Goldman Sachs to Finance Early Education Program

Goldman Sachs is making its second foray into an experimental method of financing social services, lending up to $4.6 million for a childhood education program in Salt Lake City.

This “social impact bond,” in which Goldman stands to make money if the program is successful but will lose its investment if it fails, will support a preschool program intended to reduce the need for special education and remedial services. The upshot, in theory, is that taxpayers will not have to bear the upfront cost of the program.

Goldman is being joined in this effort by the Chicago investor J.B. Pritzker, who is providing a subordinate loan of up to $2.4 million, bringing the total financing to $7 million. The loans will be announced at an event in Chicago on Thursday.

“Social impact bonds are an entirely new way of financing things that have traditionally been paid for either through philanthropy or by taxpayer dollars,” said Alicia Glen, head of Goldman’s urban investment group.

Though the effectiveness of this type of financing remains unproved, it has gained a prominent adherent in New York City, which allowed Goldman to invest nearly $10 million in a jail program last year. The city was the first in the United States to test social impact bonds.

For Goldman, which could gain a public-relations benefit from the investment, Salt Lake City has become an important business center. The city is home to Goldman’s second-largest office in the United States, and the Wall Street firm held its annual meeting there in May.

The loans are going to the United Way of Salt Lake, which oversees the Utah High Quality Preschool Program. The investment’s success will be measured by the level of cost savings when children do not need to use special education services, which are financed by the state.

The loans carry an interest rate of 5 percent, which is paid along with the principal if the program is successful. In the best case, Goldman and Mr. Pritzker would make additional “success fees.”

“We’re creating something sustainable that has a focus on returns,” Mr. Prtizker said. “This titillates my interest in business and engages me.”

This type of financing, which was first used in Britain in 2010, has raised eyebrows. Data on the New York investment, focused on men incarcerated at Rikers Island, is not yet available.

“I think it’s distressing the degree to which a new industry has been built around social impact bonds before it’s ever been proven viable,” said Mark Rosenman, a professor emeritus at Union Institute and University in Cincinnati. “We ought to work it to fruition in a couple places before we start promoting it.”

Still, governments around the country are beginning to embrace social impact bonds. Six state and local governments were chosen this week by the Rockefeller Foundation and the Harvard Kennedy School’s social impact bond technical assistance lab to receive help in developing such programs after 28 governments applied.

Janis Dubno, a senior policy analyst at the nonprofit Voices for Utah Children, who came up with the idea for the Salt Lake City transaction, said the intention was to shift “resources from remediation to prevention.”

The deal is “a proof-of-concept transaction,” Ms. Dubno, a former investment banker, said. “What we would like to do is demonstrate that this kind of structure can be put into place.”

Executive Covets Goldman Seat Where a Friend Snugly Sits

Inside Goldman Sachs, Gary D. Cohn is the man who is waiting â€" and waiting â€" to be king.

He has long been considered the heir apparent of Lloyd C. Blankfein, who has been the chairman and chief executive of the elite Wall Street firm since 2006. But Mr. Blankfein has shown few signs that he is ready to step aside, Goldman insiders say.

After steering the firm through the financial crisis and surviving a firestorm over allegations that Goldman had bet against its own clients, Mr. Blankfein, 58, now appears to be enjoying himself. He has become an elder statesman of finance. But unlike past Goldman chieftains, he is not widely talked about as a candidate for a high-level job in Washington.

So Mr. Blankfein has regrown a beard and come to embrace the limelight, giving speeches on gay marriage and education, and attending celebrity Oscar parties. He often jokes that he plans to die at his desk.

It is no laughing matter for Mr. Cohn, who as Goldman’s 52-year-old president is the Prince Charles of Wall Street, a man for whom the crown seems just beyond his grasp. Mr. Cohn is growing increasingly restless, according to friends and colleagues. Some inside Goldman wonder if he will depart if Mr. Blankfein doesn’t move soon. That would throw a monkey wrench into Goldman’s succession plans, leaving the firm without a natural candidate ready to replace Mr. Blankfein.

It is perhaps no accident that whispers of Mr. Cohn’s restlessness are now being heard outside the firm’s gleaming Battery Park tower. A lot is riding on the studied dance of money, power and persuasion that Mr. Blankfein and Mr. Cohn are engaged in.

“You can’t understate the importance of the person who runs Goldman,” said Michael J. Driscoll, a former senior trader at Bear Stearns who now teaches at Adelphi University. “The head of Goldman is the de facto head of Wall Street.”

The dance between the two executives is made more intriguing by the lack of visible tension between them. By their own accounts, the two men are friends. For years, their families vacationed together, and Mr. Cohn recently attended the wedding of Mr. Blankfein’s eldest son.

But this is Goldman Sachs, a firm known for a focused ruthlessness in every trade and every deal, a place where ambition can be as outsize as the compensation. It is a firm that is no stranger to Machiavellian power plays: Mr. Blankfein’s predecessor, Henry M. Paulson Jr., who was later Treasury secretary, became chief executive in what was effectively a coup against his counterpart, Jon S. Corzine, who later entered New Jersey politics.

While Mr. Cohn is still the front-runner to succeed Mr. Blankfein, time is not his friend. The firm will continue to groom other contenders, increasing the chances that the leadership baton could be passed to one of them and not to Mr. Cohn.

The leading candidates to take over from Mr. Blankfein should Mr. Cohn leave or be passed over are Harvey M. Schwartz, Goldman’s chief financial officer, and its investment banking co-chief, David M. Solomon, according to people briefed on the firm’s succession plans. But neither man is currently being groomed for the top job.

A spokesman for the firm said: “We are pleased to have a very strong and stable leadership team with decades of experience at the firm. Eighteen of the 30 members of our management committee have been at Goldman Sachs for at least 20 years.”

Regardless of the outcome, the power dynamic at the top of Goldman, the world’s most profitable investment bank, is intensely watched within the firm because it can make or break the careers of a number of professionals.

The rumblings emerging from Goldman’s headquarters come during a long period of stability at the top. At the same time, some of its rivals have experienced upheaval. Over the last 12 months, a number of senior managers have left JPMorgan Chase, while Citigroup ousted its chief executive.

At Goldman, no such exodus is envisioned, but there is the challenge of keeping restless senior executives happy.

It is a particularly nettlesome problem for someone like Mr. Cohn, who has publicly said that he wants Mr. Blankfein’s job. Mr. Cohn is responsible for the firm’s day-to-day operations and is, by many accounts, very engaged despite his impatience. Mr. Cohn also helped navigate Goldman through the financial crisis. For those efforts, he has earned nearly $128 million since 2007, according to Equilar, a compensation data firm.

Still, it is almost certain that Mr. Cohn, who got his start as a metals trader, could make more money working at a hedge fund. Such a move, while tempting, would almost certainly come with less power than the job he wants at Goldman. As a result, some people inside Goldman feel that Mr. Cohn is not serious about leaving anytime soon.

For his part, Mr. Blankfein appears to have no great incentive to leave. A number of former top Goldman executives, including Mr. Paulson, Mr. Corzine and Robert E. Rubin, fashioned second careers out of government service. Yet Mr. Blankfein himself has acknowledged that a government post is an unlikely option, given the beating that he and other Wall Street bankers took during and after the financial crisis.

It wasn’t long ago that most of Wall Street wouldn’t have given Mr. Blankfein strong odds of survival. On his watch, Goldman was accused of defrauding investors and paid $550 million to settle the allegations. Mr. Cohn, a native of Shaker Heights, Ohio, is cut broadly from the same cloth as Mr. Blankfein. Should he get the top job, it would break an unstated tradition at the firm of passing the top job from a trader to a banker, as both men hail from the trading side of the business. Under their leadership, the business has tilted from advising and underwriting for corporate clients to emphasizing trading.

