Detroit Sues to Cancel Some Costly Contracts

Detroit filed suit on Friday to invalidate some complex transactions it used to finance its pensions, contending they were illegal from the very beginning.

In a complaint filed in United States bankruptcy court, the city argues that deals with special entities set up in 2005 and 2006, which raised $1.4 billion, were aimed only at circumventing a ceiling on the amount of debt it could take on. It is seeking a ruling that it has no obligation to make payments on the so-called certificates of participation issued to raise the money.

In a stunning turnaround, Detroit is also seeking to cancel some costly long-term contracts that were part of the deal, leaving two large banks, Bank of America and UBS, empty-handed just weeks after offering to pay them $165 million to get out of them. If a judge agrees, Detroit could be freed from having to honor the contracts, known as interest-rate swaps, which require it to pay tens of millions of dollars a year to the two banks.

Detroit’s lawsuit came two weeks after its bankruptcy judge, Steven Rhodes, rejected the $165 million proposal as “too much money” and sent the city back to negotiate less costly terms. He also suggested that the city could bring suit contesting the legality of the transactions.

Rather than proposing to pay a smaller amount to terminate the swaps, Detroit is seeking a court ruling that they were illegal from the outset. It says that in 2005 it was in no position to borrow, having exhausted its capacity to issue debt under state law. It argues that the two banks led a team that created sham corporations and made it look as if those corporations, and not Detroit, had issued the debt.

“This deal was bad for the city from its onset despite reassurances it would adequately resolve the city’s pension issues,” Kevyn Orr, the city’s emergency manager, said in a statement. “We have tried without success to negotiate a resolution to this dispute and to allow the city and its taxpayers to move forward and unwind these illegal transactions.”

Some creditors, angry at seeing the swaps being paid while they were being told to expect losses, have argued that the city should try to claw back some of the money it has been paying the two banks.

Detroit explained some of the mechanics of the coming litigation in a proposed plan of adjustment that it recently gave to its creditors. The city said it would set aside $4.2 million a month in a special reserve in case its lawsuit failed. If the judge finds that the swaps were not only valid but also a secured credit, then Detroit said it would use the money to pay some portion of the claim on the swaps.

In case of a partial victory, with the court deciding that swaps were valid but unsecured, Detroit said it would to take back all the money in the reserve and use it to provide services. Instead of cash, Bank of America and UBS would be given portions of some notes that the city proposes to issue to unsecured creditors.

Some of those notes would also be used to pay the investors who bought the 2005 debt and the insurers that have promised to step in and make Detroit’s payments if it defaults.

The swaps have been a big sticking point in the bankruptcy case because Detroit had previously pledged some casino tax revenue to the two banks to secure the stream of payments the contracts called for it to make. In bankruptcy, Detroit wanted to get the casino money back to use as collateral for a special new loan it needed to finance its activities in bankruptcy.

Critic of Online Ad Firm Blinkx Is Part of the Controversy

Rick Friedman for The New York Times Benjamin Edelman, seen here in 2006, specializes in Internet advertising.

LONDON â€" A Harvard Business School professor has raised pointed questions in an article about an Internet advertising company, prompting a plunge in its stock price. He himself, though, is now a subject of controversy.

On his personal blog Thursday, Benjamin G. Edelman, posted an analysis titled “The Darker Side of Blinkx,” about a British online video and advertising company, which among other things said Blinkx’s user traffic numbers may be misleadingly high.

The shares, of which about 10 percent were held by short-sellers betting the stock would fall, had plunged by 31 percent by the time the London trading day ended Thursday. They regained only a small part of that ground on Friday.

Mr. Edelman acknowledged in his report that it was paid for by a client that he has not identified.

In a telephone interview Friday, Mr. Edelman declined to say who had paid him for the analysis or how much he had been paid. He said that he did not know whether his client held a stake in Blinkx. A specialist in Internet advertising, Mr. Edelman said he was simply providing his expert assessment of what he called the failings of Blinkx, which operates an Internet portal for video content and charges brands to advertise alongside the videos.

“The work stands on its merits,” Mr. Edelman said. “These are questions that deserve to be answered.”

The questions he raised included ethical ones about products that Blinkx obtained through recent acquisitions of smaller firms, The products allowed Blinkx to download adware â€" unwanted software that displays pop-up ads and can also spy on users’ web habits to show pertinent ads â€" on users’ computers without their clear consent. Mr. Edelman also raised concerns over how the firm had recently increased traffic to its own main video website, questioning whether some of the company’s reported advertising traffic was in fact simply users the company steers to itself.

Blinkx, in a brief statement on Thursday, categorically denied the accusations and said it disagreed with the report’s conclusions. A spokesman on Friday declined to comment further.

Before the Blinkx sell-off on Thursday, several hedge funds had built sizable minority stakes in Blinkx in so-called short positions that would enable them to benefit from a fall in the price, according to statistics from British financial regulators.

A spokeswoman for the Financial Conduct Authority, the main British financial regulator, declined to comment Friday.

The sudden attention on Blinkx highlights some of the vagaries of the fast-growing digital advertising market and companies’ quest for new ways to measure and monetize people’s online activities.

Analysts say the tracking technologies are used in ways that few people fully understand and have made it difficult for advertisers to calculate success.

“It’s even a black box for people in the advertising industry,” said Daniel Knapp, director of advertising research at the advisory firm IHS in London. “People are working with business models that didn’t even exist a couple of years before.”

Compared with many of these new ad-tech companies, though, Blinkx is an industry veteran.

The company was founded by Suranga Chandratillake, the former chief technology officer of the British software company Autonomy, which was sold to Hewlett-Packard in 2011 for $11.1 billion. Mr. Chandratillake is now Blinkx’s president and chief strategy officer. Blinkx’s video search technology grew out of research at the University of Cambridge, and the firm has offices in both London and San Francisco.

In early 2007, Blinkx raised around $50 million through an initial public offering in London. Before Thursday’s fall, its share price had risen more than 160 percent over the last eight years, and Blinkx reported a threefold increase in its net profit, to $7.8 million, during the six months through September, the latest figures available.

Blinkx has benefited from the rapid rise of advertising spending within online video. In total, global digital advertising spending rose around 15 percent, to $118.4 billion, last year, according to the research firm eMarketer.

Analysts, however, have raised concerns that online advertising can become susceptible to so-called click fraud â€" when automated computer programs click on Internet ads to drive traffic.

While Blinkx has said it uses filters to remove such practices from its services, some analysts have called on the company to be more transparent on how it generates income.

“We like the online video arena, but would like to have a clearer view on the network business model at Blinkx,” David Reynolds, an analyst at Jefferies International, said recently in a research report.

