Good Monday morning, and congrats to the Philadelphia Eagles for winning an entertaining Super Bowl. But who won the ad game: Procter & Gamble, Amazon or Toyota? (It wasn’t Dodge.) We could use your help: Our colleagues who broke the Harvey Weinstein story are looking at how corporate codes of conduct are changing. Please tell them here, and say we sent you.
Broadcom puts more pressure on Qualcomm
In raising its takeover bid to about $121 billion just now, Broadcom is hoping to allay concerns about its takeover bid and its quest to create a behemoth in computer chips.
• A takeover price of $82 a share, up from its original offer of $70
• A “significant” breakup fee if a deal were to be halted for antitrust reasons
• A “ticking fee” that Broadcom would pay in cash if a deal took more than a year to close
It said the new “best and final” offer would be withdrawn if Qualcomm either pushed its annual shareholder meeting back from March 6 (when Broadcom hopes to unseat the entire board) or if it paid more than $110 a share for NXP Semiconductor.
The context: Qualcomm recently reported a 96 percent drop in operating income amid a royalty dispute with Apple. That has given Broadcom some pause, but not enough to make it walk away.
Continue reading the main storyWhat’s next: This offer isn’t likely to tempt Qualcomm. It has a better chance of tempting investors, who might then press the chip maker into negotiations.
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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.
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How worried should JPMorgan clients be about health care?
Ever since the bank announced a partnership with Amazon and Berkshire Hathaway to create a new health care company, it appears that many have been very worried.
More from Anna Wilde Mathews, Dana Cimilluca and Emily Glazer of the WSJ:
In a reflection of the sensitivity of the subject, JPMorgan Chief Executive James Dimon hit the phones Tuesday to assuage clients’ concerns, people familiar with the matter said. So did some of the firm’s health care bankers, who get paid handsomely to help clients with mergers and other deals and worry the move could cost them business.
One response: Ultimately, Mr. Dimon, Jeff Bezos and Warren Buffett are working on a sort of group-purchasing venture, according to some of JPMorgan’s bankers. That’s far less transformative than some on Wall Street had hoped — or feared.
How much more will Wells Fargo have to do?
On Janet Yellen’s last day atop the Fed (see below), the regulator demanded that Wells Fargo replace four directors and capped the bank’s growth. The goal: to send a message.
More from Emily Flitter, Binyamin Appelbaum and David Enrich:
The settlement is an attempt by the Fed to impress upon banks that their boards of directors should be vigorous, independent watchdogs — and if they fail, there will be consequences. That reflects a shift from regulators’ historically hands-off approach to corporate boards, and the boards’ role is likely to grow in importance as regulators appointed by President Trump and Republicans in Congress generally loosen the reins on big banks.
Behind the scenes: Wells Fargo executives were irate that the Fed’s announcement trumpeted the replacement of the banks’ directors, and that it implied the boardroom changes came at the Fed’s instruction.
The big question: Will Wells Fargo have to do more than it just agreed? Gillian Tan of Gadfly suggests that Timothy Sloan, who became the bank’s C.E.O. after the scandals, may have to go.
The Washington flyaround
• Paul Ryan deleted a tweet crediting the tax overhaul for a secretary’s $1.50-a-week pay raise. He’s still being mocked for it. (NYT)
• The federal government is set to nearly double its borrowing this fiscal year, to $955 billion. (WaPo)
• Democrats on the House Intelligence Committee plan to push for the release of their own memo rebutting the one by Representative Devin Nunes about the surveillance of a Trump campaign aide. Mr. Nunes said he, too, had more memos to release.
• Senator Dick Durbin, Democrat of Illinois, said that Congress is unlikely to reach an agreement to protect the immigrants known as Dreamers this week, despite a Feb. 8 government funding deadline. But John McCain and Chris Coons plan on introducing a bipartisan immigration bill anyway.
• Jeff Sessions’s silence in the wake of President Trump’s attacks on the Justice Department has weakened morale there. (NYT)
Janet Yellen’s exit interview
The now-former Fed chairwoman told PBS NewsHour that while she didn’t agree with Alan Greenspan that there were bubbles in the stock and bond markets, she did see reasons for concern.
From her interview with Judy Woodruff:
“I don’t want to label what we’re seeing a bubble — as a bubble.
“But I would say that asset valuations generally are elevated, and this is a characterization that we have offered up, for example, last summer in our monetary policy report.”
Already, investors appear more cautious, faced with a tight-looking labor market and central banks potentially preparing to raise rates and take away the easy-money punch bowl.
Today’s update: Both Asian and European stock markets continued Friday’s declines.
