Hasbro is in talks to buy DreamWorks Animation in a deal that would be an unusual union of toy maker and animation studio, Andrew Ross Sorkin and Michael J. de la Merced report in DealBook, citing people briefed on the matter. Should a deal be reached, it would come more than a month after the studio held talks with another prospective buyer, the Japanese telecommunications company SoftBank. Under the current terms of the proposed deal, Hasbro would pay a mix of cash and stock, though an exact price has not yet been determined, one of the people said.
Jeffrey Katzenberg, the chief executive of DreamWorks Animation, is seeking more than $30 a share, a significant premium over his company’s current stock price. Shares in DreamWorks Animation closed on Wednesday at $22.37, giving the studio a market value of about $1.9 billion. Hasbro’s stock closed on Wednesday at $57.47 a share, giving it a market value of about $7.2 billion. Mr. Katzenberg is expected to stay with DreamWorks Animation.
In courting the Hollywood studio, Hasbro believes that it can find a new market for its stable of toys, which includes G.I. Joe and My Little Pony. Hasbro’s chief executive, Brian Goldner, has long sought to take advantage of the company’s properties to transform it into a global entertainment titan. In buying DreamWorks Animation, Hasbro, would be teaming up with Hollywood’s smallest film studio. Though the studio has been responsible for blockbusters like the “Shrek” and “Kung Fu Panda” franchises, it has lately fared poorly, with films like “Turbo” and “Rise of the Guardians” falling well short of expectations. The run of misfortune helped contribute to two consecutive quarterly losses, including a $15.4 million loss in the quarter ended June 30.
BANKS PAY PRICE FOR RATE-RIGGING | Citing chat room messages filled with typos, jargon and vulgarities, American, British and Swiss regulators on Wednesday fined some of the world’s biggest banks ‒ UBS, JPMorgan Chase, Citigroup, HSBC, the Royal Bank of Scotland and Bank of America ‒ a combined $4.25 billion, accusing them of conspiring to manipulate the foreign currency markets, DealBook writes. The fines ‒ imposed largely by the Financial Conduct Authority of Britain and the Commodity Futures Trading Commission ‒ pose no risk to the health of the banks, nor were any traders or executives charged with wrongdoing. And yet the settlements on Wednesday closed only the first chapter of what is shaping up to be a more damaging story for the banks.
So what’s next? The Justice Department is said to be investigating criminal misconduct by banks and their employees, an inquiry that appeared to heat up this month when JPMorgan’s lawyers met with prosecutors in Washington to open discussions about the case. Citigroup is also expected to have a preliminary meeting with prosecutors in the coming weeks. Barclays, which withdrew from Wednesday’s settlement at the last minute, has a meeting scheduled for later this month. The meetings also provide an opportunity for the Federal Reserve and Department of Financial Services in New York, two regulators that sat out Wednesday’s deal, to join the meetings and extract their own huge penalties for currency manipulation.
BRASH CULTURE EXPOSED | The documents that the American and British regulators released on Wednesday offered a rare glimpse at a brash culture of rampant profit-seeking in the foreign exchange market. They show traders forming groups at the banks with names like “one team, one dream,” “a cooperative” and “the A-team.” Using code names to identify clients, the groups shared private information about clients including pension funds, hedge funds and big asset management firms. One document showed a conversation among three traders ‒ at JPMorgan, Citibank and UBS ‒ discussing whether to let a fourth into their group.
ASSESSING THE SETTLEMENT | “The total fine of $4.25 billion imposed by British, American and Swiss regulators sounds like a lot of money, but no one bank has to bear the brunt of the bad publicity,” Peter J. Henning writes in the White Collar Watch column. “This is really a ‘settlement light,’ though, because much like the beer, it is not fully satisfying until the criminal investigation for the manipulative conduct is resolved. The Justice Department is sure to seek additional fines as part of deferred prosecution agreements that can also be expected to impose new monitoring costs on the banks to avoid future violations.”
John Plender writes in The Financial Times: “Clearly the culture of the world’s biggest banks is fundamentally rotten. The question is whether it can ever be cleared up. It is hard to see how that is going to happen as long as the main thrust of the regulatory response to such egregious behavior is to fine the banks, thereby bleeding shareholders, rather than go for the directors and executives who have so signally failed to respond to regulatory exhortation.”
Bloomberg View’s Matt Levine writes: “These guys in these chat rooms sure sound bad. And they sure intended to manipulate the FX markets. It’s much less clear how much damage they actually did, or even could have done. But that’s a secondary question. After Libor, terrible chat room conversations are enough in themselves to justify billion-dollar fines.”
