In Brief: CLO Edition
2018 Jan 17
Today's Top Story
Nine-Year Threshold for Independent Directors Back in Focus in Singapore
Singapore-listed companies will have to justify the independence of long-serving independent directors if suggested rule changes put forth by the Corporate Governance Council go into force within the second half of this year. To encourage firms to refresh and introduce more diversity into their boardrooms, the Council is proposing to enforce a "nine-year rule" that will reassess whether an independent director (ID) still qualifies as independent after nine years in the role. The Singapore Exchange (SGX) is seeking public feedback on whether the "nine-year rule" should be written into the Listing Rules as a hard limit, or if the ID's term should be put to an annual two-tier vote. Nearly 30 percent of IDs in Singapore have more than nine years of service under their belts and some IDs have served for more than 30 years, reports the Business Times (17 January, Lee).
Flurry of Lawsuits Filed to Fight Repeal of Net Neutrality
The legal fight against the Federal Communications Commission's (FCC) recent repeal of so-called net neutrality regulations began on 16 January, with a flurry of lawsuits filed to block the agency's action. One suit, filed by 21 state attorneys general, said the agency's actions broke federal law. Suits were also filed by Free Press and Public Knowledge, two public interest groups. Four of the suits were filed in the United States Court of Appeals for the District of Columbia Circuit. The lawsuits have long been expected. The filings on Tuesday, petitions to begin the suits, kick off what is expected to be an extended legal and political debate about the future of internet policy, reports the New York Times (16 January, Kang).
Mergers and Acquisitions
Energizer to Add Rayovac Brand
Energizer on Tuesday agreed to spend US$2 billion to purchase Spectrum Brands' battery and lighting assets, reports U.S. News and World Report (16 January), adding the Rayovac brand to its battery and lighting division. Spectrum announced earlier in January that it was seeking a buyer for the assets in order to place greater emphasis on such other businesses as hardware and pet supplies. Adding Rayovac will broaden the product portfolio held by Energizer Holdings. The deal is expected to close later this year.
Starz Names Audrey Lee as GC
Audrey Lee has joined Starz as executive vice president and general counsel, the premium cabler announced 16 January. Lee will report directly to Starz President and CEO Chris Albrecht and take over for Chief Legal Officer David Weil, who joined Starz in 2014 and will continue in a consulting role, reports Variety (16 January, Otterson). Lee joins Starz from Lionsgate where she served as executive vice president and deputy general counsel.
New Cyberattack on Cryptocurrency Investors Came From North Korea, Report Says
A new hacking offensive against cryptocurrency investors uses malware similar to that deployed in North Korea's attack on Sony Pictures Entertainment and its WannaCry ransomware assault, cybersecurity researchers said. In a report on 16 January, U.S. cybersecurity firm Recorded Future identified the Lazarus group — a hacking operation with links to the North Korean regime — as behind the malware campaign, which began targeting users of a South Korean exchange in the late fall and may still be active. It is unknown how successful the hackers were, or how much was stolen, reports the Wall Street Journal (17 January, Cheng). The allegation comes amid signs that Pyongyang has been mining and hacking bitcoin as it seeks new revenue sources to help fund its weapons program in the face of tightening sanctions.
Troubles Push GE to Consider a Breakup
The Wall Street Journal (17 January, Gryta) reports that General Electric (GE) is considering breaking itself apart, a bold move that would mark the end of one of America's oldest and biggest conglomerates. In the last year, GE has fallen on hard times, prompting it to change chief executives, sell assets, and cut its dividend. Even with those moves, the company has struggled to reassure shareholders that it has addressed its problems, especially in a climate where activist investors are pressuring businesses from Alcoa Inc. to Xerox Corp. to streamline their operations.
