Actavis in Preliminary Talks With Warner Chilcott

Actavis is in talks with another drug maker about a potential merger after talks with Valeant Pharmaceuticals fell through.

Actavis, which makes generic drugs, said on Friday that it was in early stage talks with Warner Chilcott, adding that no agreement has been reached. The announcement was welcome news for Actavis investors after the collapse last month of talks over a sale to Valeant.

Shares of Actavis surged 12.2 percent on Friday, closing at $119.86. Warner Chilcott’s stock rose almost 20 percent, to $18.01.

By engaging with Warner Chilcott, Actavis is looking to acquire a smaller company rather than sell itself to a bigger rival. A combination with Valeant would have been one of the biggest health care deals of the year.

Actavis, which is based in Parsippany, N.J., has a market capitalization of $15.3 billion after the rise on Friday. Warner Chilcott, based in Dublin, has a market capitalization of $4.5 billion as of the end of trading on Friday.

Warner Chilcott, which sells branded drugs, explored a possible sale last year, but no deal ultimately materialized.

The biggest shareholder of Warner Chilcott is Fidelity Management and Research, the mutual fund company, with a 10 percent stake as of Thursday, according to Bloomberg data. Fidelity is the second-largest shareholder of Actavis, with a stake of 5.7 percent, the data shows.

2 Key JPMorgan Directors Back Dimon’s Dual Roles

Jamie Dimon has received a spirited defense against calls by some shareholders to split his jobs of chief executive and chairman of JPMorgan Chase.

The lead director of the bank’s board, Lee R. Raymond, and William C. Weldon, the chairman of the board’s corporate governance and nominating committee, released on Friday a letter recommending shareholders vote against a proposal to separate the chief executive and chairman roles and endorsing the re-election of all the directors.

The letter was in response to recommendations by two proxy advisory firms, Institutional Shareholders Services and Glass, Lewis, to split the jobs and to withhold support from certain directors. (Three of the 11 directors in the case of I.S.S., while Glass, Lewis takes aim at six.)

The letter noted that the jobs of chairman and chief executive have been separate in the past and said that the decision to split them should be based on the composition of the board, the chief executive and the circumstances of the time.

“We believe that our current board makeup (with every director other than Mr. Dimon being independent) and strong presiding director function provide appropriate accountability to our shareholders and counterbalance to the combined C.E.O./chair role,” the letter said.

Furthermore, the letter said, “It bears mention that there is little evidentiary support for the proposition that a split of chairman and C.E.O. positions is in all cases good for company performance and beneficial to shareholders.”

The letter said that while the proxy advisers and some shareholders were focusing on a multibillion-dollar trading loss in the company’s chief investment office in London in 2012, the board should be evaluated on the company’s broader performance, which it described as “very strong on a relative and absolute basis.”

In recommending that all the directors be re-elected, the letter cited their experience and continuity:

All of our directors have deep experience in public company governance and with JPMorgan Chase in particular. They are essentially the same directors who helped the Company navigate through the financial crisis, as well as our acquisitions and integrations of Bear Stearns and the assets and certain liabilities of Washington Mutual. That our Board’s membership has been relatively stable when compared to the wholesale changes made by companies that suffered near catastrophic losses and severe capital and liquidity events during the financial crisis is a testament to the work of an engaged, proactive JPMorgan Chase Board, in close collaboration with the Company’s management.

2 Key JPMorgan Directors Back Dimon’s Dual Roles

Jamie Dimon has received a spirited defense against calls by some shareholders to split his jobs of chief executive and chairman of JPMorgan Chase.

The lead director of the bank’s board, Lee R. Raymond, and William C. Weldon, the chairman of the board’s corporate governance and nominating committee, released on Friday a letter recommending shareholders vote against a proposal to separate the chief executive and chairman roles and endorsing the re-election of all the directors.

The letter was in response to recommendations by two proxy advisory firms, Institutional Shareholders Services and Glass, Lewis, to split the jobs and to withhold support from certain directors. (Three of the 11 directors in the case of I.S.S., while Glass, Lewis takes aim at six.)

The letter noted that the jobs of chairman and chief executive have been separate in the past and said that the decision to split them should be based on the composition of the board, the chief executive and the circumstances of the time.

“We believe that our current board makeup (with every director other than Mr. Dimon being independent) and strong presiding director function provide appropriate accountability to our shareholders and counterbalance to the combined C.E.O./chair role,” the letter said.

Furthermore, the letter said, “It bears mention that there is little evidentiary support for the proposition that a split of chairman and C.E.O. positions is in all cases good for company performance and beneficial to shareholders.”

The letter said that while the proxy advisers and some shareholders were focusing on a multibillion-dollar trading loss in the company’s chief investment office in London in 2012, the board should be evaluated on the company’s broader performance, which it described as “very strong on a relative and absolute basis.”

