A new roadmap for scrutinizing deals
The Justice Department and the Federal Trade Commission released long-awaited merger guidelines Wednesday morning, but the proposed regulatory framework took an aggressive approach despite losing a string of lawsuits in which regulators tried to block the deal. has not changed.
Regulators Under Administration Since President Lyndon Johnson The government has set new guidelines, but they are not mandated by law, so they serve mainly for policy purposes. But the overarching proposal, introduced by FTC Chairman Rina Kern and Justice Department antitrust chief Jonathan Cantor, has one important distinguishing feature. It is a roadmap for judges to understand the regulator’s more progressive views on trust busting through footnotes on case law. — a clear counter-argument to those who say the tougher approach is not based on US rules.
This guideline broadens the scope of evaluating transactions. Regulators say the current law is not up to date. “We are updating our enforcement manuals to reflect the realities of how companies do business in the modern economy,” Khan said in a statement, adding that the proposal would allow the FTC to “enforce the mandates and legal regulations mandated by Congress.” I can do it,” he added. This is a precedent in the book. ”
The guidelines consider whether the major platforms can use their scale to establish market power and beat early competition. (Critics of this approach argue that it is nearly impossible to know what threats young technologies might pose in the future.)
The proposal also suggests that regulators assess the cumulative impact of multiple transactions, which could affect the private equity industry. And the guidelines aim to explore how transactions affect employees as well as consumers.
New Rules Continue Widespread Battle Against Biden Administration Consolidation. “Competition is at the heart of capitalism” Rael Brainardsaid the head of the National Economic Council in a speech earlier this month. Alongside the new merger rules, the White House Wednesday announced a new enforcement group to crack down on price gouging in food and produce markets.
Can regulators get the courts on their side? Regulators have had some success blocking deals, but courts often disagree with the agency’s views on how deals go. The FTC and DOJ have lost several lawsuits, most notably a move to block Microsoft’s $70 billion acquisition of Activision Blizzard.
what’s next? This guideline has a comment period of 60 days. In addition, authorities need to persuade courts to agree with the interpretation of case law. And dealmakers will have to decide what battles they are prepared to fight.
what is going on here
Meta and Microsoft partner on AI The social media giant will for the first time distribute a version of its technology that will be freely available to commercial users via Microsoft’s Azure cloud computing platform.Microsoft too Introducing a $30/month AI subscription The stock rose for Word, Excel, and Teams users, hitting an all-time high on Tuesday.
Senators will propose stock ownership limits for lawmakers and federal employees. Upcoming bills by New York Democrat Kirsten Gillibrand and Missouri Republican Josh Hawley would limit lawmakers, their aides, the president, vice president, and executive branch employees. from holding individual stocksThe same is true for blind trusts, according to The Wall Street Journal. The move comes amid growing public opposition to policymakers owning stakes in regulated companies.
Donald Trump has said he is likely to be indicted again by the federal government. The former president said he received a so-called target letter from special counsel Jack Smith investigating him over efforts to overturn the 2020 election results. It’s unclear what effect the new criminal charges will have on Trump’s standing in the polls and fundraising of the campaign.
The UK antitrust regulator has provisionally approved Broadcom’s acquisition of VMware. The Office of Competitive Markets said the $69 billion acquisition of enterprise software maker VMware competition will not decrease. The agency continues to negotiate a possible $70 billion contract modification with Microsoft and Activision Blizzard after moving to block the $70 billion deal.
Michael Moritz leaves Sequoia
Michael Moritz, who has built a track record as one of Silicon Valley’s leading venture capital investors, will leave Sequoia Capital after working there for about 38 years. The company’s managing partner, Roelof Botha, announced the news to Limited Partners this morning in a memo confirmed by Dealbook.
Moritz chronicled the early days of the Internet. He’s a reporter for Time magazine, and became San Francisco bureau chief just as some of today’s tech giants were just getting started. His work included books on Steve Jobs and Apple.
This venture capitalist has scored some big wins. He joined Sequoia in 1986 and led investments in companies such as Google, Yahoo, PayPal, LinkedIn and Stripe. He has served as partner and chairman, and in 2012 abandoned his day-to-day operations after revealing he was diagnosed with an unspecified medical condition.
Moritz has shifted his focus to Sequoia Heritage. of Wealth Management Unit Partially seeded by Moritz and former Sequoia global managing partner Doug Leone. Mr. Botha said Mr. Moritz will continue to represent the company in a small number of companies, but that the board will change over time.
His departure marks the latest shift at Sequoia. The company announced last month that it would spin off its China operations and spin off its India and Southeast Asia operations into three separate partnerships. The US and European operations will retain the Sequoia brand.
Is Kim Kardashian’s clothing brand preparing to go public?