Judge Signals He Will Approve Settlement Between Allergan Shareholders and Pershing, Valeant
On 16 January, a federal judge signaled he would approve a US$290 million settlement reached by Pershing Square Capital Management, Valeant Pharmaceuticals International Inc., and the shareholders of Allergan PLC who had alleged the two firms improperly profited from their failed attempt to buy the maker of Botox. In a 16 January hearing, the judge also said he intended to publicly issue a final version of a tentative opinion he had privately issued last month that rejected two key legal arguments Pershing Square and Valeant had made. The settlement was reached last month to end a suit that threatened the profits of Valeant and Pershing Square founder and CEO William Ackman on their lucrative Allergan partnership, which earned them collectively about US$2.6 billion, though they failed to buy the company as they intended, reports the Wall Street Journal (16 January, Benoit, Rockoff).
Food and Beverage
Nestle Sells U.S. Unit to Ferrero
Swiss food group Nestle has inked a US$2.8 billion deal to sell its U.S. confectionery business to Italy's Ferrero, reports CNBC News (16 January). The unit has been underperforming competitors for years as consumers have bought healthier snacks. For family-owned Ferrero, the acquisition represents an opportunity to quickly build important scale and negotiating power in the key U.S. market.
Britain Investigates Carillion Directors
Britain has ordered a fast-track inquiry into the role played by Carillion's directors in the failure of the construction and services group, Reuters (16 January, Sandle, Fraser) reports. Mired in debt and pension liabilities, the 200-year-old company went into liquidation earlier this week, a move that has threatened suppliers, merchants, and large banks. Business Secretary Greg Clark insists that a complete picture of the events which caused Carillion to enter liquidation needs to be established by the Insolvency Service. "I have asked that the investigation looks not only at the conduct of the directors at the point of its insolvency, but also of any individuals who were previously directors," Clark said. "Any evidence of misconduct will be taken very seriously."
Instacart Buys Toronto-Based Unata
American grocery delivery service Instacart is buying Toronto-based technology company Unata as part of its ambitious expansion efforts across Canada. On 16 January, Instacart Chief Business Officer Nilam Ganenthiran said that the acquisition will give the company access to Unata's digital flyer, loyalty, e-catering, and list-building capabilities — and fits into its lofty goal of providing services to 80 percent of Canadian consumers within the next 18 months. Unata was founded in 2009 as a way to offer retailers a chance to digitize and introduce an online grocery platform. The company has recently been toying with voice-activation services that would allow customers to place orders through devices like Google Home, reports the Financial Post (16 January, Deschamps).
Corporate Social Responsibility
BlackRock Tells CEOs That They Must Do Good for Society
More than 1,000 global CEOs received a letter 16 January from one of the world's most influential money managers with a pointed message: Simply posting good financial returns is no longer enough; you must have a positive impact on society, too. In his annual letter to CEOs, Laurence Fink, the chairman and CEO of BlackRock, which manages nearly US$6.3 trillion in investments, put CEOs on high alert that they would be expected to answer questions about their long-term strategy, how they plan to use savings from the tax reform law, what role they play in their communities, and whether they are creating a diverse workforce that is being retrained for opportunities in a more automated future. "To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society," Fink wrote in his letter. The letter comes amid a greater recognition in corporate boardrooms and money management offices about the importance of issues like climate change, leadership diversity, and income inequality for the long-term health of the bottom lines of companies, reports the Washington Post (16 January, McGregor).
McDonald's Aims for Fully Recycled Packaging by 2025
McDonald's on Tuesday pledged that all its packaging worldwide will come from sustainable sources by 2025, reports BBC News (16 January). The fast-food giant will aim to get all items like bags, cups, and straws from recycled or renewable materials, an increase from 50 percent presently. Additionally, McDonald's wants 100 percent of its eateries to recycle packaging by 2025 versus only 10 percent now. The company already aims for 100 percent of its paper and card packaging, such as burger boxes, to come from recycled or certified sources where no deforestation occurs by 2020. Francesca DeBiase, McDonald's chief supply chain and sustainability officer, said it was customers' top request "to use less packaging, sourced responsibly, and designed to be taken care of after use." However, with 37,000 sites worldwide, McDonald's concedes some restaurants might struggle to recycle packaging by 2025 because infrastructure, regulations, and customer behavior vary around the globe.
2018 ACC Foundation Cybersecurity Summit