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DealBook: Melrose Agrees to Buy German Utility Meter Manufacturer for $2.3 Billion

June 30, 2012 by Leave a Comment

LONDON – The British investment company Melrose agreed on Friday to buy the Elster Group, a German utility meter manufacturer, for $2.3 billion.

Melrose, a London-based firm that specializes in acquiring underperforming manufacturing businesses, said it would offer investors in Elster $20.50 a share for the German company, a 48.6 percent premium on Elster’s closing share price on June 11 before the deal was first reported.

Elster, listed on the New York Stock Exchange in 2010, was previously owned by the private equity firm CVC Capital Partners, which bought the German company in 2005.

Europe’s sluggish economy has hurt many of the Continent’s companies, particularly in industries that are reliant on consumer spending.

Elster, which manufacturers meters for the electricity, gas and water industries, had announced a cost-cutting program as part of its efforts to tackle the economic downturn in Europe. Melrose expects to invest in Elster’s main business areas, as well as extract further cost savings from the company’s already announced restructuring plan.

“We believe that Elster is an excellent fit with the Melrose acquisition criteria,” Melrose’s chief executive, Simon Peckham, said in a statement. “Elster is a high quality business with strong end markets and the potential for significant development and improvement under Melrose management.”

Elster’s largest shareholder, Rembrandt Holdings, previously said it had reached an agreement with Melrose to sell its stake in the German company to Melrose.

Melrose said it would finance the deal through new debt and a rights issue of around $1.87 billion. Investors have already subscribed to around 60 percent of the rights issue, according to a person with direct knowledge of the deal.

Melrose’s rights issue is expected to be completed by the end of July. The deal for Elster is expected to close by Aug 31.

JPMorgan advised Melrose on the deal, and is underwriting the rights issue with Investec, Barclays, HSBC and Royal Bank of Canada. Rothschild and Deutsche Bank advised Elster.

Article source: http://dealbook.nytimes.com/2012/06/29/melrose-agrees-to-buy-german-utility-meter-manufacturer-for-2-3-billion/?partner=rss&emc=rss

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Protesters Clash With Police in Lower Manhattan

November 18, 2011 by Leave a Comment

In Lower Manhattan, protesters tossed aside metal barricades to converge again on Zuccotti Park after failing in an attempt to shut down the New York Stock Exchange. In Los Angeles, more than 20 protesters were arrested after ignoring orders to vacate streets. In Denver, 100 protesters marched by government buildings and intersections, bringing traffic to a standstill.

Organized weeks ago, the so-called day of action came two days after the police cleared the Occupy Wall Street encampment from Zuccotti Park in Manhattan in an early morning raid. After the protesters were ousted from the park that had become their de facto headquarters, a judge agreed that they could return later that day, albeit without their camping gear. They looked to Thursday to gauge the support and mettle that the movement had retained.

“We failed to close the stock exchange, but we took back our park,” said Adam Farooqui, 25, of Queens. “That was a real victory.”

Throughout Manhattan on Thursday, more than 200 people had been arrested by the evening, many after rough confrontations with the police. The police said that 5 protesters were charged with felony assault, and that 7 officers and 10 protesters were injured.

In more than a dozen cities, the demonstrations included marches across bridges, which protesters said were emblematic of a deteriorating public infrastructure.

Shortly before 6 p.m., about 60 protesters, including a New York City councilman, Jumaane D. Williams, were arrested for blocking a roadway that leads to the Manhattan side of the Brooklyn Bridge.

Also arrested were one of the city’s top labor leaders, George Gresham, president of 1199/S.E.I.U., United Healthcare Workers East, and Mary Kay Henry, the president of the nationwide Service Employees International Union.

Protesters, many carrying candles, later filed across the bridge’s pedestrian walkway and crossed the East River.

The demonstrations came as encampments nationwide were being cleared out by city officials. In Philadelphia on Thursday, about 75 members of Occupy Philly met to discuss how to respond to city notices, posted on Wednesday, urging them to leave their encampment because construction plans were imminent.

In Oakland, Calif., where protesters have had sharp confrontations with the police, members of the Occupy movement chose not to participate in the call to action, shifting its next protest to Saturday in an effort to “continue this national momentum,” according to the group’s Web site.