In recommending that all the directors be re-elected, the letter cited their experience and continuity:

All of our directors have deep experience in public company governance and with JPMorgan Chase in particular. They are essentially the same directors who helped the Company navigate through the financial crisis, as well as our acquisitions and integrations of Bear Stearns and the assets and certain liabilities of Washington Mutual. That our Board’s membership has been relatively stable when compared to the wholesale changes made by companies that suffered near catastrophic losses and severe capital and liquidity events during the financial crisis is a testament to the work of an engaged, proactive JPMorgan Chase Board, in close collaboration with the Company’s management.

2 Key JPMorgan Directors Back Dimon’s Dual Roles

Jamie Dimon has received a spirited defense against calls by some shareholders to split his jobs of chief executive and chairman of JPMorgan Chase.

The lead director of the bank’s board, Lee R. Raymond, and William C. Weldon, the chairman of the board’s corporate governance and nominating committee, released on Friday a letter recommending shareholders vote against a proposal to separate the chief executive and chairman roles and endorsing the re-election of all the directors.

The letter was in response to recommendations by two proxy advisory firms, Institutional Shareholders Services and Glass, Lewis, to split the jobs and to withhold support from certain directors. (Three of the 11 directors in the case of I.S.S., while Glass, Lewis takes aim at six.)

The letter noted that the jobs of chairman and chief executive have been separate in the past and said that the decision to split them should be based on the composition of the board, the chief executive and the circumstances of the time.

“We believe that our current board makeup (with every director other than Mr. Dimon being independent) and strong presiding director function provide appropriate accountability to our shareholders and counterbalance to the combined C.E.O./chair role,” the letter said.

Furthermore, the letter said, “It bears mention that there is little evidentiary support for the proposition that a split of chairman and C.E.O. positions is in all cases good for company performance and beneficial to shareholders.”

The letter said that while the proxy advisers and some shareholders were focusing on a multibillion-dollar trading loss in the company’s chief investment office in London in 2012, the board should be evaluated on the company’s broader performance, which it described as “very strong on a relative and absolute basis.”

In recommending that all the directors be re-elected, the letter cited their experience and continuity:

All of our directors have deep experience in public company governance and with JPMorgan Chase in particular. They are essentially the same directors who helped the Company navigate through the financial crisis, as well as our acquisitions and integrations of Bear Stearns and the assets and certain liabilities of Washington Mutual. That our Board’s membership has been relatively stable when compared to the wholesale changes made by companies that suffered near catastrophic losses and severe capital and liquidity events during the financial crisis is a testament to the work of an engaged, proactive JPMorgan Chase Board, in close collaboration with the Company’s management.

2 Key JPMorgan Directors Back Dimon’s Dual Roles

Jamie Dimon has received a spirited defense against calls by some shareholders to split his jobs of chief executive and chairman of JPMorgan Chase.

The lead director of the bank’s board, Lee R. Raymond, and William C. Weldon, the chairman of the board’s corporate governance and nominating committee, released on Friday a letter recommending shareholders vote against a proposal to separate the chief executive and chairman roles and endorsing the re-election of all the directors.

The letter was in response to recommendations by two proxy advisory firms, Institutional Shareholders Services and Glass, Lewis, to split the jobs and to withhold support from certain directors. (Three of the 11 directors in the case of I.S.S., while Glass, Lewis takes aim at six.)

The letter noted that the jobs of chairman and chief executive have been separate in the past and said that the decision to split them should be based on the composition of the board, the chief executive and the circumstances of the time.

“We believe that our current board makeup (with every director other than Mr. Dimon being independent) and strong presiding director function provide appropriate accountability to our shareholders and counterbalance to the combined C.E.O./chair role,” the letter said.

Furthermore, the letter said, “It bears mention that there is little evidentiary support for the proposition that a split of chairman and C.E.O. positions is in all cases good for company performance and beneficial to shareholders.”

The letter said that while the proxy advisers and some shareholders were focusing on a multibillion-dollar trading loss in the company’s chief investment office in London in 2012, the board should be evaluated on the company’s broader performance, which it described as “very strong on a relative and absolute basis.”

In recommending that all the directors be re-elected, the letter cited their experience and continuity:

All of our directors have deep experience in public company governance and with JPMorgan Chase in particular. They are essentially the same directors who helped the Company navigate through the financial crisis, as well as our acquisitions and integrations of Bear Stearns and the assets and certain liabilities of Washington Mutual. That our Board’s membership has been relatively stable when compared to the wholesale changes made by companies that suffered near catastrophic losses and severe capital and liquidity events during the financial crisis is a testament to the work of an engaged, proactive JPMorgan Chase Board, in close collaboration with the Company’s management.

What Lies Ahead for Dell After Icahn’s New Demand

The new proposal by Carl C. Icahn and Southeastern Asset Management for Dell presents some new complications that a special committee of the computer company’s board must consider.

But in some ways, it simplifies matters a bit.

In the eyes of the special committee, the offer put forth by Mr. Icahn may actually be a step backward from his last proposal. During Dell’s go-shop process, meant to solicit higher-priced alternatives to a $24.4 billion buyout by Michael S. Dell and the investment firm Silver Lake, the billionaire offered to pay $15 a share for 58 percent of the company.