DEBTS CANCELED BY BANKRUPTCY STILL MAR CREDIT | In the world of consumer debt, these are the zombies, Jessica Silver-Greenberg writes in DealBook. Tens of thousands of Americans who went through bankruptcy are still haunted by debts long after federal judges have extinguished the bills in court. The problem, state and federal officials suspect, is that some of the nation’s biggest banks ignore bankruptcy court discharges, which render the debts void. The banks keep the debts alive on credit reports, essentially forcing borrowers to make payments on bills that they do not legally owe. The practice potentially breathes new life into the pools of bad debt that are bought by financial firms.
Now lawyers with the United States Trustee Program, an arm of the Justice Department, are investigating JPMorgan Chase, Bank of America, Citigroup and Synchrony Financial, formerly known as GE Capital Retail Finance, suspecting the banks of violating federal bankruptcy law by ignoring the discharge injunction, say people briefed on the investigations. The banks say that they comply with all federal laws in their collection and sale of debt. But federal judges have started to raise alarms that some banks are threatening the foundations of bankruptcy.
“For the debt buyers and the banks, the people briefed on the investigations said, it is a mutually beneficial arrangement: The banks typically send along any payments that they receive from borrowers to the debt buyers, which in turn, are more willing to buy portfolios of soured debts ‒ including many that will wind up voided in bankruptcy ‒ from the banks,” Ms. Silver-Greenberg writes. At the center of the investigation is the way banks report debts to the credit reporting agencies. Once a borrower voids a debt in bankruptcy, creditors are required to update credit reports to reflect that the debt is no longer owed, removing any notation of “past due” or “charged off.” The banks routinely fail to do that, errors which current and former bankruptcy judges suspect are debt-collection tactics.
ON THE AGENDA | Weekly jobless claims are out at 8:30 a.m. The Job Openings and Labor Turnover Survey is released at 10 a.m. The Treasury’s monthly budget report is released at 2 p.m. Janet L. Yellen, chairwoman of the Federal Reserve, delivers the welcoming remarks at a conference on international macroeconomics and finance at 12:45 p.m. in Washington. On this day in 2006, Google closed its $1.65 billion deal for YouTube.
On the Hill: Both houses of Congress begin holding elections to pick their leadership. The House Committee on Financial Services holds a hearing titled “Terrorist Financing and the Islamic State” at 10 a.m.
GOLDMAN NAMES NEW PARTNERS | Goldman Sachs added 78 names to its vaunted list of partners on Wednesday, slightly more than the 70 it selected 2012 when it last chose a new class of partners, DealBook’s Nathaniel Popper writes. The bank picked 111 new partners in 2010. Only about 1.5 percent of all Goldman employees are partners, and it is one of the most sought-after honors on Wall Street. The list of new partners includes Jake Siewert, the firm’s head of public relations, who joined Goldman in 2012 when it was trying to remake its public image.
The partner role, a holdover from an earlier era when most banks were owned by their partners, does not come with any explicit responsibilities. But partners do receive a salary bump, a cut of a special partner bonus pool, a window office and access to information and opportunities within the firm. Fifty percent of the new partners are in the Americas, and 14 percent are women, the same proportion as in the last class. The investment banking division, which advises companies on raising money, produced 30 percent of the new partners, while the trading operations had 32 percent of the new names.
