Rupert Murdoch’s bid for Dow Jones & Company is heating up again.
The family that controls Dow Jones agreed to meet with News Corporation, the media company headed by Murdoch . News Corp made an unsolicited bid for Dow Jones earlier this month. Until now the Bancroft family, which controls 64% of the voting power of Dow Jones largely through its super-voting class B shares, had refused to meet with Murdoch or representatives of Dow Jones to discuss the offer.
“Since first receiving the News Corporation proposal, the Family has carefully considered and discussed among ourselves and with our advisors how best to achieve that overarching objective, while serving the best interests of the Company’s various constituencies,” the family said in a preliminary statement first reported by the Wall Street Journal, which is owned by Dow Jones.
“After a detailed review of the business of Dow Jones and the evolving competitive environment in which it operates, the Family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corporation,” the statement says.
In early May, News Corp offered $5 billion for Dow Jones, a sixty-seven percent premium over where the stock price trading before the bid. Through representatives on the board of directors of Dow Jones, members of the Bancroft family representing a majority of the voting power declined the offer. The board of directors has officially take no action on the offer. Since making the bid Murdoch has attempted to win support from the Bancroft family, but he has not increased his offer. In recent weeks some analysts began predicting that Murdoch would withdraw the offer if the family continued to refuse to negotiate.
The Wall Street Journal said the statement would be finalized after the conclusion of a meeting of the board of directors, which was underway tonight. At the time this was posted, no statement had been filed with the Securities and Exchange Commission on behalf of Dow Jones or the Bancrofts.
The statement may mean that the Bancrofts are willing to accept an offer from Rupert Murdoch. But by indicating a willingness to sell, they may also be hoping to attract other bidders. Tonight’s statement affirms that the family will also consider other bids.
Bancroft Family Plans to Discuss Dow Jones Bid With News Corp. [Wall Street Journal]
Bancrofts’ Statement on Dow Jones Bid [Wall Street Journal]
Archive for May 2007
Rupert Murdoch’s bid for Dow Jones & Company is heating up again.
When Bankers Break Down!
By Bess Levin
Email Brawl Exposes the Brutal Hours and Boring Work Of Junior Investment Bankers
The extreme hours and often menial work that characterize the lives of many junior investment bankers were on display last night in an exchange between a first-year analyst and a more senior associate at a middle market investment bank. It all began with a note at 6:04 PM. Although the original back-and-forth was strictly between two colleagues, the emails were forwarded outside the firm by a later recipient. As these things are wont to do, the mêlée very quickly spread through investment banking circles.
The spat began after Roger asked Billy (we’re changing the names because we have been unable to reach the people involved) to put together a working group list for him within an hour. Working group lists are used by investment bankers and law firms to collect and disseminate the contact information of professionals working on a transaction. Putting the lists together is not difficult but it is notoriously boring work. Although Roger’s request is rather straight-forward, Billy objected to the request and told Roger he thought it sounded “testy.”
“There is really no reason to get testy, Roger,” Billy said. “I was here all night, you know that, and I am curious as to why you are passing this off to me. I am aware that it takes 5 minutes to do, but you should know there is a difference between ‘pushing back’ and wondering why (for the 2nd time this week) you are giving me in particular a WGL. I thought that’s what staffing is for.”
[The rest of the exchange, after the jump]
Hedge funds are often touted as “early adopters” of new investment methods and developing strategies for doing this super cool thing called making money. Algorithmic trading, long short (cutting edge when Alfred Jones did it), the free gift-with proxy battle giveaway. All started at hedge funds. So it stands to reason that HFs will probably be ahead of the curve when they fire all of their equity analysts, as Tanya Beder, quant industry vet and noted hater of equity analysts, thinks they ought to do. She thinks computers should replace the EAs who, through her hate-tinted glasses, aren’t pulling their weight, not to mention not doing anything that couldn’t be done by a computer.
“Given the same set of factors, it will always produce the same result,” Beder hissed today. “Its signals are pure and systematic.” She argues that the next logical step is to supplant equity analysts with machines, and soon. Beder didn’t get her all-star returns at Caxton by tying a bunch of dead weights to her payroll.
Sandy Gross is gentler with regard to the unnecessary leaches whose services are no longer required at their companies. It’s not that hedge funds necessarily want to gather up their non-performing flock, take them around back and fire a few rounds off, they have to, in order to make room for the quant “rocket scientists” for which there is a “great demand.” (Here’s a good example of the difference between hedge funds and Dealbreaker: we demand mediocrity at best.)
