One scoop to start: Activist investor Cevian Capital has taken a €1.2bn stake in UBS, betting that the Swiss bank can double its valuation over the next three to five years.
And: Trevor Milton, the founder of hydrogen-powered truckmaker Nikola, was on Monday sentenced to four years in prison for defrauding investors about the readiness of his start-up’s technologies, in order to boost its share price.
In today’s newsletter:
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Two big wins for antitrust enforcers
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The Japanese company buying US Steel
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The plan to rescue Farfetch
Regulators even out the antitrust score
Global regulators had been on a losing streak lately, with back-to-back losses including Amgen’s $28bn takeover of fellow drugmaker Horizon Therapeutics and Microsoft’s $75bn purchase of game developer Activision Blizzard. That is until this week, when two big deals fell apart in less than 24 hours.
Adobe on Monday abandoned its proposed $20bn acquisition of product design software company Figma, saying there was “no clear path to receive necessary regulatory approvals” from UK and EU watchdogs.
The software giant, which will pay Figma $1bn in a termination fee under the terms of the merger agreement, had been battling EU and UK regulators to little avail.
At the crux of regulators’ arguments was that the deal had come to represent, in the EU’s words, a “killer acquisition” in which a large company acquires a smaller competitor to eliminate rivalry.
Figma had come on to the scene as one of the software giant’s most promising competitors in decades, and the exorbitant price Adobe had offered — roughly 50 times its annual recurring revenue — seemed to reflect how much it was willing to spend to quash its nimble new disrupter.
Adobe disputed those claims, stating that it wanted to offer customers new products.
Meanwhile in the US, biotech group Illumina on Sunday said it would divest from Grail, the cancer screening start-up it bought in 2021 for nearly $8bn, after the acquisition was blocked by the European Commission.
The decision by the San Diego-based maker of gene-sequencing machines comes after an order by Brussels in October to divest the unit as well as a separate lawsuit by the US Federal Trade Commission to block the deal, which Illumina abandoned its appeal of earlier this month.
While Joe Biden’s league of “trustbusters” and their global counterparts celebrate their respective wins, billionaire corporate raider Carl Icahn is using Illumina’s defeat to secure a victory of his own.
Writing in a letter to shareholders on Monday in which he said he supported Illumina’s decision to sell or spin off Grail — the saga had resulted in “$55 billion in market value destruction, and years of expensive litigation across two continents with not a single victory to show for it”, he wrote. He also took it as an opportunity to call out Illumina’s board.
There’s another huge test around the corner for antitrust watchdogs: the FTC’s lawsuit against Amazon, which could be a deciding moment for the agency’s chair Lina Khan and her fight against Big Tech.
Capitalism reins in the sale of US Steel
In August, Cleveland-Cliffs wrapped its unsolicited bid for US Steel in an American flag. The US Steel board has now deferred to another American value: capitalism.
On Monday, the Pittsburgh icon US Steel announced it had reached a deal to sell itself to Japan’s Nippon Steel at a total enterprise value of $15bn. It’s a huge price for a company that was trading at half the buyout value prior to the auction and bidding war that kicked off in late summer.
Cleveland, an iron ore specialist that had bought its way into steel production, had initially made a cash and stock offer. But it quickly couched its bid as a way to create an American national champion in a basic industry. Cleveland had also secured the backing of the United Steelworkers union.
Chinese players now dominate global steel production and US Steel — once associated with the robber barons Andrew Carnegie and John Pierpont Morgan — has now been diminished as an American powerhouse. As Lex points out, Nippon paid a blowout price. The board believed it had a fiduciary duty to get the best price even if the winning buyer came from abroad.
Later on Monday, the union and Pennsylvania senator John Fetterman expressed their concerns about selling to a foreign company, even one that hails from an ally eager to put investment to work in the fast-growing US.
There will undoubtedly be a serious national security review. But workers don’t have an official say in the matter and other objections look thin at the moment.
A Farfetched rescue
José Neves, the founder of the luxury retailer Farfetch, pitched himself as a technology nerd with an eye for fashion. But on Monday, his high-end ecommerce company appeared to reach an unglamorous end as an independent business.
Faced with a struggling business, plunging share price and credit rating downgrade, Farfetch agreed to be acquired by the South Korean ecommerce group Coupang.
While the business held an initial public offering in New York in 2018 and reached a peak valuation of about $24bn in 2021, a shift from pandemic shopping habits and other troubles have led its share price to plunge more than 97 per cent since its public debut.
Coupang, which operates in food delivery, video streaming and online shopping in Japan, South Korea and elsewhere, negotiated the deal with a group of debtholders who held most of a term loan owed by Farfetch, according to a disclosure filing.
The investment group Greenoaks, an early Coupang backer, will also take part in the rescue deal that will give Farfetch a $500mn bridge loan to continue offering its services.
Farfetch’s lifeline will also come at the expense of another deal. It had been set to buy lossmaking luxury ecommerce site Yoox Net-a-Porter from Swiss group Richemont, a deal that was signed in 2020 but had yet to close. That plan is now off.
Job moves
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Christian Lucas, a senior European dealmaker at Silver Lake, has been named a managing partner at the US tech-focused private equity group.
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Goldman Sachs co-head of Latin America Ricardo Mora is leaving the bank, DD reports.
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Former JPMorgan Chase banker Nicolas Aguzin is to leave his role as chief executive of Hong Kong’s stock market operator HKEX at the end of his three-year term.
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Paul Weiss has hired Clifford Chance London-based private equity partners Chris Sullivan and Taner Hassan, Financial News reports.
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Brian Reissaus, former head of the Committee on Foreign Investment in the United States, has joined Freshfields as a senior adviser on national security.
Smart reads
Crime . . . Bankers have long come under regulatory pressure in the fight against dirty money. Yet lawyers and other professionals haven’t been held to the same standard, Bloomberg’s Paul J Davies writes.
. . . and punishment However, the new US Corporate Transparency act could help the crackdown on money laundering by placing liability on lawyers, accountants and other such “gatekeepers” who turn a blind eye, Perkins Coie partner Jamie Schafer writes in an FT op-ed.
Lines in the sand Academics at the University of Pennsylvania have expressed concerns that a campaign by private equity boss Marc Rowan on antisemitism is threatening the school’s independence, the FT reports.
News round-up
Iliad proposes merger of Italian operations with Vodafone Italia (FT)
Software AG sells data platform to IBM for €2.1bn (FT)
Intermarché and Auchan open talks on buying Casino stores (FT)
UK landlord LondonMetric in talks to buy Alton Towers owner LXI (FT)
SEC charges fintech Tingo chief with ‘massive’ fraud after Hindenburg short position (FT)
Ex-Freshfields partner on trial for tax fraud takes ‘full responsibility’ for errors (FT)
Tesla rival Nio secures $2.2bn investment from Abu Dhabi fund (FT)
Unilever to sell slow-growing brands to private equity group Yellow Wood (FT)
Ryanair boss Michael O’Leary on course for €100mn bonus (FT)
Nikko in talks to buy Tikehau Stake, form partnership in Asia (Bloomberg)
European buyout firms increase salaries despite downturn (FT)
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