June 5, 2023

DealBook: I.S.S. Backs Sprint’s Deal With SoftBank

The biggest of the proxy advisory firms, Institutional Shareholder Services, lent its support to Sprint Nextel‘s proposed sale to SoftBank of Japan late Friday, amid ongoing criticism of the deal by investors and a rival bid by Dish Network.

In its report, I.S.S. found that SoftBank’s offer fairly valued Sprint and provided much-needed capital that would help the wireless provider expand its network and turn around its long-struggling fortunes.

“Given the strategic merits of the SoftBank transaction, the sales and negtiation process overseen by the board, the strength of the valuation relative to precedent transactions, and the market reaction, a vote for the transaction is warranted,” I.S.S. wrote.

The recommendation by I.S.S. may influence many of the institutional investors that own shares in Sprint ahead of a scheduled meeting on June 12. The shareholder vote is considered the last major hurdle for the deal: Sprint and SoftBank received national security clearance for the offer earlier this week, and the Federal Communications Commission is expected to rule within days.

Some shareholders have questioned whether SoftBank’s offer values the cellphone service provider highly enough.

SoftBank is offering $7.30 a share in cash. It already invested $3.1 billion in Sprint last fall, providing capital that helped shore up the American company and financed a separate bid for an affiliated network operator, Clearwire. And if the deal is approved, it will invest an additional $4.9 billion.

If the deal is approved, SoftBank would own 70 percent of Sprint.

All told, I.S.S. values SoftBank’s bid at $6.45 a share, a level the proxy adviser finds reasonable.

By contrast, Dish’s takeover bid is offering $7 a share for Sprint in cash and stock. I.S.S. did not take a position on Dish’s rival $25.5 billion bid, citing the Sprint board’s ongoing discussions with the satellite TV company and the preliminary public details of the offer.

But I.S.S. did pose questions about whether a combined Dish and Sprint, which would carry more debt, would be able to afford the necessary expenses to improve the cellphone service provider’s network.

Shares in Sprint closed on Friday at $7.30 a share, suggesting that investors are expecting a bump from either side.

Article source: http://dealbook.nytimes.com/2013/06/01/i-s-s-backs-sprints-deal-with-softbank/?partner=rss&emc=rss

Bucks Blog: Resolution: Resign as Family Chief Financial Officer

I got married in 2010 to a law student. We entered the marriage with different financial circumstances: I’d been working for a few years, paying taxes, saving for retirement and building credit. He was in school, focused primarily on covering his tuition. So when we merged our finances, it made sense based on our differing positions (and my fascination with personal finance) that I would continue to manage the money for us both.

This year, however, my husband graduated, passed the bar and is now planning his re-entry into the work force. And I’m welcoming the change as an opportunity to step back from being the main one in charge of our finances.

Pulling this off poses a few challenges, though. First, there is the technical. Online accounts for retirement savings, credit cards, etc. are intended to be accessed by one person only, so we’ve had to research ways to keep my usernames and passwords secure but allow my husband to find them.

Then there’s an educational hurdle. Although I’ve tried to keep my husband in the loop about the various moves I’ve made with our money, his easygoing nature and absolute trust in my judgment has meant that he doesn’t scrutinize our options. Looking at interest rate tables and reading prospectuses is more my thing. So now my husband is tasked with learning everything from what day of the month our utilities are due to which expenses can be paid out of our health savings account.

The rewards of this project will make the effort worthwhile, in terms of the benefit to our bottom line and our relationship.  Sharing these responsibilities will serve as checks and balances for everything from paying bills on time and watching our budget to tweaking our investment portfolio. His lower tolerance for risk and preference to keep cash will be a welcome balance to my gain-chasing impulses.

Most of all, I’m looking forward to knowing we’re equal partners in making choices about our future.

Article source: http://feeds.nytimes.com/click.phdo?i=5328e906c3d97933dcd6588099fa18c9

Expansion of European Bailout Fund Clears Hurdle

The 103-to-66 vote, with 30 legislators absent, still leaves 7 of the 17 members of the euro zone yet to ratify a bailout fund that, despite expanded resources and power, is considered much too small to fend off further market attacks on Greece and other wounded countries.

The laborious approval process, which can be held up by objections from any one of the countries in the euro zone, has highlighted deep flaws in alliance’s decision making. Every major initiative must traverse an obstacle course, and each hurdle can jostle financial markets anew.

On Wednesday, major stock market indexes in Europe fell after three consecutive sessions of gains.

Though Finland can now be checked off the list, the next holdout may prove to be Slovakia, where there was talk a vote on the bailout fund might be delayed until late October, past the unofficial deadline of midmonth. Many Slovakians resent having to help bail out Greece, which, despite its problems, is wealthier.

