Broadcom Hits Qualcomm for Raising Its NXP Bid: DealBook Briefing

Good Wednesday. Here’s what we’re watching:

• Broadcom whacks Qualcomm for raising its NXP bid.

• How Skadden got involved in the special counsel’s Russia inquiry.

• AT&T’s political gambit suffers a setback.

• Amazon is still giving retailers heartburn.

Want this in your own email inbox? Here’s the sign-up.

Broadcom whacks Qualcomm for raising its NXP bid

Qualcomm defied Broadcom’s demand not to raise its takeover bid for NXP on Tuesday by increasing that offer by about 16 percent. Now Broadcom has retaliated.

Broadcom shaved $3 per share off its hostile takeover bid for Qualcomm acquisition, to $79.

Broadcom’s rationale is that the new NXP offer transfers value away from Qualcomm’s shareholders. From the news release:

Broadcom believes that a responsible Qualcomm board could have preserved value by following ISS’s clear recommendation to work with Broadcom on the NXP transaction and negotiate the sale of Qualcomm to Broadcom. Instead Qualcomm’s board acted against the best interests of its stockholders by unilaterally transferring excessive value to NXP’s activist stockholders.

Broadcom had previously said that it would walk away if the NXP offer went above $110 a share, but now seems content to take its chances at Qualcomm’s annual shareholder meeting.

Broadcom wants six seats on Qualcomm’s board. That campaign gained momentum when the proxy advisers I.S.S. and Glass Lewis recommended that Qualcomm shareholders vote for at least four of its director nominees.

A Qualcomm representative didn’t have an immediate comment.

How the shares moved today: Qualcomm’s were down 1.5 percent, while Broadcom’s were up slightly. Shares in NXP — the real winner in this deal saga so far — were essentially unchanged.

— Michael de la Merced

The deals flyaround

• Carl Icahn and Darwin Deason pressed Xerox to pursue alternatives to its complicated deal with Fujifilm. (Reuters)

• HNA has borrowed from the private equity firm Pacific Alliance Group, a sign that it may be struggling to raise capital from more traditional sources. (FT)

Untangling the productivity mystery.

An economy is doing well when companies each year manage to become more productive, or get more output from their employees and equipment. But productivity for years has grown far more slowly than it did in the past, effectively restraining economic growth. This decline has prompted economists to hunt for causes – and the latest big work on the issue comes from the McKinsey Global Institute. The Upshot’s Neil Irwin does a great job of explaining McKinsey’s main finding:

The latest wrinkle is that the researchers now believe that productivity growth depends not just on the supply side of the economy — what companies produce and what technologies they use to do it — but also significantly on the demand side. That is to say, productivity advancements don’t happen in a vacuum just because technology is available. They also happen because companies need to increase production to match demand for their goods, and a shortage, either of workers or of materials, forces them to think creatively about how to do so.

Or is productivity suffering because certain companies have become too big? New research posted by France’s central bank, the Banque de France, shows that the largest companies in the United States now account for a significantly larger share of production. This dominance, the paper asserts, could allow the companies to enjoy “monopoly rents,” the term economists use to describe the subsidies companies enjoy if their business is protected in ways that are not available to other firms.

“If these firms hold a dominant position in their market, they enjoy monopoly rents and have little incentive to invest in order to increase their productive capacities. This behavior could explain the weakness of investment in recent years, despite the high rates of return on capital.”

— Peter Eavis

JPMorgan’s headquartersCreditMike Segar/Reuters

J.P. Morgan to get a new home.

The largest United States bank by assets announced that it plans to tear down its current headquarters at 270 Park Ave. and build 2.5 million square-foot modern tower in its place.

The new headquarters has yet to be designed, but it is expected, according to Bloomberg, to be between 70 and 75 stories and house 15,000 employees. The current headquarters was designed in the late 1950s for about 3,500 employees, JPMorgan said.

During construction, employees will be temporarily moved 237, 245 and 277 Park Ave. and 383 and 390 Madison Ave., Bloomberg reported citing a person familiar with the matter.

The tower would be the first major project under New York City’s Midtown East rezoning plan, designed to encourage office construction in the area.

A new finance chief at Glassdoor

The job recruiting site said Wednesday that it has hired Jim Cox as its C.F.O., as part of a series of high-level executive appointments.

Mr. Cox was most recently at Lithium Technologies, a maker of customer relationship management software.