Now, Mr. Icahn and Southeastern are demanding that Dell pay out $12 a share to investors, either in cash or in additional stock. The two shareholders, who together own more than 11 percent of the company, would take stock, and are seeking to have the support of 20 percent of the company’s shares.

It is closer to what Mr. Icahn had proposed when he first surfaced as a big shareholder in Dell: a special dividend of $9 a share.

According to the special committee’s calculations, that would mean a group led by Mr. Icahn and Southeastern would ultimately control about two-thirds of Dell.

The offer essentially amounts to a big. one-time special dividend. The committee said in a statement that it was reviewing the proposal.

But it isn’t clear whether those directors will ultimately view the new demand by Mr. Icahn as a superior proposal, since he technically doesn’t have to put any money up and isn’t seeking to buy control outright. In securities filings, the committee said that it had considered alternatives to a sale of the company, including a so-called leveraged recapitalization similar to what the Icahn-Southeastern group has proposed â€" but deemed them inferior to Mr. Dell’s offer.

Mr. Icahn hasn’t formally laid out how his plan would be financed, though he said on CNBC that he would be willing to offer “a couple of billion dollars” as bridge financing and had an informal commitment of $1.6 billion from the Jefferies Group.

Should the special committee turn down Mr. Icahn and Southeastern, the two investors will seek to persuade fellow shareholders to vote down Mr. Dell’s offer. And then they will seek to replace the company’s entire board at an annual investor meeting to follow soon afterward. (While Mr. Icahn has called upon Dell to combine the two votes in a single meeting, the board is unlikely to agree, and it’s unclear how he can force such a move.)

Meeting dates haven’t been set yet for either a vote on the deal or for the annual meeting. But the former is likely to be scheduled sometime in July, and if necessary the latter would be held sometime in August, according to a person briefed on the matter.

Week in Review: Big Names and Big Money in Las Vegas

Hedge fund manager and S.E.C. reach deal. | JPMorgan sued over credit card debt cases. | Enron’s Skilling strikes a deal for a shorter prison sentence. | Hedge fund impresario plays host in Las Vegas. | Errors afflict more checks issued to aid homeowners. | Small firm could turn the vote on Jamie Dimon. | New York investigates advances on pensions. | A humbled Kleiner Perkins adjusts its strategy. | Two big banks face suits in mortgage pact abuses. | Andrew Ross Sorkin says that for Warren Buffett, the past isn’t always a prologue. | A call for new blood on the JPMorgan board.

A look back on our reporting of the past week’s highs and lows in finance.

True Religion Jeans to Be Sold to Private Equity Firm | The designer denim company agreed to be acquired by TowerBrook Capital Partners for about $835 million, underscoring the rise of premium-priced jeans as a high-fashion staple and status symbol. DealBook »

Carl Icahn Proposes Rival Bid for Dell | The billionaire and Southeastern Asset Management, two of the struggling computer maker’s biggest shareholders, seek to challenge a $24.4 billion takeover that they have criticized as “the great giveaway.” DealBook »

JPMorgan Sued Over Credit Card Debt Cases | California’s top law enforcement official accused JPMorgan Chase of flooding the state’s courts with questionable lawsuits to collect overdue credit card debt. DealBook »

Small Firm Could Turn the Vote on Dimon | Governance for Owners, a London-based firm that is virtually unknown on Wall Street, has been tasked with voting the shares of JPMorgan Chase’s largest shareholder. DealBook »

Dealbook Column: For Buffett, the Past Isn’t Always Prologue | Andrew Ross Sorkin says that an investor invoked a predecessor of Warren E. Buffett when he questioned the Berkshire Hathaway chief about the company’s future. DealBook »

A Call for New Blood on the JPMorgan Board | Institutional Shareholder Services says three directors on the risk policy committee lack risk management backgrounds. DealBook »

Hedge Fund Manager and S.E.C. Reach Deal | When federal regulators sued Philip A. Falcone last summer, they claimed his actions “read like the final exam in a graduate school course in how to operate a hedge fund unlawfully.” DealBook »

SAC Is Said to Extend a Deadline for Clients | At the height of his powers, Steven A. Cohen turned away investors. These days, he is fighting to keep them. DealBook »

Hedge Fund Impresario Plays Host In Las Vegas | In an industry known for reclusive traders and math geeks, Wall Street’s Anthony Scaramucci is a P. T. Barnum in a Ferragamo tie. DealBook »

Advertising: When Madison Avenue Went Public | It’s not often that a popular television show illustrates corporate finance. But the most recent episode of “Mad Men” provided [SPOILER ALERT!] a lesson in advertising agency deal-making, circa 1968. DealBook »

Bulking Up on Bankers for Hong Kong I.P.O.’s | Faced with a declining stock market in Hong Kong, companies are hiring armies of underwriters to market new shares. DealBook »

A Humbled Kleiner Perkins Adjusts Its Strategy | After big hits in the dot-com boom, Kleiner Perkins has been sideswiped by a series of lackluster bets in green technology and missed chances in social media. DealBook »

