A Merger Monday in the Munchies Sector: DealBook Briefing

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A Merger Monday in the Munchies Sector: DealBook Briefing


2017-12-18 15:56:53

What they have in common: Both Campbell and Hershey are trying to diversify away from their core food products, soup and chocolate. Both have been suffered from stagnant sales in recent years. The advantage of pursuing Snyder’s-Lance and Amplify is that they also focus on somewhat healthier snacks, a category that has taken off in popularity.

Here’s what Denise Morrison of Campbell had to say about her company’s acquisition:

The acquisition of Snyder’s-Lance will accelerate Campbell’s strategy and is in line with our Purpose, ‘real food that matters for life’s moments.’ It will provide our consumers with an even greater variety of better-for-you snacks.

And here’s what Michele Buck of Hershey said:

The acquisition of Amplify and its product portfolio is an important step in our journey to becoming an innovative snacking powerhouse as together it will enable us to bring scale and category management capabilities to a key sub-segment of the warehouse snack aisle.”

The reaction: Synder’s-Lance is up 6.6 percent this morning. Amplify’s stock is up 70 percent.

The advisers

For Campbell: Credit Suisse, Rothschild and Weil, Gotshal & Manges

For Snyder’s-Lance: Goldman Sachs, Deutsche Bank and Jenner & Block

For Hershey: JPMorgan Chase, Morgan Stanley and Skadden, Arps, Slate, Meagher & Flom

For Amplify: Jefferies and Godwin Procter

— Michael J. de la Merced

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Drew Angerer/Getty Images

The man who once was one of Disney’s biggest money makers has resigned.

John Skipper, the president of ESPN, has stepped down today, citing a “substance addiction” problem.

From a statement quoted by ESPN:

I have struggled for many years with a substance addiction. I have decided that the most important thing I can do right now is to take care of my problem.

I have disclosed that decision to the company, and we mutually agreed that it was appropriate that I resign. I will always appreciate the human understanding and warmth that Bob [Iger, Disney’s C.E.O.] displayed here and always.

Who he is: Mr. Skipper, who took over ESPN five years ago, assumed control of the sports network back when it was one of the most formidable media properties on the planet, able to command high carriage fees from pay-TV providers given its popularity.

But as cable TV providers lose customers to streaming services, ESPN has become more of a millstone around the neck of its corporate parent, shedding subscribers amid the rise of internet-based sports outlets. That has forced ESPN to resort to layoffs.

The context: Mr. Skipper is stepping down days after Disney announced a deal to buy most of 21st Century Fox. Among the assets that would be included in the transaction are Fox’s 22 regional sports networks, which could be combined with ESPN to shore up Disney’s sports video holdings.

We’ll update as more information become available.

— Michael J. de la Merced

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Why the E.U. is investigating Ikea.

For decades, the company best known for its sometimes maddening-to-assemble low-priced furniture has also had a reputation as a master tax avoider, making use of complex legal structures to minimize its tax bill.

That organization was satirically illustrated in a report by the European Green Party last year (see the photo above). Now the European Commission is looking into whether Dutch regulators have let Ikea get away with an “unfair advantage over other companies” with its byzantine structure.

More from Chad Bray in the NYT:

The company’s business model was changed to a franchise structure in the early 1980s, with Inter Ikea operating its franchise business. Inter Ikea, through a Dutch subsidiary, receives franchise fees equal to 3 percent of the revenue from Ikea stores worldwide, according to regulators. Although Ikea was founded in Sweden in 1943, the parent company is based in the Netherlands.

European regulators are concerned in particular about a 2006 Dutch ruling that allowed Inter Ikea to send a significant part of its franchise profits, in the form of an annual license fee, to a company in Luxembourg, where it was not taxed.

Over the years, Ikea has argued that its business structure was perfectly legal.

— Michael J. de la Merced

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President Trump at the White House on Sunday.

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Andrew Harnik/Associated Press

C.E.O.s worry about the tax bill and the Trump presidency.

Andrew writes:

The narrative of the week is clearly going to be the tax plan, which is almost certain to pass Congress this week. The real question is how the business community will react (not everyone is applauding) and whether the overhaul will change corporate America’s view of President Trump.