[Insert obligatory Ren Tech/DE Shaw chest bump here, which symbolizes the proven success of quants].
Brad Hintz, financial services analyst at AllianceBernstein, noted that “there are lots of arguments as to why equity analysts are doomed,” and even rambled off a few (“regulatory investigations into analyst conflicts, the technology stock crash.”) But you probably know something that Brad doesn’t. Feel free–dare we say encouraged– to share it with us now.
Equity analysts facing new quant challenge [Reuters]
Good news for the self consciously pudgy – now ice cream, cereals and granola may be able to give you cancer. Coca-Cola and Cargill are ready to release lines of products sweetened with rebiana, the latest low-calorie sweetener pending regulatory approval. The marketing rationale here is that as long as that calorie number on the package goes down, all is permitted (next up – low calorie bleach, low calorie gasoline). Now you can dip your trans-fat free french fries in that vanilla cookie dough blend without gaining a pound!
Coca-Cola also plans to make the obvious switch to rebiana in its soft drinks, in attempts to assuage the guilt of people who feel they need 200% of the recommended daily dose of B12 from sugar water (a market Coca-Cola now has covered courtesy of Glaceau).
Despite recent market share losses from the happy magic water and happy magic energy drink beverage categories, carbonated soft-drinks are the second most consumed food & drink item in the universe next to sandwiches, according to food industry analyst Harry Balzer at the NPD group (watch his MarketWatch commentary here).
Rebiana comes from a natural herb (the cyclohexatriene herb) and doesn’t add any calories – making it the presumed “holy grail” of sweeteners (or just the lowest calorie most sugary tasting of sweeteners).
Word on the Sweet [MarketWatch]
Caption Contest Thursday: If These Bankers Can’t Even Properly Execute A Waterfall, How Can You Expect Them To Increase Deal Volume?By Bess Levin
Finally, the financial journalism community (yes, it’s a community) offers us something more than meaningless commentary. David Weidner, who we love, gets service-y today over at MarketWatch with a nifty how-to guide, re: insider trading. We’ll get right down to it:
Things that work:
+ Be within earshot of the mergers and acquisitions department at your local Wall Street bank
+ Keep it simple; it’s when you start to get too intricate and show-off-y that people get suspicious
+ When emailing conspirators about the insider trading you’re doing together, speak in code, but not in tongue. Say things like “Let the fun begin,” and not “ǂʼaama nǃei zhu”
+ Stay modest: pull a fast one on the Securities and Exchange Commission 10, maybe 20 times. 9 times is too few (we’re in this to make money, not friends), 25 is too many.
Things that don’t work:
+ Allowing your trade calls to be recorded on your employer’s log.
+ Doing it with your wife
+ Recruiting conspirators at Turkish bathhouses
+ Laying out plans in Grand Central Terminal
The insider’s path to beating the market [MarketWatch]
China isn’t gobbling up foreign assets at a rate that many expected, with overseas acquisitions this year on pace to reach only about 75% of last year’s volume. China more than doubled overseas M&A volume last year, acquiring over $20bn in foreign assets in 2006, up from $9.6bn in 2005. This year China’s overseas deal volume stands at $6.2bn, and most acquisitions have been attempts to bolster existing energy platforms.
One continuing problem with Chinese companies looking to buy abroad is that pesky disclosure and regulatory requirements often get in the way, forcing acquirers to put on a façade of being legit, or at least solvent (and this is before they even attempt to state a value-adding proposition).
For now, India is still the go-to emerging market for foreign deals in Asia. Last year, India barely edged out China in terms of foreign deal volume, with $21.7bn in deals. This year however, India is on pace to double China’s volume with $14.1bn worth of foreign deals completed so far this year.
One reason for this year’s foreign deal lull in China is that Chinese officials are preoccupied with scanning the frescoes of the 1,600 year old Dunhuang caves that served as a religious center and trade hub on the Silk Road during the Sui and Tang dynasties. I don’t know, it sounds like a good reason.
Chinese buyers gun-shy on overseas M&A [Reuters]
China’s 1,600-Year-Old Dunhuang Frescoes Enter the Digital Age [Bloomberg]
The Shake Shack in Madison Square Park is open for business, and we’ve already heard reports of summer interns at Credit Suisse standing on the long lines to get burgers and fries for lunch.
This reminds us of the perennial question: who has the best lunch time eating options in finance? Credit Suisse’s offices, located on the east side of Madison Square Park, make it a clear nominee simply because the superb shake shack is located there. Please leave your other nominations in comments.