Enron’s Skilling Strikes a Deal for a Shorter Prison Sentence | Under federal prison rules, Jeffrey K. Skilling â€" who had been sentenced to 24 years and 4 months â€" could leave prison as soon as 2017. DealBook »

Errors Afflict More Checks Issued to Aid Homeowners | Almost 100,000 homeowners got checks for less than they were owed under the settlement with the nation’s biggest banks. DealBook »

New York Investigates Advances on Pensions | The state’s top banking regulator has begun an investigation into the lenders that woo retirees to sign over their monthly checks in return for cash. DealBook »

Deal Professor: Hasty Arrangements in Depths of Crisis Return to Haunt Chrysler | Steven M. Davidoff says that in a fight over the value of Chrysler, Fiat and the United Automobile Workers union are $6 billion apart. DealBook »

2 Big Banks Face Suits in Mortgage Pact Abuse | New York says that Bank of America and Wells Fargo are violating the terms of a big foreclosure settlement. DealBook »

After Years of Battling, Bank of America and MBIA Settle Mortgage Dispute | A $1.7 billion deal ends a legal dispute over mortgage-backed securities. DealBook »

Jeweler Is Charged in KPMG Insider Case | Bryan Shaw, who has been helping prosecutors build a case against Scott London, a former KPMG executive, was formally charged. DealBook »

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Hey Soul Sister (And or Hedge Fund Titan) | Train performed at the Wall Street schmooze-fest in Sin City known as the SALT conference. DealBook »

A Strong Response to Paying Board Nominees

The stakes just got higher for shareholder activists.

Responding to hedge funds’ efforts to give incentives to nominees to company boards, the law firm Wachtell, Lipton, Rosen & Katz in essence came over the top on Thursday in a memo distributed to clients. Signed by the leading deal lawyer Martin Lipton and seven other Wachtell partners, the memo proposes that company boards consider adopting a bylaw prohibiting shareholder activists from compensating director nominees. Excluded from this prohibition are out-of-pocket expenses and payments for indemnification.

Wachtell’s proposal takes square aim at a topic I recently wrote about: the payment by hedge funds of large amounts of incentive compensation to director nominees. The issue has come to light because of two recent activist situations. Paul Singer’s Elliott Management has nominated five directors to the 14-member board of Hess while Barry Rosenstein’s Jana Partners recently lost a contest to elect five directors to Agrium’s 12-member board. In both cases, the hedge funds’ director nominees were provided with incentive compensation linked to the hedge funds’ investments that had the potential to pay them millions of dollars.

Since then a mini-debate has broken out online among law professors over whether these payments are legal or appropriate. Wachtell, which has done battle before with academics over their views in support of shareholders, is now citing two academics who are on its side.

The first is John C. Coffee Jr., the Columbia Law School professor, who stated that these “third-party bonuses create the wrong incentives, fragment the board and imply a shift toward both the short-term and higher risk.”

Meanwhile, Professor Stephen Bainbridge of the UCLA School of Law has written extensively on this subject and summed up his feelings by stating that “if this nonsense is not illegal, it ought to be.”

On the other side, several equally well-respected academics have signed off on these arrangements, even allowing themselves to be quoted in Elliot’s materials. In this corner we have Professor Randall Thomas of Vanderbilt Law School who said this approach made sense because it “lends itself to allowing these nominees, if elected, to focus on independent decision-making and fulfilling their fiduciary obligations on behalf of shareholders.” Another professor quoted in the materials is Larry Cunningham of George Washington University Law School who later argued that all of this “is intended to align the interests of those directors with those of the company’s shareholders.”

As you might suspect with all of this debate, many issues are being raised about whether these directors can be deemed independent, whether they have different incentives and whether this whole arrangement is even appropriate. Another law professor, Usha Rodrigues of the University of Georgia Law School, offers her own views on this while summarizing the state of play.

But as before and without wading into this feeding frenzy, I am a bit wary of these arrangements. I can see the need that hedge funds have to find director nominees and to attract the most qualified they need to be compensated. This compensation is all disclosed, so shareholders and other directors can monitor the situation and refuse to re-elect directors if the payment turns out to be inappropriate.

But I also have a “here we go again” view. Are we now going to do for director compensation what we did for chief executive compensation and spiral it all higher? The assumption that aligning incentives must be a good thing brings to mind that line from Whitney Houston that “the children are the future.” Of course they are the future, but it doesn’t really mean anything more than that. (Full disclosure: I am not only an academic, I have on occasion listened to Whitney Houston.) Another way to look at this is to examine what happened at Apple. Does anyone think that Apple would not have performed as well if it had paid Al Gore a couple of million dollars to be a director instead of tens of millions of dollars?

Still, though I am wary about incentive compensation for directors coming directly from hedge funds, I think that the issue is worth discussing and examining. And let’s be clear, in the case of Hess I believe the real issue is the company’s extremely poor relative performance over the years and which slate of directors is best situated to take the company forward.

