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Comcast Adds Another Piece in Media Plan


Three weeks ago, Comcast unveiled plans to build an addition to its headquarters, a gleaming steel-and-glass tower designed by the renowned architect Norman Foster that will cast a shadow over downtown Philadelphia.

With its proposed $45 billion takeover of Time Warner Cable, the company could do much the same over the media and telecommunications landscape.

The deal, announced on Thursday, solidifies Comcast’s reputation as an enterprise with grand, even audacious, ambitions. Begun 51 years ago with just 1,200 subscribers in northern Mississippi, Comcast has grown into a giant conglomerate that now has one foot in the broadband and cable businesses and another in content, thanks to its ownership of NBCUniversal.

Its competitors now include companies as varied as Verizon in broadband and the Walt Disney Company in entertainment, and with a market capitalization of $138 billion it is bigger than either, and more diverse.

“I don’t know of a company that has the combination of assets that Comcast has,” said John Doerr, the prominent venture capitalist. “It’s a well-integrated suite. That’s where the world is headed.”

The deal to acquire Time Warner Cable â€" completed in just a week â€" is certain to face scrutiny from the government and opposition from consumer groups. But if approved, it will make Comcast a national player, adding millions of subscribers in major markets like New York City, Dallas and Los Angeles.

Investors expressed some skepticism, sending Comcast shares down 4 percent in trading Thursday. Some think that Comcast may have overpaid in the deal. In addition, Comcast faces the challenge of successfully managing large, sometimes unwieldy components â€" much the way Time Warner did when it owned AOL, Time Warner Cable and an array of other assets.

But analysts generally praised the deal. Richard Greenfield, an analyst at BTIG who had predicted that Comcast would eventually arrive as a buyer, said the transaction would pay off in the long term.

“It’s too transformative a deal to pass up,” Mr. Greenfield said. “It shows recognition of a rapidly changing landscape.”

The move further establishes the reputation of Comcast’s chief executive, Brian L. Roberts, as a daring deal maker with expansive ambitions. A soft-spoken 54-year-old, he lacks the outsize personality of an executive like Rupert Murdoch but has nevertheless become an influential mogul, with power centers in both Philadelphia and Manhattan’s 30 Rockefeller Center. His company reported $6.8 billion in profit on $64.7 billion in revenue last year.

Mr. Roberts, whose father, Ralph, founded the company in 1963, has deep roots in the cable industry. He spent some of his teenage years as an intern answering service calls and repairing cables. But over time, he developed what analysts and friends call a sharp mind and a killer instinct, unafraid to pursue high-priced takeovers.

“Fifteen years ago, a lot of cable entrepreneurs of my dad’s generation began selling their companies and we wanted to buy,” Mr. Roberts said in a telephone interview. “We wanted to create a company that was sustainable.”

Behind the approximately $100 billion in deals that he has overseen has been a belief that the company could compete across a variety of platforms with Verizon, AT&T and DirecTV. And he foresaw the importance of high-speed data early on, according to Mr. Doerr, who became friends with Mr. Roberts in the 1990s.

Mr. Roberts recalled that when Bill Gates invested $1 billion in his company in 1997, the Microsoft billionaire told him that data would be a bigger business than video one day.

“I didn’t know what he was talking about then, but he was right,” Mr. Roberts said.

Over the years, Mr. Roberts assembled a management team that has won praise for its acumen, including Neil Smit, the former Navy SEAL who will oversee Comcast’s expanded cable businesses, and Michael Angelakis who, as Comcast’s chief financial officer, oversaw the negotiations with Time Warner Cable.

On the team is Stephen Burke, who left Disney 16 years ago to join Comcast when it was still a small-time player in the cable industry. He has since become the head of NBCUniversal.

“I had a lot of people sort of scratch their heads and say, ‘Why would you go to a little regional cable company?’ ” Mr. Burke said in an interview. “I went because I was convinced at the time â€" and I was right, more right than I knew â€" that Brian wanted to create the next great American media company. “

Mr. Roberts has long been a top negotiator in his company’s deals. Mr. Doerr, a top partner at the investment firm Kleiner Perkins Caufield & Byers, recalled negotiating against his friend in a broadband deal in the late 1990s. He said he needed to take a nap under a table late one night while Mr. Roberts kept going.

But it was the acquisition of AT&T’s cable business for $47 billion 13 years ago â€" beating rivals like Time Warner in the process and becoming the country’s biggest cable provider â€" that first revealed the scope of Comcast’s ambitions.

“Once we got big in distribution, we looked at people like Rupert Murdoch and John Malone and just felt in our bones that content and distribution together worked well,” Mr. Burke said. “So once we were of size on the cable side, we turned to look to a content company to buy.”

The next deal was even bolder, but ended badly: In 2004, Comcast made an ill-advised bid to acquire Disney for $54 billion, setting off a revolt among its shareholders, forcing Mr. Roberts to admit defeat and bide his time for another media property.

A secret meeting on an Idaho golf course in summer 2009 provided that avenue. Jeffrey Immelt, General Electric’s chief executive, told Mr. Burke and Ralph Roberts that G.E. was willing to part with NBCUniversal. Months later, Comcast announced a deal to take control of the NBC media empire.

The acquisition satisfied Mr. Roberts’s urge to plant a flag among the major media companies. But it did not tamp down his instinct for pushing Comcast to stay ahead of the technological changes roiling the industry. Those changes only further stimulated Mr. Roberts’s natural inclinations to expand and tinker.

Comcast still lacked the national cable presence that Verizon and AT&T had, limiting how broadly it could promote new media services like advanced video on demand. The company’s management seemed in no rush to take that next step, but when Time Warner Cable finally called upon its rival for help in fending off a hostile bid by Charter Communications, Mr. Roberts and his team struck, quietly negotiating the deal in less than a week.

Comcast has shown few signs of sitting still. Last month, the company suggested that it planned to team with a utility to sell electricity in Pennsylvania. And it has already begun offering home security and automation through its Xfinity services.

“I don’t think of it as a cable company anymore,” Mr. Doerr said.

A version of this article appears in print on 02/14/2014, on page A1 of the NewYork edition with the headline: Comcast Path: Daring Deals To Add Reach .

Industry Shifts May Aid Comcast in Takeover Bid

On the face of it, the merger of the country’s two largest cable companies would seem like a nonstarter, given its steep regulatory hurdles and skepticism from consumer watchdogs.

But Comcast’s proposed acquisition of Time Warner Cable comes at a moment of seismic change in the television industry, with consumers increasingly cutting their cable cords and instead streaming their favorite shows via the Internet through services like Netflix, YouTube, Amazon and Hulu.

This shifting landscape may aid Comcast as it seeks to persuade government officials â€" and deploy its prodigious army of lobbyists â€" to win approval for its $45 billion takeover.

“I believe television will change more in the next five years than in the last 50,” Brian L. Roberts, Comcast’s chief executive, has said.

Still, the combination of the two companies, creating a cable and broadband behemoth serving 30 million customers across 42 states, is expected to come under intense scrutiny from the Obama administration, which has toughened its enforcement of federal antitrust laws.

But much of the focus on Thursday over how the proposed deal would affect competition in cable TV overshadowed what could be a more important consideration for regulators: the merger’s effect on broadband Internet service, which is rapidly becoming the most important pipe running into the homes of most American consumers.