Mr. Cohn got his start at New York’s commodities exchange in 1983. He became known as “gum guy” because his job included holding the chewing gum needed to wet the throats of screaming traders. Soon, he began trading silver with his own capital, a job he had until Goldman came calling in 1990.

He took a pay cut for the opportunity to trade metals at Goldman, and struck up a close friendship with Mr. Blankfein. Over the years Mr. Cohn followed Mr. Blankfein up the corporate ladder, becoming co-president and co-chief operating officer when Mr. Blankfein became chief.

The men are both part of the Manhattan elite. Mr. Blankfein lives on Central Park West, while Mr. Cohn and his wife, an artist, live on the Upper East Side. Mr. Cohn, who has three daughters, also owns a house in the Hamptons not far from Mr. Blankfein’s home.

“All his frustrations aside, Gary has joked to me that he can see why Lloyd doesn’t leave,” said a friend who asked not to be named. “The two men really do both love what they do.”

Clearwire Endorses Dish’s Sweetened Bid

Clearwire on Wednesday switched its allegiance to Dish Network, recommending that shareholders accept its bid of $4.40 a share over a rival offer from Sprint Nextel.

Clearwire also postponed a shareholder vote from Thursday to June 24. Meanwhile, Dish extended its tender offer, which had been set to expire on Friday, to July 2.

The change in recommendation is a setback for Sprint, which is seeking to buy the roughly 49 percent of Clearwire that it does not already own for about $3.40 a share. Its approach for Clearwire is meant to gain full control of an important affiliate whose wireless spectrum holdings are the cornerstone of a campaign to improve its network and make the company more competitive.

But Dish stymied those plans with its latest bid, disclosed on the eve of an earlier scheduled vote. Dish is also bidding for Sprint itself but was dealt a blow earlier this week when Sprint accepted a sweetened takeover bid from SoftBank of Japan.

While Sprint is set to raise its stake in Clearwire to more than 65 percent through agreements with a number of other large investors, the latest decision by Clearwire may give Dish a significant amount of negotiating leverage. Investors in Clearwire have already indicated that they consider Sprint’s offer -  itself raised from $2.97 a share â€" too low.

Shares in Clearwire closed at $4.37 on Wednesday, before the company announced its decision.

Sprint said in a statement that it was evaluating Clearwire’s decision and intends to enforce its contractual rights.

Safeway to Sell Its Operations in Canada

OTTAWA â€" The Canadian retailer Sobeys said on Wednesday that it would pay $5.8 billion in cash for the Canadian operations of Safeway, a move that will make it the leading grocery chain in western Canada.

Sobeys, which is based in Stellerton, Nova Scotia, has used a series of takeovers to become the second-largest grocery chain in Canada after the Loblaw Companies of Toronto. While it has long been rumored that Safeway might leave the Canadian market, the sale came as something of a surprise.

During a conference call with investors, executives from Sobeys and the Empire Company, the publicly traded holding company that owns the grocer and is controlled by the Sobey family, declined to discuss how the deal was reached with Safeway, which is based in Pleasanton, Calf. But they were quick to dismiss analysts’ suggestions that Sobeys might find itself in a bidding war for the 213 Canada Safeway stores.

“This is a done deal,” Marc Poulin, the president and chief executive of Sobeys, said during the call.

In eastern Canada, Sobeys has followed store acquisitions with extensive renovations, rebranding and the construction of efficient and highly automated food distribution warehouses. Like Loblaw and Safeway, it has also focused heavily on the development of private label-brands, particularly those with high margins. During the conference call, it outlined similar plans for the Canada Safeway properities.

While Sobeys does operate stores in western Canada, it has lagged behind Safeway and Loblaws in the region, particularly oil-rich Alberta. With the acquisition, Sobey estimated that it would generate annual revenue of about $24 billion and would run about 1,500 stores nationwide.

As part of the takeover, Sobeys will sell and then lease back about 4.8 million square feet of store space now owned by Safeway Canada and valued at $1.8 billion. During the conference call, the company suggested that the buyer would be Crombie, a real estate investment trust partly owned by Empire, which owns several Sobeys properties.

While the Canada Safeway stores are comparatively few in number, most of them are large and situated in prime locales.

Sobeys and Loblaws may both be controlled by their founding families, but they have distinctly different styles. The Westons of Toronto, who control Loblaw, are prominent members of Canadian society and have expanded their family holdings globally to include famous operations like Selfridge’s department store in London.

The leaders of the Sobey family, who all hold positions in the company, have stuck to Canada and live relatively modest and low-profile lives in Stellerton, a coal mining town that is something of a backwater even in Nova Scotia.

Coty Raises About $1 Billion in Its Public Debut

After trying once before, the cosmetics maker Coty is set to finally become a public company.

The company, whose products run from Sally Hansen nail polish to perfumes endorsed by Beyoncé and Katy Perry, priced its initial public offering at $17.50 a share on Wednesday, in the middle of its expected range of $16.50 to $18.50.

The stock sale values the company at about $6.7 billion.

The offering, which raised just less than $1 billion in proceeds, is one of the three biggest initial offerings in the United States this year, according to data from Renaissance Capital.

With Wednesday’s sale, Coty completed an effort it began several years ago with a few detours along the way. Among them was the company’s aborted takeover bid last year for a larger rival, Avon Products.

Coty’s selling shareholders sought to take advantage of a burgeoning market for stock offerings amid a healthy rise in equity market valuations this year.

The company’s owners are also betting on a revival of consumer confidence, with customers increasing their purchases of higher-ticket perfumes and nail polishes. According to a Euromonitor survey cited in Coty’s prospectus, the company’s main sectors are expected to grow 3 percent to 4 percent a year through 2016.

Coty reported $258.1 million in net income for the nine months ended March 31, up more than fourfold compared with results in the period a year earlier, though its revenue was roughly flat at $3.59 billion.

Founded by a French perfumer 108 years ago, Coty has become a significant player in the global cosmetics market. It already has a strong hold in the perfume market, especially in the realm of licensed fragrances from the likes of Calvin Klein, Marc Jacobs and Chloé.

And through a string of deals for companies like OPI and TJoy of China, it has broadened both its product offerings and its reach. Coty now sells its wares in more than 130 countries, with an increasing emphasis in emerging markets like Brazil and China.

That international push was one of the main drivers behind the company’s $10.7 billion bid for Avon last year. Despite being roughly half the size of its target, Coty argued that it could bring a strong management team to its embattled rival.

Yet despite securing the backing of Berkshire Hathaway, Coty was unable to convince Avon of the merits of a merger and withdrew its takeover bid last spring. Soon afterward, it filed for an initial public offering.

Wednesday’s stock sale will finally open the path to an exit for Coty’s primary owners, the wealthy Reimann family of Germany. Through its investment vehicle, Joh. A. Benckiser, the family bought the company in 1992 and spearheaded its expansion.

Coty had contemplated going public two years ago but held off because of volatile market conditions.

Coty’s other primary shareholders, the investment firms Berkshire Partners and Rhone Capital, will also sell shares in the offering.

The investors will still retain control of Coty even after selling some of their shares, however. Their remaining holdings will be converted into Class B stock, each share of which will carry 10 votes. All told, the three will control nearly 98 percent of the company’s voting power after the I.P.O.

The company’s shares will begin trading on Thursday on the New York Stock Exchange under the ticker symbol “COTY.”