Last week, I attended Jeffrey Sonnenfeld’s Yale C.E.O. Summit, where some of the biggest business leaders in the world participate and talk candidly about issues from business to policy — and, this year, did so just as the tax plan seemed to turn a corner.

The event is considered off-the-record, so I can’t share exact details of what was said. But Mr. Sonnenfeld sent me the results of a survey he took electronically during the event, and they are eye-opening.

• “Eighty-one percent of attendees surveyed … are embarrassed by President Trump’s representation of the United States’ interests and image on the world stage.”

• “Fifty-five percent felt the proposed tax reform package should be signed into law, but 72 percent believe that it is ‘wrong’ for the package to sizably increase the national debt. About 62 percent are concerned that the tax proposal will negatively impact the nation’s health care system.”

• Only “14 percent of respondents’ companies plan to make large, immediate domestic capital investments if the bill passes.”

82 percent of attendees feel taxing carried interest at the capital gains rate is “improper.”

The tax flyaround

• Republicans promised that their tax overhaul would reduce Americans’ annual tax filings to forms the size of a postcard. By that measure, their legislative efforts have failed, as the labyrinthine tax code remains enormously complex. (NYT)

• The likely hit that residents of high-tax states like New York will take from the tax code change has already caused a slowdown in real estate sales, as companies weigh shifting jobs to lower-cost areas. (WSJ)

• A last-minute change to the tax bill, not included in the previous House or Senate legislation, benefits real estate investors. (Bloomberg)

• The tax overhaul retains incentives for companies to keep their operations in the United States, according to some tax experts — and in some ways has incentives for shifting more operations abroad. (WaPo)

• John McCain of Arizona will miss the tax vote, although that isn’t expected to cause trouble for the Senate G.O.P. leadership. (CBS News)

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CNBC

How the life savings of many Puerto Ricans evaporated.

CNBC’s Dawn Giel, Leslie Picker and Scott Zamost investigate the role UBS played in the saving of many Puerto Ricans being wiped out.

• “More than 2,000 arbitration cases have been filed against UBS and other broker-dealers, including Santander Securities, Popular Securities and Merrill Lynch. UBS had disproportionately more litigation because the firm had at one point about half of the island’s market share.”

• “By the end of 2012, more than $10 billion in assets were invested in UBS’s bond funds. That represented about 10 percent of the island’s gross domestic product at the time.”

• Residents of Puerto Rico who invested in the island’s bonds were told their investment would be safe and would generate greater returns than comparable investments. And when the value of those bonds began to tumble, they were told to hold on, prices would eventually rebound.

• “This year, eventually became never after Puerto Rico triggered bankruptcy-like proceedings, and the island began restructuring its debt to seek protection from creditors — pushing the already depreciated bond prices within the funds lower. Then came Hurricane Maria and those prices plummeted even further.”

• Today, money invested in UBS’s bond funds has been “nearly wiped out.”

— Stephen Grocer

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Tony Ressler, left, in 2015.

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Curtis Compton/Atlanta-Journal Constitution, via Associated Press

Tony Ressler steps down as Ares Management’s C.E.O.

Mr. Ressler, 57, who co-founded the $106 billion investment firm (and is a co-owner of the Atlanta Hawks basketball team), said today that he will assume the role of executive chairman.

His fellow co-founder, Michael J. Arougheti, 45, will become C.E.O.

The move by Ares, which owns the likes of Neiman Marcus, is the latest sign of succession planning within the private equity industry. (See KKR or Carlyle.)

Mr. Ressler’s statement:

“Today’s appointments recognize the tremendous contributions that Mike Arougheti, Mike McFerran, and Ryan Berry have made in leading Ares during its recent growth while remaining equally committed to preserving our unique corporate culture,” said Mr. Ressler. “Mike Arougheti was instrumental in building and growing our Credit Group and expanding our businesses in the U.S. and Europe, and now is the time for him to assume greater oversight of all of Ares.”

— Michael J. de la Merced

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Bill McGlashan of TPG Growth.