The events on Thursday in New York City began shortly before 8 a.m. Throughout the morning, the protesters wound their way through the heart of the financial district in a cat-and-mouse game with the police. At one point, the protesters engulfed police vehicles, forcing them to halt, and broke police lines, only to be pushed back by metal barricades and swinging batons.

The stock exchange opened for trading as usual at 9:30 a.m.

The marchers returned to Zuccotti Park, hoisted the police barricades that had been encircling it and rushed past officers, some of whom began shoving demonstrators and throwing punches.

In the early afternoon, a protester was led from the park with blood streaming down his face. The police said he had thrown a small battery at officers and taken a deputy inspector’s hat. The man, who the police said identified himself as Brandon Watts, 20, was charged with attempted assault and grand larceny. The authorities said that he had been arrested at least four times since the Occupy Wall Street demonstration began and that when he was arrested Thursday, he resisted arrest and struck his head when officers brought him down.

At a news conference at Bellevue Hospital Center, where an officer with a cut hand had received 20 stitches, Mayor Michael R. Bloomberg said that some protesters “deliberately pursued violence” and that “the police maintained incredible restraint.”

Protesters had planned to “occupy the subways” throughout the city at 3 p.m., but the turnout of protesters on the trains was scant. At 5 p.m., thousands of protesters and members of about a dozen unions converged on Foley Square. “It’s magnificent,” Laurel Sturt, 55, who teaches elementary school in the Bronx, said as she gazed at the crowd. “All great movements of the past started like this.”

At a Midtown gathering of business leaders on Thursday, Mr. Bloomberg said that the protests were a dire sign of the public’s economic fears.

“The public is getting scared,” he said. “They don’t know what to do, and they’re going to strike out.” He added, “They just know the system isn’t working, and they don’t want to wait around.”

Reporting was contributed by Matt Flegenheimer, Steven Greenhouse, Rob Harris, Colin Moynihan, Katharine Q. Seelye and Kate Taylor from New York; Dan Frosch from Denver; Ian Lovett from Los Angeles; Sean Collins Walsh from Philadelphia; Malia Wollan from Berkeley, Calif.; and Lee van der Voo from Portland, Ore.

Article source: http://feeds.nytimes.com/click.phdo?i=5cbba15ad8ef576541881d0e8b268ee4

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DealBook: European Regulators to Tell NYSE and Deutsche Börse of Merger Concerns

October 4, 2011 by Leave a Comment

Mark Lennihan/Associated PressDuncan Niederauer, left, chief of NYSE Euronext, with Reto Francioni of Deutsche Börse, on video, at a news conference in February.

European regulators are sending a statement of objections to the Deutsche Börse and NYSE Euronext over their proposed $9 billion merger, a person with direct knowledge of the action said Tuesday. The move shows that the competition authorities will demand at least remedial action by the two companies.

The statement is being sent by the European Commission to the two companies this week, the person said. That person asked not to be identified because the objections had not been formally announced.

The commission had said in August that it would conduct an in-depth review of the proposed combination, citing ‘‘concerns in a number of areas, in particular in the field of derivatives trading and clearing.’’ That announcement came after the two companies’ shareholders in July gave their blessing to a deal, which would create a giant international market with big presences in stocks and options and a commanding position in European derivatives.

The issuing of a statement of objection is a normal part of the review, in which the authorities detail their antitrust concerns, and does not necessarily mean the deal is endangered. In addition to the derivatives and clearing concerns, it could encompass issues including job cuts and the preservation of financial activities in various cities.

Opponents of the proposed merger are hoping that the commission will demand that the companies sell the London International Financial Futures and Options Exchange, or Liffe, which Euronext acquired in 2002, five years before Euronext was itself acquired by the New York Stock Exchange. Such a move might lead the partners to reconsider the logic behind the tie-up.

NYSE Euronext and Deutsche Börse

Kevin McPartland, head of fixed income research at the TABB Group, said the European regulators were looking at the impact on a regional level, while antitrust authorities in the United States — who saw a combined entity competing globally with rivals in New York and Singapore — had taken a more global view in granting their approval.

If the companies were told to divest Liffe as a condition for approval, he said, ‘‘it would look a lot less appealing.’’ But he added: ‘‘There are enough potential compromises that they could work through most concerns.’’