Its offering was led by Bank of America Merrill Lynch, JPMorgan Chase and Morgan Stanley.

Malone May Play Role of Spoiler in Cable Deal

Vodafone’s ambitions in Germany could be undone by the king of cable. The British mobile giant has finally admitted it wants to buy Kabel Deutschland, the country’s biggest cable operator. Yet John Malone, the pay-television magnate behind Liberty Global, must be thinking hard about whether he can afford to make a rival approach. At the very least he could make life hard for Vodafone.

At more than 10 billion euros including debt, Kabel Deutschland would be both big and expensive. Vodafone’s opening gambit was 81 to 82 euros a share, Reuters says. That equates to a lofty 10.6 times 2014 Ebitda, on Espirito Santo numbers. The lure is the chance to shore up Vodafone’s position in its largest non-United States market, giving it a credible “quad-play” offering and significant savings, chiefly by bypassing a wholesale deal with Deutsche Telekom. JPMorgan Chase has estimated synergies could have a present value of 2.3 billion euros.

Yet Kabel Deutschland is also attractive to Mr. Malone, a serial deal-doer busy assembling a pan-European cable empire. He already owns the No. 2 in the German market, Unitymedia Kabel BW, and is a big believer in scale. Liberty’s chief executive, Mike Fries, said recently it would “love to be bigger” in Germany.

Vodafone is the better bet to acquire Kabel Deutschland. It has more financial firepower and bigger potential synergies. In contrast, the ink has only just dried on Liberty’s $24 billion merger with Britain’s Virgin Media. Mr. Malone hates overpaying, as shown recently in Belgium, has alternative targets and might struggle to convince German trustbusters.

But Mr. Malone has some leverage here. He could break with tradition and pay a lot for strategic reasons, chiefly in shares. Or he could just make mischief by showing an interest. Bid hopes have already inflated the shares. Pushing up the asking price further would force Vodafone to choose between overpaying or leaving empty-handed. Vodafone cannot afford to test its investors’ patience too much, thanks to a patchy long-term record on M.&A. If the deal collapsed, Liberty could always pounce at a later date.

Quentin Webb is a columnist at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Centerview Hires 2 Senior Media Bankers From Morgan Stanley

Centerview Partners said on Wednesday that it had poached two senior media bankers from Morgan Stanley in the latest hiring by the boutique investment bank.

The two, Alex Glantz and Todd J. Davison, were most recently the co-heads of Morgan Stanley’s North American media team. Among their clients are CBS, McGraw-Hill, Time Warner and the Warner Music Group.

“Todd and Alex have built successful careers by giving their clients unvarnished advice and judgment and by focusing on the long-term strategic needs of a business,” Blair Effron, a co-founder of Centerview, said in a statement. “They are a perfect fit culturally with the client-centric principles that Centerview adheres to and promotes.”

Centerview has been busy of late, advising on deals like the $23 billion takeover of H. J. Heinz, the $16.7 billion sale of General Electric‘s remaining stake in NBC Universal and the sale of a 45 percent stake in Alliance Boots to Walgreen.

The Management Buyout Path of Less Resistance

David H. Murdock’s effort to take the Dole Food Company private shows how a recent Delaware case has made these types of management buyouts easier, perhaps too easy.

I’ve been writing this column for more than five years, and during that time management buyouts have been low-hanging fruit for material and criticism (pun fully intended). Time and again, management buyouts have gone awry as executives allegedly used their position to buy companies on the cheap. Just recall buyouts for Landry’s, CSX and J. Crew. And the new management buyout drawing criticism is the proposed $24.4 billion acquisition of Dell Computer by its founder and chief executive, Michael Dell, and the private equity firm Silver Lake.

But while management buyouts are subject to easy criticism that executives are using their position to try to force through a deal at a low price, there is a set of best practices that has emerged over the years to try to manage the inherent conflicts present in such buyouts.

These controls include the creation of a special committee of independent directors with independent advisers, a go-shop provision to allow the company to seek other offers once the deal is announced and a provision that the transaction be approved by a majority of the shareholders not part of the buyout group to ensure that independent shareholders can veto the deal. The central idea behind all of these is to empower boards and shareholders to say no and negotiate a deal with management on terms the company would get from other bidders.

Mr. Murdock, who is the chairman and chief executive of Dole Food, appears well advised because he has specifically conditioned his bid on the approval of a special committee as well as a majority of the remaining shareholders. This is not just to meet with best practices but to comply with a recent Delaware decision that is likely to change the way these deals are done. Many companies, including Dole, are incorporated in Delaware and subject to its laws.

Traditionally, Mr. Murdock’s bid, which values the company at $1.1 billion, would be subject to heightened scrutiny not just because he is management but because he already owns a 40 percent stake. If Mr. Murdock was only management and owned a smaller stake, Delaware law is likely to require only that the deal be approved by the disinterested shareholders or directors in order for a Delaware court to apply the so-called business judgment rule to the transaction, a form of deferential review that essentially means that no court will question the acquisition further.

But when the acquirer is a controlling shareholder, Delaware has traditionally imposed a higher standard of review to ensure that this type of transaction, commonly known as a freeze-out transaction, is fair to shareholders. In fact, the standard is often referred to as an entire fairness review. Under this standard, the Delaware courts will scrutinize a freeze-out transaction for fair price and fair dealing. Mr. Murdock does not own a majority stake, but he still probably owns enough shares to propel him into the category of higher scrutiny.

Delaware courts have been debating for more than a decade whether the entire fairness standard should still be imposed if there were procedures in place to remove the conflict, like an independent committee of directors and a condition of majority approval by the remaining shareholders. The latest decision to address this problem was issued just last month. Chancellor Leo E. Strine, Jr. held in In re MFW Shareholders Litigation that approval of a going-private transaction by both a committee of independent directors and a majority-of-minority condition would result in the lower business judgment standard of review and that Delaware courts would not review the transaction for fairness.

This has excited deal lawyers, who don’t often get excited, because it creates a real path for a controlling shareholder to acquire a company without having to deal with significant litigation risk.

Mr. Murdock’s lawyers have clearly read this case, and Mr. Murdock appears to be angling to obtain this lower level of court review by including these provisions.

But the real question is whether the protections commonly used in these conflicted transactions actually work.

In an article written by Matthew D. Cain and myself and published in 2011, we studied all management buyouts from 2003 to 2009, 103 in total, to determine what procedures actually worked to protect shareholders. We found that buyouts with independent committees resulted in 14 percent higher premiums on average for shareholders. Boards that actively negotiated against a management bidder and negotiated competitive acquisition contracts protective of shareholders also resulted in 15 percent higher premiums on average than buyouts with noncompetitive contracts. These were two provisions that benefited shareholders.

But we did not find any significant results that the inclusion of a majority-of-minority condition resulted in higher premiums. Similarly, we also found that inclusion of a go-shop provision had no effect on the deal premium, consistent with the finding of a previous study by Guhan Subramanian that go-shop provisions were ineffective and appeared to serve to cover up undervalued management buyouts.

These findings are not just relevant to management buyouts but to going-private transactions, as we had many of these dual-type transactions in our sample.

In fairness to the chancellor, he was trying to avoid running afoul of a previous Delaware Supreme Court ruling that held that an independent committee of directors was not enough to avoid an entire fairness review.

Looking at the evidence, however, it’s not clear why Chancellor Strine’s approach should make a difference. Instead, the evidence points to the fact that simply including an independent director committee should be an effective way to deal with the management conflict by having an independent force to negotiate on behalf of the shareholders.