Morgan Stanley’s Stock Bet Yields Windfall on Paper

When Morgan Stanley’s share price fell to $20 in 2011, the bank’s chief executive, James P. Gorman, and several of his top lieutenants tried to encourage investors by buying up stock with their own money. Now, that put-your-money-where-your-mouth-is approach appears to have paid off.

Mr. Gorman purchased 100,000 shares for about $2 million in August 2011. With the stock price on Friday at $29.51, Mr. Gorman has netted nearly $1 million on his investment on paper.

Ruth Porat, the bank’s chief financial officer, and Paul J. Taubman, then one of the co-heads of the bank’s securities arm, bought more than $1.5 million worth of shares at the same time Mr. Gorman did. Today, those shares would be worth more than $2.2 million, assuming they have not yet been sold.

Mr. Gorman, like other bank chief executives, receives stock as part of his annual compensation. His equity award nearly doubled, in fact, in 2013. But it is rare for the head of a bank to purchase shares in his or her own company.

“It’s rare, but it’s viewed as a signal of confidence,” said Alan Johnson, the managing director of Johnson Associates, which monitors Wall Street compensation.

Stocks of Wall Street were on fire in 2013. And the Standard & Poor’s 500-stock index rose nearly 30 percent last year, its best advance since 1997.

The roaring markets finally brought some good news for bank employees. Bonuses have increasingly been paid in restricted stock, which typically vests over a period of three years, and bank stocks have had a choppy ride since the financial crisis.

“It’s been quite volatile and it had been depressed for several years,” Mr. Johnson said. “We’re certainly more optimistic than we were a year ago.”

Assuming a three-year vesting plan and no declines in share price, the value of restricted stock awarded to employees at Bank of America Merrill Lynch, JPMorgan, Citigroup, Morgan Stanley and Goldman Sachs in 2012 will rise 72 percent, the first increase since 2009, according to data from Johnson Associates.

After the financial crisis, regulators and lawmakers criticized what they saw as Wall Street’s outsize compensation as having incentivized the kind of risk-taking that led to the mortgage crisis and the economic collapse in 2008.

In response, many of the banks began to defer larger amounts of bonuses, which would theoretically align employee interest more with the longer-term health of the firm. That wasn’t good news for employees at Wall Street’s biggest financial banks, who saw the value of their restricted stock units plummet after the financial crisis.

Morgan Stanley deferred up to 75 percent of bonuses in 2011, up from 40 percent in 2009. The bank promoted its pay-later plan as a new model for Wall Street, even as some critics said the firm just wasn’t doing well enough to pay more compensation upfront.

Mr. Gorman rode Morgan Stanley’s stock all the way down to $12 a share at one point in 2012. That would have meant a net loss to the chief executive of $700,000 if he would have sold then.

But investors have been bolstered by the bank’s move away from its riskier trading businesses as it has shifted focus to growing its relatively safer wealth management unit.

Weekend Reading: Super Bowl Quotes for Wall Street

Big banks are giving their junior workers time off just in time for the Super Bowl. This week we’re looking at quotable National Football League stars and Wall Street financier counterparts.

“Omaha!” - Peyton Manning, Denver Broncos

Manning, the highest paid player in the N.F.L. is due $15 million next season, on par with Lloyd C. Blankfein, the chief executive of Goldman Sachs, who was granted restricted shares worth almost as much as part of his 2013 pay package. Mr. Blankfein’s total compensation is expected to be around $23 million. The Oracle of Omaha, Warren E. Buffett, famously takes only a $100,000 salary. That’s less than the $405,000 rookie minimum salary for the N.F.L.

“I’m the best corner in the game! When you try me with a sorry receiver like Crabtree that’s the result you’re gonna get! Don’t you ever talk about me!” - Richard Sherman, Seattle Seahawks

Sherman, a Stanford University graduate, was called a “thug” and worse for his trash talking after the N.F.C. championship game. Endorsements offers of $5 million soon followed, the player’s agent told CNNMoney.

Bitcoin advocates Cameron and Tyler Winklevoss also grabbed attention this week for taking a swipe at their opponents: the traditional banking industry. “Solutions don’t really come from the current industry,” Cameron Winklevoss said.  The Harvard graduates have made of career of public feuds, having made their early reputation battling Mark Zuckerberg over ownership of Facebook.

“I’m just ’bout that action, boss.” - Marshawn Lynch, Seattle Seahawks

Lynch, the running back known as “Beast Mode,” doesn’t speak to the media very often, but when he does the world listens to every word.

The hedge fund titan Paul E. Singer has his own nickname - “vulture capitalist” - and is famously shy about speaking with the financial press. The billionaire does his talking through conferences like the World Economic Forum in Davos and his letters to shareholders of Elliott Management. In a 2013 letter obtained by ValueWalk, Mr. Singer attacked big banks saying that if “a law is ignored in thousands of subtle ways, then over time the rule of law will be replaced by corruption and whim.”

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

FRIDAY

Judge Approves Bank of America Mortgage Settlement | A New York State judge on Friday approved most of an $8.5 billion agreement by Bank of America to settle claims by nearly two dozen mortgage securities investors. DealBook »

THURSDAY

Goldman Gives Chief $14.7 Million Stock Bonus | Lloyd C. Blankfein, the chief executive of Goldman Sachs, was awarded company stock worth $14.7 million as part of his 2013 package, about 10.5 percent more than in the previous year. DealBook »

Former Chief of S.E.C. to Shift Consulting Job | Mary L. Schapiro is leaving a full-time role at the Promontory Financial Group and said her time would be spent on an array of university lectures, speaking engagements and corporate board work. DealBook »

Over Just 7 Days, Lenovo Wraps Up Two Deals Totaling $5.2 Billion | Lenovo, already the world’s biggest PC maker, is a company in a hurry. It bought a business of low-end servers that will remain in demand for years, and Motorola Mobility, which makes it the trusted partner of Google. DealBook »

Goldman Deal Threatens Danish Government | When Denmark gave the company approval to buy a stake in its state utility, the Socialist People’s Party withdrew its ministers from the country’s governing coalition. DealBook »

Libyan Investment Fund Sues Goldman Over Loss | The Libyan Investment Authority claims that Goldman Sachs made more than $1 billion in derivatives trades that became worthless in value but left the bank with a profit of $350 million. DealBook »

News Analysis: Libya Says Goldman Didn’t Explain Options | The Libyan Investment Authority says Goldman did not provide confirmations of trades until weeks, or in some cases months, after they were made or require it to sign the normal agreement required to trade in derivatives. DealBook »