But while making good points about the flaws of this compensation, Mr. Lipton and the lawyers at Wachtell aim to shut down the entire practice. This includes not only the potentially multimillion-dollar payments that Elliot and Jana agreed to, but the common practice of “tipping” hedge fund director nominees anywhere from $15,000 to $150,000 for just agreeing to be nominated. In fact, this type of tipping is really the more common practice than the most recent incentive compensation.

If Wachtell’s bylaw is adopted widely, and I suspect it will see some momentum, directors will have to agree to be nominated out of the goodness of their hearts. In other words, the bylaw not only strikes at the incentive compensation that is being the debated but the more common “tipping” arrangements that are not.

In fairness, Wachtell states in the memo that this bylaw will not stop directors from receiving compensation if they are elected or the hedge fund from paying them if they are not. But if you read the proposed bylaw, it is so broadly worded that any arrangements to compensate director nominees who do not get elected after the fact would be prohibited.
Moreover, the bylaw continues another worrying trend in corporate law. The use of bylaw amendments by boards to shut down, or severely inhibit, shareholder activism. Most recently, Commonwealth REIT successfully defended in a Maryland court the adoption of a bylaw requiring arbitration of shareholder disputes. The net effect was to halt for an indeterminate period a shareholder activist campaign by .

In this case, Wachtell’s bylaw could chill shareholder activist activity by making it harder to obtain qualified director nominees. Again, it may be that this compensation should be regulated or monitored, but wouldn’t it be better for this to be done in consultation with shareholders rather than unilaterally by the board. Institutional Shareholder Services, the large and influential proxy adviser, for example, has yet to take a position on the issue, which has just burst on the scene.

So while Wachtell is certainly raising the stakes in response to activists, and should be credited with raising good points that need to be addressed about this type of compensation, it still may be too much too early.

A Social Media View of the Davos of Hedge Funds

A look at some of the social media dispatches from SALT conference in Las Vegas. The SkyBridge Alternatives Conference brings together more than 1,800 wealthy investors and hedge funds for four days of conferences, concerts and revelry.

Peter Lattman of DealBook called the Anthony Scaramucci, the host of the event, a PT Barnum in a Ferragamo tie. While the event brings together senior money managers and Washington power brokers, it is also highlights the bacchanalia which Wall Street has tried to avoid since the financial crisis.

[View the story "SALT Hedge Fund Conference in Las Vegas" on Storify]

True Religion to Be Sold to TowerBrook for $835 Million

It is a high-priced deal for high-priced jeans.

True Religion Apparel, the designer denim company, announced Friday that it had agreed to be acquired by the private equity firm TowerBrook Capital Partners for about $835 million.

A deal for True Religion has been expected since October, when the company announced that it was evaluating a possible sale of the company. TowerBrook will pay $32 a share in cash, representing a roughly 9 percent premium to where the shares closed on Thursday.

The purchase underscores the rise of premium-priced jeans as a high-fashion staple and status symbol. Over the past decade, a variety of brands, including Paper Denim & Cloth, Seven for All Mankind and Citizens of Humanity, have fueled the frenzy for expensive denim, hawking their wares for upward of $300.

True Religion, which, like many of its competitors is based in Southern California, was among the fastest growing of these brands, fueling the demand for the perfect pair of frayed, ripped, or faded jeans. It justifies its premium prices by using high-quality denim and having workers hand finish the pants with unique stitching or patterns.

The company was started in 2002 by Jeffrey Lubell, who as a teenager growing up in New York would bleach bell-bottoms and embellish his favorite pairs of jeans with leather and denim patches, according to its Web site. He says of the company’s name: “There’s only one real religion and that’s people. And all the people in the world wear jeans.”

True Religion started a retail business in 2005, and now operates 124 stores in the United States and 31 locations internationally, as of March 31. In recent years, the company’s growth has slowed as cash-strapped consumers have shied away from its pricey products.

TowerBrook, the private equity firm that is acquiring True Religion, has experience owning upscale brands. The company’s portfolio once included the luxury shoe maker Jimmy Choo, which it sold to German fashion company Labelux.

TowerBrook, which was spun out from the investment firm Soros Fund Management in 2005, also has investments in Rave Holdings, the movie theater chain, and the St. Louis Blues hockey franchise.

Deutsche Bank, Jefferies Group and UBS served as financial advisers to TowerBrook, while Wachtell, Lipton, Rosen & Katz acted as legal counsel. Guggenheim Securities advised True Religion, and Greenberg Traurig provided legal advice.

Warburg Pincus Closes Latest Fund at $11.2 Billion

Warburg Pincus said on Friday that it had closed its latest fund at $11.2 billion, in one of the biggest private equity fund-raising rounds since the end of the financial crisis.

The fund, Warburg Pincus Private Equity XI, will be earmarked for deals across an array of industries, including energy, financial services, technology and media. The final close came one year after the fund’s first close.

“We are pleased to announce our final close,” Charles R. Kaye, a co-president of the firm, said in a statement. “This successful fundraise, in a challenging environment, was driven by strong support from both existing and new investors. We see this success as a clear endorsement by our investors of our global growth investing model.”