A merged Comcast and Time Warner Cable would have nearly twice as many high-speed Internet subscribers as the next largest company and would control roughly 38 percent of the high-speed Internet market, according to figures compiled by the Leichtman Research Group, an independent firm in Durham, N.H. The combined companies would account for nearly 32 million broadband customers, compared with 16 million for AT&T and nine million for Verizon.

The effect on cable TV and Internet service prompted many consumer advocacy organizations to immediately express hostility toward the deal.

“This industry is notoriously unpopular with consumers due to poor customer service, not to mention ever-increasing bills, and a deal this size doesn’t exactly convince us that things will get better,” said Delara Derakhshani, policy counsel for Consumers Union.

Washington lawmakers also said they would give it close scrutiny. Senator Amy Klobuchar of Minnesota, chairwoman of the Senate Antitrust Subcommittee, said that because the proposed merger “could have a significant impact on the cable industry and affect consumers across the country,” she planned to convene a hearing to examine the deal.

The transaction also has raised concerns among some of the cable networks, whose channels reach consumers through providers like Comcast. Randel Falco, chief executive of Univision Communications, said the company would monitor the government review.

“When the No. 1 and the No. 2 cable operators merge it is a cause of concern that requires significant scrutiny,” Mr. Falco said.

But Comcast officials dismissed much of the criticism of the deal as “hysteria” and noted that the new company’s market share of cable subscribers would be no higher than it was after completing a similar transaction with Adelphia in 2006.

In addition, Comcast said that it and Time Warner Cable did not compete in a single ZIP code anywhere in the United States. Nor is the deal likely to have an effect on other providers of television programming â€" including Verizon, AT&T, DirecTV and Dish â€" which in recent years have performed better than the cable companies. Since 2005, Comcast said, telecommunications companies and satellite providers gained 18 million customers while traditional cable companies lost 10 million subscribers.

“Previous antitrust concerns are truly antiquated in light of today’s marketplace realities,” David L. Cohen, a Comcast executive and its chief lobbyist, said on Thursday.

There are also “cord cutters” who have jettisoned their cable providers and watch television on the Internet via fast-growing services like Netflix and YouTube.

Comcast already has plenty of experience dealing with antitrust and other regulatory officials in Washington. In 2011, the company spent a year persuading officials at the Justice Department and the Federal Communications Commission to approve its takeover of the entertainment giant NBCUniversal. It gained the approval in part by agreeing to certain conditions, among them a promise not to use NBC’s clout as a provider of programming to deny access to its customers by competing producers of television and films.

But many in Washington say that Mr. Cohen, a veteran of Philadelphia politics, is Comcast’s secret weapon in trying to persuade government regulators to sign off on the deal.

Mr. Cohen has close ties to President Obama, perhaps even closer than Comcast’s chief executive, Mr. Roberts, who has golfed with the president on Martha’s Vineyard.

A major Democratic fund-raiser, Mr. Cohen and his wife hosted Mr. Obama at their Philadelphia home in 2011, raising $1.2 million at an event where the president called the couple “great friends.”

Mr. Cohen also was a guest at the White House on Tuesday for the state dinner in honor of President François Hollande of France.

Other Comcast officials have the ability to reach deep into the regulatory agencies that will review the merger, while officials at those agencies also are very familiar with Comcast and the cable business. Shortly after the F.C.C. approved Comcast’s purchase of NBCUniversal, one of the commissioners who voted in favor of the deal, Meredith Attwell Baker, joined Comcast as a lobbyist.

The current F.C.C. chairman, Tom Wheeler, once served as the leader of the cable industry’s chief lobbying group. And the current director of the antitrust division of the Justice Department, William J. Baer, represented NBCUniversal during the Comcast deal as a lawyer in private practice.

A Justice Department spokeswoman declined to comment on whether Mr. Baer’s work for NBC would affect his ability to oversee the investigation of the Comcast-Time Warner Cable transaction.

Last month, well before the announcement of the Comcast-Time Warner Cable deal, Mr. Baer said in an interview that any transactions involving telecommunications companies, including wireless phone companies or cable providers, would be closely scrutinized by the antitrust division. In 2011, the Justice Department blocked AT&T’s proposed $39 billion acquisition of T-Mobile.

Comcast officials said on Thursday that they had not yet directly engaged regulators about the deal other than to tell them it was occurring. But the company has in a way already started negotiating, saying that as part of the deal it would divest about three million subscribers.

That will keep the combined company with about 30 million subscribers, or less than 30 percent of the national total. From 1993 until 2009, when a federal appeals court threw out the rule, cable companies were forbidden by the F.C.C. from controlling more than 30 percent of the nation’s video marketplace. Though the rule is no longer in effect, Comcast officials cited it Thursday as proof that their transaction would not stifle competition.

Many consumer advocates disputed that position.

“No one woke up this morning wishing their cable company was bigger,” said Craig Aaron, president of the consumer advocacy group Free Press. “This deal would be the cable guy on steroids â€" pumped up, unstoppable and grasping for your wallet.”

A version of this article appears in print on 02/14/2014, on page A1 of the NewYork edition with the headline: Industry Shifts May Aid Comcast In Takeover Bid .

Banks in London Devise Way Around Europe’s Bonus Rules

A battle over banker bonuses is building in this financial capital.

Since the 2008 crisis, regulators around the world have tried to rein in bonuses, worried that big payouts encourage excessive risk-taking by bankers and traders. The European Union has gone further than most, limiting bankers to bonuses equal to one or two times their salaries.

But the bank giants operating in London â€" including Goldman Sachs, Bank of America Merrill Lynch and Barclays â€" are seeking to outflank the new restrictions. Responding to the law, they are structuring new pay packages that try to satisfy both their emboldened regulators and their very expensive employees.

So goodbye, big bonus.

Hello, role-based pay.

Other banks have called their new payments “allowances.” At least one labeled it “reviewable salary.”

One of the European lawmakers who led the push for bonus caps is not buying the semantic somersaults.

“These are bonuses in disguise,” said Philippe Lamberts, a Belgian member of the Green Party in the European Parliament. “I wonder how they will hold up in a court of law.”

The banks are nonetheless pressing on with the changes, with the goal of making sure their top talent in Europe gets paid.

Yet as the banks tie themselves in knots to comply with the bonus cap law, the new pay packages may undermine what bank regulators worldwide have sought to do for nearly six years: force banks to stagger the payment of bonuses over much longer periods. Such deferrals, as they are known on Wall Street, enable the money to be taken back if bets go bad.

“This may leave us not just no better off, but worse off from the management of systemic risk,” said Andrew Tyrie, chairman of the Treasury Select Committee and a Conservative member of Parliament. The commission on banking standards that he led concluded, among other issues, that compensation needed to include longer deferrals and more take-backs to discourage excessive risk-taking.

But the new structures â€" which do not entirely replace bonuses â€" pay more upfront and leave less available to take back.

“It doesn’t chime well with what regulators are asking banks to do,” said Jon Terry, head of the global financial services human resources leader at PricewaterhouseCoopers in London, which is working with many of the leading banks.

Bank executives and many leading political figures in Britain say that the bonus-cap law, which applies to European banks and the European operations of global banks, will drive up their fixed costs of compensation by forcing them to pay more in annual salary.

It also creates an unfair playing field, they say, noting that bankers and traders in New York, Hong Kong or Singapore face no such constraints.

“It makes London less competitive against the U.S. and Singapore and anywhere outside the E.U.,” said Stephen Brooks of the PA Consulting Group in London. “That’s a disadvantage to the E.U.”

