Goldfarb is an assistant editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Hair on the Street

One of the biggest growth areas on Wall Street It may just be on the faces of some executives. Carl Icahn has now joined Lloyd Blankfein as one of the bearded elite of finance.

H.J. Heinz Sets Shareholder Date for Deal

PITTSBURGH--(BUSINESS WIRE)--H.J. Heinz Company (NYSE: HNZ) (“Heinz”) today announced that it has set a date for a special meeting of its shareholders to consider and vote on, among other things, a proposal to approve and adopt the previously announced merger agreement, dated as of February 13, 2013, as amended, providing for the acquisition of Heinz by an investment consortium comprised of Berkshire Hathaway and an investment fund affiliated with 3G Capital. The special meeting will be held on April 30, 2013, at 8 a.m. Eastern Time, at the offices of Davis Polk & Wardwell LLP at 450 Lexington Avenue, New York, NY 10017.

Heinz also announced that the parties have received early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the transaction. The early termination of the waiting period under the Hart-Scott-Rodino Act satisfies one of the conditions for consummation of the transaction.

At the closing of the transaction, Heinz shareholders will receive $72.50 in cash for each share of common stock they own, in a transaction valued at $28 billion, including the assumption of Heinz’s outstanding debt.

Heinz shareholders of record as of the close of business on March 18, 2013 are entitled to vote at the special meeting. Additional information concerning the special meeting and the transaction is included in the definitive proxy statement relating to the special meeting, which has been filed with the Securities and Exchange Commission and will be mailed to Heinz shareholders who are entitled to vote at the special meeting.

The transaction remains subject to certain other closing conditions, including approval by Heinz shareholders, receipt of certain other regulatory approvals and other customary closing conditions, and is expected to close late in the second calendar quarter of 2013 or in the third calendar quarter of 2013.

About Heinz
H.J. Heinz Company, offering “Good Food Every Day”™ is one of the world’s leading marketers and producers of healthy, convenient and affordable foods specializing in ketchup, sauces, meals, soups, snacks and infant nutrition. Heinz provides superior quality, taste and nutrition for all eating occasions whether in the home, restaurants, the office or “on-the-go.” Heinz is a global family of leading branded products, including Heinz® Ketchup, sauces, soups, beans, pasta and infant foods (representing over one third of Heinz’s total sales), Ore-Ida® potato products, Weight Watchers® Smart Ones® entrées, T.G.I. Friday’s® snacks, and Plasmon infant nutrition. Heinz is famous for its iconic brands on six continents, showcased by Heinz® Ketchup, The World’s Favorite Ketchup®.

Cautionary Statement Regarding Forward-Looking Statements
This document and Heinz’s other public pronouncements contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified by the words “will,” “expects,” “anticipates,” “believes,” “estimates” or similar expressions and include Heinz’s expectations as to future revenue growth, earnings, capital expenditures and other spending, dividend policy, and planned credit rating, as well as anticipated reductions in spending. These forward-looking statements reflect management’s view of future events and financial performance. These statements are subject to risks, uncertainties, assumptions and other important factors, many of which may be beyond Heinz’s control, and could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Factors that could cause actual results to differ from such statements include, but are not limited to:

• the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement,
• the failure to receive, on a timely basis or otherwise, the required approvals by Heinz’s shareholders and government or regulatory agencies,
• the risk that a closing condition to the proposed merger may not be satisfied,
• the failure to obtain the necessary financing in connection with the proposed merger,
• the ability of Heinz to retain and hire key personnel and maintain relationship with customers, suppliers and other business partners pending the consummation of the proposed merger, and
• other factors described in “Risk Factors” and “Cautionary Statement Relevant to Forward-Looking Information” in Heinz’s Annual Report on Form 10-K for the fiscal year ended April 29, 2012 and reports on Forms 10-Q thereafter.

The forward-looking statements are and will be based on management’s then current views and assumptions regarding future events and speak only as of their dates. Heinz undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the securities laws.

Additional Information and Where to Find It
This document may be deemed to be solicitation material in respect of the proposed merger between Heinz and a subsidiary of Hawk Acquisition Holding Corporation. In connection with the proposed merger, Heinz filed a definitive proxy statement with the United States Securities and Exchange Commission (“SEC”) on March 27, 2013. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS, INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The definitive proxy statement will be mailed to the shareholders of Heinz who are entitled to vote at the special meeting seeking their approval of the proposed merger. Heinz’s shareholders will also be able to obtain a copy of the definitive proxy statement free of charge by directing a request to: H.J. Heinz Company, P.O. Box 57, Pittsburgh, Pennsylvania 15230, Attention: Corporate Affairs Department. In addition, the definitive proxy statement is available free of charge at the SEC’s website, www.sec.gov.