WEDNESDAY

After Big Bet, Google to Sell Motorola Unit | Though not a total financial loss, the announced sale of the smartphone unit for $2.91 billion, less than two years after Google paid $12.5 billion for it, is a sign of fits and starts at the company in the mobile age. DealBook »

Wall St.’s New Housing Bonanza | Banks have begun selling bonds backed by foreclosed homes turned into rentals in the United States, bringing calls for Congress to look into the deals. DealBook »

Wireless Mergers Will Draw Scrutiny, Antitrust Chief Says | William J. Baer, assistant attorney general for the Justice Department’s antitrust division, also said any proposed merger among cable television companies would face similar scrutiny. DealBook »

Foundations Band Together to Get Rid of Fossil-Fuel Investments | Taking cues from old fights to end apartheid and oppose tobacco, several foundations are addressing the warming of the planet. DealBook »

Pressured By Investors, Sotheby’s Takes Steps | Sotheby’s outlined plans to pay $300 million to shareholders in the form of a special dividend, and said it would begin a $150 million share repurchase program. DealBook »

Senator Asks Veterans Agency to Review How Financial Advisers Are Accredited | A lax accreditation process is effectively giving “unscrupulous or unqualified individuals” an opportunity to waste taxpayer money and harm veterans, Senator Claire McCaskill said. DealBook »

A Former Regulator Returns to Private Practice | David Meister, who left the post of enforcement chief at the Commodity Futures Trading Commission last fall, will return to his old firm, Skadden, Arps. DealBook »

Colleague of SAC Leader Wasn’t Alerted to Trades | An associate of Steven A. Cohen said at the trial of Mathew Martoma, a former SAC Capital Advisors trader, that he was told of drug stock sales after the fact. DealBook »

Europe’s Bank Risk Plan Is Long Shot | The European Union revealed a long-awaited proposal to reduce the systemic risk posed by big banks like the Volcker Rule in the United States, but it may be a long time before the European Parliament considers it. DealBook »

Chinese Bank Buys Into London Trading | Industrial and Commercial Bank of China is buying a controlling interest in Standard Bank’s global markets business in London, making it the first large Chinese lender to have a substantial trading operation in London. DealBook »

TUESDAY

News Analysis: Hedge Funds Sniff for Even Bigger Payouts From Banks | One hedge fund, Fir Tree Partners, is even trying to coax other investors out of participating in the $4.5 billion JPMorgan Chase settlement with private investors. DealBook »

A Swipe at Traditional Banking at a Forum on Bitcoin’s Future | A hearing on the regulatory future of Bitcoin gave advocates the chance to enumerate what they view as the advantages Bitcoin could provide over current systems of moving money around the world. DealBook »

SAC’s Counsel Testifies at Insider Trading Trial in Unexpected Move by the Defense | Testimony by the chief counsel at SAC could allow prosecutors to scrutinize compliance at the multibillion-dollar hedge fund founded by Steven A. Cohen. DealBook »

Deal Professor: Answers to a Puzzling Deal at Alibaba Remain in the Shadows | Alibaba’s acquisition of a sleepy technology company set of a flurry of speculation. After Alibaba’s public debut, scrutiny of its deals will only intensify, the Deal Professor writes. DealBook »

MONDAY

DealBook Column: Anxiety Rises Over Japan and China’s Relations | A major topic of discussion at the World Economic Forum was the ties of two Asian neighbors with a long history of strained interactions, writes Andrew Ross Sorkin. DealBook »

Bitcoin Figure Is Accused of Conspiring to Launder Drug Money | One of the most prominent players in the Bitcoin universe, Charles Shrem, was arrested on Sunday, accused of conspiring to facilitate drug transactions on the now-defunct online bazaar Silk Road. DealBook »

Past Sins Haunting Royal Bank of Scotland | The bank said it would set aside £3 billion, or nearly $5 billion, to cover litigation losses tied to soured mortgage-backed securities and other assets sold before the financial crisis began. DealBook »

Despite Spate of Deals, Vodafone Faces an Uncertain Future | Telecommunications analysts debate whether Vodafone can prosper on its own or whether it would be better off as a takeover target. DealBook »

SUNDAY

Banks’ Role in Payday Lending Is Target | Federal prosecutors are scrutinizing whether banks have allowed businesses to siphon billions of dollars from consumers’ accounts. DealBook »

WEEK IN VERSE

‘Halftime’ | Every Super Bowl halftime should feature Beyoncé. YouTube »

Accounting for Jamie Dimon’s Big Raise

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Judge Approves Bank of America Mortgage Settlement

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More Mindfulness, Less Meditation

Here’s the promise: Meditation - and mindfulness meditation, in particular - will reduce your cortisol level, blood pressure, social anxiety and depression. It will increase your immune response, resilience and focus and improve your relationships â€" including with yourself. It will also bolster your performance at work and provide inner peace. It may even cure psoriasis.

50 Cent meditates. So do Lena Dunham and Alanis Morissette. Steven P. Jobs meditated, and mindfulness as a practice is sweeping through Silicon Valley. A week from Saturday, 2,000 technology executives and other seekers will gather for a sold-out conference called Wisdom 2.0, suddenly a must-attend event for the cognoscenti.

Even Rupert Murdoch has tried meditating, summing up its appeal in a haikulike tweet: “Everyone recommends, not that easy to get started, but said to improve everything.”

Really? For what it’s worth, I don’t think so.

I first learned to meditate 25 years ago, built a daily practice in mindfulness and spent hundreds of hours sitting with my eyes closed and my legs crossed. I also interviewed dozens of meditators, including the most prominent teachers, for a book I wrote in 1995 called “What Really Matters: Searching for Wisdom in America.”
But the more time I spent meditating, the less value I derived from it. Which is not to say I think it has no benefits at all.

The simplest definition of meditation is learning to do one thing at a time. Building the capacity to quiet the mind has undeniable value at a time when our attention is under siege, and distraction has become our steady state. Meditation - in the right doses â€" is also valuable as a means to relax the body, quiet the emotions and refresh one’s energy. There is growing evidence that meditation has some health benefits.

What I haven’t seen is much evidence that meditating leads people to behave better, improves their relationships or makes them happier.

Consider what Jack Kornfield has to say about meditation. In the 1970s, after spending a number of years as a monk in Southeast Asia, Mr. Kornfield was one of the first Americans to bring the practice of mindfulness to the West. He remains one of the best-known mindfulness teachers, while also practicing as a psychologist.

“While I benefited enormously from the training in the Thai and Burmese monasteries where I practiced,” he wrote, “I noticed two striking things. First, there were major areas of difficulty in my life, such as loneliness, intimate relationships, work, childhood wounds, and patterns of fear that even very deep meditation didn’t touch.