More from Ms. Yellen: She also spoke about being the first Fed chair in history not to be renominated after a full term. “Well, I would have liked to serve an additional term, and I did make that clear. So, I will say that I was disappointed not to be reappointed,” she said.
Starboard attacks Mellanox over stock sales
Starboard Value, the activist hedge fund, has taken up a new line of attack as it pushes for change at the chip maker Mellanox. It is accusing top executives and board members of not having enough faith in their company.
The criticism: Starboard says Mellanox management and directors have sold shares more than 370 times since the company’s I.P.O., while buying its shares on the open market just once.
The bigger picture: Starboard is trying to unseat Mellanox’s entire board, arguing that the company needs either to improve its business, including by being more focused in its research spending, or to consider selling itself.
Instead of Viacom, should CBS strike a deal with Amazon?
Here’s a summary of the case for that, put forth by Ed Lee at Recode:
• Getting bigger by merging with another media company doesn’t solve CBS’s problems. Selling to a tech giant with great online distribution does more.
• Amazon’s exceptionally deep pockets would let CBS bid for expensive must-watch content like sports rights amid tougher competition.
The very big question: Would Shari Redstone, who with her father controls both CBS and Viacom, allow a deal that didn’t involve both companies?
The deals flyaround
• Is debt driving Dell’s deliberations about a potential I.P.O. or deal with VMware? Maybe less than you’d think. (NYT)
• Soho House, the operator of trendy members’ clubs, has hired Goldman Sachs and JPMorgan Chase to lead a planned I.P.O. (FT)
• Does the deal boom signal a top for the debt markets? (FT)
• The Carlyle Group, Bain Capital and Apollo Global Management are among those jockeying for Akzo Nobel’s chemicals unit, according to unnamed sources. (FT)
• GlaxoSmithKline and Reckitt Benckiser were the only bidders for Pfizer’s consumer unit, according to unnamed sources. (Bloomberg)
Samsung’s heir walks out of prison
A South Korean appeals court reduced and suspended Lee Jae-yong’s sentence for bribery and corruption.
A lawyer for Mr. Lee said that his client would appeal to South Korea’s Supreme Court to be declared innocent of the remaining charges. Prosecutors haven’t yet said if they’ll appeal. But critics of the country’s conglomerates had hoped that Mr. Lee’s original, unusually long sentence — five years — would herald tougher regulation.
The context: Samsung has done fine with Mr. Lee in jail: Its electronics operation is earning gangbuster profits and its semiconductor business is well positioned to keep minting money.
Where is Bitcoin today?
At $7,783, says CoinMarketCap, down another 12 percent over the past 24 hours. Other big virtual currencies are down, too.
Not helping: Credit card issuers including JPMorgan, Bank of America, Citigroup and Lloyds are now blocking purchases of virtual currency.
How Bell Pottinger, a pioneer of shameless P.R., died
It helped create the template for London P.R. firms catering to foreign governments. But it went bankrupt in a tale of corporate skulduggery — working for the wealthy Gupta family of South Africa and inflaming racial tensions there — that seems lifted from “House of Cards.”
More from David Segal of the NYT:
“In my years of running the P.R.C.A., I have never seen anything worse, never seen anything equal to it,” Francis Ingham, director general of the trade association, said in an interview. “The work was on a completely new scale of awfulness. Bell Pottinger may have set back race relations in South Africa by as much as 10 years.”
The misconduct flyaround
• Uma Thurman has opened up about what she described as sexual misconduct toward her by Harvey Weinstein. (NYT)
• Five women of different ages and professions gathered to discuss experiences of the gender wage gap: “That was the most humiliating experience that I have ever had.” (NYT)
Quote of the day
“There are a lot of entrepreneurs [in Silicon Valley] developing the next app for clothes shopping who say, not ironically, that ‘We are changing the world.’ You’re not changing the world.”
— J.D. Vance, venture investor and memoirist, in a lunch interview with the F.T.
The Speed Read
• Unilever brought deodorant to China dreaming of a market with 2.6 billion armpits, but struggled against beliefs that it’s healthy to sweat. Other companies have hit similar cultural difficulties. (NYT)
• Early employees of Google and Facebook are among the founders of the Center for Humane Technology, which will challenge the companies they helped to build. (NYT)
• Amazon has trained markets to give it leeway. They appear to accept that it has a strategy for Whole Foods that will take time. (NYT)
• New York Times reporters bought the same ingredients for Super Bowl meatballs at a Whole Foods 365 store and a Walmart. Both the price and the outcome were different. (NYT)
• Greg Coffey, the star hedge fund trader known as “the Wizard of Oz” who retired five years ago, is raising $2 billion for a new fund focused on emerging markets, according to anonymous sources. (FT)
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