Participants in the Solicitation
Heinz and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed merger. Information regarding Heinz’s directors and executive officers is available in Heinz’s proxy statement for its 2012 annual meeting of shareholders, which was filed with the SEC on July 6, 2012. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of Heinz’s shareholders in connection with the proposed merger is set forth in the definitive proxy statement filed with the SEC on March 27, 2013. These documents are available free of charge at the SEC’s website at www.sec.gov, and by mail at: H.J. Heinz Company, P.O. Box 57, Pittsburgh, Pennsylvania 15230, Attention: Corporate Affairs Department.

Nomura Hires Former Bank of America Merrill Lynch Banker

HONG KONGâ€"Nomura has hired a former high-ranking investment banker at Bank of America Merrill Lynch to serve as the Japanese bank’s new head of equities for Asia excluding Japan, according to an internal memo obtained by DealBook.

Yasuhiro Fujiwara will join Nomura as a managing director and will also serve as the head of equity derivatives trading for the Asia Pacific region, according to the memo, the contents of which were confirmed by a Nomura spokesman.

At Bank of America Merrill Lynch, Mr. Fujiwara served as head of equities for Asia Pacific until he left in 2011. Before that worked at UBS Japan and JP Morgan. He will be based in Hong Kong and work closely with Norikazu Akedo, head of Nomura’s Japan equities business from Tokyo.

Nomura Hires Former Bank of America Merrill Lynch Banker

HONG KONGâ€"Nomura has hired a former high-ranking investment banker at Bank of America Merrill Lynch to serve as the Japanese bank’s new head of equities for Asia excluding Japan, according to an internal memo obtained by DealBook.

Yasuhiro Fujiwara will join Nomura as a managing director and will also serve as the head of equity derivatives trading for the Asia Pacific region, according to the memo, the contents of which were confirmed by a Nomura spokesman.

At Bank of America Merrill Lynch, Mr. Fujiwara served as head of equities for Asia Pacific until he left in 2011. Before that worked at UBS Japan and JP Morgan. He will be based in Hong Kong and work closely with Norikazu Akedo, head of Nomura’s Japan equities business from Tokyo.

JPMorgan’s Friction With Washington

JPMORGAN’S FRICTION WITH WASHINGTON  |  It was not long ago that JPMorgan Chase and its chief executive, Jamie Dimon, held special sway in Washington. But that status may be fading, as the bank “increasingly finds itself in the cross hairs of federal authorities,” Jessica Silver-Greenberg and Ben Protess report in DealBook.

The criminal inquiry over the big trading loss last year joins other legal tangles. “In a previously undisclosed case, prosecutors are examining whether JPMorgan failed to fully alert authorities to suspicions about Bernard L. Madoff, according to several people with direct knowledge of the matter.” In addition, “JPMorgan misstated how the bank may have harmed more than 5,000 homeowners in foreclosure, according to several people briefed on the matter. The bank’s primary regulator, the Office of the Comptroller of the Currency, is expected to collect a cash payment from the bank to remedy the flawed review of loans, these people say.”

Those mortgage errors, while relatively minor on their own, highlight the growing friction with regulators. Eight federal agencies are investigating JPMorgan, and federal prosecutors and the Federal Bureau of Investigation are examining potential wrongdoing. In April, senior JPMorgan executives, including Mr. Dimon, are expected to meet with investigators examining the multibillion-dollar trading loss that was the focus of a recent Senate report, people briefed on the matter said.

“Jamie and other executives feel terrible that the bank’s self-inflicted mistakes have put regulators in an awkward position,” said Joe Evangelisti, a JPMorgan spokesman. “We are wholly to blame for our errors and are fully cooperating with all authorities to make things right.”