“Second, among the several dozen Western monks (and lots of Asian meditators) I met during my time in Asia, with a few notable exceptions, most were not helped by meditation in big areas of their lives. Meditation and spiritual practice can easily be used to suppress and avoid feeling or to escape from difficult areas of our lives.”
So how to use meditation to best effect?

First, don’t expect more than it can deliver.

In the modern world, meditation is far more effective as a technique of self-management than as a means of personal transformation, much less enlightenment.

Second, start simply.

Mindfulness - or “vipassana” â€" is a specific type of meditative practice from Theravada Buddhism. It involves learning to watch one’s thoughts, feelings and sensations as they arise and pass, without becoming caught up in them. By building the capacity to witness one’s own experience without attachment or reactivity, the teaching goes, one slowly begins to see through the illusion of permanence and separateness.

The problem with mindfulness as a starting place is that it’s an advanced practice. In traditional teaching, students first learned to stabilize their attention through “samatha,” or concentration meditation. Concentration involves focusing on a single object of attention, such as the breath or a mantra, as in transcendental meditation. Only when students learned to reliably quiet their minds - a process that often took years of practice - was the more subtle and advanced practice of vipassana introduced.

In my experience, concentration meditation is a simpler and more reliable way than mindfulness to build control of one’s attention, quiet down and relax - especially so for those in the early stages of meditating.

Finally, don’t assume more is better.

“Mindfulness practice has its benefits,” said Catherine Ingram, author of “Passionate Presence,” “but in my case, after 17 years of practice, there came a point when mentally noting my breath, thoughts and sensations became wearisome, a sense of always having homework and of constantly chopping reality into little bits.”

Even a few minutes of sitting quietly and following the breath goes a long way. I’ve found it especially effective to breathe in to a count of three and out to a count of six - effectively extending the outbreath and deepening the experience of relaxation. Counting is also an effective object of attention, and therefore enhances concentration.

I’ve also found that it’s more practical to truly focus and relax for a minute or two several times a day than to meditate for a long period and constantly battle with distraction along the way.

There is a difference between mindfulness meditation and simple mindfulness. The latter isn’t a practice separate from everyday life. Mindfulness just means becoming more conscious of what you’re feeling, more intentional about your behaviors and more attentive to your impact on others. It’s about presence â€" what Ms. Ingram calls “keeping quiet and simple inside, rather than having any mental task whatsoever.”

The real challenge isn’t what we’re able to do with our eyes closed. It’s to be more self-aware in the crucible of our everyday lives, and to behave better as a result. That’s mindfulness in action.

About the Author

Tony Schwartz is the chief executive of the Energy Project and the author, most recently, of “Be Excellent at Anything: The Four Keys to Transforming the Way We Work and Live.” Twitter: @tonyschwartz

From High Above Times Square, a Super Bowl Tease

The football carnival that has taken over 14 blocks of Broadway around Times Square may be fun for Super Bowl crowds, but those who work in the surrounding buildings are growing weary.

That so-called fan zone â€" stretching from 47th to 34th Streets â€" houses office buildings for some of high finance’s most prominent names, including Barclays and Morgan Stanley. Ernst & Young’s offices sit smack at the heart of the festivities, at 42nd and Seventh Avenue. And other big office buildings, including the Bank of America Tower on Sixth Avenue between 42nd and 43rd Streets, are about a block away from Broadway.

Millions of dollars of deals, foreign-exchange trading and other transactions are flowing in conference rooms while visitors on the streets take in a toboggan, a horse decked out in Denver Broncos garb and dancing blue robots.

“Most people here are more annoyed by more people here than excited,” said one junior banker at a big investment bank, whose building looms above Times Square, whose company, like many other financial firms, have rules discouraging employees from speaking to reporters. “People in my group have been avoiding Times Square.”

By the time he leaves work, usually around 11 p.m., it is too cold to enjoy any of the events, he added.

The bankers may not be the only ones inconvenienced by the festivities. Prostitutes are being arrested. Flower shops lament the traffic jams. And New Yorkers are taking to Twitter to complain.

Employees of the financial and consulting firms who work in the area are accustomed to a certain level of inconvenience in Times Square, like zigzagging around costumed characters to get their morning coffee and trying to find the rarely available taxi when they leave work late at night.

Turning Broadway into a traffic-free pregame celebration has only introduced a different obstacle course. Now, instead of Elmos to navigate, there are people milling about in football jerseys. Instead of a naked cowboy, there is the Vince Lombardi trophy.

“Times Square is always insane, so it kind of just washes by us,” said Natan Last, an associate consultant at Bain and Company. Bain’s office is in the Thomson Reuters Building at Three Times Square, on Seventh Avenue between 42nd and 43rd Streets.

Despite the cold, Mr. Last, who has created crossword puzzles for The New York Times, said he and a group of colleagues were planning to test out the toboggan run, between 40th and 41st Streets, if they could get away from their desks to purchase tickets.

As the weekend approaches, some bankers are optimistic they may be able to get out of the office early enough to see what all of the fuss is about. The junior investment banker said he has heard people talking about getting together after work to check out the scene. But he said if he had the time, he would probably avoid the Super Bowl scene. “I would probably just go to a local bar,” he said.

Contender for Microsoft Helm Seen as Unlikely to Shake It Up

As Microsoft hunts for its new chief executive, the firm appears to have zeroed in on a true company man who has spearheaded Microsoft’s efforts to stay on the cutting edge.

But Satya Nadella, a 22-year veteran of the technology colossus, probably isn’t the man for drastic action like breaking it up or striking huge deals.

According to The Times’s Nick Wingfield and other news reports, Microsoft has focused on Mr. Nadella, the head of its cloud technology group. Mr. Nadella has pushed Microsoft further into cloud computing by overseeing efforts to compete with the likes of Amazon, whose industrial-strength servers have become the digital landlord of choice for many smaller companies.

Mr. Nadella described a changing technology landscape in an interview in 2012 when the company announced its new Windows Server 2012 software. “We want to be a primary provider of operating systems for people who want servers both to connect to the cloud, and to build their own cloud systems.”

Mr. Nadella is a true insider, having worked closely with the company’s departing chief executive, Steven A. Ballmer, who announced last year that he was planning to vacate his post. That familiarity could be an advantage for Mr. Nadella, since Mr. Ballmer still holds a seat on the company’s board, along with Microsoft’s chairman, Bill Gates.

But that familiarity may come at a price, at least for Microsoft critics who believe the aging company needs a bigger shot in the arm to bolster its stock performance.