Amelia Torres, a spokeswoman for the commission, declined to comment, beyond noting that the deadline for a decision was Dec. 13. NYSE Euronext and Deutsche Börse also declined to comment.

Reuters had earlier reported the statement of objections.

Michael de la Merced contributed reporting from New York and Jack Ewing from Frankfurt.

Article source: http://feeds.nytimes.com/click.phdo?i=90f432bd57e98b258ed1254bab34ffac

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Justice Dept. Moves to Block Merger Between AT&T and T-Mobile

September 1, 2011 by Leave a Comment

The lawsuit sets up the most substantial antitrust battle since the election of President Obama, who campaigned with promises to revitalize the Justice Department’s policing of mergers and their effects on competition, which he said declined significantly under the Bush administration.

ATT said it would fight the lawsuit. “We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed,” the company said in a statement. “The D.O.J. has the burden of proving alleged anti-competitive effects and we intend to vigorously contest this matter in court.”

ATT said it had no warning that the government was going to file to block the merger, because it has been actively involved in discussions with both the Justice Department and the Federal Communications Commission since the proposal was announced in March. ATT has indicated that it would consider some divestitures or other business actions to allow the deal to go forward.

But Justice Department officials said that those discussions led it to believe that it would difficult to arrange conditions under which the merger could proceed. “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer,” said Sharis A. Pozen, acting assistant attorney general in charge of the Justice Department’s antitrust division.

The Justice Department has broad authority to influence proposed deals. On rare occasions, the agency takes the aggressive step of suing to block a deal altogether, as it is doing with ATT and did earlier this year with HR Block’s bid for the owner of TaxAct tax preparation software.

Sometimes just the threat of legal action is enough to stymie a deal, as in May when Nasdaq dropped its rival bid for the New York Stock Exchange’s parent company. In other cases, the Justice Department will remain silent, blessing a deal by default.

ATT’s promise to fight the suit could mean a potentially lengthy fight.

Consumer advocacy groups cheered the announcement. “This announcement is something for consumers to celebrate,” said Parul P. Desai, policy counsel for Consumers Union. “We have consistently warned that eliminating T-Mobile as a low-cost option will raise prices, lower choices and turn the cellular market into a duopoly controlled by ATT and Verizon.”

Harold Feld, legal director of Public Knowledge, a nonprofit group, said, “Fighting this job-killing merger is the best Labor Day present anyone can give the American people.” But labor groups had generally supported the merger, in part because a substantial number of ATT employees are members of the Communications Workers of America, while T-Mobile is a largely nonunion company.

Deputy Attorney General James M. Cole said the department decided that among those adversely affected would be wireless customers in rural areas and those with lower incomes. He said he also believed that an independent T-Mobile would be more likely to expand its business and add jobs, while mergers often result in the elimination of jobs.

The future of an independent T-Mobile is more of a question today, however, than before the merger with ATT was announced. Its parent company, Deutsche Telekom, has said it does not want to continue to invest in the American wireless market, preferring to focus on the growth of its telecommunications business in Europe.

Before ATT announced its intention to buy T-Mobile, there was consistent speculation in the wireless industry that a merger between T-Mobile and Sprint Nextel, the third-largest provider, was in the works. But such a deal looks unlikely in light of the arguments mustered by the Justice Department against the ATT deal.

Article source: http://feeds.nytimes.com/click.phdo?i=f3a08014e5ece300dda57f79cb31fa27

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Fair Game: When Two-Thirds Isn’t Enough

June 12, 2011 by Leave a Comment

The owners of Cedar Fair L.P., a leisure and entertainment company in Sandusky, Ohio, have learned this the hard way. Cedar Fair owns 11 amusement parks, including Cedar Point in Sandusky, Dorney Park in Pennsylvania and Knott’s Berry Farm in California, as well as water parks and hotels. Last year, it generated almost $1 billion in revenue.

The company trades on the New York Stock Exchange under the happy symbol FUN. But its investors have not had much fun lately. From year-end 2005 through the end of 2010, Cedar Fair lagged behind the Standard Poor’s 500-stock index, the S. P. 400 and the S. P. index of movie and entertainment companies.