If only it were that simple.

The problem is that we also found in our paper that the size of the premium paid changed depending on who initiated the transaction. We found that when the deal was initiated by management, premiums were significantly lower than if it was initiated by the board itself or a third party. We did not report the actual premium difference in our paper, but for our sample, takeovers initiated by directors produced premiums that were 9.4 percent higher, on average, than those initiated by management. And transactions initiated by third-party bidders were associated with premiums that were 12.8 percent higher, on average, than those initiated by management.

These findings appear to bear out the hypothesis that management can use its knowledge of the company and position to obtain lower premiums. This occurs even when there is an independent committee of directors.

These findings suggest that Delaware courts may still want to scrutinize these transactions more heavily even when there are procedural protections in place, particularly when management is initiating the transaction. It it likely the MFW decision will be appealed, and so now the Delaware Supreme Court will decide this matter.

Which brings us back to Dole. While all of the procedures listed above â€" and that Mr. Murdock has requested â€" are likely to be put in place, not surprisingly the initiating entity here is Mr. Murdock. He has, after all, taken the company private once before. This puts this deal in that category of real danger â€" where the premium may be lower because management can use its influence and perfectly time the transaction to get a good deal. This doesn’t mean that it is the case here, just that the shareholders and board of Dole might want to be careful as they move to negotiate a sale.

The Management Buyout Path of Less Resistance

David H. Murdock’s effort to take the Dole Food Company private shows how a recent Delaware case has made these types of management buyouts easier, perhaps too easy.

I’ve been writing this column for more than five years, and during that time management buyouts have been low-hanging fruit for material and criticism (pun fully intended). Time and again, management buyouts have gone awry as executives allegedly used their position to buy companies on the cheap. Just recall buyouts for Landry’s, CSX and J. Crew. And the new management buyout drawing criticism is the proposed $24.4 billion acquisition of Dell Computer by its founder and chief executive, Michael Dell, and the private equity firm Silver Lake.

But while management buyouts are subject to easy criticism that executives are using their position to try to force through a deal at a low price, there is a set of best practices that has emerged over the years to try to manage the inherent conflicts present in such buyouts.

These controls include the creation of a special committee of independent directors with independent advisers, a go-shop provision to allow the company to seek other offers once the deal is announced and a provision that the transaction be approved by a majority of the shareholders not part of the buyout group to ensure that independent shareholders can veto the deal. The central idea behind all of these is to empower boards and shareholders to say no and negotiate a deal with management on terms the company would get from other bidders.

Mr. Murdock, who is the chairman and chief executive of Dole Food, appears well advised because he has specifically conditioned his bid on the approval of a special committee as well as a majority of the remaining shareholders. This is not just to meet with best practices but to comply with a recent Delaware decision that is likely to change the way these deals are done. Many companies, including Dole, are incorporated in Delaware and subject to its laws.

Traditionally, Mr. Murdock’s bid, which values the company at $1.1 billion, would be subject to heightened scrutiny not just because he is management but because he already owns a 40 percent stake. If Mr. Murdock was only management and owned a smaller stake, Delaware law is likely to require only that the deal be approved by the disinterested shareholders or directors in order for a Delaware court to apply the so-called business judgment rule to the transaction, a form of deferential review that essentially means that no court will question the acquisition further.

But when the acquirer is a controlling shareholder, Delaware has traditionally imposed a higher standard of review to ensure that this type of transaction, commonly known as a freeze-out transaction, is fair to shareholders. In fact, the standard is often referred to as an entire fairness review. Under this standard, the Delaware courts will scrutinize a freeze-out transaction for fair price and fair dealing. Mr. Murdock does not own a majority stake, but he still probably owns enough shares to propel him into the category of higher scrutiny.

Delaware courts have been debating for more than a decade whether the entire fairness standard should still be imposed if there were procedures in place to remove the conflict, like an independent committee of directors and a condition of majority approval by the remaining shareholders. The latest decision to address this problem was issued just last month. Chancellor Leo E. Strine, Jr. held in In re MFW Shareholders Litigation that approval of a going-private transaction by both a committee of independent directors and a majority-of-minority condition would result in the lower business judgment standard of review and that Delaware courts would not review the transaction for fairness.

This has excited deal lawyers, who don’t often get excited, because it creates a real path for a controlling shareholder to acquire a company without having to deal with significant litigation risk.

Mr. Murdock’s lawyers have clearly read this case, and Mr. Murdock appears to be angling to obtain this lower level of court review by including these provisions.

But the real question is whether the protections commonly used in these conflicted transactions actually work.

In an article written by Matthew D. Cain and myself and published in 2011, we studied all management buyouts from 2003 to 2009, 103 in total, to determine what procedures actually worked to protect shareholders. We found that buyouts with independent committees resulted in 14 percent higher premiums on average for shareholders. Boards that actively negotiated against a management bidder and negotiated competitive acquisition contracts protective of shareholders also resulted in 15 percent higher premiums on average than buyouts with noncompetitive contracts. These were two provisions that benefited shareholders.

But we did not find any significant results that the inclusion of a majority-of-minority condition resulted in higher premiums. Similarly, we also found that inclusion of a go-shop provision had no effect on the deal premium, consistent with the finding of a previous study by Guhan Subramanian that go-shop provisions were ineffective and appeared to serve to cover up undervalued management buyouts.

These findings are not just relevant to management buyouts but to going-private transactions, as we had many of these dual-type transactions in our sample.

In fairness to the chancellor, he was trying to avoid running afoul of a previous Delaware Supreme Court ruling that held that an independent committee of directors was not enough to avoid an entire fairness review.

Looking at the evidence, however, it’s not clear why Chancellor Strine’s approach should make a difference. Instead, the evidence points to the fact that simply including an independent director committee should be an effective way to deal with the management conflict by having an independent force to negotiate on behalf of the shareholders.

If only it were that simple.

The problem is that we also found in our paper that the size of the premium paid changed depending on who initiated the transaction. We found that when the deal was initiated by management, premiums were significantly lower than if it was initiated by the board itself or a third party. We did not report the actual premium difference in our paper, but for our sample, takeovers initiated by directors produced premiums that were 9.4 percent higher, on average, than those initiated by management. And transactions initiated by third-party bidders were associated with premiums that were 12.8 percent higher, on average, than those initiated by management.

These findings appear to bear out the hypothesis that management can use its knowledge of the company and position to obtain lower premiums. This occurs even when there is an independent committee of directors.

These findings suggest that Delaware courts may still want to scrutinize these transactions more heavily even when there are procedural protections in place, particularly when management is initiating the transaction. It it likely the MFW decision will be appealed, and so now the Delaware Supreme Court will decide this matter.

Which brings us back to Dole. While all of the procedures listed above â€" and that Mr. Murdock has requested â€" are likely to be put in place, not surprisingly the initiating entity here is Mr. Murdock. He has, after all, taken the company private once before. This puts this deal in that category of real danger â€" where the premium may be lower because management can use its influence and perfectly time the transaction to get a good deal. This doesn’t mean that it is the case here, just that the shareholders and board of Dole might want to be careful as they move to negotiate a sale.

Wall Street Titans Celebrate UJA-Federation

When the hedge fund manager Daniel S. Och called Bruce J. Richards, chief executive of Marathon Asset Management, it was not to discuss the latest gossip around their building, 15 Central Park West, which is home to several Wall Street heavyweights.

Rather, it was to invite Mr. Richards to another association of financial titans: those honored by the UJA-Federation of New York, a charitable organization focused on Jewish philanthropy.