“He’ll bring a new energy to the spot, but remember that he is a 22-year veteran of Microsoft,” said Colin Gillis, an analyst with BGC Partners. “For the people who are looking for wholesale change and an outsider to come in and shake up a sleepy culture, that’s not this.”

Microsoft has pushed into other businesses as consumer PC sales have slowed, so betting on an executive with a track record of pushing initiatives would make sense.

But whether Mr. Nadella can bring that success to some of the company’s other products, like the Xbox gaming console, is unclear. Aligning Microsoft’s jumble of businesses amid an onslaught of competition from the worlds of mobile devices, social media and other technologies would be a challenge for any successor to Mr. Ballmer.

“The unknown is that he’s never run a large public company before,” Mr. Gillis said. “He’s been a division head.”

Google’s Stock Split Comes as Shares Hit Record Highs

Remember when Google announced plans to split its stock, creating a third class of shares? No worries if you couldn’t; the technology titan announced it in the spring of 2012.

Now the company’s board has finally cleared the way for the stock division â€" just as Google is trading at record highs.

By early afternoon on Friday, shares in the company were trading at $1,180.52. Come April 2, that could fall to about $590.26 or so, as the number of shares doubles.

As DealBook and others have noted before, however, it’s not a simple 2-for-1 split. The new shares will be Class C shares, which carry no voting rights but enjoy the same economic rights â€" meaning dividends, if Google ever pays them â€" as existing Class A shares. The company’s founding duo, Larry Page and Sergey Brin, would still control the majority of the all-important Class B shares that hold 10 times the voting power of Class A shares.

Both the Deal Professor and Andrew Ross Sorkin, the DealBook columnist, have criticized Google for the move, which essentially solidifies the control by Mr. Page and Mr. Brin of what is now a nearly $400 billion company.

Google eventually settled a lawsuit by shareholders who argued that the issuance of nonvoting shares was unfair, though as the Deal Professor noted, the agreement doesn’t address the larger issue of the Class B shares’ voting power.

K.K.R. Buys Stake in German Soccer Club

Kohlberg Kravis Roberts & Company, a private equity giant with its hands in a range of businesses, from natural gas to maritime finance, has bought into a new sector: German soccer.

K.K.R. has agreed to buy a 9.7 percent stake in Hertha BSC, a soccer club in Berlin, according to an announcement on Friday. The deal, worth 61.2 million euros ($82.6 million), will allow a club that had experienced years of financial challenges to reduce its debt and buy back licensing and catering rights.

The deal ties K.K.R. to a soccer team with a loyal following in Germany, and one that had long been in search of a major investor. Last year, Hertha BSC sold rights to catering in its stadium, part of an effort to shore up its finances.

Though outside investors are not unusual in German soccer â€" Audi and Adidas own stakes in another club, Bayern Munich â€" it is virtually unheard of for an American private equity firm to buy a stake. The German association that regulates the industry forbids any investor from owning a majority of a club’s shares.

K.K.R., which is getting a seat on Hertha BSC’s supervisory board, has the option to increase its stake to 33.3 percent over time. Still, the private equity firm will not be allowed to influence matters related to the sport, like finding new players.

The deal “represents a quantum leap for the economic situation of our club,” Michael Preetz, managing director of Hertha BSC, said in a statement. “We will remain fully committed to our strategy of focusing on our superior youth development and of integrating young, talented players.”

Hertha BSC has had a mixed record over the years, and the last time it won the German championship was in 1931. Still, it is currently ranked seventh out of 18 in the Bundesliga, Germany’s premier league. With more than 30,000 members, it is Berlin’s biggest club.

The deal is K.K.R.’s latest in Germany. In recent years, the firm has invested in Wild Flavors, a maker of ingredients for food and beverages, and struck a deal to restructure the debt of the auto repair chain Auto-Teile-Unger.

It also formed a music rights joint venture with Bertelsmann, which the media giant bought full control of last year.

In the soccer deal, executives of Hertha BSC sought to emphasize that working with private equity would not change how the club operates. But they extolled the deal’s financial benefits.

Ingo Schiller, the club’s chief financial officer, said: “Today is the best day I have had since taking on a managerial role.”

Start-Up Aims to Circumvent Rules on Private Stock Sales

You have likely heard of “first world problems.” But here is a Silicon Valley problem â€" and a company trying to solve it.

With closely held start-ups commanding rich valuations, employees who hold shares in those companies are wealthy on paper, with few ways to access that wealth to buy a house or a car. The more established start-ups have imposed tight restrictions on their employees’ ability to sell their shares.

One young company, however, is trying to get around these rules with a novel way to provide liquidity.

The company, Equidate, which opened its doors on Thursday, says it will allow start-up employees to sell the rights to the economic upside (or downside) of their shares, without actually transferring ownership of the shares. In other words, in exchange for a shot of cash, the employee would agree to forfeit any gains in a future initial public offering. (The employee would retain the voting rights of a shareholder.)

The idea is sure to provoke skepticism from start-ups and their legal teams, which take pains to limit the universe of owners of their stock. Start-ups have clamped down on secondary transactions in recent years, forcing companies like SecondMarket and SharesPost â€" two pioneers of secondary markets in private stock â€" to alter their business models. Equidate hopes to get around these restrictions by simulating the financial effects of a sale of shares without a sale actually taking place.

“As an adviser to many tech start-ups, I’m seeing more of these types of offerings - which aim to get around the restriction on stock transfers which private companies have increasingly put in place,” Samuel B. Angus, a partner at the law firm Fenwick & West, said in an email.

Equidate has no real track record in this business, and its proposition â€" trying to circumvent tightly worded legal documents â€" may well fail. But its initial employees bring some experience in technology circles. One is Gil Silberman, a Silicon Valley lawyer who has worked with companies like LinkedIn and OpenTable.

Another, Sohail Prasad, a 20-year-old dropout from Carnegie Mellon, received financing from the prominent incubator Y Combinator for a previous start-up project, Hiptype. He most recently worked as a product manager at Zynga.

“You look at these pre-I.P.O. companies, and it’s taking them longer and longer to reach an I.P.O.,” Mr. Prasad, Equidate’s chief executive, said. “There are these people who have been at these companies for a long time who are completely tied up.”

For prospective investors, Equidate pitches itself as a way to gain exposure to young companies before they go public. Only accredited investors â€" defined as having a net worth above $1 million or annual earnings over $200,000 â€" can participate.

In a statement, Equidate said it had “millions of dollars of equity listed on the platform from hot pre-I.P.O. companies such as Dropbox and BuzzFeed.”

Mr. Prasad said he had spoken with “a number” of privately held start-ups about Equidate.

“At varying levels, they all have different concerns or different things they want control of or answers to,” Mr. Prasad said. “But we haven’t been banned from anyone yet.”