Now that’s a hat trick.

Given that Cedar Fair depends on people who are willing to spend money for a day out, it’s perhaps no surprise that the recession hit its business hard. The company cut cash distributions to its investors to $1.23 per share unit in 2009, from $1.92 the previous year. The stock fell 8.9 percent that year.

This grim performance attracted a suitor in late 2009. Apollo Global Management, a big private equity firm, tried to take over Cedar Fair on the cheap. Apollo bid $11.50 a share that December. Cedar Fair urged investors to accept that offer, but investors, led by Q Investments, a money management company out of Texas that owns 18.1 percent of the units outstanding, voted down the buyout.

The stock has since rallied 63 percent, closing on Friday at $18.76 a share, as the company’s results improved, and Q Investments has grown increasingly aggressive in pushing the board to be more responsive to stakeholders — that is, the owners.

Indeed, Q Investments has become something of a thorn in the side of Cedar Fair’s management and board. Late last year, the firm pushed for a special meeting of unit holders to vote on its proposal that the chairman of Cedar Fair’s board be an independent director who has not served as an officer of the company or any of its affiliates. Cedar Fair’s board urged unit holders to vote against this proposal, saying it would shrink the pool of candidates available for the position.

Nevertheless, the proposal passed, and Cedar Fair appointed a new chairman who is independent.

Q Investments mounted an even bigger fight earlier this year. It is trying to change the company’s practice of barring unit holders from nominating candidates to the Cedar Fair board.

Cedar Fair is set up as a publicly traded partnership operated by a general partner. Because of this structure, unit holders do not have the right to nominate directors to the company’s board. That right is reserved for the general partner.

“Giving shareholders the right to nominate directors is the most basic and fundamental right in corporate America,” said Geoffrey Raynor, senior managing partner and founder of Q Investments. “We cannot find one corporation in the Fortune 500 that does not allow shareholders this right.”

CEDAR FAIR’S board was unreceptive to the idea that the company’s owners be allowed to nominate directors to represent them. So, last March, Q Investments put forward another proposal that would require Cedar Fair to allow unit holders to nominate directors. Unit holders voted on the proposal at a special meeting on June 2.

It passed resoundingly. Investors holding 67 percent of the Cedar Fair units outstanding voted in favor of letting shareholders nominate directors to the board, according to company filings. An even greater majority of the units that cast a vote on the proposal — 96 percent — supported it.

The shareholders had spoken. Did the company hear?

Not exactly. While acknowledging that a vast majority of its owners wanted to be able to nominate directors, Cedar Fair said that investors’ wishes could not be granted. The partnership’s regulations, Cedar Fair said, require that changes in the company’s by-laws involving matters such as board elections, must receive the support of 80 percent of the units outstanding. So, even though more than two-thirds of the units outstanding had been cast in support of the change in the by-laws, the proposal failed.

Q Investments said that it had studied voting patterns among unit holders at the company and that roughly 30 percent of Cedar Fair units typically were not even cast at shareholder meetings. As a result, Q Investments said, the 80 percent threshold was virtually unachievable.

“This most recent vote was as close to unanimous as possible,” Mr. Raynor said. “Seventy percent of all unit holders voted, and 95 percent of those voting supported giving unit holders the right to nominate directors. Yet this board has refused to give unit holders this right.”

Stacy Frole, director of investor relations at Cedar Fair, said that the board could not abide by its owners’ wishes and change the 80 percent threshold. “These are the regulations of the general partner; we can’t circumvent those,” she said. “Within the general partner regulations, it would require an 80 percent vote to change the 80 percent voting requirement.”

But Mr. Raynor pointed out that when the 80 percent threshold was instituted, back in 2004, on matters relating to governance issues, it was required to be passed with only two-thirds of the unit-holder vote. “It’s like a third-world dictator being elected by a simple majority and then unilaterally instituting a rule that says, ‘in the future, any challenger must receive 80 percent of the vote,’ ” he said.

Ms. Frole said that Cedar Fair was examining alternatives to try to assuage its big and loud investors. But it sure seems that effecting change at a company should not be that difficult for its owners.

