Opening Bell: 10.08.14 - Dealbreaker

Opening Bell: 10.08.14

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Valeant, Pershing Square to Boost Allergan Bid (WSJ)
Valeant Pharmaceuticals International Inc. and activist investor William Ackman plan to boost their offer for Allergan Inc. by $15 a share, people familiar with the matter said, trying to keep the Botox maker from striking a rival deal. The new bid could value Allergan at more than $56 billion, increasing the offer by $4.5 billion. That would make it the largest deal of the year if completed, surpassing AbbVie Inc. ABBV -2.01% ’s pending $54 billion acquisition of Shire PLC. A $15 bump would bring the bid from Valeant and Mr. Ackman’s Pershing Square Capital Management LP to about $191 a share, based on Valeant’s closing price Tuesday. That is 2.5% above the closing price of Allergan’s shares, which rose Tuesday to $186.20. The bidders are still ironing out timing and the mix of cash and stock, the people said.

Profit at Goldman Less Easy to Find (Dealbook)
...the company is facing questions about whether it will be able to maintain its place atop the financial industry in a new era of regulations that hit hardest the very businesses in which Goldman makes the most money. Among Wall Street analysts, the company has been losing its favored position. Only a quarter of the analysts that follow the company have a buy recommendation on the shares of Goldman Sachs — the lowest proportion in years — while roughly half are still positive on its fiercest rival, Morgan Stanley, and even more recommend buying JPMorgan Chase stock. Further signs will come next week, when Goldman and the other big banks report third-quarter results. Goldman is expected to report higher profit than it did a year ago, but much of the bank’s recent success has come from divisions that are expected to shrink as new regulations are phased in.

Florida Pension Fund Significantly Reducing Pimco Exposure (WSJ)
The Florida State Board of Administration plans to pull more than $2 billion from Pacific Investment Management Co. following the departure of co-founder Bill Gross in late September. The decision appears to represent the biggest movement of funds disclosed by a public agency since Mr. Gross unexpectedly resigned from Pimco on Sept. 26. to join rival Janus Capital Group Inc.

A thousand miles apart, Janus bond chief Smith embraces Gross (Reuters)
Before hiring star bond fund manager Bill Gross last month, Janus Capital Group Inc (JNS.N) Chief Executive Dick Weil took care to check with the bond chief he already had, Gibson Smith. Smith said he has embraced the idea, despite concerns in the industry that Gross may not be enough of a team player. Smith said on Tuesday he plans to stay at Janus, with his team intact, after Weil said continuity was important. Weil "wanted to maintain what we have built and not do anything disruptive," Smith said. "This is good for the Janus fixed-income business and good for Janus as a whole," Smith said of Gross' move in a telephone interview. Smith said he expects to talk about markets with the one-time Pimco leader. But they will be about 1,000 miles apart. The two will operate two distinct business units, with Gross operating out of a Newport Beach, California office, which Smith called "Janus West."

New Dating App Caters to Rich by Weeding Out the Poor (NBC)
A new dating app called Luxy matches wealthy singles...to wealthy singles. It describes itself as "Tinder, minus the poor people." The app's iTunes page claims members are CEOs, investors, millionaires, and fitness models. So far, there are 3,000 users, and the average male user's income is $200,000, company spokesman Darren Shuster told Vice. Shuster also told CNN that Luxy's rich clientele is self-regulating and the app does not (yet) enforce salary verification. "If you show up in a 20-year-old VW Bug, and request to meet at McDonald's, you won't last very long on LUXY," Shuster said. "It doesn't take long to weed out those who belong on a different kind of dating site." The app is so controversial that the CEO's identity is kept anonymous. "With the rise of high-speed digital dating, it's about time somebody introduced a filter to weed out low-income prospects by neighborhood," wrote the app's nameless CEO in a release.

A.I.G. Trial Puts Book, and Author, on Hot Seat (Dealbook)
So often did parts of his book, “Stress Test,” come up during Mr. Geithner’s testimony at the trial of a lawsuit against the government over its bailout of the American International Group, that at one point Justice Department lawyers suggested the entire book should be submitted as evidence. And it was. David Boies, the lawyer for Maurice R. Greenberg, the former A.I.G. chief executive, who has sued the government for $40 billion claiming the Federal Reserve shortchanged shareholders in 2008pulled out copies to give to the Justice Department’s lawyers and Mr. Geithner. Mr. Geithner sat on the stand with a half-amused, half-nervous look. Mr. Boies and his team had its own prop, too: The television displays in the courtroom shone with a black-and-white image of the cover, complete with a sticker that read “Autographed.” The hardcover handouts prompted the presiding judge, Judge Thomas C. Wheeler of the United States Court of Claims, to interject dryly: “Do you have a copy for court, or should I visit Barnes & Noble?” But while the scene of Mr. Geithner sitting in the witness box frequently holding a copy of his own book, paging through with the help of some stylish reading glasses, struck some in the courtroom as a bit farcical, the strategy by Mr. Greenberg’s legal team was carefully orchestrated. Mr. Greenberg’s side believes that much of what Mr. Geithner has said in his book — and which he consequently cannot dispute during the trial without hurting his own credibility — helps the shareholders’ case, according to people briefed on the legal strategy. Mr. Greenberg’s lawyers also obtained transcripts of the unpublished interviews the former Treasury secretary gave to people assisting him with putting together “Stress Test.”

Puerto Rico to Sell $1.2 Billion in Notes on Unusual Terms (WSJ)
Puerto Rico is expected to sell up to $1.2 billion of short-term notes this week to large banks that have agreed to hold the debt until it matures in June, forestalling the heavy selling that followed a bond sale in March. Lenders including J.P. Morgan Chase, Bank of America Corp. and Morgan Stanley have said they won’t sell the debt, which is often sold by purchasing banks to bond funds and other buyers, according to people familiar with Puerto Rico’s financing plans. The sale of short-term notes, rated below investment grade, is expected to be arranged by J.P. Morgan, the people said. The $3.5 billion of bonds in March were purchased largely by hedge funds.

Germany’s Insistence on Austerity Meets With Revolt in the Eurozone (NYT)
France this week stepped up what has become an open revolt by some of the eurozone’s bigger economies against Chancellor Angela Merkel’s continued demands for deficit reduction in the face of slowing growth. Italy has warned against too rigidly following Germany’s preferred approach. Even the president of the European Central Bank, Mario Draghi, is pushing for Germany to loosen up. The disagreement looms over European Union leaders as they meet at least three times this month, starting on Wednesday in Milan with discussion of high unemployment, particularly among the young, and the question of how to get Europe’s economies moving again.

Couple sentenced for having sex in cop car after drunk driving bust (NYDN)
A Wisconsin man and woman were sentenced for allegedly having sex in the backseat of a cop car while being driven to jail. Travis Husnik, 33, and Heather Basten, 29, had been pulled over for drunk driving in Oconto County on Aug. 3, the Green Bay Press Gazette reported Tuesday. The deputy told the man to pull his pants up and ordered him to sit in the front seat, according to the local paper. "At a minimum, the mildest word that I can think of, the most favorable word I can think of, is your conduct is completely disrespectful to the officer," Judge Jay Conley said later in court. "The process of being arrested is supposed to be somewhat unpleasant ... and you end up having a tryst. Incredible."

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