Start-Up Aims to Circumvent Rules on Private Stock Sales

You have likely heard of “first world problems.” But here is a Silicon Valley problem â€" and a company trying to solve it.

With closely held start-ups commanding rich valuations, employees who hold shares in those companies are wealthy on paper, with few ways to access that wealth to buy a house or a car. The more established start-ups have imposed tight restrictions on their employees’ ability to sell their shares.

One young company, however, is trying to get around these rules with a novel way to provide liquidity.

The company, Equidate, which opened its doors on Thursday, says it will allow start-up employees to sell the rights to the economic upside (or downside) of their shares, without actually transferring ownership of the shares. In other words, in exchange for a shot of cash, the employee would agree to forfeit any gains in a future initial public offering. (The employee would retain the voting rights of a shareholder.)

The idea is sure to provoke skepticism from start-ups and their legal teams, which take pains to limit the universe of owners of their stock. Start-ups have clamped down on secondary transactions in recent years, forcing companies like SecondMarket and SharesPost â€" two pioneers of secondary markets in private stock â€" to alter their business models. Equidate hopes to get around these restrictions by simulating the financial effects of a sale of shares without a sale actually taking place.

“As an adviser to many tech start-ups, I’m seeing more of these types of offerings - which aim to get around the restriction on stock transfers which private companies have increasingly put in place,” Samuel B. Angus, a partner at the law firm Fenwick & West, said in an email.

Equidate has no real track record in this business, and its proposition â€" trying to circumvent tightly worded legal documents â€" may well fail. But its initial employees bring some experience in technology circles. One is Gil Silberman, a Silicon Valley lawyer who has worked with companies like LinkedIn and OpenTable.

Another, Sohail Prasad, a 20-year-old dropout from Carnegie Mellon, received financing from the prominent incubator Y Combinator for a previous start-up project, Hiptype. He most recently worked as a product manager at Zynga.

“You look at these pre-I.P.O. companies, and it’s taking them longer and longer to reach an I.P.O.,” Mr. Prasad, Equidate’s chief executive, said. “There are these people who have been at these companies for a long time who are completely tied up.”

For prospective investors, Equidate pitches itself as a way to gain exposure to young companies before they go public. Only accredited investors â€" defined as having a net worth above $1 million or annual earnings over $200,000 â€" can participate.

In a statement, Equidate said it had “millions of dollars of equity listed on the platform from hot pre-I.P.O. companies such as Dropbox and BuzzFeed.”

Mr. Prasad said he had spoken with “a number” of privately held start-ups about Equidate.

“At varying levels, they all have different concerns or different things they want control of or answers to,” Mr. Prasad said. “But we haven’t been banned from anyone yet.”

Detroit Plan Is Said to Split Creditors Into 2 Groups

Detroit is preparing to resolve its bankruptcy case by splitting its unsecured creditors into two groups and treating them differently, according to people briefed on the city’s plan.

One group, composed of retired city workers, would get cash for their claims, while others, holders and insurers of certain city debts, would get a series of notes of uncertain but lesser value. One person, who asked not to be identified because of a confidentiality order, called the plan “massively discriminatory.”

It is a fundamental principle of United States bankruptcy law that similarly situated creditors are treated equitably. In Detroit’s bankruptcy case, both the pensioners and the genral obligation bondholders are eager to avoid a court precedent where one group would be privileged above another.

Some creditors view the city’s proposal, presented in sometimes tense meetings with a mediator, as a blunt negotiating tool meant to cudgel them into accepting unfavorable terms, one of the people briefed on it said.

The city is expected to file a plan with the bankruptcy court by Feb. 17. After that, creditors will file any objections. Detroit’s bankruptcy judge, Steven Rhodes, must eventually decide whether the plan is fair and equitable.

Creditors slated to get smaller recoveries were said to be considering their legal options. The bankruptcy ju! dge, mediators and other officials shepherding Detroit through its bankruptcy case have repeatedly urged the parties to reach out-of-court settlements and avoid litigation. The city has more than 100,000 creditors, and there are fears that the city might become hopelessly bogged down if a string of protracted lawsuits is started.

The people briefed on the plan said it contained a “base scenario” in which cash and notes worth $4.2 billion would be divided among the unsecured creditors. Retirees would get cash worth roughly 50 percent of their claims over time, while holders of debt issued in 2005 to shore up the pension system would get about 10 percent.

The city also described a second possible way in which additional money might be available through a lease of Detroit’s water nd sewer system. If that deal is completed, the city would propose giving all unsecured creditors an additional 3 percent of their claims, but some would still receive more than others.

Some of the money for the retirees’ claims is proposed to come from an arrangement being struck with philanthropic organizations in Michigan, which would give roughly $350 million to the Detroit Institute of Art. Their donations are expected to be matched dollar for dollar by the State of Michigan.

The money would be used to keep valuable artworks in Detroit, but the donors have also agreed to stipulate that it be used to pay the retirees’ pensions, to the extent possible.

The pr! oposal in! cluded $3.1 billion in cash contributions that Detroit would make to its municipal pension system over the next 40 years, and $500 million to support the city retirees’ health plan.

The art proceeds and state appropriations would be divided equally between the city’s two pension funds, one for the police and firefighters, and another for all other municipal workers. The cash would be split a little differently, with the police and firefighters’ pension fund getting $1.4 billion and the general pension fund getting $1.7 billion.

Recoveries for the financial creditors would come from several types of notes that the city would issue. Some of the notes would give creditors a 20 percent recovery rate, but some of them would also have their claims sharply reduced, leaving them with jut 10 percent.

Goldman’s Chief Gets a Raise

GOLDMAN AWARDS ITS CHIEF WITH A RAISE  |  Goldman Sachs’s board decided to give Lloyd C. Blankfein, the banks chief executive, stock options worth $14.7 million as part of his 2013 pay package, eclipsing last year’s total.

Though the cash portion of Mr. Blankfein’s bonus has not yet been disclosed, he and other senior executives have typically been awarded a 70-30 split between stock and cash. If this holds true, it would mean Mr. Blankfein is set to receive around $6 million in cash. Including his base salary of about $2 million, his total compensation for 2013 stands to be around $23 million, leaving Jamie Dimon, the chief of JPMorgan Chase, in the dust.

LENOVO’S WEEKLONG SPENDING SPREE  |  Think your week was hectic? Consider Lenovo’s. In just seven days, Lenovo, the Chinese technology behemoth, announced two deals totaling $5.2 billion. The first, announced Jan. 23, was a $2.3 billion acquisition of IBM’s low-end server business. The second, announced on Thursday, was the purchase of Motorola Mobility from Google for $2.9 billion. During those seven days, Lenovo’s chief financial officer had secret meetings and dealt with the impending Chinese Lunar New Year.