Warburg Pincus raised $15 billion for its last fund in 2008, as conditions for private equity deal-making began to crumble.

It began raising money for its 11th fund two years ago. Since then, the landscape for buyouts has improved considerably, with cheap debt financing and improving stock markets making it easier to buy and sell companies.

Warburg Pincus has benefited. It paid out $6.2 billion to its limited partners last year and another $3 billion in the first quarter this year alone, in large part by selling off pieces of portfolio companies like Ziggo, a Dutch cable-TV company.

“Our strong track record and continuing ability to both make and exit investments that generate attractive rates of return, regardless of economic cycle, is a testament to the firm’s focus on building durable businesses that deliver value over the long term,” Joseph P. Landy, Warburg Pincus’s other co-president, said.

A Fresh Challenge to Dell Buyout

ICAHN AND SOUTHEASTERN READY RIVAL BID FOR DELL  |  The billionaire Carl C. Icahn and Southeastern Asset Management, two of the biggest shareholders of Dell, plan to bid for the computer maker in a last-ditch effort to stop what they call “the great giveaway,” the $24.4 billion management buyout led by Michael S. Dell, the company’s founder, and the private equity firm Silver Lake, Andrew Ross Sorkin and Michael J. de la Merced report in DealBook.

Unlike the bid currently on the table, which would pay shareholders $13.65 a share in cash, the bid by Mr. Icahn and Southeastern, disclosed in a letter to Dell’s board Thursday night, would pay shareholders about $12 a share either in cash or in additional shares of the company, leaving a portion of Dell publicly traded. If the special committee of Dell’s board refuses to budge, the two investors, which together owned more than 11 percent of Dell’s shares as of late March, have threatened a legal battle. “We are often cynical about corporate boards, but this board has brought that cynicism to new heights,” their letter to Dell’s board said. “This company has suffered long enough from very wrongheaded decisions made by the board and its management.”

By offering to give shareholders a chance to remain investors in Dell, the shareholders argue their bid is worth more than the offer on the table. Dell’s stock closed Thursday at $13.32 and rose modestly in trading after hours.

CALIFORNIA SUES JPMORGAN OVER CREDIT CARD CASES  |  California’s attorney general accused JPMorgan Chase on Thursday of flooding the state’s courts with questionable lawsuits to collect overdue credit card debt, claiming that the bank “committed debt collection abuses against tens of thousands of California consumers,” Jessica Silver-Greenberg reports in DealBook. From January 2008 to April 2011, JPMorgan filed thousands of lawsuits each month to collect such debt, claims the attorney general, Kamala D. Harris. The bank took shortcuts like relying on court documents that were not reviewed for accuracy, Ms. Harris says. “To maintain this breakneck pace,” according to the lawsuit, JPMorgan relied on “unlawful practices.”

Ms. Silver-Greenberg writes: “The accusations outlined in the lawsuit echo problems â€" from questionable documents used in lawsuits to incomplete records â€" that plagued the foreclosure process and prompted a multibillion-dollar settlement with big banks. One hallmark of the foreclosure crisis, robosigning, in which banks worked through mountains of legal documents without reviewing them for accuracy, is at the center of Ms. Harris’s lawsuit against JPMorgan.”

SAC’S FIGHT TO KEEP CLIENTS  |  The giant hedge fund run by Steven A. Cohen has extended a deadline for investors to decide whether to withdraw money, pushing the date to June 3 from May 16, DealBook’s Peter Lattman reports, citing a person briefed on the matter. “While only a couple of weeks, the extension hints at the tense behind-the-scenes discussions between SAC and its investors over the firm’s central role in the government’s broad crackdown on insider trading,” Mr. Lattman writes. “One possible reason for granting the additional time is that SAC investors are awaiting the resolution of a civil action brought against SAC by the Securities and Exchange Commission.”

ON THE AGENDA  |  Ben Bernanke, the Federal Reserve chairman, gives the keynote address at a conference of the Chicago Fed. Jacob Lew, the secretary of the Treasury, is on CNBC at 5:30 a.m. The banking analyst Michael Mayo is on Bloomberg TV at 7:45 a.m.

FALCONE AND S.E.C. REACH DEAL  |  The Securities and Exchange Commission appears to have softened its tone nearly a year after suing Philip A. Falcone. The high-flying hedge fund manager, who was accused last summer of manipulating the market, using hedge fund assets to pay his own taxes and “secretly” favoring select customers at the expense of others, disclosed in a filing on Thursday that he had “reached an agreement in principle” to settle the two cases with the S.E.C. DealBook’s Ben Protess writes: “The settlement, which came after a federal judge in New York questioned aspects of the cases, would be a moral victory of sorts for Mr. Falcone, who has stubbornly resisted a deal for more than a year. It might also reignite concerns that the S.E.C.’s results sometimes fall short of its ambitions.”

