If you were Microsoft and the sponsors of an LBO came to you and said, “we have about $17bn in debt to place, do you want $2bn of it,” would you say yes? Let’s say you’d say yes: would you demand a higher or lower interest rate for it than everyone else?
The Dell deal is pretty new and soon we’ll have a Background of the Merger to chew over – and, y’know, actual deal docs – but for now the most informative reporting seems to be this Journal story and it’s … sort of odd. Here is Microsoft’s involvement:
Between Silver Lake and Mr. Dell, the buyout group felt it could arrange for cash and loans on its own. The choice was between taking on $2 billion more in high-yield debt or bringing in Microsoft as a “passive debt investor” who would get no board seats or governance rights, but would be “emotionally and financially committed” to Dell’s future, a person said. Microsoft and Dell already are partners, but the $2 billion debt was aimed at creating a closer partnership between the two within an existing commercial agreement, the person and others said. Microsoft’s $2 billion note is a multi-year instrument with an attractive interest rate, one of the people said.
I don’t know what any of those words mean! The concept of Microsoft being “emotionally committed” to anything particularly boggles me. (It may have something to do with supporting “the long term success of the entire PC ecosystem” without ticking off other manufacturers by taking an equity stake in Dell.)
Also, I don’t know what “attractive interest rate” means. Read more »
On the heels of the SEC’s action against Goldman Sachs, Wall Street’s top cop is nearing the conclusion of a high-profile insider trading case that has simmered for over five years.
According to several sources close to the case, the SEC is in final negotiations to settle insider trading charges against Pequot Capital Management, over a year after it issued the firm and its founder, Arthur Samberg a so-called Wells notice, indicating the agency was going to formally charge the firm.
It’s unclear what the final settlement will be, but sources said the two sides have recently discussed an agreement that includes a total of about $25 million in fines with Pequot neither admitting nor denying wrongdoing.
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Yes, we were quite shocked too, to find that Portfolio (yes, that Portfolio) seems to have an occasional penchant for investigative journalism. Or perhaps they are just more tolerant of reading SEC filings and the like than we have been of late. But who can resist a juicy tale of unexplained millions in payments to former Microsoft employees, divorce filings, insider trading, politically motivated SEC coverups and, best of all perhaps, John Mack?
A separate facet of the S.E.C. investigation looked into whether Morgan Stanley C.E.O. John Mack had fed inside information to Samberg about a planned General Electric acquisition of Heller Financial, a lender to businesses. Samberg’s hedge fund had bought Heller shares and shorted G.E. stock in advance of the announcement, and made $18 million on the trading, the S.E.C. said.
The Mack aspect of the case hit the headlines because the S.E.C. fired the government lawyer investigating the allegations, Gary Aguirre. Aguirre claimed he was fired for insisting on subpoenaing Mack, a move which he said higher-ups at the S.E.C. overruled because of Mack’s connections and political clout.
The S.E.C. denied that, but a joint investigation by the Senate judiciary and finance committees in August 2007 sided with Aguirre and sharply faulted the S.E.C. for failing to pursue the case, including the evidence concerning Zilkha and Samberg’s Microsoft trading.
Pequot’s Puzzling Payments [Portfolio]
It used to be that the Microsoft-Yahoo clash seemed, at its root, a “personality conflict.” Yang and Ballmer’s war of words was, at one point, so pointed that Ballmer was said unable to consider an acquisition of any kind while Yang was still leading the firm. Or, that was the press version, anyhow. Around this time Microsoft spent a period in that Texas Hold’em sort of intentions limbo. When strong, attempt to appear weak, when weak, attempt to appear strong. Ballmer didn’t want to advertise the degree to which he lusted after Yahoo. Nor did anyone at Microsoft want to admit that the firm was (is) dangerously close to obsolescence and irrelevance in the face of Googlesque economies (though various classes of writers literally fell over each other to point this out). So, what exactly are we to make of this:
Microsoft Corp. is no longer interested in buying all of Yahoo Inc., CEO Steve Ballmer said Wednesday, though he told shareholders that the company would still be “very open” to a collaboration on Internet search. His comments sent Yahoo shares diving by 12 percent.