The flurry of deals highlights just how eager Lenovo is to continue its rise through the top echelons of technology companies. With the IBM server acquisition, Lenovo put itself in a position to take on Dell and Hewlett-Packard, and its Motorola purchase moved it into the No. 3 position in smartphones, behind Samsung and Apple. But Lenovo’s furious quest to take on the world’s technology giants also raises questions about whether the company is trying to do too much, too fast.

“Though there is some strategic logic, shareholders have little way of working out whether the deals stack up,” write Ethan Bilby and Peter Thal Larsen of Reuters Breakingviews.

LIBYAN INVESTMENT FUND SUES GOLDMAN  |  The Libyan Investment Authority, the country’s sovereign investment fund, has filed a lawsuit against Goldman Sachs contending that the bank made a $350 million profit from more than $1 billion in derivatives trades that became worthless, Jenny Anderson reports in DealBook.

In a news release on Thursday, Abdul Magid Breish, the chairman of the Libyan Investment Authority, said: “While Goldman Sachs was orchestrating these unjustly exploitative transactions, it repeatedly told the L.I.A. that it sought a long-term relationship with the L.I.A. as a strategic partner. This was untrue.” A Goldman spokesman said the bank believes the claims are “without merit.”

The investment authority contends that Goldman did not explain the investments, which were effectively long-term call options on six stocks, and that the Libyans did not understand the investments, Floyd Norris writes in DealBook. All of the investments cited in the lawsuit expired worthless, with an investment in Citigroup’s shares falling the furthest out of the money. Had the Libyan fund bought the shares instead of options, it would have lost money but not nearly all of its investment.

ON THE AGENDA  |  Farewell, Ben S. Bernanke, whose last day as chairman of the Federal Reserve is today. Personal income figures for December are out at 8:30 a.m. The Reuters/University of Michigan consumer sentiment index for January is out at 9:55 a.m. Richard W. Fisher, the president of the Dallas Fed, speaks on the economic outlook at 1:15 p.m. John C. Williams, president of the San Francisco Fed, is on Fox Business Network at 1 p.m. Robert Kraft, the owner of the New England Patriots, is on CNBC at 8 a.m. Buck French, the founder and chief executive of Fantex Holdings, is on CNBC at 12:30 p.m. The mascots for the Denver Broncos and the Seattle Seahawks are on CNBC at 5 p.m. Get your game face on for Super Bowl XLVIII. Kickoff is at 6:30 pm on Sunday.

INSIDER TRADING ON OBAMA’S MYRA?  |  Almost one million shares of the sub-penny stock Myriad Entertainment & Resorts, (Nasdaq ticker: MYRA) were traded Jan. 17, more than a week before President Obama introduced the MyRA savings account in his State of the Union address, Bloomberg News reports.

A POETIC INVESTMENT BANKER  |  A former summer investment banking intern emailed The Financial Times this poem. Here is a snippet: “The ubiquitous klaxon / The blinding love of cash / Work past when the work is done / Contribute to the next crash.”

MEN’S WEARHOUSE COULD PAY MORE FOR RIVAL  |  The takeover battle involving Men’s Wearhouse and Jos. A. Bank continued on Thursday, with Men’s Wearhouse indicating in a letter that it may be willing to increase its bid for its rival, Rachel Abrams writes in DealBook. In the letter, Men’s Wearhouse remained confident in its offer of $57.50 a share, but added that “we are prepared to increase our offer price if you can demonstrate or we can discover additional value through discussions or limited due diligence.”

The willingness of Men’s Wearhouse to raise its bid has left analysts wondering how much is too much.
While some contend that the company is fairly valued given its closing price on Wednesday, others say it is reasonable to assume that the performance of both companies will improve.

Mergers & Acquisitions »

Google’s Sale of Motorola Unit Could Help Samsung  |  Google’s sale of Motorola Mobility to the Chinese computer maker Lenovo could bolster Samsung Electronics while putting other makers of Android phones, like HTC, Sony and Huawei, in a tough spot, the Bits blog reports.
NEW YORK TIMES BITS

Zynga Buys Mobile Game Maker  |  Zynga announced it was purchasing the mobile game developer NaturalMotion for $527 million, The Associated Press reports. The acquisition is Zynga’s largest to date.
ASSOCIATED PRESS

Deutsche Telekom Said to Consider Stake in OTE  |  Deutsche Telecom is said to be in talks to acquire a 10 percent stake in Hellenic Telecommunications Organization, known as OTE, Bloomberg News reports, citing unidentified people familiar with the situation. OTE has a market value of $7 billion.
BLOOMBERG NEWS

Telenav Buys Skobbler for $24 Million  |  Telenav, a wireless location-based services company, has purchased the navigation app Skobbler for $23.8 million in cash and stock, ReCode reports.
RECODE

Investors to Receive Payout from BATS-Direct Edge Merger  |  Investors in BATS Global Markets and Direct Edge, which include Morgan Stanley and Goldman Sachs, are expected to share a payout of $235 million of special dividends after the merger between the two companies is complete, The Financial Times reports.
FINANCIAL TIMES

INVESTMENT BANKING »

Goldman Deal Threatens Danish Government  |  When Denmark gave Goldman Sachs approval to buy a stake in its state utility, the Socialist People’s Party withdrew its ministers from the country’s governing coalition.
DealBook »

Bank of America Faces $2.1 Billion Penalty  |  The United States government is seeking a $2.1 billion fine from Bank of America over faulty mortgages, an increase from the initial $860 million penalty the government had asked for, The Financial Times report. The high-profile case is known as the “hustle,” after the bank’s “high-speed swim lane” used to rush through loans.
FINANCIAL TIMES

Bank Profits Reach Post-Crisis Highs  |  Profits for the six largest American banks totaled $77.5 billion in 2013, the highest total since the financial crisis, Quartz reports.
QUARTZ

Banks Easing Limits on Lending  |  United States banks are beginning to increase their risk appetites, resulting in steady loan growth, The Wall Street Journal reports.
WALL STREET JOURNAL

PRIVATE EQUITY »

For Blackstone, a Pot of Gold Remains Out of Reach  |  The world’s biggest private equity fund, known as Blackstone Capital Partners V, represents a potentially lucrative source of profit for Blackstone â€" but one that remains locked up for the immediate future.
DealBook »

Blackstone Earnings More Than Doubled in Fourth Quarter  |  The Blackstone Group’s results handily beat Wall Street forecasts as it reaped big gains on its investments in private equity and real estate.
DealBook »