“Bruce has felt left out of the tribe,” joked Andrew Rabinowitz, the chief operating officer of Marathon, as he introduced Mr. Richards at an event Tuesday evening. “This is UJA’s way of saying, ‘Welcome back, Bruce.’”

Jewish humor filled the air at the the Plaza Hotel in Manhattan at the event, which honored Mr. Richards and John M. Shapiro, the co-founder of Chieftain Capital Management, who received a lifetime achievement award. The gala, the more intimate of two Wall Street events the UJA-Federation hosts annually, raised more than $2 million.

Hedge fund bosses like Larry Robbins of Glenview Capital Management and Michael Karsch of Karsch Capital Management worked the room, while junior finance workers sampled platters of sushi and steak. (Mr. Och, who serves as senior chairman of the charitable organization’s investment management division, had hurt his back and couldn’t make it on Tuesday.) This being a Wall Street affair, there was plenty of opportunity for networking.

“Rob, we have all these hedge fund managers out there,” Mr. Richards said, addressing Robert S. Kapito, president of BlackRock, and making reference to the asset manager’s nearly $4 trillion under management.

“We just want a little piece. Just a little bit,” Mr. Richards said.

Mr. Kapito had just finished telling a joke about golf, featuring Mr. Richards. “It seems the pope has met with his cardinals to discuss a proposal from Bruce Richards,” Mr. Kapito said. Mr. Richards had challenged the pope to a game of golf to show the friendship between the Catholic and Jewish religions, the joke went. The Catholic church chose the golfer Jack Nicklaus to be its proxy, promising to make him a cardinal. While Mr. Nicklaus played well, he ended up losing â€" to “rabbi Tiger Woods.”

Mr. Richards joined a list of prominent honorees, including Boaz Weinstein, the founder of Saba Capital, who was honored at a UJA-Federation dinner last year.

In December, Lloyd C. Blankfein, chief executive of Goldman Sachs â€" and a resident of 15 Central Park West â€" will be honored by the organization along with David K. Wassong, managing director at Soros Fund Management.

But as strong as the UJA-Federation’s ties to Wall Street are, there is one company it has yet to attract as a sponsor.

“Bruce many, many years ago used to work for Jamie Dimon, and they’re still good friends,” Mr. Rabinowitz said, referring to the chief executive of JPMorgan Chase. “The UJA has been trying to get JPMorgan to be a sponsor for many years. So they figured they’d use Bruce’s connections on Wall Street to help make that difference.”

A spokeswoman for JPMorgan did not immediately respond to a request for comment. Though JPMorgan was not a sponsor of the event, it does support the organization, Shari Harel, a spokeswoman for the UJA-Federation, said.

R.B.S. Chief to Step Down

LONDON - Stephen Hester, the chief executive of the part-nationalized Royal Bank of Scotland, announced on Wednesday that he was leaving the bank.

Mr. Hester helped navigate R.B.S. after it received a multi-billion-dollar bailout from British taxpayers during the financial crisis that gave the
government majority control over the bank.

He has overseen a major overhaul of the British bank, which has shed hundreds of billions of dollars of assets and shrunk its investment banking operations.

Earlier this year, R.B.S. announced that it would hopefully be in a position from the middle of next year for the government to start reducing its 81 percent stake in the bank.

Mr. Hester said he would have liked to overseen the privatization process, but the board had decided that a new chief executive would be needed to lead the British bank from under the government’s ownership. Analysts said the total privatization process could take up to eight years.

“While leading that process would be the end of an incredible chapter for me, ideally for the company it should be led by someone at the beginning of their journey,” Mr. Hester said in a statement. “I will therefore step down at the end of this year.”

The R.B.S. chief is expected to walk away with a salary and pension package worth up to $8.8 million

Reform Efforts in Washington Reflect Few Lessons of Housing Crisis

Nearly five years after the government took over the mortgage giants Fannie Mae and Freddie Mac, Congress is slouching toward remaking how Americans buy homes.

Gingerly, Senators Bob Corker, Republican of Tennessee, and Mark R. Warner, Democrat of Virginia, have been working up a bill. Yet it’s striking how much the process is being dominated by emotional battles and financial interests.

In the right corner â€" politically as well as figuratively â€" we have the contingent that despises Fannie Mae and Freddie Mac. These people continue, against the evidence, to consider them the central cause of the financial crisis. Their preferred solution is to wipe these companies from the earth and somehow get the government out of housing. The hope is that a thousand flowers will bloom on their graves, as private investors rush in to finance mortgages.

In the left corner â€" politically speaking, we are talking left of center â€" is a group of financiers that favors a plan to bring back Fannie and Freddie. The argument, forwarded by the banker James E. Millstein, who served as the chief restructuring officer in President Obama’s Treasury Department, is that they can be fixed.

Investors like the hedge fund manager John Paulson and Bruce Berkowitz of Fairholme Capital Management have embraced this idea, contending that Fannie and Freddie can pay back taxpayers, be recapitalized and live again. Not incidentally, they could profit handsomely if this works, as they have bought up positions in Fannie and Freddie. It’s a time-honored strategy: make one Wall Street investment and then make a second investment in some Washington lobbying to protect the first.

The Corker-Warner plan creates a government insurance operation, similar to the Federal Deposit Insurance Corporation, that would insure mortgage-backed securities. Private investors would have to shoulder the first losses, probably about 10 percent. Taxpayers would not have to bail out those investors should things go south.

It’s an appealing notion and the plan has commendable aspects. But if the system worked as advertised, it could make the next housing crisis worse.

To understand why, we should revisit what we have learned about the American housing and mortgage market.

First, we learned that the housing market is so central to people’s wealth and the economy that the government will try to save it in a crash. At least Mr. Corker and Mr. Warner’s plan grasps that, unlike the most fervent conservatives.

Second, Fannie and Freddie were fatally flawed. They were hybrids, privately held institutions with government charters â€" along with too much political influence and too little capital. Investors believed they were implicitly guaranteed by the government, and so they were. (Shareholders got hugely diluted, but not wiped out.) The plan tries to solve this by making the insurance explicit and then supposedly cutting off the private players from the government trough.

Neither of the two senators’ offices made someone available for comment. A statement from Mr. Corker’s spokesman emphasized the plan’s protection for taxpayers; Mr. Warner’s added a goal to maintain access to credit.

The Corker-Warner proposal, which borrows ideas from the recent Bipartisan Policy Center proposal and the left-leaning Center for American Progress, depends on getting three things exactly right. Private investors will need to have enough incentive to buy the securities (or, to use the jargon, there will need to be adequate liquidity in the market). These private entities will also need to put up enough money to have enough skin in the game to prevent taxpayers from taking a bath on the mortgages. On top of that, these firms and insurance companies will need enough capital to prevent taxpayers from having to step in to take over the companies.

There’s reason to be skeptical that Congress will succeed in fine-tuning all of this. Unless the new insurance corporation regulates all housing-related investors, they will be subjected to different oversight from different agencies. Typically, businesses will gravitate to the most lenient agency and the one requiring the least capital.

If the Corker-Warner proposal were to go through, the private companies that have pole position would be the private mortgage insurers. The Republican Party has a fondness for this industry, going so far as to blow it a kiss in the party’s 2012 platform. Uncomfortably, private mortgage insurers were quietly a major part of the problem after the housing bubble burst. They were woefully undercapitalized and have been operating almost as zombie institutions.

The 10 percent private investor number also poses a concern. It’s a satisfyingly high number. But it’s a number that will probably create big problems when housing goes into a downturn. Remember the Great National Housing Crash? Private investors fled. Fannie and Freddie needed to step in to provide liquidity. And the real Big Daddy was the Federal Reserve.