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Brendan Moran/Sportsfile for Web Summit

Exclusive: TPG Growth closes its latest fund at $3.7 billion.

At that level, the investment fund’s fourth vehicle is not significantly bigger than its previous one, despite having gained fame for its early and lucrative investments in Uber, Spotify and Airbnb.

But Bill McGlashan, the managing partner of TPG Growth, told Michael that staying relatively small — despite being able to raise much more money — was a deliberate choice.

“It’d change the kind of companies we’d invest in,” Mr. McGlashan said. “It’d change the role we’d play.”

Worth noting: TPG Growth’s third fund, which was raised two years ago, has returned 13.6 percent so far, while its second fund, which was raised four years ago, has returned 25.3 percent, according to Pitchbook.

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Frank Apollonio for The New York Times

How Aryeh Bourkoff wants to take advantage of a media deal frenzy.

As the Walt Disney Company moves to buy most of Fox and AT&T tries to close its takeover of Time Warner, Mr. Bourkoff’s LionTree is trying to claim a bigger piece of the action — and grow from a firm built on the connections of its founder into an institution that can endure.

From Michael’s profile of Mr. Bourkoff and LionTree:

“It’s a fortunate thing that we happen to be at the right place at the right time,” Mr. Bourkoff said in an interview in his Midtown Manhattan office. He added, “The entire firm today, based on what we see coming into the future, is keenly structured to play into that.”

How LionTree is trying to stand out: The firm goes beyond offering advice, including by publishing a weekly newsletter and a podcast, holding exclusive conferences on ski slopes and on sailboats, and by backing a publicly traded investment vehicle.

What media executives have to say about Mr. Bourkoff and LionTree

Les Moonves of CBS: “Aryeh is going to be involved or peripherally involved in everything that’s going on.”

David Zaslav of Discovery Communications: “For every deal you see, there have been 10 dinners and 10 lunches. There’s a little piece of information in each conversation.”

Robert Kyncl, YouTube’s chief business officer, of the LionTree team: “Aryeh does a really good job of weaving them in with the business leaders around them so that it’s not a one-man show.”

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Lucasfilm, via Associated Press

Media trivia of the day, “Star Wars” edition.

“The Last Jedi” — which Michael hasn’t seen yet, so no spoilers, readers — collected $450 million at the box office this weekend, the second-biggest opening by a movie ever.

Think about this: If Disney already owned Fox’s movie studio, the combined company would have had the top three films this past weekend, which together reaped $243 million in ticket sales. And if AT&T had already owned Time Warner, then Disney and AT&T combined would have produced seven of the top 10 grossing movies of 2017.

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Faisal Al Nasser/Reuters

What’s $300 million to a crown prince?

It may matter when the royal in question is Crown Prince Mohammed bin Salman of Saudi Arabia, who is leading an anticorruption purge in his kingdom that has included detaining hundreds of relatives.

The NYT reported this weekend that Prince Mohammed was the buyer of a $300 million chateau in France two years ago, another in a series of nine-digit purchases that also includes a $500 million yacht and a $450 million Leonardo da Vinci painting.

From Nicholas Kulish and Mike Forsythe of the NYT:

“He has tried to build an image of himself, with a fair amount of success, that he is different, that he’s a reformer, at least a social reformer, and that he’s not corrupt,” said Bruce O. Riedel, a former C.I.A. analyst and author. “And this is a severe blow to that image.”

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Mark Blinch/Reuters

The cost of a C.E.O.’s ill health.

On Friday, CSX said that Hunter Harrison was taking a medical leave, and the railroad operator’s stock dropped $4 billion. The next day, he died — and has left questions about how ill he had been, and for how long.

The WSJ took a look at the scrutiny that has now landed on CSX’s board and its decision to hire a lauded railroad executive who nevertheless appears to have been ill for some time.

Allan Horwich, a law professor at Northwestern University, told Bloomberg:

“The most important thing is whether there were statements made by the company since he was hired that were inconsistent with the true state of his health at the time, and whether the company knew that,” Mr. Horwich said.

A spokesman for CSX told Bloomberg that the company was confident in the adequacy of its disclosures.