K.K.R. Considering Tech Investing Platform  |  The private equity firm Kohlberg Kravis Roberts may be forming a growth equity platform focused on technology, Fortune reports.
FORTUNE

One Kings Lane Raises $112 Million  |  One Kings Lane, the popular home-decor online retailer, has raised $112 million in a new round of fund-raising, TechCrunch reported on Thursday.
DealBook »

HEDGE FUNDS »

TI Automotive Owners Tap Blackstone for Advice  |  TI Automotive’s hedge fund owners are said to have hired the advisory arm of the Blackstone Group to assess the merits of various options for the company like taking it public or selling it to private equity, Reuters reports, citing unidentified people familiar with the situation.
REUTERS

Bridgwater’s Dalio Discusses World View  |  Ray Dalio, the founder of the hedge fund Bridgewater Associates, spoke to CBS News about his understanding of the world.
CBS NEWS

Hedge Fund Billionaire Backs Social Impact Bond  |  The hedge fund billionaire John Arnold, along with Goldman Sachs and other philanthropic partners, have backed a $27 million social impact bond to prevent young men in Massachusetts from going back to prison or jail, CNBC reports.
CNBC

I.P.O./OFFERINGS »

Telecom Firm Altice Raises $1.8 Billion in I.P.O.  |  The pricing gives the company, which has operations in several European countries and the Caribbean, a market value of €5.7 billion and fuel for potential acquisitions.
DealBook »

An Alibaba Rival Plans Its Own I.P.O. This Year  |  JD.com, one of China’s biggest e-commerce companies, said in a regulatory filing that it planned to raise $1.5 billion this year in an initial public offering in the United States.
DealBook »

Box, an Online Storage Start-Up, Is Said to File for an I.P.O.  |  The online storage and document-sharing provider, founded seven years ago, has become one of Silicon Valley’s darlings.
DEALBOOK

New Home Company Said to Raise $86 Million in I.P.O.  |  The homebuilder New Home Company priced its shares at $11 in its initial public offering and is said to have raised $86 million, Reuters reports.
REUTERS

VENTURE CAPITAL »

Former Chief of Akamai Joins General Catalyst as Partner  |  Paul Sagan, who ran Akamai Technologies for eight years, will act as a hands-on adviser to young companies in which the venture capital firm is invested.
DealBook »

CrunchFund Raising Second Fund  |  CrunchFund, the early-stage venture capital firm led by Michael Arrington, the founder of the TechCrunch news site, is raising its second fund with a target of about $30 million, Fortune writes.
FORTUNE

Fashion Start-Up Raises $1.2 Million  |  The New York-based fashion start-up Bow & Drape, which has begun experimenting with 3-D printing to make some of its accessories, has raised $1.2 million, The Wall Street Journal reports.
WALL STREET JOURNAL

Same-Day Hotel App Expands  |  HotelTonight, a mobile phone app start-up for booking same-day hotels at a discount, has signed on 10 hotel brands and received an investment from a real estate owner, The Wall Street Journal reports. The app has already raised $80 million, largely from the hedge fund Coatue Management and venture capital firms.
WALL STREET JOURNAL

Venture Investments in Florida Companies Double  |  Venture capital-backed companies in Florida raised $618 million in 2013, twice the total in 2012, The Wall Street Journal reports. While Florida is not known for attracting venture capital investments, its health care companies are drawing considerable interest from investors.
WALL STREET JOURNAL

LEGAL/REGULATORY »

Former Chief of S.E.C. to Shift Consulting Job  |  Mary L. Schapiro said her time would be spent on an array of university lectures, speaking engagements and corporate board work.
DealBook »

A Real-Life ‘Wolf of Wall Street’ Reunion, Minus the Wolf  |  The movie left out some of the intriguing details of Jordan Belfort’s crimes, a group of men who had front-row seats to the real thing said at a law school event in Manhattan on Wednesday.
DealBook »

Banks Could Still Face Tougher Capital Requirements to Prevent Crises  |  Although central bankers and national regulators agreed to support a low leverage ratio for banks, the chairman of the Basel Committee on Bank Supervision suggested that the panel could still recommend stiffer requirements.
DealBook »

European Commission Proposes More Oversight of Repo Market  |  The European Commission has put forth a proposal that would tighten oversight of the repo and securities financing market, which is meant to curb risky trading by banks, The Financial Times writes.
FINANCIAL TIMES

Portugal to Sell Bailed-Out Bank’s Miró Art  |  The Portuguese government is looking to raise $50 million by selling some artwork by Joan Miró, which was owned by Banco Portugues de Negocios when it was seized by the state in 2008, Bloomberg News reports.
BLOOMBERG NEWS

Activists Solicit Shareholders to Replace Board at CommonWealth REIT  |  Corvex Management and Related Fund Management are frustrated with the Portnoy family, which controls CommonWealth REIT, and the firms have begun a consent solicitation process aimed at replacing the CommonWealth board.
DealBook »

Telecom Firm Altice Raises $1.8 Billion in I.P.O.

LONDON â€" Altice, the European cable and mobile operator, raised 1.3 billion euros in an initial public offering on Friday, as the telecommunications company pays down its debt and looks for potential acquisitions across the Continent.

Founded by the French entrepreneur Patrick Drahi in 2002, Altice said it sold 46.1 million shares at €28.25, or about $38.29, a share. Altice sold €750 million of new shares and a further €550 million of existing shares owned by Mr. Drahi’s holding company Next L.P., raising the €1.3 billion, or about $1.8 billion.

The pricing gives the company, which has operations in several European countries and the Caribbean, a market value of €5.7 billion. Altice’s shares starting trading in Amsterdam.

European cellphone and cable companies are attempting to consolidate their operations across the Continent, and both Liberty Global and the British telecoms operator Vodafone are said to be mulling an offer for the Spanish cable firm Ono that could value the company at around $10 billion.

John C. Malone’s Liberty Global agreed to buy the Dutch cable operator Ziggo on Monday for around $13.7 billion.

Mr. Drahi of Altice told reporters earlier this month that his cable and mobile company was also looking at up to 10 potential acquisitions to expand its existing businesses or move into new countries. He did not provide specifics on which firms Altice was targeting.

Speculation, however, has centered on the French cellphone operator SFR, which is currently being spun out of the European conglomerate Vivendi.

Altice owns a 40 percent stake in the French cable operator Numericable, which also raised around $1 billion through its own initial public offering in November. And analysts have said that a potential deal for SFR could offer Numericable the ability to diversify its operations within France.

Goldman Sachs and Morgan Stanley coordinated Altice’s I.P.O., while Credit Suisse, Deutsche Bank and HSBC participated in the listing.