We know the big guns of Wall Street prefer places like Campagnola, Rao’s, San Pietro and Four Seasons. We remember the Tom Wolfe essay which asserted that New York City was kept alive by the business lunch. But what we have in mind here is something a little less grand. Not lunch for the generals—lunch for the soliders. The lunch you grab before heading back to
the trenches your desk. Lunch for the summers, the analysts, the associates and the newly minted VPs.
And a brief administrative note. Today marks the start of DealBreaker’s Summer Watch. The summer interns have started at the banks, the summer shares in East Egg kicked off this past weekend, Merrill Lynch is firing the sickly, and the market around the corner from DB HQ has peaches. We’ve assigned DealBreaker Associate Editor Bess Levin to the Summer Beat, collecting the best, brightest and most brutal stories of the summer.
She’s assembling information about everything you can imagine. And she needs your help. Email her at firstname.lastname@example.org. How many summers has your shop hired? What are they paid? Where do they go to school? Who has the hottest summers? What events are planned? Are they doing real work or holding your place on line at the Shake Shack?
Also, remember, whatever happens in the Hamptons never stays in the Hamptons. It ends up on DealBreaker. Send your stories of bankers gone wild near the beach to us. Send your stories of never making it out to your share because you’re stuck in the office. We’re here for you. Be there for us.
Among the possible insider traders in CNBC’s fake portfolio challenge are an investment manager (with an MBA—from Stanford!), a radiology resident in Detroit (shocker) and a retired chemical engineer from Bollingbrook, Ill. CNBC said yesterday that in order to drum up interest in the network beyond the comings and goings of man meat Charlie Gasparino, it would be looking into unusual trading in the simulated contest. Timothy Sykes, “hedge fund manager and blogger,” told the LA Times yesterday, “There are always going to be cheaters. You can try your best to make it fair for everyone, but sometimes a few people are going to try to find ways around it,” which may or may not explain how he turned $13,000 into a pre-tax sum of just over $2 million. Concidentally, CNBC just happens to be airing a six-episode series next month called “American Greed: Scams, Scoundrels, and Scandals.” The b-roll of the day-trading (with not-real money) cheaters should be incredible.
Earlier: CNBC: THIS Is What We Choose To Take A Stand On
CNBC probes stock-game claims [LA Times]
Bill Hambrecht, founder of I-banking substitute WR Hambrecht & Co. wants to start a football league with Tim Armstrong at Google and Mark Cuban. Aspiring NFL competitors have a history of staying afloat for about as long as the Lusitania at a U-boat party, and Hambrecht has been a proud co-captain of at least one of these sinking ships – as a minority partner in the Oakland Invaders of the USFL (United States Football League), which folded after three years in 1985.
This time, the United Football League (Uniting Football rather than States this time) is bound to be successful, because it plans to focus on non-NFL cities and feature a public ownership structure. Buy your share of the Poughkeepsie Angry Pirates today. Hambrecht’s blistering chain of logic was basically that the Green Bay Packers are publicly owned and have an extremely loyal fan base willing to wear dairy products as accessories (something the 12 NFL championships (9 league championships before Super Bowls started and 3 Super Bowls) clearly have nothing to do with), so public ownership in small places must be an instant key to success. At least part public ownership, as teams will have a tripartite ownership structure between owners, the league and fans. Specifics from the New York Times:
Each owner will put up $30 million, giving him an initial half-interest in the team; the league will own the other half. But eventually the fans themselves will become shareholders — because each team is going to sell shares to the public. Then the owner, the league and the fans will each own a third of every franchise. Hambrecht and his executives believe that the initial public offerings will raise, on average, another $60 million per team, giving it about $90 million in working capital. They also hope that the stock sale will create intense fan loyalty.
So Billy H. has seen Rudy a couple of times and remains optimistic about the ability of guys with “heart” to provide footballtainment. After all, Tom Brady was a sixth rounder and Bill Walsh said the talent levels of the people cut from an NFL roster don’t differ much from the talent levels of the people who just make the team (in that you can say with equal conviction, “He’s no Jerry Rice”). This is actually part of Hambrecht’s marketing spiel (or at least the denial portion of his stages of grief).
According to some random guy the New York Times asked (a “sports economist” at Stanford, which must have “sports economics” classes, which must be like the physical kinesiology of the econ department (and I only say this because it sounds cool and I’m jealous)), the real barrier to entry in terms of competing with the NFL is getting stadium deals in larger cities and not providing a watchable game of football with the world’s best players (think he may have over-thought that one).
First and Long — Very Long [New York Times]