The lesson for investors: Spencer Jakab of Heard on the Street writes, “The value that investors put on his ability to turn around CSX was overly optimistic. Now, it looks irrational.”

In other news: Robert G. Wilmers, the longtime chairman and C.E.O. of M & T Bank, died unexpectedly Saturday night. He was 83.

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Jerry Richardson, the owner of the Carolina Panthers.

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Ted S. Warren/Associated Press

The latest in misconduct news.

• Jerry Richardson, owner of the Carolina Panthers, said that he planned to sell the N.F.L. franchise after Sports Illustrated reported that the league was investigating reports of confidential payouts made to settle accusations of sexual and racial harassment. (Sports Illustrated)

• An anonymous email sent to Visa’s C.E.O. this fall about Jim McCarthy, then the head of the financial card giant’s innovation, and his relationships with women in the company, eventually led to Mr. McCarthy being fired. (WSJ)

• 21st Century Fox moved to “clarify” recent comments by Rupert Murdoch on sexual misconduct accusations against Fox News. (Bloomberg)

Lloyd Blankfein weighs in again on Brexit.

His latest short-form missive is the fourth of his 30 tweets to talk about Britain’s forthcoming departure from the European Union.

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The Brexit flyaround

• Prime Minister Theresa May asserts in an op-ed that her government has made strides in securing the best-possible deal for Britain. (Telegraph)

• But members of her own cabinet, including Foreign Secretary Boris Johnson, say the British government must be able to discard European laws during the transition period after Britain formally leaves the bloc. (The Times)

• The E.U.’s lead Brexit negotiator, Michel Barnier, warned that Britain won’t get its own custom-tailored trade deal. (Prospect)

The Speed Read

• Power has been restored at Hartsfield-Jackson International Airport in Atlanta after electricity was knocked out, apparently as a result of a fire at the world’s busiest airport. Still, Delta Air Lines said that it planned to cancel 300 flights today. (NYT)

• In Toronto, family and friends of the billionaire Apotex generic-drug mogul Barry Sherman and his wife, Honey, say someone killed them and made it look like a murder-suicide. (NYT)

• K.K.R. emerged victorious in the fight among private equity firms for Unilever’s margarine and spreads business, agreeing to pay 6.8 billion euros, or $8 billion, for brands like I Can’t Believe It’s Not Butter. (WSJ)

• Gemalto, a digital security company, accepted a €4.8 billion takeover bid from Thales, rejecting an unwanted approach by Atos. (Reuters)

• Tencent and JD.com agreed to buy a stake in Vipshop Holdings, one of China’s most popular online clothing sellers, in a shot across the bow directed at Alibaba. (WSJ)

• Behind the surge in semiconductor mergers is a new generation of chip-maker executives less focused on research and development than on cutting costs and gaining scale in the industry by buying competitors. (NYT)

• Hershey is near a deal to buy Amplify Snack Brands, the maker of Skinnypop popcorn, for about $1.6 billion to continue diversifying its offerings beyond its mainstay chocolate products, according to unidentified people. (CNBC)

• Oracle agreed to buy Aconex, an Australian maker of collaboration software for construction companies, for $1.2 billion in cash. (TechCrunch)

• Humana and the private equity firms Welsh, Carson, Anderson and Stowe and TPG Capital are in talks to buy Kindred Healthcare, a home-care provider, for $750 million, according to unidentified people. (WSJ)

• The InstaPot, one of the hottest cooking devices of the year, is the brainchild of a Canadian start-up that has never raised outside money, spent no money on advertising and relied on Amazon to transform a tiny operation into a hit international business. (NYT)

• Lockheed Martin and Aerion announced plans to create a new supersonic jet for business travel, capable of flying 60 percent faster than regular commercial aircraft. (WaPo)

• The era of the wide-eyed, gee-whiz profile of a Silicon Valley story has ended. (Wired)

You can find live updates throughout the day at nytimes.com/dealbook.

We’d love your feedback as we experiment with the writing, format and design of this briefing. Please email thoughts and suggestions to bizday@nytimes.com.

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