New roadmap for auditing deals
The Justice Department and Federal Trade Commission announced long-awaited merger guidelines Wednesday morning, and the proposed regulatory framework reveals that regulators are not changing their aggressive approach despite losing a string of court cases when they tried to block the transactions.
Regulators under departments dating the president Lyndon Johnson They set new guidelines, which function largely as a matter of policy intent because they are not enforced by law. But the sweeping proposals by Lina Khan, chair of the Federal Trade Commission, and Jonathan Kanter, the Justice Department’s chief antitrust official, have one key distinguishing feature: a roadmap for justices to understand regulators’ more progressive views on trust fraud across the margins on case law. — a clear refutation for those who say the tougher approach is not based on US rules.
Guidelines expand the scope of evaluating deals. The organizers say the current laws are not appropriate for the contemporary era. “We are updating our implementation guide to reflect the realities of how companies do business in the modern economy,” Ms. Khan said in a statement, adding that the proposals would enable the FTC to implement “the mandate given us by Congress and the statutory legislation.” precedent in books.”
The guidelines consider how large dominant platforms can use their scale to establish market power and eliminate emerging competition. (Critics of this approach argue that it is almost impossible to know what threat new technologies might pose in the future.)
The proposals also indicate that regulators are assessing the cumulative impact of multiple deals, which could have implications for the private equity industry. The guidelines aim to examine how deals affect employees, not just consumers.
The new rules continue the Biden administration’s broader battle against uniformity. “Competition is fundamental to capitalism,” Lyle BrainardThe director of the National Economic Council said in a speech this month. Along with the new merger rules, the White House on Wednesday announced a new enforcement group to crack down on price gouging in food and agricultural markets.
Can regulators get the courts on their side? Regulators have had some success reversing deals, but courts have often disagreed with their views on deal-making. The Federal Trade Commission and Department of Justice have lost several lawsuits, most notably a move to block Microsoft’s $70 billion acquisition of Activision Blizzard.
What then? The guidelines will be subject to a 60-day comment period. Beyond that, the agencies will have to convince the courts to agree with their interpretation of precedent. Dealmakers will need to decide which battles they are willing to fight.
Here’s what happens
Meta and Microsoft are working together in the field of artificial intelligence The social media giant will distribute a version of its technology that is freely available to commercial users for the first time via the Microsoft Azure cloud computing platform. Microsoft too Introducing an AI subscription of $30 per month users of Word, Excel and Teams, which sent the number of shares to a record high on Tuesday.
Senators plan to propose stock ownership limits for lawmakers and federal officials. An upcoming bill by Kirsten Gillibrand, D-NY, and Josh Hawley, R-Missouri, would restrict lawmakers, their aides, the president, vice president, and executive branch staff of owning individual stocks, even in blind trust funds, according to the Wall Street Journal. The move comes amid growing public anger at policymakers who own shares in the companies they regulate.
Donald Trump says he is likely to face another federal indictment. The former president revealed that he received so-called targeted letters from Jack Smith, the special counsel investigating him over efforts to overturn the results of the 2020 election. It is unclear how the new criminal charges will affect Trump’s standing in the polls or fundraising.
UK antitrust regulator temporarily erases Broadcom’s takeover of VMware. The Competition and Markets Authority found that the $69 billion acquisition of VMware, an enterprise software maker, Competition will not decrease. The agency is still negotiating with Microsoft and Activision Blizzard over potential changes to the $70 billion deal, after it moved to block it.
Michael Moretz leaves Sequoia
Michael Moritz, who built a legacy as one of the leading venture capital investors in Silicon Valley, is leaving Sequoia Capital after nearly 38 years. Roelof Botha, the firm’s managing partner, announced the news to its limited partners in a note this morning seen by DealBook.
Mr. Moritz chronicled the early days of the Internet. He was a Time magazine reporter and became the San Francisco bureau chief at a time when some of the tech giants were just getting started. His work has included books on Steve Jobs and Apple.
The venture capitalist has made some big gains. He joined Sequoia in 1986 and has led its investments in companies including Google, Yahoo, PayPal, LinkedIn and Stripe. He’s acted as a partner — relinquishing day-to-day management in 2012 after revealing he had an unspecified medical condition — and chair.
Mr. Moritz turns his focus to Sequoia Heritage, the Wealth Management Unit Ranked in part by Mr. Moritz and Doug Lyon, former Global Managing Partner of Sequoia. Mr. Botha said that Mr. Moritz will continue to represent the company on a handful of companies but will be replaced on boards over time.
His passing is the latest transformation for Sequoia. The company announced last month that it would split into three separate partnerships, removing business in China and running operations in India and Southeast Asia. American and European companies will retain the Sequoia brand.
Is Kim Kardashian’s clothing brand preparing for the IPO?