Without some mechanism to ease the requirement, the contemplated reform could exacerbate a panic, not ameliorate one. A Harvard finance professor, David S. Scharfstein, has a proposal that would remedy this, with the government stepping in during a crisis, ramping up its mortgage insurance business only in a downturn when private investors are fleeing.

What’s striking is how much we’ve learned about housing since the crisis that isn’t reflected in the reform efforts.

We have learned, for example, that the mortgage servicers have been unholy disasters, foreclosing on homeowners incorrectly, fighting principal reduction and dragging their feet on mortgage modifications that would have helped people stay in their homes. One lesson, then, is that separating mortgage servicing from ownership is a bad idea. The banks that kept loans on their books have been more ready to work out loans to keep people in their homes. The current Washington plans don’t do much about this.

We’ve also learned that having an oligopoly of giant banks controlling the mortgage market leads to higher rates. And, because of the backlash against Fannie and Freddie, we are in danger of turning against the idea that the government has an important role in providing access to credit for those who might not be able to otherwise buy or rent homes.

Mr. Corker and Mr. Warner nod to providing greater access for small banks to compete with the big boys. And it provides a mechanism to provide access to housing for the credit-impaired. But in their fixation with solving Fannie and Freddie, the current Washington efforts give these important reforms short shrift.

The work is in the early stages. But the narrowness of the conversation is troubling.

New Chief for GE Capital

FAIRFIELD, Conn.--(BUSINESS WIRE)--GE (NYSE: GE) Chairman and CEO Jeff Immelt announced today the appointment of Keith Sherin as chairman and CEO of GE Capital, succeeding Mike Neal, who is retiring. Immelt also announced that GE Capital CFO Jeff Bornstein will succeed Sherin as CFO of GE. The appointments are effective July 1, 2013.

“Keith is one of the most respected CFOs in the world”

Sherin, 54, has been GE’s CFO for 14 years, and a vice chairman since 2007. He has been a member of the GE Capital board for 14 years and has been closely involved in the transformation of GE Capital into a more focused financial services business with solid earnings.

“Keith is one of the most respected CFOs in the world,” said Immelt. “He is a trusted colleague and a smart business partner. As a vice chairman of GE, he has played an integral role in defining our growth strategy, implementing our compliance programs and delivering value to our shareowners. His deep understanding of Capital’s people and operations will make him a strong leader for this business. Keith’s appointment underscores the importance of GE Capital to GE.”

Sherin has been senior vice president and GE's CFO since 1998. He joined GE in 1981 through the GE Financial Management Program and has held senior financial positions in GE businesses including Aviation, Plastics and Medical Systems. Sherin earned his B.A. from the University of Notre Dame and an M.B.A. from Columbia University.

Sherin succeeds Mike Neal, who is retiring after 34 years with GE in both Capital and Industrial businesses. Neal has been a GE vice chairman since 2005 and will continue in that role through the end of 2013 to help with the transition.

“Mike has led Capital for six years with a steady hand, a deep knowledge of markets and a focus on delivering results for Capital and for GE,” said Immelt. “Mike and his team helped keep GE Capital safe and secure and transformed it into a more focused and valuable business that is an important part of GE’s future. We are all grateful to Mike for his many contributions to our company.”

GE Capital has become a secure, focused financial services business, with a goal of reducing ending net investment (ENI) from approximately $400 billion today to $300-$350 billion by the end of 2014. With a leading position in midmarket lending, GE Capital will continue to be a strong earnings contributor for GE while providing excess cash to the parent company.

Jeff Bornstein, 47, is currently a senior vice president and CFO of GE Capital, a role he has held since 2008. He joined GE in 1989 through the GE Financial Management Program and has held senior financial positions in Aviation, Plastics, and Commercial Finance. Bornstein received his B.S. in Business Administration from Northeastern University.

Said Immelt, “Jeff is well known and respected within the financial services industry and will be a terrific CFO, a position he has held at Capital for more than five years. He is a tough-minded leader with sharp analytical skills and a broad understanding of GE, having worked in many of our industrial businesses.”

About GE

GE (NYSE: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website at www.ge.com.

This document contains “forward-looking statements” - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; potential market disruptions or other impacts arising in the United States or Europe from developments in the European sovereign debt situation; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding and on our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; changes in Japanese consumer behavior that may affect our estimates of liability for excess interest refund claims (GE Money Japan); pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level; GECC’s ability to pay dividends to GE at the planned level; our ability to convert pre-order commitments into orders; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; our capital allocation plans, as such plans may change and affect planned share repurchases and strategic actions, including acquisitions, joint ventures and dispositions; our success in completing announced transactions and integrating acquired businesses; the impact of potential information technology or data security breaches; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.

Indian Tire Maker to Buy Cooper Tire for $2.5 Billion

One of India’s largest tire makers, Apollo Tyres, announced a deal on Wednesday to acquire the Cooper Tire and Rubber Company for $2.5 billion in cash.

The acquisition would give Apollo a major foothold in the United States, the world’s second-largest auto market after China. Cooper, which focuses on passenger and light- and medium-truck replacement tires, is the fourth-largest tire maker in North America. Its brands include Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.

Under the terms of the deal, Cooper shareholders will receive $35 a share in cash - a 42.5 percent premium to its closing stock price on Tuesday and a 40 percent premium to Cooper’s 30-day volume-weighted average price. The Economic Times of India reported in October that the two companies were near a deal.

In premarket trading, shares of Cooper were up more than 40 percent.

The combined company will be the seventh-largest tire company in the world, with $6.6 billion in total sales.

“This transformational transaction provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world,” Onkar S. Kanwar, chairman of Apollo, said in a statement.

Cooper, based in Findlay, Ohio, has its origins in a business founded in 1914. As of the end of last year, it employed 13,550 worldwide. The company said it would continue to recognize its labor unions and honor the terms of collective bargaining agreements.

Apollo, based in Gurgaon, India, near Delhi, was founded in 1972. It has plants in India, the Netherlands and South Africa.

Morgan Stanley and Deutsche Bank and the law firms Sullivan & Cromwell and Amarchand & Mangaldas & Suresh A. Shroff & Company advised Apollo. The investment firm Greater Pacific Capital acted as strategic and financial adviser to Apollo.

Bank of America Merrill Lynch and the law firm Jones Day advised Cooper.

British Regulator Looking Into Currency Rates Trades

LONDON - Britain’s financial regulator said Wednesday that it was examining claims that traders at large banks manipulated some foreign-exchange benchmark rates and that it might start an official investigation.

The Financial Conduct Authority is talking to individuals in the foreign exchange market and seeking more information about claims that traders rigged the so-called WM/Reuters rates before deciding whether to open an investigation.

Bloomberg News reported that employees have been manipulating the rate by pushing through client trades before and during 60-second windows when the benchmarks are set. The rates are used by fund managers to calculate the value of their holdings and by index providers such as FTSE Group, Bloomberg reported.

A spokesman for the F.C.A. said the watchdog was already looking at the foreign exchange market before the Bloomberg report but added that it was still too early to say whether its findings would lead to an official investigation.

Because the foreign exchange market is not regulated, any F.C.A. inquiry would focus on individuals authorized by the regulator to act in the market and whether companies do enough to prevent market abuse.

“The F.C.A. is aware of these allegations and has been speaking to the relevant parties,” Stewart Todd, a spokesman, said.

Bloomberg, citing two unnamed traders, reported that rate manipulation occurred daily and has been going on for at least a decade, affecting the value of funds and derivatives.