Mergers & Acquisitions »

Facebook Said to Be in Talks Over Buying Waze  |  If Facebook were to buy Waze, a mobile navigation service, it would give the social network the ability to better deliver locally tailored ads and content to its users, The New York Times reports.
NEW YORK TIMES

Barnes & Noble Shares Jump on Sign of Microsoft Interest in Nook  |  Microsoft is said to have offered to take over the Nook unit’s e-books and devices operations, but it is unclear whether there are any current talks on a possible deal.
DealBook »

Bank of America to Sell Mortgage Servicing Rights to KeyBank  |  Bank of America is selling a portfolio of commercial mortgage servicing rights valued at about $110 billion for an undisclosed amount, Reuters reports.
REUTERS

Ares Management Said to Be Buying AREA Property Partners  |  The Wall Street Journal reports: “Ares Management, a Los Angeles-based investment firm with about $60 billion under management, is acquiring AREA Property Partners, a New York-based real estate investor, according to people briefed on the matter.”
WALL STREET JOURNAL

Dish’s Results Hint at Trouble for Sprint Bid  |  Dish Network’s pay-TV pain signals trouble for its $25.5 billion bid for Sprint Nextel, Robert Cyran of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS

Cloud Storage Company Box to Buy Crocodoc  | 
REUTERS

INVESTMENT BANKING »

After Complaint, Bloomberg Restricts Journalists’ Access to Customer Data  |  Goldman Sachs raised concerns that journalists at Bloomberg News had access to log-in information about customers of the terminal service, leading Bloomberg L.P. to restrict its journalists’ access to such data, The Wall Street Journal reports.
WALL STREET JOURNAL

Goldman’s Cohn Can’t Escape the ‘Squid’  |  Gary D. Cohn, the president and chief operating officer of Goldman Sachs, said Wall Street still faced a challenge in explaining its role in the lives of everyday people.
DealBook »

Margin Debt Is Back in Style  |  “Small investors are borrowing against their portfolios at a rapid clip, reaching levels of debt not seen since the financial crisis,” The Wall Street Journal writes.
WALL STREET JOURNAL

With Wall Street Support, a Charity Grows Up  |  The financier Leon D. Black and his wife, Debra, formed an organization to help raise money to fight skin cancer after she was successfully treated for the disease.
DealBook »

R.B.S. Names Chief of Citizens Financial  |  Bruce Van Saun, Royal Bank of Scotland’s finance director, has been appointed chief executive of the Citizens Financial Group, the company’s United States unit, two years ahead of its planned initial public offering.
DealBook »

PRIVATE EQUITY »

Extreme Reach, Video Advertising Company, Attracts $50 Million  |  The growth equity firm Spectrum Equity invested “in excess of” $50 million for a minority stake in Extreme Reach, which offers a video platform for advertising.
BOSTON GLOBE

Carlyle’s First-Quarter Profit Barely Budged  |  The Carlyle Group’s earnings rose less than 1 percent in the first quarter, the firm reported on Thursday. The small gain came largely thanks to a rise in the value of its investments.
DealBook »

HEDGE FUNDS »

What Happens in Vegas for Hedge Funds  |  The SALT hedge fund conference is an ideas conference, a Wall Street bacchanal and a power-networking event. It is also a place to absorb the musings of senior Wall Street money managers and Washington politicos.
DealBook »

Paulson Puts Hotel Unit in Bankruptcy  |  Reuters reports: “Billionaire investor John Paulson has put a real estate unit of his hedge fund into bankruptcy to thwart a lawsuit by a lender that claims it is owed tens of millions of dollars related to the recent sale of several luxury resorts.”
REUTERS

I.P.O./OFFERINGS »

Sprouts, Grocer Backed by Apollo, Files for I.P.O.  |  Sprouts Farmers Markets, an organic grocer that was acquired by the private equity firm Apollo Global Management in 2011, is aiming to raise up to $300 million in an I.P.O.
REUTERS

VENTURE CAPITAL »

Salesforce Acquires Clipboard, Bookmarking Service  |  “The deal was worth between $10 million and $20 million, according to a closely involved source,” AllThingsD reports.
ALLTHINGSD

LEGAL/REGULATORY »

Judging by Bond Market, Giant Banks Seen as Too Big to Fail  |  President Obama said in 2010 that the Dodd-Frank law would put an end to taxpayer bailouts of Wall Street. But “investors, it turns out, don’t believe that,” Bob Ivry reports in Bloomberg Markets magazine. “The people who lend money to the largest banks are betting that Uncle Sam will toss a lifeline to a giant should it stumble, according to a study by Deniz Anginer, a World Bank financial economist.”
BLOOMBERG MARKETS

Fannie Mae to Pay $59.4 Billion to Treasury  |  The payment is coming after Fannie Mae reported a record quarterly profit.
BLOOMBERG NEWS

Investors in Bankia to Sue Bank of Spain  |  The New York Times reports: “A group of investors plans to file an unusual lawsuit against the Bank of Spain, accusing the central bank of failing to warn investors of the problems at Bankia, a giant mortgage lender whose downfall helped set off a banking crisis that obliged Spain to seek a bailout from Europe.”
NEW YORK TIMES

Japan’s Pro-Inflation Policies Show Signs of Helping  |  “In the last few months, the nation’s new prime minister, Shinzo Abe, has pushed policy makers and other officials to take bold steps to revive one of the world’s largest economies. Their handiwork was evident on Thursday when the Japanese yen hit 100 to the dollar for the first time in four years,” The New York Times writes.
NEW YORK TIMES

Bank of England Keeps Benchmark Rate Unchanged  | 
NEW YORK TIMES

Hess to Split Chairman and C.E.O. Jobs

The Hess Corporation said on Friday that it planned to separate its chairman and chief executive roles, hoping to blunt a months-long campaign by an activist investor and assuage restive shareholders.

