In Brief: CLO Edition
2018 Dec 15
Today's Top Story
Japan Plots Tougher Regulation of Tech Giants
Japan is following in the footsteps of other countries that have scrutinized the dominant role of Google, Amazon, Facebook, and Apple. After an expert panel called for better oversight on competition and privacy, Japan plans to tighten regulation of tech giants. Despite the benefits these companies bring, tech giants “tend to monopolize the market through their features such as ... low costs and economies of scale,” according to a government report. A trade ministry official said the government will announce principles for new regulations in the next two weeks, reports the Business Times (13 December). Japan's anti-trust authorities have said they plan to investigate whether global tech firms are using their market leader positions to exploit contractors or obstruct competition.
Mergers and Acquisitions
LVMH to Acquire Luxury Hotel Group Belmond
Fortune (14 December, Dobush) reports that LVMH Moët Hennessy Louis Vuitton has agreed to purchase Belmond in a deal valued at US$2.6 billion. Belmond Group already owns such luxury hotel properties as the Hotel Cipriani in Venice and the Copacabana Palace in Rio de Janeiro. In addition, it operates luxury cruises and train services. LVMH is the parent company of fashion houses including Christian Dior, Marc Jacobs, and Givenchy, as well as premium spirits, cosmetics, and fragrances. To date, its hospitality business includes the Bulgari hotel brand and Cheval Blanc, a collection of luxury properties. The acquisition of Belmond will expand this business.
Caterpillar Names CEO Chairman of the Board
The Wall Street Journal (13 December, Hufford) reports that Caterpillar CEO Jim Umpleby was named chairman of the company's board of directors. The move, which cements Umpleby's leadership almost two years into his tenure, reverses Caterpillar's decision to split the CEO and chairman posts in 2017.
Labor and Employment
U.S. Pension Funds Ask Companies for More Information About Their Workers
Some of the largest U.S. pension funds want companies to disclose more information on worker pay, location, and the types of jobs their employees perform, reports the Wall Street Journal (13 December, Gillers). In a letter, the pension funds and several charitable organizations asked publicly traded companies to disclose data that goes beyond what the U.S. Securities and Exchange Commission requires. The letter asks for the breakdown of a company's labor force by job function or business unit, the number of full- or part-time employees, geographic location of workers, and whether the firm uses subcontractors. The letter also asks about the experience and education levels of staffers, different types of compensation such as incentives, and the company's "overall compensation philosophy." The letter was sent to the boards of all Fortune 500 companies.
Apple Seeks to Resolve China iPhone Ban
In November, the Intermediate People’s Court in Fuzhou issued a preliminary injunction banning Chinese imports and sales of seven Apple smartphone models. The order said the phones had violated two Qualcomm patents related to photo manipulation and using apps on a touchscreen, reports the Financial Times (14 December, Yang). Now, Apple is attempting to resolve China’s ban with a software update. In response to Apple’s news, Qualcomm said the company “continues to disregard and violate the Fuzhou court’s orders.” Yuan Yang, a lawyer at DeBund Law Offices, noted that the court order was vague and therefore left options open for Apple.
Oil Traders in Spotlight of Brazil Bribery Probe
Recent allegations made by prosecutors against four of the world’s largest oil trading companies have opened a new phase in the long-running “Car Wash” corruption investigation in Brazil. Federal prosecutors allege that Vitol SA, Trafigura, Glencore PLC, Mercuria Energy Group, and some smaller players collectively paid at least US$31 million in bribes over a six-year period to employees at Brazil’s state-led oil company Petrobras to sell them oil at sweetheart prices, reports Reuters (13 December, Brooks, Payne). They also said the illicit activity may still be ongoing. Last week, Brazilian authorities searched the Rio de Janeiro-area offices of Vitol, Trafigura, and Glencore as well as other entities they allege participated in the scheme. No charges have been filed.
Detour Gold's CEO Quits After Shareholder Revolt
Michael Kenyon, interim CEO of Detour Gold, has stepped down after a proxy contest led by Paulson & Co., a New York hedge fund that has led a shareholder effort to overhaul the company’s board and top management. Shareholders ousted five of nine board members, including Kenyon and chairman Alex Morrison. New directors were voted in by shareholders, including Dawn Whittaker, former chair of Kirkland Lake Gold Inc.'s corporate-governance committee and Steven Feldman, previously a partner with Goldman Sachs & Co. Paulson, which owns about 5.7 percent of Detour's shares, had been pushing for a board overhaul since June and had sought the removal of eight directors in the proxy contest. David Neuhauser, managing director with Livermore Partners, a U.S. investment firm that voted in favor of Paulson's slate, said that Detour now has a “a real chance" of turning itself around. Meanwhile, James Gowans, Detour's new chairman, said he was looking forward to working with the newly elected directors to find a new CEO, but gave no details on what direction the company might go in, reports the Toronto Globe and Mail (12 December, McGee).
J&J Pulled Into Fight Over Shareholder Lawsuits
The Wall Street Journal (13 December, Michaels) reports that Johnson & Johnson (J&J) is being drawn into a battle over how much freedom shareholders have to sue companies in a bid by lawsuit opponents to force regulators to pick sides over investors' access to the courts. Hal Scott, who represents a trust that owns J&J shares, filed a shareholder proposal with the company to push shareholder disputes into private arbitration hearings rather than federal court. J&J has no plans to bring the proposal up for a shareholder vote, though. Earlier this week, the J&J petitioned the Securities and Exchange Commission for permission to reject it.
U.K. Telecom Regulator Reviews Broadband Pricing
Ofcom, the U.K. telecoms watchdog, said it has launched a review of broadband providers pricing. The watchdog said that under planned new rules, it will force companies to tell customers about their best deals. Currently, Ofcom said that around four million households with basic broadband that had passed the end of their initial contract could switch to superfast for the same or cheaper than they already paid, reports the Financial Times (14 December, Pooley). The move is similar to one made in the energy market, where suppliers are required to tell their customers about their best available tariff when existing deals come to an end to prevent consumers defaulting on to companies' “standard variable tariff," which is usually their most expensive.
Facebook Settles Lawsuit With ZeniMax Over VR Tech
Facebook has reached a settlement with ZeniMax Media. In a lawsuit, the video gaming firm alleged that Facebook stole ZeniMax-held proprietary virtual reality (VR) technology, ZeniMax CEO Robert Altman said. The terms of the settlement were not disclosed, but Altman said his company was satisfied with the result, reports Xinhua (12 December).
Air France Becomes First Major Airline to Name Female Chief Executive
Air France made history this week by naming Anne Rigail CEO, reports The Hill (13 December, Gstalter), making her the first woman to lead a major airline. Rigail, who is currently the company's executive vice president for customers, has been with the French carrier for more than a quarter-century. She will succeed acting CEO Benjamin Smith, who applauded her promotion. Few women have headed airlines of any size. The U.K.-based discount airline EasyJet had a female CEO, Carolyn McCall, until this past March when she exited to take the reins of British broadcaster ITV. McCall's successor, Johan Lundgren, voluntarily took a nearly US$50,000 pay cut to match what her previous salary was.