Kim Kardashian-co-founded clothing brand Skims has raised $270 million in its latest funding round, dealbook’s Michael de la Merced first reports, valuing the company The amount is said to be $4 billion.
This is another achievement for the four-year-old company to maintain its rapid growth. But it could also raise questions about whether Skims is gearing up for another milestone, his IPO.
Skims grew rapidly. The company is currently profitable and is expected to reach $750 million in revenue this year, up from $500 million in 2022. The main reason for this is the expansion beyond shapewear to include loungewear and swimwear.
The e-commerce startup is also making inroads into brick-and-mortar stores, with plans to open flagship stores in Los Angeles and New York next year after opening locations inside stores such as Nordstrom and Saks.
The round was led by Wellington Management, Asset management company known for investing in start-up companies Coming soon. The latest round brings Skims’ total funding to $670 million.
Kardashian was declared a billionaire after a 2021 investment round, but is still the company’s largest shareholder. Together, she and her CEO Jens Grede own the majority stake.
An IPO is likely in the future of the company. In addition to bringing in Mr. Wellington (a company’s entry into the cap table almost always precedes an IPO), the brand has also hired a CFO and many other startups that eventually pursued a stake sale. and other similar measures.
Grede declined to say when Skims would go public, but told the dealbook that he was “in no hurry”, although stock market investors have recently shown interest in the consumer business. said that He added that an IPO is still the goal, saying, “At some point in the future, Skims deserves to be a public company.”
A big check on and from the Tesla board
of Proposed paymentIn one of the largest shareholder derivative lawsuits, the electric car maker seeks to settle accusations by the Detroit Police Department and the Fire Retirement Fund that the electric car maker was too tied up with the CEO, according to plaintiffs. The plaintiffs allege that they paid the board of directors “significantly” excessive compensation as shareholder representatives. result.
The lawsuit accused Tesla’s board of directors of failing to exercise proper oversight. Between 2017 and 2020, when the lawsuit was filed, the board deprived shareholders of large sums of money belonging to the company by paying members “unfair and excessive compensation” (both cash and option grants). A majority of Tesla’s independent shareholders rejected changes to director compensation for 2014 and 2019, it said.
The lawsuit also accused Musk of holding multiple board meetings with friends and family to ensure desired results and avoiding independent oversight. Musk himself is among the defendants in the lawsuit. his brother, Kimbal Musk. Robin Denholm, Chairman of Tesla since 2018. James Murdoch, current director. Former directors Antonio Gracias, Steven Jurvetson and Larry Ellison.
Tesla denied any wrongdoing in court filings. The directors said they acted in good faith but agreed to settle to end the costly litigation. As part of the proposed settlement, the defendants have agreed not to receive any compensation in 2021, 2022 or 2023, and the company will provide details to investors on how it will consider the proposed board compensation. We plan to provide it.
There is one issue that the proposed settlement does not address. It’s Musk’s $56 billion salary package, which is the subject of a separate lawsuit that could soon reach a verdict.
Carvana secures a debt lifeline
Calvana has announced a debt restructuring deal aimed at alleviating ballooning interest payments and avoiding bankruptcy at a time when the once-high-profile online car dealer faces sluggish sales and a sluggish stock price.
Carvana bet big on the used-car boom. that Acquired car auction business It was sold for $2.2 billion in May 2022, just as the Fed was raising rates.carvana sales has decreased significantly since thenwill leave the company with excess inventory and a heavy loss.
Neil Boudetto and Joe Rennison of The Times reported on the Calvana debt deal, noting that the company will also issue about $350 million in new stock.
The company’s shares surged nearly 25% in pre-market trading.
Information of sale
Investment giant Blackstone AUM reaches $1 trillionDespite intense scrutiny in recent months over troubles at one of its real estate funds. (FT)
middle east sovereign wealth fund It has invested billions of dollars in helping private equity funds such as KKR, EQT and Brookfield close deals while other funds have dried up. (Bloomberg)
vanmoof, the Dutch maker of a popular electric bike series that raised $128 million two years ago has filed for bankruptcy. (The Verge)
Over 8,000 authors signed a questionnaire addressed to technology company CEOs. not use their own work You will be able to train AI tools for free. (WSJ)
SEC Chairman Gary Gensler said AI tools Herd mentality of investors It can lead to a financial crisis. (insider)
best of the rest
“What happened to Dubai?” ‘New Geneva’ for Russian oil trade” (FT)
Gucci CEO Marco Bizzarri is stepping down amid a transformation at Gucci’s parent company, luxury conglomerate Kering. (New York Times)
Angelo Mosillo, who built Countrywide Financial into a mortgage giant before being accused of its role in the 2008 financial crisis, died Sunday. he was 84 years old. (New York Times)
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