For the moment, the banks in London have an ally in the British government, which is suing to block the law, saying that the European Commission has overstepped its authority. (Banker compensation is important to the British government, which gets 60 cents of every bonus dollar in the form of taxes and national insurance, according to Mr. Brooks.)

And British regulators so far seem comfortable with the new pay structures, with banks including Barclays and Goldman Sachs indicating in memos to employees and internal conversations that they have conferred with their regulator on the pay packages.

The 2013 European law limits certain bankers to bonuses equal to one times their salary, or two times if shareholders approve it. It defines what is considered fixed pay and what is variable pay, more commonly known as bonuses.

The banks were clearly in a bind. Data from the European Banking Authority show that in 2012 top bankers earned bonuses of two and a half to five and a half times as much as their salaries. In 2012, for example, Goldman Sachs paid its 115 so-called code staff employees in Europe â€" those to whom the caps apply â€" $86.1 million in salary and $450.7 million in cash and stock bonuses. That averages to about $4.7 million in total compensation for each person, with the bonus equal to 5.2 times as much as the salary.

But bank executives and their lawyers and consultants spotted an opening in the rigid definitions, with payments that are neither fixed, like a salary, nor variable, like a bonus.

For example, such payments may be made weekly, monthly or semiannually â€" like a salary â€" but they cannot be applied to pensions, making them more like a bonus. For some, the amounts will be reset every year, like a salary, and for others, it can vary with the economic environment, or a banker’s new role, like a bonus.

The British regulator has told the banks that the payments will most likely pass muster if they are noncontractual and not based on performance, according to compensation consultants, bank officials and lawyers. This is a bit of a turnaround for an industry that believes its extraordinarily high compensation is justified on the basis of exceptional performance.

A spokeswoman for the Prudential Regulatory Authority, which is an arm of the Bank of England and regulates the banks, declined to comment.

Antony P. Jenkins, Barclays’ chief executive, said this week that role-based pay was “not performance-related, but an adjustment to fixed pay.” After announcing a drop in profits and job cuts, Mr. Jenkins defended the decision to increase the investment bank’s bonus pool by 13 percent.

“Barclays does not set competitive rates in the marketplace,” he said, insisting that it was in the interest of shareholders to attract and retain top talent (though he waived his own bonus of £2.7 million, or $4.5 million). The move prompted some corporate governance experts to question, “for whom is this institution being run?” as Roger Barker, head of corporate governance at the Institute of Directors, put it.

Payments to employees that are of similar size to bonuses are expected to raise many questions. Traditionally, traders have been paid largely on the basis of their business unit’s profits. Healthy employee incentives could be undermined if large sums were being paid out on the basis of broader measures like the wider economic environment or a person’s job description. Shareholders, in particular, might protest. The unorthodox payments come at the same time that British regulators have been trying to press banks to repair their ethical culture.

At a hearing last year, Andrew Bailey, the chief of the Prudential Regulation Authority, described one unintended effect of the bonus cap. “It will also institute an unhelpful culture of banks spending their time finding ways around the rules,” he said.

His prediction did not take long to come true. Barclays, for example, explained its new role-based pay in a memo to employees in November. The pay, the memo said, would allow the bank to comply with the European legislation and offer “competitive market compensation to employees.” In January, Bank of America Merrill Lynch told its client-facing managing directors in London that they would get a 20 percent pay raise to $500,000 (£303,000).

While the law came from the European Parliament, the recently created European Banking Authority is charged with defining to whom the law applies. It is now writing guidelines to further clarify what constitutes “fixed and variable” compensation.

Both the authority and the European Commission can investigate noncompliance, and the commission can bring a case to the European Court of Justice. This raises the risk of regulatory penalties to banks trying to make bonuses look like other types of pay.

“We expect all banks to comply strictly with European rules on bonuses, and continuous talk about how to circumvent the rules is disturbing,” said Michel Barnier, Europe’s commissioner for overseeing financial services.

Jenny Anderson reported from London, and Peter Eavis from New York.



PepsiCo Declines to Spin Off Beverage Unit

PepsiCo Inc. said on Thursday that it had decided not to spin off its North American beverage business, effectively rejecting a push by the activist investor Nelson Peltz.

In a public filing, Pepsi said it came to its conclusion after enlisting bankers and consultants to perform an “exhaustive review” of the business. Ultimately, Pepsi determined it had enough reason to keep the unit, including the amount of free cash flow it generates and how much it expects beverages to “benefit from planned productivity and innovation initiatives.”

Mr. Peltz has pushed for months for Pepsi to carve up its various snack and soft drink units, or merge with Mondelez International, the snack business spun off by Kraft in 2012. Mr. Peltz’s investment firm Trian Fund Management has amassed a stake in both companies of more than $2.7 billion.

A spokesman for Trian declined to comment.

Pressure had been mounting for Pepsi to respond to Mr. Peltz’s overtures. In January, the company got a little breathing room when Mr. Peltz won a seat on Mondelez’s board, which ended his attempts to push the two food giants together.

Pepsi’s North American soft drink business has been slumping, with revenue down 2 percent in 2013. In the past, Mr. Peltz has called the beverage business “wonderful” but stagnant.

“The carbonated soft drink business is just not growing,” Mr. Peltz said in July. “Tastes change, people change.”

But Pepsi reaffirmed its commitment to that business on Thursday, saying it was among the most important to its retail customers.

A representative for Pepsi did not immediately respond to requests for further comment.

While the beverage business sagged in 2013, Pepsi’s profits received a lift from its North American snack products, which include the Frito-Lay and Quaker brands. Net revenue from its snack business rose 5 percent last year, to $25 billion.



Caught Beneath the Wheels of the Comcast Juggernaut

Comcast’s deal machine has spit out a value destroyer. Digesting Time Warner Cable is ambitious even for a serial acquirer like Comcast’s chief executive, Brian Roberts. As with some of his many previous purchases, it looks set to generate a return on investment below Comcast’s cost of capital. That’s crummy but not criminal. It’s also not surprising given the medieval governance the Roberts family uses to oversee its fiefdom.

The math simply doesn’t add up. Include Time Warner Cable’s debt with the equity Comcast is offering, and the deal’s enterprise value clocks in at nearly $70 billion. Factor in $1.5 billion of savings Comcast promises with the target’s expected operating profit of $4.7 billion and Comcast will get some $4.3 billion of after-tax operating profit. Divide that by the enterprise value and the return amounts to about 6.2 percent, below the 7.1 percent that Nomura estimates is Comcast’s weighted average cost of capital.

That’s no disaster. Comcast can argue the actual price, net of synergies, values the Time Warner Cable enterprise at a multiple of earnings before interest, taxes, depreciation and amortization that is lower than the one Comcast itself fetches in the stock market. By another metric, Comcast is paying a premium of about $11 billion to its quarry’s price before the bidding for control took off in earnest late last year, or about equal to the net present value of the anticipated cost savings from the deal. It’s a transfer of value to Time Warner Cable owners, but not hugely so.

No matter how it’s sliced, though, investors erased $6 billion from Comcast’s market value. The message is one of concern over how Mr. Roberts and his lieutenants wheel and deal. In this case, it could mean they’ll need to find additional financial benefits from combining the two companies, something Comcast would be understandably loath to talk about while competition watchdogs are eagerly sniffing around.