Kanye West’s Billion-Dollar Ambitions

Behind Kanye’s Mask

Karsten Moran for The New York Times

Kanye West at the 2013 Governors Ball music festival in New York.

Malibu, Calif. â€" From Shangri-la Studio here you can see the Pacific Ocean just over the fence lapping calmly at Zuma Beach. And this compound is just as Zen, with recording equipment set up in various locations, including an old bus and a spotless white house with all the mirrors removed.

But there is no rest at Shangri-la, at least for Kanye West. For several days in late May and early June, he and a rotating group of intimates, collaborators and hangers-on were holed up in service of finishing “Yeezus” (Roc-A-Fella/Def Jam), Mr. West’s sixth solo album, out Tuesday, and one that marks a turn away from his reliable maximalism to something more urgent and visceral.

The original studios were built under the supervision of Bob Dylan and the Band in the 1970s â€" some of “The Last Waltz” was filmed here â€" and the property was bought in 2011 by the producer Rick Rubin, the man whose brain Mr. West had come here to pick. Together, they sandpapered off the album’s rough edges, rerecording vocals and sometimes writing entire new verses. Even as the deadline loomed, Mr. West made room for an appearance at the baby shower for his girlfriend, Kim Kardashian, who’s expecting their first child. As the days passed, the songs noticeably morphed, becoming more skeletal and ferocious.

One afternoon, Mr. Rubin exited the studio and declared, to everyone and no one, “It’s un-bee-leave-able what’s happening in there.”

If by that he meant the paring-down to what Mr. West lightheartedly referred to as “aspiration minimalism,” then yes, it was somewhat unbelievable.

Mr. West has had the most sui generis hip-hop career of the last decade. No rapper has embodied hip-hop’s often contradictory impulses of narcissism and social good quite as he has, and no producer has celebrated the lush and the ornate quite as he has. He has spent most of his career in additive mode, figuring out how to make music that’s majestic and thought-provoking and grand-scaled. And he’s also widened the genre’s gates, whether for middle-class values or high-fashion and high-art dreams.

At the same time, he’s been a frequent lightning rod for controversy, a bombastic figure who can count rankling two presidents among his achievements, along with being a reliably dyspeptic presence at award shows (when he attends them).

But Mr. West is, above all, a technician, obsessed with sound, and the music of “Yeezus” â€" spare, direct and throbbing â€" is, effectively, a palate cleanser after years of overexertion, backing up lyrics that are among the most serrated and provocative of his career.

In a conversation that spanned several hours over three days, and is excerpted here, the Chicago-raised Mr. West, 36, was similarly forthright, both elliptical and lucid, even as long workdays led to evident fatigue. He compared the current moment â€" about to release “Yeezus,” and looking to make a bigger footprint in worlds outside of music â€" to life just before his debut album, “The College Dropout,” from 2004, another time when he was in untested waters. “I want to break the glass ceilings,” he said. “I’m frustrated.”

When your debut album, “The College Dropout” came out, the thing that people began to associate with you besides music was: Here’s someone who’s going to argue for his place in history; like, “Why am I not getting five stars?”

I think you got to make your case. Seventh grade, I wanted to be on the basketball team. I didn’t get on the team, so that summer I practiced. I was on the summer league. My team won the championship; I was the point guard. And then when I went for eighth grade, I practiced and I hit every free throw, every layup, and the next day I looked on this chart, and my name wasn’t on it. I asked the coach what’s up, and they were like, “You’re just not on it.” I was like, “But I hit every shot.” The next year â€" I was on the junior team when I was a freshman, that’s how good I was. But I wasn’t on my eighth-grade team, because some coach â€" some Grammy, some reviewer, some fashion person, some blah blah blah â€" they’re all the same as that coach. Where I didn’t feel that I had a position in eighth grade to scream and say, “Because I hit every one of my shots, I deserve to be on this team!” I’m letting it out on everybody who doesn’t want to give me my credit.

And you know you hit your shots.

A version of this article appeared in print on June 16, 2013, on page AR1 of the New York edition with the headline: Behind Kanye’s Mask .

Vodafone Pursues a German Deal

The British wireless giant Vodafone has approached Kabel Deutschland of Germany over a potential takeover that could be worth more than $10 billion, DealBook’s Mark Scott reports. An acquisition would allow Vodafone, which owns 45 percent of Verizon Wireless, to expand its cellphone operations in Germany and offset increasing competition.

“Kabel Deutschland does not just represent an opportunity for Vodafone to extract synergies but also to better defend its core business,” telecommunications analysts at Espirito Santo in London told investors in a research note on Wednesday. The potential acquisition would be Vodafone’s largest since it bought a controlling stake in Hutchison Essar of India for $11 billion in 2007, Mr. Scott writes.

THE END OF LOW RATES  |  Interest rates may have reached a bottom, Nathaniel Popper and Peter Eavis write in DealBook. It has been a fact of life since the early 1980s that the rate charged by lenders has gone down, reaching historic lows after the financial crisis with the Federal Reserve’s stimulus measures. But over the last few months, investors and banks have been demanding higher payments for their loans, pushing up interest rates and bond yields. The cost of mortgages has been going up in recent weeks, and governments are now facing the prospect of higher borrowing costs down the road.

The first tremors were felt in products reliant on low rates, like bonds issued by American companies, but the movement is spreading more broadly. Global markets in bonds, currencies and stocks have experienced spasms of turmoil. “I think you all should be ready, because rates are going to go up,” Jamie Dimon, the chief executive of JPMorgan Chase, told a financial industry conference at the Waldorf-Astoria Hotel in Manhattan on Tuesday.

Recent economic reports suggest the economy is slowly recovering, leading many on Wall Street to prepare for the Federal Reserve to pare its stimulus program. If rates continue rising, a wide array of market participants will have to shift their assumptions. “When past performance has been so consistent, the risk that investors underestimate the risk, I think has consistently been an issue,” said Richard G. Ketchum, president of the Financial Industry Regulatory Authority.

MISSED OPPORTUNITY OF THE JOBS ACT  |  The Jump-Start Our Business Start-Ups Act was supposed to help revive new company offerings. Now, more than a year after the legislation was passed, the market for I.P.O.’s is indeed heating up, but the JOBS Act “has had little to do with it,” Steven M. Davidoff writes in the Deal Professor column.

Take the recent I.P.O. of the upscale grocer Fairway Group Holding. “Fairway’s selective use of the JOBS Act shows that it is being used to avoid disclosure of information that may cause embarrassment to the company or alert investors of problems. But at the same time, it shows that the law may have allowed companies to get away with not disclosing financial information that investors value,” Mr. Davidoff writes. “None of this has anything to do with whether Fairway would have gone public.”

ON THE AGENDA  |  Coty is expected to price its initial public offering Wednesday evening. H&R Block reports earnings after the market closes. The venture capitalist Marc Andreessen is on CNBC at 8 a.m. John Thain, head of the CIT Group, is on Bloomberg TV at 11 a.m.

REGULATOR SAYS INSURERS INFLATING BOOKS  |  “New York State regulators are calling for a nationwide moratorium on transactions that life insurers are using to alter their books by billions of dollars, saying that the deals put policyholders at risk and could lead to another taxpayer bailout,” Mary Williams Walsh reports in DealBook. “Insurers’ use of the secretive transactions has become widespread, nearly doubling over the last five years. The deals now affect life insurance policies worth trillions of dollars, according to an analysis done for The New York Times by SNL Financial, a research and data firm.”