Article source: http://feeds.nytimes.com/click.phdo?i=06420ef8abb6c0aa9f6eb3910acca0b0

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DealBook: Hong Kong Looks to Regain Footing as I.P.O. Leader

June 3, 2011 by Leave a Comment

Tim Parker, chief executive of Samsonite, at an investor presentation in Hong Kong.Jerom Favre/Bloomberg NewsTim Parker, chief executive of Samsonite, at an investor presentation in Hong Kong on Monday. Samsonite’s stock market listing in Hong Kong could raise $1.5 billion.

HONG KONG — Is Hong Kong, the global leader for initial public offerings in 2009 and 2010, in danger of losing its coveted title this year?

The stock market here has had an underwhelming start to 2011 compared with its Western rivals. By the end of May, there were 21 I.P.O.’s in Hong Kong, raising a total of $8.8 billion. New York notched 43 transactions and $23.8 billion, according to data compiled by Thomson Reuters.

Although a flurry of debuts over the next few weeks, including those from Samsonite and Prada, are expected to raise billions of dollars, Hong Kong will find it tough to hold on to the top spot given the strong showing in the United States.

The Nasdaq and New York Stock Exchange are benefiting from a boom in social media companies that are going public, like LinkedIn and Yandex. On Thursday, Groupon filed for its highly anticipated offering, which could value the company at nearly $30 billion.

Still, the sudden burst of activity in Hong Kong shows that recent worries over China’s economic slowdown and the relatively poor performance of many regional stock exchanges is fading. Instead investors are focusing on the prospects of companies that are heavily exposed to fast-growing Asia.

“There is still a lot of cash around,” said Kester Ng, head of equity capital and derivatives markets at J.P. Morgan for the Asia-Pacific region. “The risk appetite right now is not as pronounced as it was late last year, and issuers currently may not be able to get the valuations they would like. But if you have the right kind of asset in the right sector, you can definitely get deals away.”

Resource companies and luxury goods, he added, are likely to continue to do well, as investors look to capitalize on Asia’s ravenous demand for commodities and the rising affluence in the region. Huaneng Renewables, a Chinese wind power company, is planning to announce on June 9 its pricing for a $1 billion listing. Shares in MGM China, whose main asset is a giant hotel and casino in the booming gambling hub of Macao, is set to begin trading on the Hong Kong exchange on Friday. The offering raised $1.5 billion.

The strong economy is also a big reason why overseas companies are looking to Hong Kong for their market debuts.

Samsonite, which is owned by the British private equity group CVC Capital Partners, announced plans on Thursday for a Hong Kong listing that could raise as much as 11.75 billion Hong Kong dollars, or $1.5 billion, with a trading start planned for June 16.

“We want to orient the company to where the world’s center of gravity is going to be in future,” which means China and Hong Kong, Tim Parker, chief executive of Samsonite, said at a video news conference.

On Monday, Prada, the Italian fashion house, is due to start marketing a June 24 listing that could net $2 billion, according to a person with knowledge of the plans who spoke anonymously because the details had not been made public. Resourcehouse, a mining company owned by the Australian billionaire Clive Palmer, is expected to price its $3.6 billion Hong Kong offering on Friday.

“Some of these companies make 30 to 40 percent of their revenues or profits in China — their fastest growth is coming from here,” said Justin Haik, a managing director of Morgan Stanley’s global capital markets group in Hong Kong. “It is natural for such companies to list here. It gets them added visibility. And it aligns their interests with their long-term aspirations of doing business in Asia.”

Tighter credit conditions in much of Asia have provided an incentive for companies to seek alternative sources of financing, like I.P.O.’s, said Emil Wolter, head of regional strategy at Royal Bank of Scotland in Singapore.

Reflecting this, many market aspirants are mainland Chinese companies. China Everbright, a Shanghai-based lender, announced plans for a listing that could raise $6 billion to $7 billion, Reuters reported this week. Haitong Securities, a brokerage firm, could raise more than $1.5 billion, according to Bloomberg News.

The attraction to list here is understandable. Much of Asia is growing rapidly, and many of its economies escaped the pain wrought by the global financial crisis. Its financial markets have grown more sophisticated. And investors in the region and elsewhere have ample cash they want to put to work in Asia.

All of this has helped Asian exchanges capture a rising share of stock market activity in recent years, with Hong Kong the standout beneficiary in terms of attracting new listings.