Even then, it’s hard not to detect a discrepancy between the desires of shareholders for rational investment returns and those of Mr. Roberts to expand his empire. The company’s bylaws make it all too easy. He controls all of Comcast’s class B shares, which constitute an “undilutable” 33.3 percent of the total voting power of all classes of Comcast common stock. With that sort of power, Mr. Roberts can afford to let fellow owners squirm.

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



Caught Beneath the Wheels of the Comcast Juggernaut

Comcast’s deal machine has spit out a value destroyer. Digesting Time Warner Cable is ambitious even for a serial acquirer like Comcast’s chief executive, Brian Roberts. As with some of his many previous purchases, it looks set to generate a return on investment below Comcast’s cost of capital. That’s crummy but not criminal. It’s also not surprising given the medieval governance the Roberts family uses to oversee its fiefdom.

The math simply doesn’t add up. Include Time Warner Cable’s debt with the equity Comcast is offering, and the deal’s enterprise value clocks in at nearly $70 billion. Factor in $1.5 billion of savings Comcast promises with the target’s expected operating profit of $4.7 billion and Comcast will get some $4.3 billion of after-tax operating profit. Divide that by the enterprise value and the return amounts to about 6.2 percent, below the 7.1 percent that Nomura estimates is Comcast’s weighted average cost of capital.

That’s no disaster. Comcast can argue the actual price, net of synergies, values the Time Warner Cable enterprise at a multiple of earnings before interest, taxes, depreciation and amortization that is lower than the one Comcast itself fetches in the stock market. By another metric, Comcast is paying a premium of about $11 billion to its quarry’s price before the bidding for control took off in earnest late last year, or about equal to the net present value of the anticipated cost savings from the deal. It’s a transfer of value to Time Warner Cable owners, but not hugely so.

No matter how it’s sliced, though, investors erased $6 billion from Comcast’s market value. The message is one of concern over how Mr. Roberts and his lieutenants wheel and deal. In this case, it could mean they’ll need to find additional financial benefits from combining the two companies, something Comcast would be understandably loath to talk about while competition watchdogs are eagerly sniffing around.

Even then, it’s hard not to detect a discrepancy between the desires of shareholders for rational investment returns and those of Mr. Roberts to expand his empire. The company’s bylaws make it all too easy. He controls all of Comcast’s class B shares, which constitute an “undilutable” 33.3 percent of the total voting power of all classes of Comcast common stock. With that sort of power, Mr. Roberts can afford to let fellow owners squirm.

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



Lessons Learned From Charter’s Previous Hostile Offer for Time Warner Cable

That long proxy fight to take control of Time Warner Cable that I predicted earlier this week? It lasted days, ending with the announcement on Thursday that Comcast would acquire Time Warner Cable. The questions now are whether Time Warner Cable can complete the deal, and what lesson we’ve learned for future hostile takeovers.

Time Warner Cable appears to have put an end to Charter Communications’ bid by pulling the proverbial rabbit out of the hat â€" a competing offer from Comcast. (In my defense, I did say that this was one way Time Warner Cable could avoid a proxy contest.) Time Warner Cable promptly accepted the offer of 2.875 Comcast shares for each Time Warner Cable share. The offer was valued at $158.82 a share, given Time Warner Cable’s closing price on Wednesday.

If a buyer’s stock goes up, it is usually because the market perceives that value is being created. Down means the opposite. This is not always right - after all, investors are pretty often wrong.

The market reaction in this case appears to signal that Comcast may have overpaid. Right now, Comcast’s shares are trading down more than 3 percent, valuing its offer at roughly $154 per Time Warner Cable share. This is about $4 billion in Comcast’s market value, and is a rough approximation of what the market, at least, views as the size of the overpayment.

Time Warner Cable has not filed the merger agreement, so we don’t know the full details. But it does not appear that there is a collar that protects Time Warner Cable’s shareholders if Comcast’s stock price goes down. Instead, the ratio is fixed, and so until this deal is completed, Time Warner Cable’s stock will trade on Comcast’s share price.

Still, Time Warner Cable’s stock is trading at only about $144 a share, about 6.5 percent below Comcast’s offer price. This spread is probably a symptom of two things. First, the deal will take about a year to clear regulatory approvals and close. Second, the regulators â€" namely the Federal Communication Commission and antitrust lawyers in the Justice Department â€" may balk.

While Comcast and Time Warner Cable have proclaimed that they have no overlap and see few antitrust problems, these issues are always tricky in industries with only a few big players. Just ask AT&T, which ended up paying a breakup fee of roughly $4 billion in its failed bid to acquire T-Mobile. So while the wait is probably the main factor driving the spread, investors are no doubt cautious about the regulatory approval process.

This may also explain why there is no breakup fee payable by either of the parties. That there is no fee is not unique. As Michael J. de la Merced noted on Thursday on DealBook, there was no breakup fee in the Citicorp-Travelers Group merger in 1998, for example. Time Warner Cable may have taken the position that the market should simply decide, which Comcast accepted because it believed that Charter will not match its price.

But not having a breakup fee also works to Comcast’s advantage if regulators block the deal. It can walk away. The alternative would have been that Comcast would have been obligated to pay a breakup fee of about $1.3 billion, if it were the standard 3 percent of deal value.

So while the risk of regulatory intervention appears low, there were enough reasons on both sides to forgo a break fee.
As for deal making in general, the sale outcome was driven by the defense that Time Warner Cable put forth. By putting a per-share figure out there in rejecting Charter’s lower bid of $132.50 a share, Time Warner Cable’s board hoped to drive Charter away.

But by doing so, Time Warner Cable acknowledged that it was up for sale. Kudos to Time Warner Cable’s four investment bankers at Morgan Stanley, Allen & Company, Citigroup and Centerview Partners for finding a better offer.

But this defense could just as easily have not worked, It could instead have pushed Time Warner Cable into a position it could not negotiate from, instead leaving the decision up to shareholders.

That’s why this type of defense should be used judiciously. It really is only for boards that think they can make the case, convincingly and with little argument, that an offer is undervalued or if there is another real buyer. If the board is not confident in either, it risks spending a lot of time and money only to lose, since shareholders these days are more inclined to go against directors on these matters.

Then again, we don’t see many hostile bids these days anyway. That Charter has bid and lost shows why. Such bids involve a huge expenditure of resources and effort for an uncertain outcome. No doubt, this deal is going to underline that point.



The Making of a Rap Tribute to the Galleon Group

What rhymes with Raj Rajaratnam?

In 2000, Turney Duff was a trader at the Galleon Group, a now-defunct hedge fund. The firm was riding high - these were the days before Mr. Rajaratnam, its founder, was convicted of insider trading.

Mr. Rajaratnam, as Mr. Duff tells it, wanted to celebrate Galleon’s success - in song. So he commissioned one from Jesse Jaymes, a rapper who had written “Go NY Go,” the Knicks’ catchy signature tune, and won an Emmy for writing “I Love This Game” for the National Basketball Association.

Mr. Duff, or Cleveland D., if you go by his rap name, was a fan of rap music, and had even formed a rap group in 1988 called Maximum Intensity. So he was pretty excited when Mr. Jaymes asked him to help with Galleon’s song.

“’Really?!’ I say, in a voice that is embarrassingly high-pitched,” Mr. Duff recounted in an excerpt from his book, “The Buy Side,” posted to his blog on Thurday. “But I follow up with a very manly, ‘Sure, love to.’”

What came of the meeting was a takeoff on Shirley Temple’s “The Good Ship Lollipop,” but way weirder. Some of the more notable lines include “It’s the good ship Galleon, when Wall Street has a rally on” and “When the market flopped, they knew it would dip, that’s why we call ‘em ‘The Good Ship.’” (A somewhat unfortunate lyric, in hindsight.)