COHEN’S BIG ART DEAL  |  Steven A. Cohen has not let an insider trading investigation â€" or an elbow â€" put a stop to his art dealings. “A renowned art collector, Mr. Cohen has bought Picasso’s ‘Le Rêve’ from the casino owner Stephen A. Wynn for $155 million, according to a person with direct knowledge of the sale who was not authorized to speak publicly,” Carol Vogel and Peter Lattman report in DealBook. Mr. Cohen, who has coveted the painting for years, agreed to buy it from Mr. Wynn for $135 million in 2006, but that deal was called off after Mr. Wynn, who has an eye disease, put his elbow through it. An art restorer repaired the canvas and apparently restored the painting’s value. The art deal was reported earlier by The New York Post.

Mr. Cohen is effectively $616 million poorer after his hedge fund, SAC Capital Advisors, settled with the government over accusations of insider trading. But he has continued to add to his world-class art collection, which includes works by Jackson Pollock, Monet and Manet. The purchase of “Le Rêve” is at least the second $100 million-plus acquisition of art by Mr. Cohen in the last two years.

BRITISH BANKS’ CAPITAL HOLE  |  British banks need to raise a combined £25 billion ($38 billion) in new capital by the end of the year to protect against future shocks, local authorities said on Wednesday. “The Bank of England, which takes over the direct supervision of British firms like HSBC and Barclays next week, said the new reserves were needed to protect against losses connected to risky loan portfolios, future regulatory fines and the rejiggering of banks’ bloated balance sheets,” DealBook’s Mark Scott writes.

For most American banks, the Federal Reserve’s stress tests showed they had sufficient capital to withstand a major downturn. “British banks are not so lucky,” Mr. Scott says.

ON THE AGENDA  |  Pinnacle Foods, owned by the Blackstone Group, is expected to price its I.P.O. Wednesday evening. Data on pending home sales for February is out at 10 a.m. Robert Benmosche, A.I.G.’s chief executive, is on CNBC at 8 a.m. A bankruptcy judge is set to rule on final approval of the merger of American Airlines and US Airways.

FORECASTS DARKEN FOR CYPRUS  |  The plan to rescue Cyprus is being complicated by a gloomy economic forecast. “Instead of the relatively modest decline of 3 percent that is built into the forecast that underpins the country’s international bailout package, many economists say that estimate will need to be revised sharply downward given the shock that the island’s small economy has endured from the extended closure of its banks,” The New York Times’s Landon Thomas Jr. writes.

Paul Krugman, the economist and columnist for The New York Times, says, “Cyprus should leave the euro. Now.” He continues: “The reason is straightforward: staying in the euro means an incredibly severe depression, which will last for many years while Cyprus tries to build a new export sector. Leaving the euro, and letting the new currency fall sharply, would greatly accelerate that rebuilding.”

Mergers & Acquisitions »

Credit Suisse to Buy Morgan Stanley’s European Wealth Unit  |  Credit Suisse is buying Morgan Stanley’s wealth management arm in Europe, the Middle East and Africa, which has assets under management of $13 billion, Reuters reports.
REUTERS

CBS Agrees to Buy 50% of Former TV Guide Network  |  CBS is buying a half-interest in TVGN, formerly the TV Guide Network, “fulfilling a longstanding goal of adding a general entertainment basic cable network to the company’s media portfolio,” The New York Times writes.
NEW YORK TIMES

Spain Plans to Reduce Stake in EADS  | 
REUTERS

The Dell Deal Scorecard  |  Need help remembering who’s offering what for Dell Here’s a guide to the proposed takeovers that Michael S. Dell and Silver Lake, Blackstone and Carl C. Icahn have each outlined for the computer company.
DealBook »

Controversial Media Deal in Taiwan Nears Collapse  |  The pro-Beijing businessmen seeking to buy two liberal publications in Taiwan were unlikely to meet a deadline on Wednesday to complete the sale, a spokesman said.
DealBook »

INVESTMENT BANKING »

I.C.B.C. Profit Beats Expectations  |  Industrial and Commercial Bank of China said profit rose 19 percent in the fourth quarter.
BLOOMBERG NEWS

Goldman Amends Warrants Deal With Buffett  |  The modified agreement essentially makes the billionaire one of the Wall Street firm’s biggest investors without having to pay additional money.
DealBook »

Buffett and Goldman Scratch Each Other’s Backs  |  By not tying up cash in Goldman Sachs, Warren E. Buffett can keep it in reserve for another Heinz-like elephantine acquisition target, Antony Currie of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS

PRIVATE EQUITY »

U.S. Firms Look to Buy Australian Software Maker  |  A group that includes the private equity firms TA Associates and Updata Partners values its target, the Nintex Group, at $222 million, The Wall Street Journal reports.
WALL STREET JOURNAL