Two blockbuster listings in 2010 — the Agricultural Bank of China and American International Assurance, the Asian life insurance unit of American International Group — helped Hong Kong raise nearly $53 billion in I.P.O.’s by the end of December. That accounted for 19.5 percent of the global total and easily topped the $34.5 billion raised in New York, according to Thomson Reuters data.

“When it comes to supply and demand, a lot of people are looking to participate in the Asian story,” said Mr. Haik of Morgan Stanley. “We’ve seen wealth growing across the region, and an institutional investor base — asset management firms and sovereign wealth funds — that is increasingly looking to put money into equities.”

The New York Times

Article source: http://dealbook.nytimes.com/2011/06/02/hong-kong-looks-to-regain-footing-as-i-p-o-leader/?partner=rss&emc=rss

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DealBook: Investor Hunger for Foreign Tech Stocks Overrides Risk

June 1, 2011 by Leave a Comment

Harry Campbell

It doesn’t hurt to be known as the Google of Russia.

Shares of Yandex, the Russian search engine company, shot up more than 55 percent in their Nasdaq market debut last week. The stock’s rise illustrates investors’ voracious appetite for emerging-market investments and Internet initial public offerings. But Yandex is also a sign of another trend: investors are willing to ignore the special risks associated with foreign Internet companies in their hunger for riches.

Yandex raised $1.3 billion in an I.P.O that valued the company at about $11 billion. This is a heady number for a company that operates only in Russia, Europe’s second-largest internet market, and has limited prospects outside that country. Yandex has about 65 percent of the Russian search market, but Google lurks there as well and has 22 percent of the market. Mail.ru, Russia’s biggest Internet company, is another potential competitor.

Still, Yandex’s valuation is not as bubbly as other tech companies’. The Russian company is valued at about 23 times 2010 revenue of about $440 million. Compare this with LinkedIn, which is valued at 35 times revenue and has a market capitalization of about $8.5 billion.

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Yandex is even conservatively valued compared with another foreign tech company, Renren. Called the Facebook of China, Renren made its debut in early May on the New York Stock Exchange, raising about $855 million. Renren’s stock is trading at about $13 a share, a bit below its initial offering price of $14 a share.

At this price, Renren is valued at $5 billion, a high valuation for a company with 2010 revenue of only $76.5 million and operating income of $17.3 million. Renren, valued at 65 times revenue, only has about 20 million to 30 million users a month and is far from China’s dominant Internet player. Competition also looms for Renren with rumors circulating of a partnership between Baidu and Facebook.

Yet the danger is not only that these companies may be part of a bubble, but that they have risks particular to foreign companies.

Take Renren. It is not even technically a Chinese company. Instead, it is incorporated in the Cayman Islands. This island location is in part because foreign ownership of Chinese companies is limited by the Chinese government. Because of these legal restrictions, buyers of Renren stock may be startled to know that Renren does not even own its major subsidiary, the operator of its social networking site.

Instead, the wife of Reren’s chief executive and founder owns 99 percent of the subsidiary, and Renren has only a contractual relationship with its primary business. Renren contends that this is effectively the same since it entitles Renren to operate the company and receive all of the economic benefits of the operation.

This may be true, and such arrangements are not uncommon when Chinese companies list abroad. But this is not the same as full ownership. China does not have a strong rule of law, and enforcing contractual rights in courts can be quite difficult. Chinese regulators could interfere and unwind this contractual relationship, or Renren’s chief executive could decide to take advantage of this relationship.

What if Renren’s chief executive and his wife were to divorce? With $5 billion at stake, people may not act in the most ethical manner. Yahoo can ably attest to these problems. It is in a fierce dispute with its Chinese partner, the Alibaba Group, a company Yahoo owns 43 percent of. Yahoo accuses Alibaba of illegally transferring Alibaba’s most important subsidiary, Alipay, using China’s murky and under-enforced laws to shield these actions.

There are also questions of accounting fraud. The chairman of Renren’s audit committee, Derek Palaschuk, resigned in the weeks before Renren’s I.P.O. because of accusations of fraud at another Chinese company listed on the New York Stock Exchange, Longtop Financial Technologies, where he was the chief financial officer. Accounting fraud is a serious problem among Chinese companies, as Floyd Norris of The New York Times recently noted in writing about Longtop. Shares of Longtop are now worthless.