In honor of Shirley Temple Black, who died on Monday at the age of 85, Mr. Duff posted the song to his site, where you can also read the full back story.



Fortress Buys Back Stake From Nomura

The Fortress Investment Group, the first publicly listed hedge fund in the United States, has bought back a stake from Nomura, one of its principal investors.

The news is a boon to Fortress, which paid $363.4 million for its 12 percent stake, and sent its shares climbing 5.8 percent to $8.45 on Thursday morning. Based in New York, Fortress has $58 billion under management and offers a variety of private equity and hedge fund products.

“We are very pleased to announce a transaction that provides compelling benefits to both Fortress shareholders and to the corporate objectives of a valued business partner,” said Wesley R. Edens, the co-chairman and co-founder of Fortress.

Nomura sold its remaining stake in the company to Fortress for $6 a share, representing a 25 percent discount to Fortress’s closing share price of $7.99 on Wednesday. As part of the transaction, Nomura will provide investment banking services to Fortress.

“We’re looking forward to continuing our relationship with Fortress, and are excited about the opportunity to contribute in an investment banking role to Fortress’s future success,” David Findlay, chief executive of Nomura Holding American, said in a statement.

Nomura originally paid $888 million, or $16.12 per share, for a 15 percent stake in Fortress in December 2006. At the time, Nomura said it planned to expand sales of Fortress’s products in Asia.

The move by Nomura comes as banks around the world begin to examine their portfolios and shed noncore assets in light of new Basel III banking regulations that force banks to hold more capital and reduce their risk.

When Fortress listed on the New York Stock Exchange in February 2007, it sold its shares for $18.50 a share.



Comcast and Time Warner Cable Forgo a Breakup Fee

Comcast’s $45 billion takeover of Time Warner Cable has a lot of numbers that stand out. Among them is the breakup fee if either side walks away.

That figure is zero.

The news release announcing the merger on Thursday makes no mention of a breakup fee. And top executives from both companies confirmed that there was none.

What most analysts and investors would have expected is a payment that Comcast would make to Time Warner Cable if the deal fell apart, particularly if regulators blocked the transaction. Though how much the acquirer would pay in a so-called reverse termination fee varies, one customary amount is about 3 percent of the transaction value; in this case, it would be about $1.35 billion.

Other mega deals, including the merger of Citibank and Travelers, have lacked breakup fees. On a conference call with reporters, Comcast’s chief executive, Brian Roberts, said that he could not recall any merger that his company had done having a breakup fee. Not even its takeover of NBC Universal, which cost roughly $30 billion, contained one.

But other transactions have had sizable breakup costs. In its $39 billion attempted takeover of T-Mobile USA, AT&T paid a hefty charge to its would-be target when the deal collapsed in late 2011. (The size of that fee depends on whom you ask: AT&T said that it paid $4 billion, while T-Mobile’s parent company, Deutsche Telekom, valued it at $6 billion. The difference came down to a matter of accounting.)

There are two ways of looking at the absence of a breakup fee. Comcast and Time Warner Cable are contending that they are so confident the deal will pass regulatory review that they do not need a breakup fee. And given the high price of the Comcast bid, neither expects Charter Communications or any other rival to try and make a better offer.

“The absence of a break fee reflects our confidence of getting a deal done,” Robert Marcus, Time Warner Cable’s chief executive, said on the reporter call.

On the other hand, AT&T and its advisers argued the opposite in the company’s bid for T-Mobile, saying that the fee was a sign of how committed it was to seeing the transaction through.



Comcast Has History of Big Deals

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S.E.C. Close to Naming New Senior Official

After months of deliberation, Mary Jo White is finalizing her inner circle.

Ms. White, who became chairwoman of the Securities and Exchange Commission 10 months ago, has privately indicated her plans to name a new leader of the agency’s division of trading and markets, a powerful unit that monitors the day-to-day functioning of stock exchanges and the broader financial system. Her likely pick, according to people briefed on the matter, is Stephen Luparello, a former regulator turned corporate lawyer.

Mr. Luparello, a partner at the law firm Wilmer Hale, previously spent 16 years at the Financial Industry Regulatory Authority, Wall Street’s self-policing organization. And before that, he spent nearly a decade at the S.E.C., making his latest potential move something of a homecoming.

Ms. White has not formally offered him the job and has not finalized her decision, the people briefed on the matter said, but she is expected do so in the coming weeks. An announcement does not appear to be imminent.

Ms. White’s decision would fill the last top spot on her S.E.C. roster. A former federal prosecutor, Ms. White had already put her stamp on the agency, naming a new enforcement director and general counsel. On Wednesday, she appointed the first head of the agency’s Office of the Investor Advocate.

The choice for trading and markets was trickier. The role is akin to a top deputy, a Mr. or Ms. Fix-It in times of crisis.

The trading and markets division, for example, was on the front lines of repairing Facebook’s botched initial public offering and the so-called flash crash of May 2010, when a problematic trade led the Dow Jones industrial average to plummet more than 700 points in just minutes, only to mostly recover moments later. The mishaps came to a head in August, when a problem shut down all trading in Nasdaq stocks for three hours.

With the markets appearing more problematic by the day, the new leader of the S.E.C.’s trading and markets unit would inherit a long to-do list. For one, the agency is considering plans to revoke the special authority that exchanges have to regulate the same trading they host, a divisive issue for the agency and the markets. The unit’s new leader would also grapple with writing several new rules under the Dodd-Frank Act, the regulatory overhaul law passed in response to the 2008 financial crisis.

Mr. Luparello was long rumored to be Ms. White’s choice for the role. But the talks were informal at first, the people briefed on the matter said, throwing the job up for grabs.

Ms. White and Mr. Luparello resumed the talks this year. And Mr. Luparello probably had support from another S.E.C. commissioner, Dan Gallagher, who is thought to be close to Mr. Luparello. Mr. Gallagher, a Republican who is often skeptical of Dodd-Frank and other regulatory efforts, was the acting director of the trading and markets division after the crisis until he left the agency to join Wilmer Hale.

A spokesman for the S.E.C. declined to comment. Mr. Luparello also declined to comment.

Bloomberg News reported earlier that Mr. Luparello was in consideration for the role.

If the hiring does proceed, Ms. Luparello would succeed John Ramsay, known at the S.E.C. as a steady hand while filling the role on an interim basis. Mr. Ramsay, who is thought to be friends with Mr. Luparello, is eventually expected to return to the private sector.

Mr. Luparello spent the last year in the private sector - he works in the securities department at Wilmer Hale, a go-to firm for Wall Street banks - but his resume is heavy on the regulatory side. Indeed, his career often tracked the regulatory roles of Mary L. Schapiro, the former S.E.C. chairwoman.

At the S.E.C. more than two decades ago, he worked with Mr. Ramsay as an aide to Ms. Schapiro, who was a commissioner at the time. At the Commodity Futures Trading Commission, Mr. Luparello and Mr. Ramsay were aides to Ms. Schapiro, who was chairwoman at the time.

Mr. Luparello also worked with Ms. Schapiro at Finra, the self-regulatory group that she ran before rejoining the S.E.C. At Finra, Mr. Luparello rose to the role of vice chairman, in which he oversaw the group’s regulatory and enforcement efforts.