“Let me be clear,” Ballmer said at Microsoft’s annual shareholder meeting. “We are done with all acquisition discussions with Yahoo.”
Yahoo spurned a $47.5 billion takeover offer from Microsoft in May, and later rejected Microsoft’s bid to buy only its search engine. Ballmer has said repeatedly of late that the buyout remains off the table, though a search-related deal is possible.
Ballmer dismisses Yahoo buyout but open on search [Yahoo Finance (Ha! Ha!)]
Poor Yahoo. They could be enjoying piles of cash and Microsoft stock at the moment. Indeed, Microsoft has had a bit of a battering as well, but compared to Yahoo they seem just ducky. Instead, Yahoo is about to, it seems, embark on a series of cost cuts and, well, firings. How long Yahoo shareholders are going to be on Yang’s side is anyone’s guess (are there any left?), but we won’t get any price discovery on that until someone calls a shareholder meeting.
Yahoo to outline cost-cutting plans: source [Reuters]
Following in the footsteps of superstar NFL wide-outs Chad Johnson and Terrell Owens (and former Kansas Senator Bob Dole), Carl Icahn referred to himself in the third-person today on his blog post, “Concerning the Annual Yahoo! Meeting.”
“Additionally, if any committee is formed to negotiate a meaningful transaction, Carl Icahn will be a member of that committee,” he wrote.
Now, Carl just needs a slick nickname to be right up there with Johnson and Owens. Suggestions?
Anyway, in his latest post, Carl makes it clear that he will not be attending the meeting since the proxy fight is over. He said, “it will not do shareholders or Yahoo! any good to have the annual meeting turn into a media event for no purpose.”
Carl reiterated that his minority position on the board is significant because he will be involved in any major transaction that Yahoo explores. The compromise that was reached between the two parties appears to be very beneficial for Icahn, especially since support for his board slate had significantly waned in recent weeks. We will have coverage of the meeting tomorrow.
–Senior third-person correspondent Travis
Before Steve Ballmer unveils Microsoft’s new strategy for killing it, today at 11:30:
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It is over. The proxy fight between Yahoo and Carl Icahn has ended, not with a bang but whimper.
Yahoo this morning announced that the two sides had settled with a compromise board, our own Joe Weisenthal reports at PaidContent. Icahn himself elected to the company’s board at the upcoming August 1 shareholder meeting. The board will be expanded to 11 member, with the extra two board members appointed by the board from Icahn’s list of candidates, giving Icahn 3 of the eleven seats.
As we said last week, Icahn’s bid for control of the company seemed to suffer a mortal blow when Legg Mason’s Bill Miller announced he would support the incumbent slate. All along Icahn’s efforts was subject to a serious weakness: the dependence on selling the company to Microsoft, which has been playing its own cards close to the chest. It was never really clear whether Microsoft still wanted Yahoo or how far they would go to get it.
Yahoo Settles With Carl Icahn; Icahn To Control 3 Of 11 Seats [Paid Content]
The source telling TechCrunch that Yahoo and Microsoft are talking about a full buyout again “must have been drunk” says Silicon Alley Insider’s Henry Blodget.
Instead, his source seems to indicate that Yahoo and Microsoft are discussing a search deal, as reported by CNBC and the WSJ earlier.
Yesterday, speculation sent Yahoo shares up as high as $23.71; however, the stock is hovering near its opening price so far today.
– Yacrosoft correspondent Travis
With no new posts today so far, billionaire dollar big boy Carl Icahn’s blog is off to a rather bland start. Where are his diatribes against Yahoo? Are the lawyers curbing Carl’s tongue?
We’re getting a bit worried. What if Carl doesn’t live up to all our hopes and dreams?
The standard rants about everything that is wrong with Corporate America are accurate, but we would prefer Carl to wax poetic about why Yahoo management is destroying the company’s future prospects and stock price. Doesn’t he at least owe all his hedge fund buddies who piled into Yahoo after he made his move a bit more color on this? Where are his thoughts on the mass departure of Yahoo executives?
We say give the lawyers the finger, throw all caution to the wind, and tell us what you really think, Carl.
–by senior Carl Icahn stalker Travis