Here’s what Robert Hohman, Glassdoor’s C.E.O. and co-founder, said: “We are pleased to welcome Jim to Glassdoor as our new CFO as he brings a proven track record of building and managing financial operations and teams at high-growth technology companies.”

Glassdoor also appointed Christian Sutherland-Wong, most recently its general manager of monetization, as its first chief operating officer, and Samantha Zupan, a longtime executive, as its vice president of global corporate communications.

— Michael de la Merced

Alex van der Zwaan leaving the Federal District Court in Washington on Tuesday.CreditSusan Walsh/Associated Press

Skadden is under the microscope for its Paul Manafort work

The giant law firm’s work for the former Trump campaign manager — who has been charged with several criminal acts by Robert Mueller’s inquiry into Russian election interference — has come into question after a former Skadden associate entered a guilty plea in the investigation.

More from Kenneth Vogel and Andrew Kramer of the NYT:

The interest from prosecutors in what Skadden did for the Ukrainian government is one indication of the wide-ranging nature of the inquiries related to Mr. Manafort. It also highlights the risks associated with advising authoritarian governments overseas, a lucrative sideline among Washington lawyers, lobbyists and public relations consultants.

Skadden’s response: It fired the associate in question, Alex van der Zwaan, last year, and is cooperating with Mr. Mueller’s team.

Elsewhere in Russian election meddling: Here’s what we still don’t know about Facebook’s role. Chris Hughes, a co-founder, said Facebook must do more to prevent foreign interference. President Trump blamed Barack Obama for not being tougher on Russia. And meet theoligarch who helped fund Russia’s troll agency.

CreditBrandon Thibodeaux for The New York Times

AT&T’s case against the Justice Department takes a hit

The judge overseeing the Justice Department’s lawsuit to block the $85.4 billion takeover of Time Warner denied AT&T’s request to see government communications about the case. He ruled that AT&T had not “made a credible showing” that the White House had singled it out for retribution.

Retail’s Amazon problem

Symptom A: Albertsons buying Rite Aid to gain scale and enter the pharmacy business

Symptom B: Walmart’s online sales growing just 23 percent in the fourth quarter, after it splashed out on Jet.com, Bonobos and more

“It’s the battle of the old generation versus the new generation,” said Craig Johnson, president of Customer Growth Partners, a retail consulting firm. “And right now the companies that are gaining share is the new generation.”

Critics’ corner

• Of Walmart, Jennifer Saba of Breakingviews writes, “Longer term, failure online is an existential risk.” But Elizabeth Winkler of Heard on the Street says, “Given its huge size, investors need to temper their growth expectations.”

• Of the Rite Aid deal, Max Nisen and Tara Lachapelle of Gadfly write, “There aren’t a lot of appealing options out there, and Albertsons had largely exhausted them.”

Elsewhere in Amazon news

• Why would Amazon employees working on the HQ2 search be interested in an article about Arlington, Va.? Hmm. (ARL Now)

• Amazon now sells its own line of over-the-counter drugs. (CNBC)

• A closer look at Jeff Bezos’s 10,000-year clock. (CNBC)

• Start-ups that take money from the Alexa Fund should still fear Amazon’s competition. (The Information)

The policy flyaround

• Mr. Trump ordered the Justice Department to regulate bump stocks. But the Florida legislature rejected a bill that would have banned many semiautomatic weapons and large-capacity magazines. And a Florida teachers’ pension plan had held a stake in the maker of the rifle used in the Parkland school shooting.

• A clampdown by John Kelly on interim security clearances has upset Jared Kushner, who has one. (NYT)

• The advocacy group Common Cause filed complaints with the Justice Department and the Federal Election Commission over reports of $150,000 being paid to a former Playboy Playmate who said she had an affair with Mr. Trump. (WSJ)

• The Trump administration wants to sell nuclear reactors to Saudi Arabia, even though the kingdom won’t accept nonproliferation restrictions. (WSJ)

• The U.S. sold $179 billion worth of debt yesterday, now that the debt ceiling is no longer an immediate issue. (Bloomberg)

CreditCharly Triballeau/Agence France-Presse — Getty Images

More light is being shed on pay gaps in corporate America

From Peter Eavis:

For the first time — and after much protest — public companies must report their employees’ median pay and compare it with that of their C.E.O.s. (It’s thanks to Dodd-Frank.)

Honeywell disclosed last week that its C.E.O., Darius Adamczyk, took home $16.8 million last year, 333 times median employee pay.