China Pushes for Tighter Restrictions on Private Equity  | 
WALL STREET JOURNAL

HEDGE FUNDS »

Shareholder Advisory Firm Backs Agrium in Fight With Activist  |  The fertilizer maker Agrium received support from Glass Lewis, a shareholder advisory firm, in a proxy struggle with the investor Jana Partners, which has a 7.5 percent stake.
REUTERS

I.P.O./OFFERINGS »

Judge Rejects Man’s Claim of Facebook Ownership  |  A judge said the claim by Paul Ceglia that he owns a portion of Facebook was based on a fraudulent contract and should be thrown out, Bloomberg News reports.
BLOOMBERG NEWS

VENTURE CAPITAL »

Yahoo’s ‘Acqui-Hiring’ and Its Tax Implications  |  Yahoo’s acquisition of Summly could have certain tax benefits for its founder, Victor Fleischer writes in the Standard Deduction column.
DealBook »

Morin, C.E.O. of Path, on His Mobile Routine  |  “I have two iPhones, one for day and one for the night. When the day phone runs out, the night phone takes over. I never have to worry,” Dave Morin told Vanity Fair.
VANITY FAIR

LEGAL/REGULATORY »

A New Ring of Suspicious Traders  |  Bloomberg News reports: “A former Foundry Networks Inc. executive was charged in what prosecutors called a $27 million insider-trading scheme with tipping a California hedge fund analyst about the company’s acquisition by Brocade Communications Systems Inc.”
BLOOMBERG NEWS

Europe Expands Investigation Into Derivatives Market  |  The inquiry, which has already ensnared Barclays, JPMorgan Chase and Deutsche Bank, has been broadened to include the International Swaps and Derivatives Association, a trade organization for market participants.
DealBook »

DLA Piper Calls E-Mails Cited in Lawsuit an ‘Offensive’ Attempt at Humor  |  In the wake of a lawsuit of involving the billing practices of DLA Piper, the law firm issued a memo to its lawyers on Tuesday, calling language in e-mails written by its lawyers “unprofessional” and explaining its position in a case.
DealBook »

In a Faded Wall St. Scandal, Lessons for a Current One  |  The backdating scandal pales in comparison to the recklessness of the financial crisis, but it does have implications for criminal cases, Steven M. Davidoff writes in the Deal Professor column.
Deal Professor »

Force-Placed Insurance Is Scrutinized  |  Regulators have proposed a new rule to address abuses stemming from force-placed insurance, the practice of a mortgage lender purchasing a property insurance policy for a homeowner.
NEW YORK TIMES

U.S. Seeks Tax Data From Liechtenstein  | 
REUTERS

Federal Reserve Faults Citigroup Over Money Laundering Controls  |  The Federal Reserve took aim at Citigroup and the American branch of its Mexican subsidiary over failure to monitor cash transactions for potentially suspicious activity.
DealBook »

Argentina Denied Request for Full-Court Hearing on Debt  |  Argentina has lost an effort to have a full federal appeals court rehear a ruling that would prohibit the nation from treating holders of its restructured debt more favorably than other debt holders, Bloomberg News reports.
BLOOMBERG NEWS

Credit Suisse to Buy Morgan Stanley’s European Private Bank

Zurich,  March 27, 2013 Credit Suisse today announced that it has signed an agreement to acquire Morgan Stanley’s wealth management businesses in Europe, Middle East and Africa (EMEA), excluding Switzerland. The businesses with a total of over USD 13 bn of assets under management are based in the UK, Italy and Dubai, serving predominantly international Ultra High Net Worth (UHNW) and High Net Worth (HNW) clients across Europe.

The transaction complements Credit Suisse’s leading wealth management business in Europe and reinforces the bank’s focus on growing its UHNW and HNW client segments. The acquisition will add scale to the bank’s core growth markets in EMEA including the UK, Italy, Nordics, Russia and the Middle East. In the UK market, the acquisition will significantly increase Credit Suisse’s client base, making the bank a top ten player and leading wealth manager.

The businesses acquired will be integrated into Credit Suisse’s Private Banking & Wealth Management division. The acquisition will offer Morgan Stanley’s private banking clients, relationship managers and other employees an opportunity to benefit from a leading product platform and client offering, broad expertise and the highest quality standards of one of the world’s longest established private banks.