A Year Later, Ackman Sticks With His Bet Against Herbalife

It has been a little more than a year since William A. Ackman announced a $1 billion bet against Herbalife, the nutritional supplements company, and that wager is still in the red.

But Mr. Ackman, the head of Pershing Square Capital Management, struck a defiant tone on Wednesday, speaking before an audience of investors in the same auditorium where he announced the short position in late 2012. He reiterated his contention that Herbalife is a pyramid scheme â€" an accusation that the company denies â€" but added a fresh twist.

“The company is now a levered pyramid scheme,” he said at the Harbor Investment Conference in Manhattan, a charity event benefiting the Boys and Girls Harbor. “And we like that.”

Mr. Ackman was referring to Herbalife’s recent sale of $1 billion of convertible senior notes, which was intended to help the company buy back more of its stock. The transaction does not significantly affect Pershing Square’s position, Mr. Ackman said, and “on the margin, it’s helpful to us” because Herbalife has taken on more debt, increasing its leverage, in Wall Street parlance.

A representative of Herbalife said the company had no comment.

Mr. Ackman several months ago altered the composition of his Herbalife bet, using put options to protect against a possible “short squeeze,” which can happen when other investors drive up the stock price. Now, he said, his bet is larger than it was originally.

Referring to Herbalife, he said: “If it were to disappear tomorrow, we’d make a lot more than had it just blown up the day after I gave my last presentation â€" although life would be a little easier.”

Mr. Ackman, who was a co-chairman of the conference along with Mark Axelowitz, a managing director at UBS Private Wealth Management, closed the event with a question-and-answer session in which he spoke about a number of his investments, including Procter & Gamble and Air Products and Chemicals. He also had harsh words for Target, which defeated his proxy fight in 2009.

“I think it’s lost some of its magic,” Mr. Ackman said, adding that Target was threatened by the rise of online retailing. “It seems more like a slightly higher end Wal-Mart.”

The Target press office did not immediately respond to a request for comment.

On the Herbalife bet, Mr. Ackman said his firm was “on our way” to breaking even, though he declined to identify the stock price at which that would happen. The stock has fallen almost 17 percent this year through Wednesday.

While his original Herbalife presentation was a three-hour affair, with hundreds of slides, Mr. Ackman dispensed with such formalities on Wednesday, instead taking questions from the audience.

“The last time I gave a presentation in this room it was 340 slides,” he said. “So today I have no slides. Actually, I have no presentation.”



Plenty to Watch in Giant Cable Deal


Comcast just gave merger junkies plenty to watch on cable.

The biggest U.S. operator has agreed to buy rival Time Warner Cable for $45 billion in stock, interrupting a hostile takeover attempt by smaller Charter Communications. The target got the price it wanted, but not the terms. Regulatory risks are high. And all eyes will still be on the crafty John C. Malone.

The maneuvering by Charter’s boss, Tom Rutledge, appeared to have relegated Comcast, which is still busy integrating NBC Universal, to a minor role of assisting with the smaller operator’s unsolicited bid for Time Warner Cable. Instead, Comcast’s chief executive, Brian Roberts, has outflanked his would-be partners.

Mr. Roberts is offering Comcast stock worth $159 a share, just $1 shy of what Time Warner Cable’s boss, Rob Marcus, demanded from Charter, which has so far only sweetened its bid to $132.50. Mr. Marcus also wanted Charter to pay at least 60 percent of the purchase price in cash and put in place collars to protect Time Warner Cable shareholders. He is getting neither from Comcast.

Some aspects of the deal may help support Comcast shares. Putting the two companies together is expected to yield $1.5 billion of cost savings. Taxed and capitalized, those would be worth about $10 billion. That more than covers the 18 percent premium to Time Warner Cable’s most recent closing price - although it has been propped up by anticipation of a deal with Charter. Comcast also may offer another sop in the form of a $10 billion stock buyback.

The merger math could help distract investors from regulatory concerns raised by combining the country’s top two cable operators. Comcast is proposing to sell 3 million of Time Warner Cable’s 11 million pay-TV subscribers to keep its market share below a rule-of-thumb ceiling of 30 percent. That’s the same threshold it reached after previous deals in 2002 and 2006.

Trust busters, however, are tougher these days, as AT&T found out in 2011 when the Department of Justice blocked its attempted takeover of T-Mobile USA.

There is also no guarantee that Mr. Rutledge and Mr. Malone, whose Liberty Media owns 27 percent of Charter, are finished either. Mr. Rutledge is taking aim at a former employer that passed him over as C.E.O. and may not be satisfied with the subscribers Comcast plans to offload. Malone is a notorious tactician, who in the last couple years has gone headlong back into the cable industry he helped pioneer. Stay tuned.

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



Comcast-Time Warner Deal: How It’s Playing on Twitter

It is a huge merger between two household names. So, naturally, Comcast’s deal to buy Time Warner Cable is lighting up social media with quips and analysis.

The news first broke on Twitter on Wednesday evening, when David Faber of CNBC posted a brief message outlining the deal. Before long, the tweets were flying.

The conversation touched on some of the intriguing features of the deal, such as the lack of a breakup fee, and soon turned to whether the combination would stand up to scrutiny in Washington. And, of course, there were plenty of comedic analysis, too.

First, the initial reaction to the news:

Regulatory questions loom over this deal, though the companies do not compete directly in any markets.

One of Comcast’s advisers was an individual banker, Paul J. Taubman.

Some on Twitter saw an opportunity to inject humor:

Farhad Manjoo, the new technology columnist for The New York Times, weighed in:

Comcast already uses Time Warner Cable for its Internet service in New York.

A blast from the past:

What does the deal mean for a rival product from Google?

This is what happens when a TV anchor has a scoop after hours:



Comcast’s Deal for Time Warner Is Big Win for Advisers

Comcast’s $45 billion takeover of Time Warner Cable isn’t just a victory for the cable giant. It’s also an unexpected win for the company’s advisers.

For months, it had seemed as though the bevy of banks and law firms working for Charter Communications, the unwanted suitor for Time Warner Cable, were in a position to score a big payday. Its only real rival, Comcast, was in talks to buy a handful of markets from Charter should it have succeeded.

Obviously, things took a different turn in recent days.

Comcast’s financial advisers stand to make $51 million to $68 million in fees, according to estimates from Freeman & Company. Time Warner Cable’s banks could earn $57 million to $75 million.

Comcast was advised by:

The deal is particularly big for Mr. Taubman, who already has one major transaction under his belt since striking out on his own: Verizon Communications’ $130 billion purchase of the 45 percent stake in its wireless business owned by Vodafone. He has long counted Comcast as a client, having spearheaded its deal for NBC Universal.

Time Warner Cable was advised by:

  • Morgan Stanley
  • Allen & Company
  • Citigroup
  • Centerview Partners
  • Paul, Weiss, Rifkind, Wharton & Garrison
  • Skadden, Arps, Slate, Meagher & Flom

Charter was advised by:



The Comcast-Time Warner Deal, by the Numbers

The all-stock, $45.2 billion deal by Comcast to buy Time Warner Cable is set to create a major player in the cable business. Here is a look at some of the important numbers.

Number of video subscribers

Time Warner Cable: 11.4 million residential and business customers
Comcast: 21.7 million total customers

After Comcast sells 3 million subscribers, the combined company is expected to have about 30 million subscribers.