Ratios at other companies:

• Teva Pharmaceuticals’ was 302:1

• Apollo Global Management’s was 1:1 (if you exclude, as Apollo did, Leon Black’s $91 million in dividends from his stock holdings)

CreditSteve Marcus/Reuters

Steve Cohen loses a round in court

From Matthew Goldstein:

A Manhattan federal judge rejected a motion by his Point72 Asset Management to temporarily seal the complaint in a sexual discrimination lawsuit against the firm by Lauren Bonner, an employee who described the firm as a testosterone-fueled “boys’ club.”

The judge said the request was “not narrowly tailored” and ran counter to the “presumption of public access” to court records.

Point72 is trying to push the case into arbitration, and said the complaint revealed details of other employees’ compensation.

Elsewhere in sexual misconduct: Sports Illustrated published an investigation into a corrosive culture inside the Dallas Mavericks N.B.A. franchise.

The tech flyaround

• How the founders of a price comparison site ended up as antitrust crusaders taking on Google. (NYT)

• The dominance of tech giants like Facebook and Amazon could harm productivity and economic growth, according to Banque de France. And George Soros’s Open Society organization is examining ways to push back against those companies.

• Apple is in talks to buy directly from miners to secure long-term supplies of cobalt, according to unnamed sources. (It’s vital for batteries.) But don’t expect the Democratic Republic of Congo to become a real-life Wakanda.

• Facebook and Twitter fall short in enforcing rules against impersonation. (NYT)

• A.I. is getting cheaper to make — and to manipulate. (NYT)

• Spotify’s co-founders plan to keep control through super-voting shares, unnamed sources say. (Bloomberg)

• Google has revamped its payments service to better compete against Apple Pay Cash. (CNBC)

CreditFederico Parra/Agence France-Presse — Getty Images

Venezuela gets in on initial coin offerings

The embattled country is pushing ahead with the presale of the “petro,” backed by its oil reserves, hoping to pay down debt and increase imports. President Nicolás Maduro called it a “cryptocurrency to take on Superman.” But few people give it much hope.

Some questions: Would buying the currency run afoul of U.S. sanctions? Can you trust the Venezuelan government to maintain the link between the petro and oil reserves? And how will pricing work?

Elsewhere in digital money

• Long Blockchain — yes, that company — replaced its C.E.O. and announced plans to spin off its iced beverages business, while trying to avoid being delisted by Nasdaq.

• Airbus and Mercedes-Benz have hired a blockchain consultancy run by U.C. Berkeley students. (The Information)

• Hackers broke into a Tesla-owned Amazon cloud account to use it for mining virtual currencies. (Fortune)

• You missed your chance of free Bitcoins. (Reuters)

And Bitcoin’s at $11,308.70 today, according to CoinMarketCap.

Revolving Door

• Jeff Hildebrand, the billionaire oil mogul, has stepped down as the C.E.O. of Hilcorp, though he’ll remain executive chairman. (Bloomberg)

• The C.E.O. of Gap’s namesake brand, Jeff Kirwan, has stepped down as the label continues to struggle. (WSJ)

• The C.E.O. of the Mayo Clinic, John Noseworthy, plans to step down by year end. (Axios)

The Speed Read

• A Republican plan to let people pay for time off with a new baby by collecting social security benefits early has raised concerns about putting women into more precarious positions in retirement. (NYT)

• If the U.S. had to face a recession, it would have few stabilizing tools at its disposal. (NYT)

• The Weinstein Company has formally responded to one of the class-action lawsuits it faces, saying Harvey Weinstein acted alone and that the statute of limitations had run out on some of the claims. (Deadline)

• The slide in the dollar has less to do with U.S. policies and fundamentals and more to do with investors preferring turnaround stories in Europe and Japan, says Goldman Sachs. (Bloomberg)

• Outstanding Hospitality Management, which operates airport restaurant spaces, sued the Kushner Companies over a planned food hall at the former NYT Building in Manhattan. (Bloomberg)

• Li Yonghong, owner of the soccer club A.C. Milan, denied reports in the Italian newspaper Corriere della Sera that he was selling assets to settle debts. (BBC)

• Ray Dalio’s $22 billion bet is against large European companies, but ones with far more economic exposure to the rest of the world than to Europe. (FT)

• Glencore is grappling with how to pay Dan Gertler, a former partner who has been placed under sanctions by the U.S. government. It will owe him as much as $200 million in royalties over two years. (WSJ)

Know someone who would enjoy this newsletter? Tell them to sign up here.

You can find live updates throughout the day at nytimes.com/dealbook.

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

Let's block ads! (Why?)