Romeo Lacher, Head of Private Banking for Western Euroe at Credit Suisse, said: “Accelerating our growth momentum in our international markets and in our UHNW client segment remains a key priority for Credit Suisse. Morgan Stanley has developed a strong foothold in wealth management over the past years and its high quality client base and experienced employees perfectly complement our ambitions to grow our share in these areas. We look forward to welcoming Morgan Stanley’s clients and employees to Credit Suisse and working with them to deliver a strong portfolio of products, services and expertise across our private banking platform.”

Credit Suisse combines the strengths and expertise of its Private Banking & Wealth Management, including Asset Management services, and Investment Banking. The unique value proposition of Credit Suisse’s integrated banking services remains a key strength in its client offering. It enables the bank to offer customized and innovative solutions to its clients, especially to UHNW clients, the! fastest growing segment at Credit Suisse.

The acquisition is structured as an asset purchase for the businesses involved. Subject to satisfying certain closing conditions, it is expected to close later this year.

Enquiries

• Media Relations Credit Suisse AG, Tel. +41 844 33 88 44, media.relations@credit-suisse.com
• Investor Relations Credit Suisse AG, Tel. +41 44 333 71 49, investor.relations@credit-suisse.com

Credit Suisse AG Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 47,400 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.

Disclaimer
This document was produced by and the opinions epressed are those of Credit Suisse as of the date of writing and are subject to change. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not necessarily a guide to the future. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.

British Regulator Fines Prudential $45 Million

FSA/PN/031/2013
27 Mar 2013

The Financial Services Authority (FSA) has fined companies in the Prudential Group (Prudential) a total of £30 million for breaching FSA Principles and UKLA Listing Principles. The fines relate to Prudential’s failure to inform the FSA at the appropriate time that it was seeking to acquire AIA, the Asian subsidiary of AIG, in early 2010. The FSA has also censured Tidjane Thiam, Prudential’s Group Chief Executive.

Prudential failed to deal with the FSA in an open and cooperative manner when it was seeking to acquire AIA in early 2010, because it did not inform the FSA of the proposed acquisition until after it had been leaked to the media on 27 February 2010.

Prudential should have informed the FSA at the earliest opportunity to allow the FSA to decide whether to approve or reject the deal on regulatory grounds. It failed to disclose the proposed transaction even when, at a meeting between the FSA and Prudential executives on 12 February 2010, the FSA asked detailed questions about Prudential’s strategy for growth in the Asian market and its plans for raising equity and debt capital.

The proposed transaction’s size and scale would have transformed the Group’s financial position, strategy and risk profile and involved a planned rights issue of £14.5bn, which would have been the biggest ever in the UK. The transaction had the potential to impact upon the stability and confidence of the financial system in the UK and abroad.

In the circumstances the FSA had a regulatory responsibility to conduct an intensive, detailed and thorough scrutiny of the proposed transaction. The failure to inform the FSA was significant because it resulted in the FSA having to consider highly complex issues within a compressed timescale before making a decision as to whether to suspend Prudential’s shares.  It narrowed the FSA’s options in scrutinising the transaction, risked delaying the publication of Prudential’s subsequent rights issue prospectus and hampered the FSA’s ability to assist overseas regulators with their enquiries in relation to the transaction.

The FSA considers that Prudential wrongly allowed its judgement to be overly influenced by its concern about the risk of leaks. This concern meant Prudential failed to give due weight to the importance of complying with its regulatory obligations, even when explicitly advised by its own advisers of the importance of keeping the regulator informed.

As Prudential’s Group Chief Executive, Tidjane Thiam played a significant role, with others, in the decision not to contact the FSA about the proposed acquisition. Therefore, he was knowingly concerned in this breach. In censuring him, the FSA made no finding of lack of fitness and propriety in relation to Tidjane Thiam.

Tracey McDermott, FSA director of enforcement and financial crime, said:

“The FSA expects to have an open and frank relationship with the firms it supervises and with listed companies. It is essential that firms give due consideration to their regulatory obligations at all times. In particular, timely and proactive communication with the FSA is of fundamental importance to the functioning of the regulatory system and the integrity of the market.

“Prudential, led by Thiam as CEO, failed to give due consideration to its obligation to inform the FSA of this transaction, which would have had a huge impact on the group had it gone through. That was a serious error of judgement for which Prudential is paying the price. Firms should be in no doubt as to the importance of early communication with the regulator in respect of transformational transactions to avoid market and investor disruption.