If American shareholders are defrauded, their remedies are limited because any lawsuit would be required to be brought in China. The hapless owners of houses with Chinese drywall can tell you what a difficult barrier this creates.

These problems are not limited to China and take form in other emerging markets. Yandex is incorporated in the Netherlands. This likely reflects the need for clear rules to govern the company, something lacking in China and Russia. And in Russia, the principal fear is not fraud, although it is certainly possible, but government interference or nationalization.

Yandex specifically cites in its I.P.O. prospectus the risk involved with the coming Russian presidential election and states that Yandex may be subject “to aggressive application of contradictory or ambiguous laws or regulations, or to politically motivated actions.” In other words, the rule of law is anything but certain in Russia.

Given these risks, I wonder why these technology I.P.O.’s are seeking to list in the United States over other countries. It may be that we have the most robust capital markets, and this is primary attraction. There is also a darker explanation. We also have investors and day traders who invest with the herd and a media that too often drives “enthusiastic” investing. There may be something about the American market that allows bubbles to build. Foreign internet companies are simply coming here to feed on the phenomenon.

Even if this is too dark an explanation, investors should be put on notice that not all technology investments are the same. Foreign investments in particular carry much more risk, which American investors do not appear to appreciate.

Steven M. Davidoff, writing as The Deal Professor, is a commentator for DealBook on the world of mergers and acquisitions.

Article source: http://feeds.nytimes.com/click.phdo?i=964992af8ec364ffd3423a0280036ae5

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William Pennington, Casino Industry Executive, Dies at 88

May 21, 2011 by Leave a Comment

RENO, Nev.  — William Pennington, a pioneer in Nevada’s casino industry who helped build the Circus Circus empire, died here Sunday. He was 88.

He had Parkinson’s disease, his family said.

Listed for years on Forbes magazine’s list of the 400 richest people in America, Mr. Pennington gave millions of dollars to education, medicine and other charities through the William N. Pennington Foundation.

Mr. Pennington and his business partner, William Bennett, acquired Circus Circus in Las Vegas in 1974. They opened another Circus Circus in Reno in 1978 and later extended the Las Vegas Strip south with construction of the Excalibur, Luxor and Mandalay Bay resorts.

Born in Lebanon, Kan., on March 24, 1923, Mr. Pennington moved with his family to California, where he played football for the University of California, Berkeley, until he was sidelined by a knee injury. He put off graduation when he joined the Army Air Corps to serve as a bomber pilot in World War II.

Mr. Pennington moved to Reno in 1962 to work in the oil drilling business. He soon turned his attention to the gambling industry. He started by designing and building electronic gambling devices in the late 1960s. After Circus Circus began producing large profits in the 1970s, Mr. Pennington and Mr. Bennett added a second hotel tower to the casino.

A decade later, Circus Circus became one of the first gambling companies to offer shares on the New York Stock Exchange.

He is survived by his wife, Susanne; his sons William Jr., of Granite Bay, Calif., and Stephen, of Cardiff-by-the-Sea, Calif.; two sisters, Jackie Dunn of Reno and Joan Barney of Antioch, Calif.; and several grandchildren.

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DealBook: LinkedIn Rockets to $4 Billion Valuation

May 17, 2011 by Leave a Comment

LinkedInJin Lee/Bloomberg News

A few months ago, LinkedIn’s market debut looked to be relatively modest. Its value on a secondary exchange had stagnated at roughly $2.5 billion.

But LinkedIn — the professional social network that is expected to begin trading this week on the New York Stock Exchange — is defying expectations. On Tuesday, the company said in a regulatory filing that it could raise as much as than $405 million. The offering, which is priced at $42 to $45 per share, values the site at $4.3 billion.

That’s a significant improvement in a short time. In early May, the company had originally set its range at $32 to $35 per share, or roughly $3 billion. Private shares of the social network recently traded at an implied valuation of $2.5 billion on SharesPost, a secondary market.

“It’s a big surprise,” said Rory Maher, an analyst with Hudson Square Research. “Thirty percent indicates that people are dying to get into this.”