José Manuel Barroso, president of the European Commission, warned Wednesday that countries in the euro zone must move toward greater unity for the alliance to survive.

“We are today faced with the greatest challenge our union has known in all its history,” Mr. Barroso said in his annual State of the Union address at the European Parliament in Strasbourg. “If we don’t move forward with more integration, we will suffer more fragmentation. This will be a baptism of fire for a whole generation.”

Leaders in Germany and elsewhere played down speculation that they were working on bolder responses to the crisis, like a mechanism that would multiply the borrowing power of the bailout fund, the European Financial Stability Facility. Officials said they were preoccupied with getting parliamentary approval for existing measures.

But the euro zone countries face intense pressure from the United States, China and other countries to more forcefully address the sovereign debt problem before the meeting of the Group of 20 leading economies that begins Nov. 3 in Cannes.

“The euro area has been given an ultimatum to put its crisis once and for all behind its back over the coming six weeks,” Jacques Cailloux, chief European economist at Royal Bank of Scotland, wrote in a note to clients.

In an initial attempt to impose more spending discipline on euro zone members and to prevent future crises, members of the European Parliament voted Wednesday in favor of rules that would impose fines on countries that break budget and deficit rules.

Members of the euro zone are supposed to hold their budget deficits below 3 percent of gross domestic product, and total debt below 60 percent of G.D.P., but few do.

Under the new rules, countries that exceed those limits will be pressed to make a cash deposit — in an account that pays no interest — equal to 0.2 percent of G.D.P. If they still fail to rein in spending, they will forfeit the deposit.

While finance ministers would still need to agree to punish countries, the voting system has been adjusted to make it significantly more difficult to block sanctions.

In addition, national budget plans will come under greater scrutiny, and there will be an alert system to try and detect looming problems like the housing bubbles that helped create the debt crises in Spain and Ireland.

The German Parliament is scheduled to vote Thursday on the bailout fund, in what is seen as a crucial test for Chancellor Angela Merkel.

Austria is scheduled to vote Friday. The remaining countries are Cyprus, Estonia, Malta, the Netherlands and Slovakia.

There were indications that Slovakia’s Parliament might not vote until Oct. 25, beyond the midmonth deadline set by Olli Rehn, the European commissioner for economic and monetary affairs.

That would be about three months after representatives of the 17 countries in the euro zone agreed to give the rescue fund more money and power. The expanded fund will be able to loan up to €440 billion, or about $600 billion, and issue guarantees for €780 billion.

Mr. Cailloux said that the fund needed about €2 trillion to be effective.

Article source: http://feeds.nytimes.com/click.phdo?i=e3124b2bff6780a1ab4a53d9cbc42ae1

Bernanke Says Fed Would Consider New Stimulus Effort

The unexpected weakness is forcing the Fed to reconsider its determination early this year to refrain from new efforts to stimulate growth. While no additional actions appear imminent, Mr. Bernanke said in Congressional testimony Wednesday that the Fed would be prepared to act if necessary.

He described options including an explicit commitment to maintain its stimulus efforts for a longer period, the resumption of asset purchases and steps that would encourage commercial banks to use the reserves they currently keep on deposit with the central bank.

“I think we have to keep all the options on the table,” Mr. Bernanke said before the House Financial Services Committee. “We don’t know where the economy is going to go.”

Members of the Fed’s policy-making committee discussed the possibility of additional efforts at their most recent meeting, at the end of June, but they were divided regarding the costs and benefits, according to minutes of that meeting, which the Fed released on Tuesday.

Mr. Bernanke made clear Wednesday that a resumption of the central bank’s economic revival campaign faces a high hurdle. He said that the Fed would look for two conditions: economic weakness beyond current expectations and a renewed threat of deflation.

The first seems obvious to most people. The second, however, may the more important factor. The Fed’s decision to resume asset purchases last summer was made in large part because the central bank feared that prices might begin to decline, a phenomenon that can undermine growth because it causes people to delay purchases, fueling a downward cycle.

The pace of price increases since then has rebounded toward levels that economists consider healthy. Indeed, earlier this year, concern shifted to the possibility that prices were rising too fast. The Fed’s most recent forecast, last month, projected little risk of deflation.

Mr. Bernanke maintained his view, however, that a recent rise in inflation is unlikely to persist, consistent with his view that “this is still not a very strong recovery.”

Since he last spoke, however, the government reported that employment increased by only 18,000 jobs in June and that exports were weaker than expected. That has led a number of private forecasters to slash estimates of second-quarter growth. And Mr. Bernanke’s remarks on Wednesday reflected greater concern about the health of the economy.