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Mergers & Acquisitions »
DP World to Pay $2.6 Billion for Operator of Industrial Parks | The Dubai port operator DP World agreed to acquire Economic Zones World, giving it access to the Jebel Ali Free Zone, an industrial park and commercial zone near DP World’s Jebel Ali port in Dubai. DealBook »
London Stock Exchange on Track to Complete Russell Investments Deal This Year | The London Stock Exchange said on Thursday that it expected to complete the $2.7 billion acquisition of the operator of the Russell 2000 index “within the next few weeks,” a move that would give it a foothold in the United States. DealBook »
BB&T to Buy Susquehanna Bancshares for $2.5 Billion | The deal, one of the few significant banking mergers since the financial crisis, gives the BB&T Corporation a bigger foothold in Pennsylvania, Maryland, New Jersey and West Virginia. DealBook »
Actavis May Buy Allergan for Over $60 Billion | The drug maker Actavis is said to be in talks to acquire Allergan for at least $60 billion, in a deal that would help the Botox maker fend off a hostile takeover by Valeant Pharmaceuticals, Bloomberg News reports, citing unidentified people familiar with the matter. BLOOMBERG NEWS
Comcast Presses Ahead on Time Warner Cable Deal | Despite hiccups in the regulatory review process and possible regulation of the broadband industry, Comcast’s chief executive, Brian Roberts, said on Wednesday that he still expected the Time Warner Cable deal to be completed “sometime in the first quarter,” The Wall Street Journal reports. WALL STREET JOURNAL
Churchill Downs to Buy Big Fish Games | Churchill Downs Incorporated, which owns the Kentucky Derby, said on Wednesday that it would pay up to $885 million for Big Fish Games, a Seattle-based publisher of mobile games founded 12 years ago, The New York Times writes. NEW YORK TIMES
INVESTMENT BANKING »
White House Nominates Lazard Banker to Treasury Post | If approved by the Senate, Antonio Weiss, the global head of investment banking at Lazard and a significant donor to the Democratic Party, would oversee the Treasury Department’s work on fiscal policy and operations. DealBook »
Monte dei Paschi Reports Nearly $1 Billion Loss in Third Quarter | The loss comes as Monte dei Paschi, which is based in Italy, is struggling to make up a capital shortfall exposed by the European Central Bank. DealBook »
A $1 Billion Foreign Exchange Scam | When the trading website Secure Investment went offline on May 1, foreign exchange investors around the world may have lost more than $1 billion, probably forever, Bloomberg News writes. BLOOMBERG NEWS
PRIVATE EQUITY »
Samuel Zell Said to Be Among Bidders for Albertsons Stores | Albertsons, which is owned by the private equity firm Cerberus Capital Management, is looking to sell more than 100 grocery stores to help gain regulatory approval for a planned merger with the rival grocer Safeway. DealBook »
Bain Capital and Apax Make $8.8 Billion Offer to Oi for Portuguese Assets | The offer from Apax Partners and Bain Capital to the Brazilian telecommunications operator Oi could lead to a bidding war with Altice of France. DealBook »
Former Bain Capital Executive Halts Plans for New Fund | Andrew B. Balson, a former managing director at the Boston-based private equity firm Bain Capital, recently decided to scrap his plans for a new private equity firm, Fortune writes. FORTUNE
HEDGE FUNDS »
Court Rejects Bail for Former SAC Capital Trader | Mathew Martoma, a former portfolio manager for Steven A. Cohen’s hedge fund SAC Capital Advisors, is now waiting for a judge to set a new date for him to start a nine-year prison term. DealBook »
Dow to Raise Dividend and Increase Stock Buybacks | Both steps fall short of the big breakup of Dow Chemical being advocated by the activist hedge fund manager Daniel S. Loeb. DealBook »
Fears of Inflation Stem From Worrisome Origins | Hedge fund managers howl about “fake” economic data, but the paranoia over inflation is rooted in troubling episodes, Jesse Eisinger writes in his column, The Trade. DealBook »
I.P.O./OFFERINGS »
Virgin Money Valued at $1.98 Billion in I.P.O. | Virgin Money, the British financial services company partly owned by the billionaire Richard Branson, raised gross proceeds of $495.2 million in its initial public offering in London. DealBook »
ING to Further Cut Stake in Former U.S. Arm, Voya Financial | The Dutch financial services company ING Group said on Thursday that it planned to sell about 34.5 million shares, reducing its stake in Voya to about 19 percent from 32.5 percent. DealBook »
VENTURE CAPITAL »
Venture Capital Pours Money Into Real Estate Start-Ups | Venture capital firms invested $118.5 million in 11 real estate-related start-ups through the first three quarters of the year, which is already more money and more deals than any full year since 2000, according to industry tracker Dow Jones VentureSource. WALL STREET JOURNAL
HomeAway Leads $20 Million Investment in Gogobot | Gogobot, a trip-planning and reviews start-up aimed at millennial travelers, has closed a $20 million investment led by vacation rental company HomeAway, ReCode writes. RECODE
LEGAL/REGULATORY »
Mexico’s Bold Move on Debt Restructuring Contracts | Mexico has filed in the United States for an issue of bonds that would include improved collective action clauses specifically written to keep holdout investors like Paul Singer at bay. DealBook »
Obama Aims to Lift the Global Economy, and Maybe Himself | President Obama will arrive at an international economic meeting in Australia hoping to press European and Asian leaders to get their economies moving again ‒ and perhaps buoy his own presidency, The New York Times reports. NEW YORK TIMES
Political and Public Pressure Mounts on F.C.C. Head Over Open Internet Rules | As Tom Wheeler, the chairman of the Federal Communications Commission, tries to thread the needle of politics and public policy, he must also face down members of Congress and a technology industry wary of regulations stifling expansion of the Internet, The New York Times writes. NEW YORK TIMES