LinkedIn’s improving fortunes signal the swelling demand for the Web’s most promising social media start-ups. Both Groupon and Facebook are expected to go public within the next 12 months. Groupon is said to be talking to bankers about a valuation north of $20 billion. Facebook’s last major financing round, a $1.5 billion investment led by Goldman Sachs, valued the company at $50 billion.

Although a lot of the exuberance around Facebook and Groupon has been widely discussed, a strong showing for LinkedIn on its market debut on Thursday would be a positive harbinger for Internet I.P.O.’s. According to recent report released by SecondMarket, an exchange for private shares, investors expressed the most interest in shares of Facebook, followed by Twitter, Groupon and LinkedIn in the first quarter.

“It’s a good litmus test,” Mr. Maher said. “This is a confirmation that investor demand is really strong. A combination of heavy demand and the lack of supply is really driving this.”

Of the social media giants, Groupon is expected to be next on deck. The group buying site is preparing to file a prospectus within the next two weeks, according to two people close to the company who were not authorized to speak because details of the offering are private.

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Filed Under: Business News Tagged With: , ,

Stocks and Bonds: Shares Fall on Fear of Rising Commodity Prices

April 26, 2011 by Leave a Comment

About 5.34 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below the daily average of 7.74 billion.

Kimberly-Clark fell 2.7 percent to $64.24 after it cut the low end of its full-year outlook because the costs of pulp and other goods rose more than twice as much as it had expected.

The threat of rising commodity costs will remain in the spotlight for one of the busiest weeks of earnings, with 180 companies listed in Standard Poor’s 500 scheduled to report this week, including other major consumer names like Procter Gamble and Colgate-Palmolive.

“That is going to be the next thing that happens — the forward guidance is going to start to become impacted because of higher prices,” said Kenneth Polcari, managing director of ICAP Equities in New York.

Kimberly-Clark, maker of Kleenex tissue and Huggies disposable diapers, is among companies highly vulnerable to rising commodity costs because its products contain oil-based materials and paper.

The Dow Jones industrial average fell 26.11 points, or 0.21 percent, to 12,479.88. The Standard Poor’s 500-stock index shed 2.13 points, or 0.16 percent, to 1,335.25. The Nasdaq composite index gained 5.72 points, or 0.20 percent, to 2,825.88.

Johnson Controls fell 2.8 percent to $39.60 after the company, one of the world’s largest auto suppliers, said its fiscal third-quarter results would be hit by a decline in car production after the earthquake in Japan last month, which has disrupted the supply of auto parts and forced auto companies to idle plants.

Through Monday, 75 percent of the 151 companies in the S. P. 500 that have reported results this quarter have beaten analysts’ expectations. That is just above the average over the last four quarters but well above the average of 62 percent since 1994, according to Thomson Reuters data.

The Nasdaq edged higher, helped by SanDisk, a maker of flash memory cards, up 1.6 percent at $49.78 after raising its 2011 margin outlook late on Thursday. The markets were closed last week for Good Friday.

But energy and materials companies’ shares ranked among the worst performers, with the PHLX oil service sector index off 0.9 percent and the S. P. Materials Index down 0.7 percent. Oil prices slipped in thin, choppy trade as a sell-off in silver from near record highs lifted the dollar off its lows, prompting a bout of profit-taking in crude.

Company earnings reports this week include Amazon.com, Coca-Cola and Microsoft and the energy companies Exxon Mobil and Chevron.

Regarding expectations for this week’s batch of energy companies’ earnings, Mr. Polcari added: “They are all projected to be better because of high oil prices and all that stuff — great for them, but not good for anyone else.”

The week’s economic agenda includes a two-day meeting of the Federal Reserve’s policy-making committee on Tuesday and Wednesday. The Fed chairman, Ben S. Bernanke, will hold the first of four annual news conferences on Wednesday after the Federal Open Market Committee’s meeting.

Investors will look for clues about the direction of monetary policy when the Fed’s bond-buying program ends in June.

Interest rates fell on Monday. The Treasury’s benchmark 10-year note rose 9/32, to 102 5/32, and the yield slipped to 3.36 percent from 3.40 percent late Thursday.

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Filed Under: Economy News Tagged With: , ,
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