Full-Year Revenue

Time Warner Cable: $22.1 billion
Comcast: $64.7 billion

Market Capitalization

Time Warner Cable: $38 billion
Comcast: $143 billion

Headquarters

Time Warner Cable: New York
Comcast: Philadelphia

Chief Executives

Time Warner Cable: Robert Marcus
Comcast: Brian Roberts

In a recent report, the research firm Mosaik Solutions compared the footprint of Time Warner Cable and Comcast:



Comcast Swoops Up Time Warner Cable

COMCAST SWOOPS IN TO ACQUIRE TIME WARNER CABLE  |  Time Warner Cable has been dodging a takeover for months, but it finally accepted another suitor with a sweeter offer. Comcast on Thursday announced an agreement to acquire Time Warner Cable in an all-stock deal valued at about $45.2 billion. The merger will unite the biggest and second-biggest cable television operators in the country, David Gelles writes in DealBook. Under the terms of the deal, Time Warner Cable shareholders will receive $158.82 a share based on Comcast’s closing price on Wednesday.

The merger is likely to bring to an end a protracted takeover battle that Charter Communications has been waging for Time Warner Cable, leaving Charter Communications to wonder what might have been. As for Comcast, the Time Warner Cable deal would be its second big act to radically reshape the media landscape in the United States â€" the company completed its acquisition of NBC Universal less than a year ago. But despite combining the country’s two largest cable operators, a merger will probably have little effect on consumers. Nevertheless, the combination of the two cable operators is certain to attract antitrust scrutiny by regulators.

Mr. Gelles writes: “For Time Warner Cable, the deal provides a neat solution to its problems. It will receive just about the $160-a-share price it said was its true value, and possibly more. It will no longer have to slog ahead with a turnaround plan being run by a new chief executive, Rob Marcus. And it will allow it to become part of the company that is already the dominant force in cable television services.”

From The Wall Street Journal: “Comcast was very uncomfortable with the idea of a proxy fight that Charter was gearing up to wage.” After Comcast initially offered about $150 a share for Time Warner last week, Brian Roberts, the chairman and chief executive of Comcast, negotiated with top Time Warner Cable brass on the phone from Sochi, Russia, where Mr. Roberts was taking in the Winter Olympics.

FORMER TOP S.E.C. ENFORCER SWITCHES SIDES  |  George Canellos, the former co-chief of enforcement at the Securities and Exchange Commission, announced on Wednesday he would be returning to the law firm Milbank, Tweed, Hadley & McCloy, where he was a partner before joining the S.E.C. in 2009, as a partner and global head of the firm’s litigation department.

With the move, Mr. Canellos becomes the latest Wall Street regulator to switch sides, Ben Protess writes in DealBook, adding, “The job-hopping illustrates the revolving door between Wall Street and Washington, one that critics complain blurs the line between defense and prosecution.”

BANKING GROUP DROPS SUIT AGAINST VOLCKER RULE  |  The American Bankers Association backed down on Wednesday, announcing that it was dropping its lawsuit to block part of the Volcker Rule from going into effect. But the move wasn’t surprising given that the five regulatory agencies responsible for carrying out the Volcker Rule modified in January what the group had found most objectionable, Rachel Abrams writes in DealBook.

Under the original terms, community banks would have been forced to rid themselves of collateralized debt obligations backed by so-called trust-preferred securities. The new terms permit the banks to hold onto these C.D.O.’s under certain conditions. And while the association said in a statement that it was “imperative” that regulators address banks’ remaining concerns with the Volcker Rule, Frank Keating, the group’s chief executive, said that the interim rule “has helped to minimize the cost and compliance burden for those that are affected.”

ON THE AGENDA  |  Janet L. Yellen’s scheduled testimony on monetary policy before the Senate Banking Committee has been postponed due to weather. Weekly jobless claims are out at 8:30 a.m. January retail sales are released at 8:30 a.m. The business inventories report for December is out at 10 a.m. American International Group releases earnings after the market closes. Brian Roberts, the chairman and chief executive of Comcast, and Rob Marcus, the chief executive of Time Warner Cable, are on CNBC at 7 a.m. Robert H. Benmosche, the chief executive of the American International Group, is on CNBC at 4:30 p.m. and Bloomberg TV at 5:30 p.m. Richard Branson, the founder of the Virgin Group, is on Bloomberg TV at 4 p.m. Steve Forbes, the chairman of Forbes Media, is on Bloomberg TV at 4:10 p.m. Dean Gemmell, a United States national curling champion, ison CNBC at 4 p.m.

SENATE RAISES DEBT CEILING AS REPUBLICANS SURRENDER  |  Senate Republicans did their best to provide a last bit of drama, but raise the nation’s borrowing limit they did, sending the legislation to President Obama to be signed once and for all. In a last ditch attempt to stall the vote, Senator Ted Cruz, Republican of Texas demanded a 60-vote threshold on the debt increase, sending Republicans scrambling to muster at least five votes in support of ending debate on the debt ceiling measure before a snowstorm pummeled the area. The Senate voted 67 to 31 to break the filibuster, with 12 Republicans joining all 55 Democrats on the most critical vote of the day.

Once Republican leaders decided to end the debate, the Senate quickly voted to raise the debt ceiling, 55-to-43, ending three years of brinkmanship. But lest the measure’s passage provide a semblance of unity, Republicans quickly turned on each other. Some conservatives were furious at what they saw as an abdication of fiscal responsibility, and began calling for the resignation of top congressional Republicans.

Other conservatives blamed the House, which had passed the measure on Tuesday, Politico reports. “The problem was we had this all of a sudden come from the House. I’m one that really felt like the House would attach something to it,” Senator John Boozman, Republican of Arkansas, said. “It really did make it difficult.”

WINTER STRIKES AGAIN  |  Another major storm battered the South on Wednesday, bringing ice and snow that knocked out power and left motorists stranded on roads for hours. And the nasty weather is not over. In New York City, the snow will switch to sleet, rain and wind, making for lousy road conditions and general ugliness.

Mergers & Acquisitions »

Grupo Bimbo to Buy Canada Bread for $1.7 BillionGrupo Bimbo to Buy Canada Bread for $1.7 Billion  |  Bimbo agreed to pay $1.67 billion for Canada Bread, which is based in Toronto and is 90 percent owned by Maple Leaf Foods.
DealBook »

Doing the Math on Grupo Bimbo’s Deal for Canada BreadDoing the Math on Grupo Bimbo’s Deal for Canada Bread  |  Economic fluctuations have little effect on demand for bread, and even with this acquisition, Bimbo has kept its debt to a reasonable level, Robert Cyran of Reuters Breakingviews writes.
DealBook »

Buffett Looks to Exit Stake in Former Washington Post Owner  |  Warren E. Buffett’s Berkshire Hathaway is looking to swap its stake in Graham Holdings for control of a subsidiary of the company formed by the Graham family after it sold The Washington Post to Jeff Bezos, the chief executive of Amazon, The Financial Times reports. The transaction would unwind Mr. Buffett’s ties to one of his oldest holdings.
FINANCIAL TIMES

Standard Chartered Looking to Sell Swiss Private BankStandard Chartered Looking to Sell Swiss Private Bank  |  The British bank, which makes much of its profit in Asia, is exiting or selling business lines outside of its core markets as part of a streamlining effort.
DealBook »

Google Tops List of Deal-Making Technology Companies  |  Bloomberg News has compiled a list of technology’s top 10 deal makers in the last three years, with Google leading the pack.
BLOOMBERG NEWS