Among the headwinds facing the economy is “the slow growth of consumer spending, even after accounting for the effects of food and higher energy prices,” Mr. Bernanke said in his prepared testimony. “The ability and willingness of consumers to spend will be an important determinant of the pace of the recovery in coming quarters.”

Later, Mr. Bernanke described the Fed’s economic projection for the rest of this year — growth of about 3.5 percent — and said, “We’ll see if that’s the case.”

Members of Congress questioned Mr. Bernanke repeatedly about the nation’s financial problems, seeking to draw him into agreement with their positions. Mr. Bernanke refused.

“I want to see the numbers add up,” he said. “I want to see the revenues and expenditures balanced. That’s your job and that’s why you get paid the big bucks.”

He warned, however, that Congress needs to raise the debt ceiling, the maximum amount that the federal government is legally entitled to borrow. Failure to do so, he said, would cause a “huge financial calamity.” And he compared the arguments against an increase to “having a spending spree on your credit card and then refusing to pay the bill.”

The hearing included a moment of early levity. Representative Ron Paul, a Texas Republican who favors closing the Fed and has often sparred with Mr. Bernanke, recently announced that he would not run for reelection next year. He opened his remarks Wednesday by suggesting that the news of his departure might have caused Mr. Bernanke to smile.

Amidst the ensuing laughter, Mr. Bernanke was unable to resist.

Article source: http://www.nytimes.com/2011/07/14/business/economy/fed-mulls-options-in-face-of-moderate-outlook-bernanke-says.html?partner=rss&emc=rss

White House and Congress Clear Trade Deal Hurdle

Haggling over the modest and obscure benefits program had tied up the trade pacts for months, pitting Democrats concerned about the impact of competition on American workers against Republicans eager to increase foreign trade but loath to increase federal spending on another aid program.

But the deal does not assure that Congress will pass the pacts, which are crucial ingredients in the Obama administration’s recipe for reinvigorating economic growth. Indeed, Republicans quickly said they would continue to insist that the benefits program be considered separately from the trade agreements, a condition Democrats described as unacceptable.

The Obama administration, which had maintained for weeks that it would not submit the trade pacts to Congress until the deadlock was resolved, by Tuesday night found itself defending its new deal as an important step that might lead to a complete resolution.

“As a result of extensive negotiations, we now have an agreement on the underlying terms for a meaningful renewal of a strengthened” benefits program, the White House spokesman, Jay Carney, said in a statement. Other administration officials hastened to clarify that that deal did not extend to the question of how that agreement might be approved.

Senator Max Baucus, the Democratic chairman of the Finance Committee, said that he would convene a hearing Thursday morning, starting a process that could end with the bills passing into law before the end of summer.

“We think this package can get the support needed to become law,” Mr. Baucus said. “American workers and our economy can’t afford for us to wait any longer to move forward.”

Senate Republicans, however, said they would seek to strip the benefits program from the legislation by asking the Senate parliamentarian to rule that its inclusion did not comply with Senate rules, because it was not sufficiently related to the main subject of the legislation.

Senator Orrin Hatch, the ranking Republican on the Finance Committee, said that the White House’s strategy “risks support for this critical job-creating trade pact in the name of a welfare program of questionable benefit at a time when our nation is broke.”

John Boehner, the House speaker, said he would hold separate votes on the free trade agreements and the benefits program. That step, even if all four pieces pass, would terminate a special process that allows for the rapid approval of trade agreements, leaving the package much more vulnerable to Senate opposition.

“We have long said that T.A.A. — even this scaled-back version — should be dealt with separately from the trade agreements, and that is how we expect to proceed,” said Brendan Buck, a spokesman for Mr. Boehner, an Ohio Republican, referring to the worker benefit program, Trade Adjustment Assistance.

The trade agreements would eliminate tariffs on the flow of goods and services between the United States and the other countries. The United States has similar agreements with Mexico, Canada and 15 other countries.

The free trade agreement with South Korea could increase annual sales of American goods to that country by up to $10.9 billion, according to a 2007 estimate by a federal agency, the United States International Trade Commission. Dairy products, pork and poultry, chemicals, rubber and plastics are among the goods in greatest demand.

The agreement with Colombia, a much smaller trading partner, would create annual demand for about $1.1 billion in American goods, the agency estimated. It said the impact of the Panama agreement would be even smaller. It did not provide an estimate.

Steven Greenhouse contributed reporting from New York.

