In Brief: CLO Edition
2018 Oct 18
Today's Top Story
France's Shortage of Skilled Labor Threatens Economic Recovery
A growing number of companies in France are complaining about the lack of skilled workers, according to Inséé, the country's national statistical institute. The mismatch between companies' needs and the skills available threatens the country's economic recovery, reports the Financial Times (18 October, Agnew). French Finance Minister Bruno Le Maire said recently that the question of skills is "the most important economic issue" facing France. He said: "We have a system of learning that does not provide the skills that are needed. And suddenly, you have falling unemployment." According to a report in July by Bpifrance, 90 percent of mid-sized companies are facing recruitment difficulties, mostly due to an inadequate level of qualification of employees. Nicolas Bouzou, head of Asterès, an economic research center, says that three reasons are primarily to blame: a lack of trained people for the jobs that are open, a generous welfare system for unemployed people in France that does not always motivate them to look for a job, and a lack of adequate housing where many of the jobs are located.
MoviePass' Parent Probed for Fraud
The Verge (17 October, Alexander) reports that the New York attorney general's office is launching an investigation into Helios and Matheson, MoviePass' parent company, over allegedly misleading investors. The investigation aims to determine whether the firm was dishonest with investors in regards to the company's financials. "The attorney general's office is using New York's Martin Act, which was designed to protect both investors and financial institutions from fraud, to pursue the investigation.
FSOC Rescinds Federal Oversight of Prudential Financial
The U.S. Financial Stability Oversight Council has rescinded Prudential Financial's designation as a "systemically important financial institution," a label that comes with tighter scrutiny from the Federal Reserve, reports the Wall Street Journal (17 October, Tracy, Scism, Prang). This means that Prudential could potentially save tens of millions of dollars in regulatory costs. "The council's decision today follows extensive engagement with the company and a detailed analysis showing that there is not a significant risk that the company could pose a threat to financial stability," U.S. Treasury Secretary Steven Mnuchin said.
Mergers and Acquisitions
Fujifilm Wins Appeal in Legal Dispute With Xerox Over Failed Merger
Fujifilm has won an appeal in its legal dispute with Xerox, after a New York court overturned preliminary injunctions sought by investors who had blocked their planned combination, reports Reuters (16 October, Yamazaki). Xerox earlier this year terminated a US$6.1 billion deal with Fujifilm in a settlement with activist investors Carl Icahn and Darwin Deason that also gave control of the U.S. photocopier giant to new management. The ruling by the New York State Appellate Court could give the Japanese firm leverage to pressure Xerox management back into negotiations. Fujifilm is also suing Xerox in another U.S. suit that seeks more than US$1 billion, accusing it of breach of contract in abandoning the deal.
Novartis to Buy Endocyte
The Wall Street Journal (18 October, Roland, Mancini) reports that Novartis has agreed to acquire Endocyte, a U.S. company developing a new treatment for prostate cancer, for US$2.1 billion. This marks the Swiss pharmaceutical giant's most recent effort to double down on high-value prescription medications. The acquisition is CEO Vasant Narasimhan's latest move to refocus Novartis since he took the reins this past February.
Hackers Hit Three East European Companies: Cybersecurity Firm
Hackers have infected three energy and transport companies in Ukraine and Poland with sophisticated new malware and may be planning destructive cyberattacks, according to a report issued Wednesday by software security firm ESET. The Slovakia-based firm did not attribute the hacking activity, recorded between 2015 and mid-2018, to any specific country, but blamed it on a group that has been accused by Great Britain of having links to Russian military intelligence, reports Reuters (17 October, Polityuk). The report is the latest to raise suspicions in the West about Russia's GRU spy agency, accused by London of conducting a "reckless campaign" of global cyberattacks. Moscow denies the charges. Investigators at ESET said the group responsible for a series of earlier attacks against the Ukrainian energy sector, which used malicious software known as BlackEnergy, had since developed and used a new malware suite called GreyEnergy.
Facebook Shareholders Join Call for Independent Chair
Gizmodo (17 October, Jones) reports that several major public funds issued a joint statement backing a campaign to oust Facebook founder Mark Zuckerberg as chairman of the board. The state treasurers of Rhode Island, Illinois, and Pennsylvania have joined forces with New York City's comptroller in signing on to a proposal first issued by Trillium Asset Management in June. The group is calling on Facebook's shareholders to consider replacing Zuckerberg with an independent chairman, pointing out that 59 percent of S&P 1500 companies separate the roles of chairman and CEO to provide true independent oversight of corporate governance. The group said that this oversight is needed because Facebook has mishandled numerous "severe controversies," including the sharing of user personal data.
Food and Beverage
CEO of Constellation Brands Steps Down
Constellation Brands CEO Rob Sands has announced he is stepping down, CNN (17 October, Wiener-Bronner) reports. Succeeding him in March will be the company's president and COO, Bill Newlands. Sands has spent more than a decade as president and CEO of Constellation Brands. On Wednesday, he endorsed his successor, stating that Newlands "has made a significant impact" on the company since coming aboard in 2015. Once Newlands takes the reins as CEO, Sands will become Constellation Brands' executive chair, replacing his brother.
EBay Sues Amazon Over Alleged Poaching of Sellers
According to the Wall Street Journal (17 October, Stevens), eBay has filed a lawsuit against Amazon, charging the company with illegally poaching sellers on its marketplace via eBay's internal messaging system. The lawsuit alleges that Amazon "perpetrated a scheme to infiltrate and exploit eBay's internal member e-mail system" over the last few years. The alleged scheme was used by dozens of Amazon sales reps both in the United States and abroad to recruit high-value eBay sellers to Amazon. In the complaint, eBay cites alleged proof that Amazon coordinated this scheme from its headquarters.
Steinhoff Wins Delay in Legal Action Until April 2019
Steinhoff International Holdings said Dutch investor group VEB has agreed to postpone legal action against the retailer until 1 April to provide more time for the company to reorganize the business and prepare financial statements, reports Bloomberg (17 October, Bowker). CEO Danie van Der Merwe said in a statement, "This agreement allows us time to focus on completing these tasks in the interests of all stakeholders." VEB was given permission last month to sue the South African company in the Netherlands, where it is registered. According to the investor group, Steinhoff published incorrect financial statements and press releases ahead of an accounting scandal that shaved more than 95 percent off its share price. Steinhoff also faces a lawsuit from billionaire Christo Wiese, formerly the company's largest shareholder.
Corporate Social Responsibility
Activist Shareholders Unite in Anti-Lobby Resolution at Origin Energy
Forty-six percent of Origin Energy's shareholders voted in favor of a shareholder proposal that asked the company to review its membership in energy industry lobbying groups and establish criteria for supporting such organizations, reports the Sydney Morning Herald (17 October, Latimer). Although the vote fell short of the mark needed to force Origin to abide by the motion, the company promised to improve transparency with regard to its lobbying interactions. The Australian Center for Corporate Responsibility (ACCR), which backed the motion, called the vote tally a record for a shareholder proposal on an environmental, social, and governance issue in Australia. "It is a landmark shift from the investment community and signals that oppositional lobbying on climate and energy policy will no longer be tolerated," said Dan Gocher, director of climate and environment for ACCR. The vote took place Wednesday during Origin's annual general meeting. ACCR argued that the lobbying groups have taken positions that could conflict with the company's commitments on climate change and its long-term financial interests. The prospect of a similar motion from ACCR also prompted Westpac to agree this week to review its membership of lobbying groups.