Online Ranking Provider Purchased for $100 Million  |  Klout, a start-up that ranks a person’s online influence, is said to have been acquired by Lithium Technologies for $100 million, The Verge reports.
THE VERGE

INVESTMENT BANKING »

Earnings Improve at Lloyds Despite Steep Provisions  |  In 2013, Lloyds returned to a statutory profit before tax of £415 million, an important measure for the lender. The bank, which last posted a statutory profit in 2010, also raised its bonus pool by 8 percent.
DealBook »

BNP Paribas Profit Falls On U.S. Sanctions Troubles  |  The Paris bank’s fourth-quarter profit fell 76 percent to 127 million euros, or $173 million. It reported a $1.1 billion provision related to “dollar payments involving parties subject to U.S. economic sanctions.”
DealBook »

Moody’s Places R.B.S. on Review For Downgrade  |  The credit rating agency said it placed the Royal Bank of Scotland on review after the British lender said it would set aside nearly 3 billion pounds, or about $5 billion, to cover potential litigation claims.
DealBook »

Krawcheck Says Women on Wall Street Have ‘Gone Backwards’Krawcheck Says Women on Wall Street Have ‘Gone Backwards’  |  It has long been a feature of Wall Street that women are underrepresented in the executive ranks. But since the financial crisis, the situation has gotten worse, said Sallie L. Krawcheck, a former executive at Bank of America and Citigroup.
DealBook » | DealBook: Evaluating the Dearth of Female Hedge Fund Managers  | The Tech Start-Up: Leaning In Can Be Uncomfortable

7 Banks Face New Claims of Foreign Exchange Manipulation  |  Seven banks, including Citigroup, JPMorgan Chase and Barclays, are facing new claims of foreign exchange manipulation filed by the City of Philadelphia Board of Pensions and Retirement, The Financial Times reports. The class-action lawsuit is the first in the United States to include analysis of daily trading.
FINANCIAL TIMES

Weill Hoping for Big Sale of Former Maids Quarters  |  Sandford I. Weill, the former head of Citigroup, is selling his former maids quarters at 15 Central Park West for six times what he paid for it, The New York Daily News reports. Mr. Weill sold his penthouse in the same building for $88 million, the highest individual transaction in New York City’s history.
NEW YORK DAILY NEWS

PRIVATE EQUITY »

Blackstone’s Burger and Beer Night for CharityBlackstone’s Burger and Beer Night for Charity  |  Blackstone officials, including top executives like Hamilton E. James and Jonathan D. Gray, went behind the bar at a Midtown Manhattan burger joint Tuesday night to raise money for the Leukemia & Lymphoma Society.
DealBook »

Hellman & Friedman Rejects Bids For Kronos  |  The private equity firm Hellman & Friedman has rejected bids that valued Kronos, a human resources software company, at more than $4.5 billion, Reuters reports, citing unidentified people familiar with the situation. The move would have been one of the largest technology leveraged buyouts in the last 12 months, but its future is now uncertain.
REUTERS

5 Private Equity Firms Weighing Bids for Telesat  |  Five private equity firms including Kohlberg Kravis Roberts & Company, Apax Partners and Onex, a Canadian firm, are considering bids for Telesat Holdings, a Canadian satellite company, Bloomberg News reports, citing unidentified people familiar with the situation.
BLOOMBERG NEWS

Harvard’s Private Equity Head Calls It Quits  |  Lane MacDonald is leaving Harvard Management Company, which manages Harvard’s $33 billion endowment, just four months after being put in charge of private equity investments, Fortune reports. The endowment manager is now seeking its third private equity head in less than a year.
FORTUNE

Green Fund in Doubt After Firing of Terra Firma Deal Maker  |  The decision to fire Damian Darragh, one of the private equity firm Terra Firma’s star deal makers, has left investors questioning the firm’s ability to continue raising a $2 billion green energy fund, The Financial Times writes.
FINANCIAL TIMES

HEDGE FUNDS »

Evaluating the Dearth of Female Hedge Fund ManagersEvaluating the Dearth of Female Hedge Fund Managers  |  Women are underrepresented across the financial sector, but the problem is particularly acute at the top levels of the hedge fund industry. Whitney Tilson asks why, and invites reader comments in the Another View column.
DealBook »

Activist Fund to Back C.E.O. Candidate at CliffsActivist Fund to Back C.E.O. Candidate at Cliffs  |  Casablanca Capital plans to disclose on Wednesday that it is backing Lourenco Goncalves, the former chief executive of Metals USA, as its choice to lead Cliffs Natural Resources.
DealBook »

MagicJack Options Trade Raises Questions  |  A trader purchased options on MagicJack VocalTec stock last month, days before the hedge fund manager Whitney Tilson praised the stock, sending its price soaring this week. The options purchase is now poised to result in more than a twofold gain for the trader, raising questions about whether possible market manipulation occurred, The Wall Street Journal writes.
WALL STREET JOURNAL

I.P.O./OFFERINGS »

Venture Capital-Backed I.P.O.’s Make a Comeback  |  A bull market and a backlog of candidates for initial public offerings are two factors that are driving private companies to go public again, Fortune writes.
FORTUNE

Wayfair Said to Be Exploring I.P.O.  |  Wayfair, an online home goods retailer based in Boston, is said to have reached out to banks about managing an initial public offering, Bloomberg News writes, citing unidentified people familiar with the situation.
BLOOMBERG NEWS

VENTURE CAPITAL »

Disney Plays Host for Digital Start-Ups  |  In an effort to find new paths for digital growth, the Walt Disney Company announced on Wednesday that it plans to partner with the technology accelerator TechStars to advise and encourage 10 start-ups, Brooks Barnes writes in The New York Times.
NEW YORK TIMES

IBM’s Watson Fund Invests in Welltok  |  IBM’s $100 million venture capital fund has invested in Welltok, a company based in Denver that is working on applications that help consumers manage their health, ReCode reports. IBM’s fund is aimed at bolstering third-party use of its Watson cognitive computing platform.
RECODE

The Downside to Two of Venture Capital’s Senior Women Starting New Firm  |  Jennifer Fonstad, formerly a partner at Draper Fisher Jurvetson, and Theresia Gouw, formerly a partner at Accel, are opening Aspect Ventures, but their departures leave their former companies with no female investment partners in their Silicon Valley offices, The Huffington Post writes.
HUFFINGTON POST

LEGAL/REGULATORY »

Banks Left Guessing on Volcker Rule  |  The world’s biggest banks, including JPMorgan Chase, Citigroup, Barclays and Credit Suisse, could be left scrambling to meet a key reporting date for the Volcker Rule because United States regulators have not yet decided what metrics they must disclose, The Financial Times reports, citing unidentified people familiar with the situation.
FINANCIAL TIMES

Conflict in Oil Industry, Awash in Crude  |  The debate between oil producers and refiners over exports is a rare clash in a deeply guarded industry that involves arguments over national security, pricing at the pump and earnings, The New York Times writes.
NEW YORK TIMES

Regulator Sees Need to Slowing Growth of Mortgage Servicers  |  Benjamin M. Lawsky, New York State’s top financial regulator, said the “explosive growth” in nonbank mortgage servicers should be halted “before more homeowners get hurt,” Bloomberg News writes.
BLOOMBERG NEWS

Fed to Revise Capital Rules for Foreign Banks  |  The Federal Reserve plans to ease the rules for determining the number of foreign banks that will have to consolidate their American operations and hold more capital, Bloomberg News reports.
BLOOMBERG NEWS



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