Skims, the clothing brand co-founded by Kim Kardashian, has raised $270 million in its latest fundraising round, and DealBook’s Michael de la Merced was the first to report the company’s valuation at $4 billion.
It’s another mission by the four-year-old company to help sustain its rapid growth. But it may also raise questions about whether Skims is preparing itself for another milestone: an IPO
Skims’ operations grew rapidly. The company, which is now profitable, is on track to achieve $750 million in sales this year, up from $500 million in 2022. This has been driven in large part by its expansion beyond underwear into sleepwear, swimwear and more.
The company, which got its start in e-commerce, is also working on getting into physical retail: It plans to open flagship locations next year, in Los Angeles and New York, after opening in-store outposts including Nordstrom and Saks.
The tour was led by Wellington Management, An asset manager known for investing in startups Close to public appearance. The latest round brings Skims’ total fundraising total to $670 million.
Ms. Kardashian – who received billionaire certification after a 2021 investment round – remains the company’s largest shareholder; She and the company’s CEO, Jens Grady, jointly own a majority stake.
An IPO is likely in the company’s future. In addition to bringing Wellington — whose entry into the company’s cap table is always preceded by a public offering — the brand took other steps consistent with those of many startups that eventually sought to sell stock, including hiring a CFO.
Mr. Grede declined to say when Skims will go public — “we certainly don’t have a rush,” he told DealBook — but said stock market investors have recently shown interest in the consumer-oriented business. He added that an IPO remains a goal: “At some point in the future, Skims deserves to be a public company.”
Great check on and from the Tesla dashboard
the suggested paymentone of the largest shareholder-derived lawsuits, aims to settle accusations by the Detroit police and fire pension fund that the electric car maker was too obligated to its CEO — and, according to the plaintiff, overpaid “gross” amounts to its board as a result.
The lawsuit accused Tesla’s managers of failing to provide proper oversight. By paying “unfair and excessive compensation” to its members (in the form of both cash and options grants) from 2017 through 2020, when the lawsuit was filed, the board denied shareholders large sums of money that belonged to the company. It noted that the majority of Tesla’s independent shareholders rejected changes to managers’ salaries in 2014 and 2019.
The lawsuit also accused Mr. Musk of stacking the board with friends and family, making sure of the results he wanted and avoiding independent oversight. Among the defendants in the lawsuit is Musk himself. His brother Kimbal Musk. Robyn Denholm, Tesla Chair since 2018; James Murdoch, current director; and former board members Antonio Gracias, Stephen Jurvetson and Larry Ellison.
In a lawsuit, Tesla denied any wrongdoing. Saying its directors acted in good faith but agreed to a settlement to end the costly litigation. As part of the proposed settlement, the defendants have agreed not to take any compensation for 2021, 2022 and 2023, and the company will provide investors with more details on how it will put forward board compensation proposals.
There is one issue the settlement will not address: Mr. Musk’s $56 billion salary package, which is the subject of a separate lawsuit that could be decided soon.
Carvana secures the lifeline of debt
Carvana has announced a debt restructuring agreement aimed at easing bloated interest payments and helping it avoid bankruptcy, as the once online car dealer grappled with sluggish sales and falling share prices.
Carvana is betting big on the used car boom. He. She I got a car auction job for $2.2 billion in May 2022, just as the Federal Reserve was raising interest rates. Carvana sales It has decreased dramatically since thenleaving the company with an overabundance of inventory and huge losses.
The Times’s Neal Boudette and Joe Rennison report on the Carvana debt deal, noting that the company will also issue about $350 million in new shares.
Its shares jumped nearly 25 percent in pre-market trading.
Investment giant Blackstone is ready Up to $1 trillion in assets under management, despite scrutiny in recent months over problems with one of its real estate funds. (foot)
Middle Eastern Sovereign wealth funds They invested billions to help private equity funds, including KKR, EQT and Brookfield, close deals as other funding dried up. (bloomberg)
Fan MoveA Dutch company that makes a popular electric bike range raised $128 million two years ago has filed for bankruptcy. (the edge)
More than 8,000 authors have signed a letter to tech executives asking them to Not using their work To train their AI tools without compensation. (Wall Street Journal)
Gary Gensler, the head of the SEC, is concerned that AI tools could create a Herd mentality among investors It could lead to a financial crisis. (inside)
The best of the rest
How did Dubai come to be? “New Geneva” for the Russian oil trade. ” (foot)
Gucci CEO Marco Bizzarri is stepping down amid a shakeup at the brand’s parent company, luxury Kering Group. (The New York Times)
Angelo Mozilo, who turned Countrywide Financial into a mortgage giant before slamming into disrepute for his role in the 2008 financial crisis, died Sunday. He was 84 years old.
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