If its slate of directors is approved at the company’s annual meeting next week, Hess will appoint John Krenicki, a former vice chairman of General Electric, as its nonexecutive chairman. John B. Hess, the son of the company’s founder, would remain chief executive.

The move is meant to combat efforts by Elliott Management to get its five nominees on the board, part of the hedge fund’s efforts to shake up what it calls an undisciplined operator with poor oversight. Earlier this year, Hess itself replaced several of its directors, adding individuals with more experience in the oil and gas industry.

That still wasn’t enough to assuage critics like Elliott and proxy advisory firms like Institutional Shareholder Services and Glass Lewis, which each recommended that shareholders vote for the hedge fund’s nominees.

Hess said that it had decided to split the two roles after consulting with shareholders, many of whom it said supported the move. Separating the roles at the top has increasingly become a move  demanded by shareholders, including at companies like JPMorgan Chase.

The driller added that it intended to continue strengthening the board’s oversight of management.

“There is tremendous value in Hess, and management is executing on a clear and measurable plan that is already unlocking that value,” Mr. Krenicki said in a statement. “Many shareholders with whom my fellow nominees and I have met over the past few months confirm and support this view.”

Chief of British Lender Quits

LONDON - Barry Tootell, chief executive of the British lender Co-Operative Banking Group, resigned on Friday, less than a month after the firm failed to acquire part of the branch network of local rival Lloyds Banking Group.

Mr. Tootell’s resignation also comes as the credit rating agency Moody’s Investors Service cut Co-Operative Bank’s rating to junk status on fears that the British bank may suffer future losses from a growing level of delinquent loans.

The ratings agency said that Co-Operative Bank’s core Tier 1 ratio, a measure of a bank’s ability to weather financial shocks, was significantly lower than its British competitors, and the bank also remained exposed to faltering real estate loans.

“We are disappointed by the ratings downgrade announced by Moody’s,” Co-Operative Bank said in a statement on Friday. “We have a strong funding profile and high levels of liquidity, which are significantly above the regulatory requirements.”

The bank, however, acknowledged that it needed to raise more capital. British regulators announced earlier this year that the country’s largest financial institutions needed to increase their funding reserves by a combined £25 billion ($38 billion) by the end of the year.

The Co-Operative Bank has been on the backfoot since it announced last month
that it would not buy around about 630 branches from Lloyds in a potential deal, which had dragged on for more than a year.

The British lender said it had walked away from the acquisition because of weakness in the local economy that would make it difficult to generate suitable returns, according to Peter Marks, the outgoing chief executive of the Co-operative Group, which operates a range of businesses including supermarkets and funeral homes.

Mr. Tootell, head of Co-Operative’s banking unit, will be replaced by Rod Bulmer, who joined the bank six years ago after holding a senior position at the British division of Spanish bank Santander.

Chief of British Lender Quits

LONDON - Barry Tootell, chief executive of the British lender Co-Operative Banking Group, resigned on Friday, less than a month after the firm failed to acquire part of the branch network of local rival Lloyds Banking Group.

Mr. Tootell’s resignation also comes as the credit rating agency Moody’s Investors Service cut Co-Operative Bank’s rating to junk status on fears that the British bank may suffer future losses from a growing level of delinquent loans.

The ratings agency said that Co-Operative Bank’s core Tier 1 ratio, a measure of a bank’s ability to weather financial shocks, was significantly lower than its British competitors, and the bank also remained exposed to faltering real estate loans.

“We are disappointed by the ratings downgrade announced by Moody’s,” Co-Operative Bank said in a statement on Friday. “We have a strong funding profile and high levels of liquidity, which are significantly above the regulatory requirements.”

The bank, however, acknowledged that it needed to raise more capital. British regulators announced earlier this year that the country’s largest financial institutions needed to increase their funding reserves by a combined £25 billion ($38 billion) by the end of the year.

The Co-Operative Bank has been on the backfoot since it announced last month
that it would not buy around about 630 branches from Lloyds in a potential deal, which had dragged on for more than a year.

The British lender said it had walked away from the acquisition because of weakness in the local economy that would make it difficult to generate suitable returns, according to Peter Marks, the outgoing chief executive of the Co-operative Group, which operates a range of businesses including supermarkets and funeral homes.

Mr. Tootell, head of Co-Operative’s banking unit, will be replaced by Rod Bulmer, who joined the bank six years ago after holding a senior position at the British division of Spanish bank Santander.