“Thiam has also been censured in relation to his role in this matter. This case should send a clear message to all board members of their collective and individual responsibility for the decisions they make on behalf of their companies.”

The investigation was into past events and does not concern the current conduct of the management of the Prudential Group. The FSA accepts that Prudential did consider their obligations in forming their assessment in respect of informing the regulator.  Therefore, although the FSA considers that the circumstances of these breaches are serious, the FSA does not consider they were reckless or intentional.

1.  Prudential plc was fined £14m for failing to deal with the FSA in an open and co-operative manner, thereby breaching the FSA’s Listing Principle 6.

2. The Prudential Assurance Company Limited (PAC) was fined £16m for failing to deal with the FSA in an open and co-operative manner, thereby breaching Principle 11 of the FSA’s Principles for Businesses.

   Tidjane Thiam was censured for being knowingly concerned in PAC’s breach of Principle 11.

3. Listing Principle 6 provides that: “A listed company must deal with the FSA in an open and co-operative manner.”
4. Principle 11 states “A firm must deal with its regulators in an open and co-operative way, and must disclose to the FSA appropriately anything relating to the firm of which the FSA would reasonably expect notice.”
5. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
6. The FSA will be replaced by the Financial Conduct Authority and Prudential Regulation Authority in 2013 as required by the Financial Services Act 2012.

Regulators Find British Banks Must Raise $38 Billion

LONDON - British banks must raise a combined £25 billion ($38 billion) in new capital by the end of the year to protect against future financial shocks, according to a report from local authorities on Wednesday.

The Bank of England, which takes over the direct supervision of British firms like HSBC and Barclays next week, said the new reserves were needed to protect against losses connected to risky loan portfolios, future regulatory fines and the rejiggering of banks’ bloated balance sheets.

The announcement follows a five-month inquiry by British officials into the financial strength of the country’s banking industry. With the world’s largest financial institutions facing new stringent capital requirements, the Bank of England had been concerned that local firms did not have large enough capital reserves to offset ongoing instability in the world’s financial industry.

Earlier this month, the Federal Reserve also released the results of so-called stress tests of America’s largest banks, which indicated that most big banks had sufficient cash to survive a severe recession and major downturn in financial markets. Citigroup and Bank of America, after disappointing performance the previous year, now appeared to be among the strongest.

British banks are not so lucky.

The reported released on Wednesday said that local banks had overstated their capital reserves by a combined £50 billion, which authorities said would now be adjusted on the firm’s balance sheets. Many of the country’s banks already have enough cash to handle the accounting adjustment, the report said on Wednesday.

The country’s regulators also said that British banks must raise a total of £25 billion in new capital by the end of the year. The Bank of England did not name which firms needed to meet the shortfall.

Local regulators have set a deadline for the end of 2013 for banks to increase their cash reserves to a core Tier 1 capital ratio, a measure of a bank’s ability to weather financial crises, of at least 7 percent under the accounting rules known as Basel III.

Regulators on Wednesday called on banks to increase their cash reserves by raising new equity, selling so-called non-core assets, or restructuring their balance sheets. British policymakers are concerned that firms will cut lending to the local economy as part of their efforts to increase their cash reserves.

As part of increased oversight of British banks, the Prudential Regulatory Authority, a newly-created division of the Bank of England that will have daily regulatory control of the country’s largest firms, will have a direct say in how banks raise the new capital.

The authority’s board is expected to meet over the next couple of weeks to decide which banks will be forced to raise new money. British firms must receive regulatory approval for their capital raising plans.

Attention will likely focus on both the Royal Bank of Scotland and Lloyds Banking Group, which both received multi-billion dollar bailouts during the financial crisis. The part-nationalized banks have recently announced the sale of some of their divisions, including Royal Bank of Scotland’s American operation, Citizens Bank, in a bid to raise new funds.

“We see R.B.S. as most exposed,” Citigroup analysts said in a research note to investors on Wednesday.

Others firms are taking a different route. In November, Barclays issued $3 billion of so-called contingent capital, or CoCo bonds, which converts to equity if a bank’s capital falls below a certain threshold.

The push to increase cash reserves for Britain’s largest banks is part of an effort to prevent future financial crises. Starting in 2014, the Bank of England plans to conduct regular stress tests of the country’s financial institutions to check they have sufficient capital reserves.