Article source: http://feeds.nytimes.com/click.phdo?i=a16b39b984cb1e50babe7b00a622f74e

DealBook: NYSE Euronext Rejects Bid by Nasdaq and ICE

A trader on the floor of the New York Stock Exchange.Andrew Gombert/European Pressphoto Agency A trader on the floor of the New York Stock Exchange.

2:50 p.m. | Updated

The board of NYSE Euronext announced on Sunday that it would reject an unsolicited takeover bid by its rival, the Nasdaq OMX Group, and the IntercontinentalExchange, and stick with its agreement to merge with Deutsche Börse.

The long-expected decision is likely to set off a potential battle over the Big Board operator, as the two bidding groups try to convince NYSE Euronext shareholders of the merits of their respective offers.

Under the proposal by Nasdaq and ICE, announced more than a week ago, the two would split up NYSE Euronext into its two main businesses. Nasdaq would take over the New York Stock Exchange, creating the single biggest stock market in the United States, while ICE would buy NYSE Euronext’s derivatives operations.

Nasdaq and ICE’s cash-and-stock bid for NYSE Euronext is currently worth about $43.13 a share at Friday’s closing prices, or $11.3 billion. Deutsche Börse’s all-stock offer is worth about $36.98 a share, or $9.7 billion.

But in a statement on Sunday, NYSE Euronext’s board outlined several concerns about the Nasdaq offer. Chief among these is the possibility that the Nasdaq bid might not survive review by antitrust regulators.

Nasdaq and ICE expect about $740 million in cost savings three years after the deal closes, a figure driven by cutting jobs and eliminating duplicate back-end systems. Some lawmakers, like Senator Charles E. Schumer of New York, have mentioned the potential job losses in New York City as a hurdle to winning approval.

In its statement, NYSE Euronext also professed concern about the amount of debt Nasdaq would borrow to finance its offer.

NYSE Euronext’s chairman, Jan-Michiel Hessels, instead highlighted the benefits of the company’s existing agreement to merge with Deutsche Börse, which would create a trans-Atlantic powerhouse in stock, options and derivatives trading.

“With Deutsche Börse, we are committed to creating the world’s premier exchange group — a geographically diverse business, with strengths in multiple asset classes across the spectrum of capital markets services,” Mr. Hessels said in a statement.

Representatives for Nasdaq and ICE were not immediately available for comment.

Deutsche Börse said in a statement that it and NYSE Euronext had already made “significant progress on integration planning.”

The proposed merger of NYSE Euronext and Deutsche Börse has been two years in the making, aimed at improving profit by increasing scale. Both the New York Stock Exchange and Nasdaq have lost some ground to upstart electronic markets like BATS and Direct Edge.

Several exchange operators have already proposed mergers that would create new international operators in recent months. But several of those proposals have run into political interference, as national regulators fear diminishing their countries’ standings as global financial capitals.

Last week, Australia formally rejected the Australian Securities Exchange’s plan to merge with the Singapore Exchange, saying the deal “would not be in the national interest” in its current form. And Canadian lawmakers are closely scrutinizing the Toronto Stock Exchange’s proposed merger with the London Stock Exchange.

Nasdaq’s offer is being pitched as creating a new national champion, one based in New York and able to draw new stock listings that might otherwise head to foreign markets.

Deutsche Börse and NYSE Euronext plan to keep dual headquarters in Frankfurt and New York. Reto Francioni of Deutsche Börse would become chairman of the combined company, while Duncan Niederauer of NYSE Euronext would become its chief executive. Deutsche Börse shareholders would own 60 percent of the merged company, though both exchange operators have argued that the deal is a “merger of equals.”

Nasdaq has said that the combined company would be called Nasdaq NYSE Euronext, a move aimed at alleviating concerns among those like Mr. Schumer, who has insisted on retaining the NYSE name as part of any deal. Deutsche Börse and NYSE Euronext have yet to agree upon a name for their merged operations.

NYSE Euronext is being advised by Perella Weinberg Partners, BNP Paribas, Goldman Sachs and Morgan Stanley. Its legal advisers are Wachtell, Lipton, Rosen Katz; Stibbe; and Milbank, Tweed, Hadley McCloy.

Deutsche Börse is being advised by Deutsche Bank, JPMorgan and the law firm Linklaters.

Nasdaq is being advised by Bank of America Merrill Lynch, Evercore Partners and the law firm Shearman Sterling. ICE is being advised by Lazard, Broadhaven Capital Partners, BMO Capital Markets and the law firm Sullivan Cromwell.

Article source: http://feeds.nytimes.com/click.phdo?i=ecdbd269c14d9aef0080c834d9d09a0c