“Benjamin M. Lawsky, New York’s superintendent of financial services, said that life insurers based in New York had alone burnished their books by $48 billion, using what he called ‘shadow insurance,’ according to an investigation conducted by his department. He issued a report about the investigation late Tuesday. The transactions are so opaque that Mr. Lawsky said it took his team of investigators nearly a year to follow the paper trail, even though they had the power to subpoena documents.”

Mergers & Acquisitions »

Sprint and SoftBank Shore Up Defenses Against a Dish Counterbid  |  In raising its bid for Sprint Nextel, SoftBank of Japan is doing its best to make sure Dish Network will have a harder time fighting back. DealBook »

Pandora Buys a South Dakota Radio Station  |  Pandora Media said the acquisition would give the Internet radio company access to the rights and prices that competitors enjoy, Bloomberg News reports. BLOOMBERG NEWS

The Cost of Health Care Mergers  |  The elephant in the room in the debate over the soaring cost of health care is “a lack of competition in what is now America’s biggest business,” Eduardo Porter writes in the Economic Scene column of The New York Times. NEW YORK TIMES

Investor Group Ends Bid for British Water Utility  |  An effort by an investment consortium to buy the British water utility Severn Trent fell apart on Tuesday as the two sides failed to enter into talks before a deadline. DealBook »

Google Buys Waze for $1 Billion  |  Google did not disclose the purchase price for Waze, a social mapping start-up, but a person with knowledge of the transaction said it was $1.03 billion, Vindu Goel reports in the Bits blog of The New York Times. NEW YORK TIMES BITS

Taking Dole Private Is Latest Challenge for 90-Year-Old Billionaire  |  David H. Murdock once took Dole Food private. Now he is betting that he can do it again.
DEALBOOK

INVESTMENT BANKING »

Glencore Xstrata Names Mack to Its Board  |  Glencore Xstrata has named Morgan Stanley’s former chief executive, John J. Mack, and the executive chairman of the information provider Bloomberg L.P., Peter T. Grauer, as nonexecutive directors of its board. DealBook »

No ‘Hiding’ at JPMorgan Over Trading Loss, Dimon Says  |  Jamie Dimon said JPMorgan Chase would fight anyone thinking of suing the bank over its multibillion-dollar trading loss last year. “There was no hiding, there was no lying,” Mr. Dimon said at an event in New York on Tuesday, according to Bloomberg News. BLOOMBERG NEWS

What Higher Rates Might Look Like  |  “A return to normality eventually implies a benchmark 10-year Treasury yield of 4 percent or more. It won’t happen all at once, but that’s where we’re heading,” Jim O’Neill, former chairman of Goldman Sachs Asset Management, writes in Bloomberg View. BLOOMBERG VIEW

Berkshire Hathaway’s Rising Star  |  At 28 years old, Tracy Britt is becoming one of Warren E. Buffett’s top lieutenants, The Wall Street Journal writes. “With an office next to Mr. Buffett’s at Berkshire’s headquarters, Ms. Britt helps with financial research, accompanies Mr. Buffett to meetings and occasionally drives him around town,” the newspaper writes. WALL STREET JOURNAL

PRIVATE EQUITY »

Carlyle Said to Seek $4 Billion for Real Estate Fund  |  The Carlyle Group plans to begin raising what “would be one of the largest new property funds any firm has raised since the financial crisis,” The Wall Street Journal reports. WALL STREET JOURNAL

Private Equity Capitalizes on Chinese Firms’ Depressed Shares  |  The tale of Ambow Education Holding, a troubled operator of tutoring centers in China that was listed on the New York Stock Exchange, illustrates how private equity has sought to cash in on the rapid descents of such firms. DealBook »

Executive Departs Providence Equity Partners in Asia  |  Patrick Corso stepped down as head of the Hong Kong office of Providence Equity Partners, Reuters reports, citing unidentified people familiar with the matter. REUTERS

HEDGE FUNDS »

Paulson’s Gold Fund Suffers Additional Losses  |  The hedge fund manager John A. Paulson oversaw a 13 percent decline in his gold fund in May, bringing losses in the strategy to 54 percent since the start of the year, Bloomberg News reports, citing a letter to investors. BLOOMBERG NEWS

From U.S. Prosecutor’s Office to Hedge Fund P.R.  |  Ellen Davis, a spokeswoman for the United States attorney’s office in Manhattan, is leaving to join Sard Verbinnen, a public relations group that represents Steven A. Cohen’s hedge fund, reports Reuters. DealBook »

I.P.O./OFFERINGS »

Facebook Investors Air Their Grievances  |  Facebook faced frustrated investors on Tuesday at the company’s first annual meeting. “We’re disappointed with the performance of the stock over the last year,” said Mark Zuckerberg, the chief executive, according to The Wall Street Journal. “We expect there’s going to be fluctuations.” WALL STREET JOURNAL

Nomura Real Estate Trust Falls in Trading Debut  |  The Nomura real estate master fund, which raised about $1.8 billion in an initial public offering, fell 6.2 percent in its trading debut in Tokyo, Bloomberg News reports. BLOOMBERG NEWS

VENTURE CAPITAL »

Box, a Cloud Start-Up, Said to Be in Talks Over Credit Line  |  The Financial Times reports: “At least three banks are in talks to extend a credit line to Box ahead of a potential public offering for the enterprise software start-up, underscoring the lengths to which banks are willing to go to secure potentially lucrative relationships with private technology companies.” FINANCIAL TIMES

LEGAL/REGULATORY »

Rigging Currency Rates for Profit  |  Bloomberg News reports: “Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.” BLOOMBERG NEWS

Banks Get 2 Years to Comply With Swaps Trading Rule  | 
REUTERS

S.E.C. Fines Options Exchange for Lax Oversight  |  The agency fined the Chicago Board Options Exchange and its affiliate $6 million in what was the first action related to an exchange’s responsibility to self-police its market. DealBook »

Japan’s Central Bank Stays the Course  |  The Bank of Japan held its policy steady in spite of recent market volatility, The New York Times reports. NEW YORK TIMES

MBIA Fails in Legal Challenge Over Bond Deal  |  MBIA lost a lawsuit it filed in 2009 against Patriarch Partners, The Wall Street Journal reports. WALL STREET JOURNAL

Glencore Xstrata Appoints John Mack to Board

LONDON - Glencore Xstrata named John J. Mack, Morgan Stanley’s former chief executive, and Peter T. Grauer, executive chairman of information provider Bloomberg, as non-executive directors to its board on Wednesday.

The mining and commodities trading company is rearranging its board following the combination of Glencore International and Xstrata that was completed last month. The company also named Peter Coates, who advised Glencore Xstrata’s chief Ivan Glasenberg on the integration, as an executive director.

Glencore Xstrata is still searching for a chairman after the departure of John Bond, who failed to receive enough shareholder support at an investor meeting in May amid anger over multibillion-dollar bonuses to retain some Xstrata managers. Tony Hayward, the former chief executive of BP who sits on Glencore Xstrata’s board was appointed to fill the position on an interim basis until a more permanent replacement can be found.

Mr. Hayward said on Wednesday that the new directors have “an excellent business track record and extensive international experience, which we believe will prove invaluable in continuing the strength of debate and challenge which has typified the operation of the company’s board.”

Mr. Mack retired as chairman of Morgan Stanley in 2011 and continues to be a senior adviser to the bank. He was Morgan Stanley’s chief executive from 2005 until 2009. Mr. Grauer was previously chief executive of Bloomberg and a senior partner at Credit Suisse’s private equity business. Mr. Coates previously managed Xstrata’s coal business after the company bought the Australian and South African coal assets from Glencore.