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Good morning. For U.S. firms that relocated abroad before regulators cracked down on tax inversions, the benefits have turned out to be greater than just a residence in a lower-tax jurisdiction. Companies that got out while the getting was good have since enjoyed a competitive advantage with regard to corporate takeovers, in part due to the very regulations intended to block the inversions, the WSJ's Liz Hoffman reports. Since the Treasury rules went into effect last fall, 55 U.S. companies have been sold to or targeted by foreign buyers, many of those acquirers formed by inversions themselves.
Take the case of Horizon Pharma PLC, which completed its takeover of a small, closely held Irish drug company last fall and then redomiciled in Dublin. On Tuesday, Horizon went public with a $1.75 billion, all-stock takeover bid for Depomed Inc. Horizon CEO Timothy Walbert said that buying Depomed, would generate "significant operating and tax synergies, " or savings. Depomed paid 38% of its profits in taxes last year, according to regulatory filings. Horizon is targeting a tax rate in the low 20s over the longer term. Ireland has a corporate tax rate of 12.5%.
Horizon and other inverted companies are using their new, lower tax rates to turbocharge corporate takeovers. Applying those rates, often in the midteens, to profits of companies in the U.S., with a federal corporate rate of 35%, can yield extra savings on top of those traditionally wrung from mergers. Moreover, unlike the U.S., Ireland and most other countries only tax profits earned in-country, giving companies the freedom and incentive to shift income to still-lower-tax jurisdictions. Horizon has subsidiaries in Ireland, Luxembourg and Bermuda and engages in "transfer pricing," a legal way of steering profits to lower-tax jurisdictions, to keep its taxes low, according to securities filings.
CFO JOURNAL TODAY
Companies absorbing heat from medical-device tax. With Congressional Republicans currently focusing on the repeal of a tax on medical devices as their best opportunity to chip away at the Affordable Care Act, CFO Journal sought to get a sense of what's at stake for corporate America. Several companies said they absorbed the tax into regular operating expenses.
CFOs got better salary bumps than their bosses last year. Finance chiefs received better salary bumps than their chief-executive bosses last year for a second year in a row, CFO Journal's Maxwell Murphy reports. According to a forthcoming study, the median CFO salary increased 3% among studied CFOs, compared to just 0.3% for CEOs.
Confidential IPOs still a blind spot for bankers. Investment bankers are still struggling to adapt to a more secretive initial-public-offering market, since the law let companies start filing confidentially for IPOs three years ago, Emily Chasan reports. More than 50% of investment bankers think that the lack of transparency created by the JOBS Act's confidential filing provision has a negative impact on their ability to advise clients about potential competitors in the market, according to a survey.
Private midmarket company earnings rose in second quarter. Middle-market companies rebounded from a lackluster first quarter and grew revenues and earnings between April and June this year, Vipal Monga reports. According to a new report from middle-market lender Golub Capital, among 150 private companies in its loan portfolio, revenues grew 9.26% during the second quarter, compared to 7.24% in the first quarter.
Clawbacks, regulations change executive compensation at financial firms. Banking and insurance companies are demanding that their executives submit to stronger clawback provisions--giving companies the option to revoke bonuses if performance lags--and links to closely tie compensation to company performance. The moves are a reaction to growing regulatory demands, according to a new survey from consulting firm Mercer.
Growth of second quarter dividends constrained on cheap oil, gas. Dividend growth held its own in the second quarter, in terms of dollars, but the number of companies boosting payouts is shrinking while the number of cuts is on the rise, Maxwell Murphy reports. There were 562 dividend hikes last quarter among roughly 10,000 U.S.-traded companies, a more than 19% decrease from last year's second quarter, according to S&P Dow Jones Indices.
THE DAY AHEAD
Five things to watch in the Fed's June meeting minutes. Important new details about the Federal Reserve's outlook for interest rates will emerge at 2 p.m. when it releases minutes of its June 16-17 policy meeting. Analysts will be looking closely for clues as to whether the first rate increase since mid-2006 might arrive in September.
Aluminum glut dents Alcoa's prospects. Alcoa Inc. shareholders should pay close attention to what happens in Beijing. When Alcoa reports second-quarter results Wednesday, investors will be looking for any glimmers of a rebound in metal prices, especially aluminum. The company's stock has suffered, plunging 30% so far in 2015.
CORPORATE NEWS
Shell places huge bet on Arctic oil riches. Royal Dutch Shell PLC is days away from drilling in the Arctic Ocean--betting it can find enough oil to justify the huge risks that keep almost every other competitor out of those icy waters.
Energy Transfer may go hostile for Williams. Energy Transfer Equity LP said it will pursue a multibillion-dollar deal to acquire rival pipeline operator Williams Cos. with or without the company's cooperation. Energy Transfer had been quietly pursuing Williams for six months when the pipeline company rejected an all-equity offer valued at $48 billion last month.
Top executives are getting younger. As older baby boomers retire, more corporate boards are promoting members of Gen X as chief executives, a group that tends to be more tech-savvy and spend more time wooing and keeping younger staffers.
Where's the payoff? Not in lending, says lending startup. Wall Street's infatuation with online lending is heating up, with startup Payoff Inc. raising up to $250 million in debt financing. But Payoff sees consumer loans as simply a starting point; its goal is wealth management.
Uber seeks up to $1 billion funding for Chinese carveout. Uber Technologies Inc. is seeking to raise as much as $1 billion for its Chinese business, Bloomberg reports. Uber China has been discussing a valuation of about $7 billion to $8 billion with potential backers. Baidu Inc. plans to buy a new stake in the local unit.
Ex-Im Bank a political football. U.S. manufacturers that say they rely on the Export-Import Bank to compete with similarly supported foreign companies face a potential speed bump on the road to renewing the agency's charter: much of the GOP presidential field has lined up against the bank, including three who reside in the Senate.
Home developer Five Point files for IPO. California residential developer Five Point Holdings Inc. made a preliminary filing for an initial public offering, signaling that the IPO market has warmed to home builders after a year-plus lull. New-home sales in the first five months of this year were up 23% from the same period a year ago amid job growth.
Technology experts hit back at FBI on encryption. Silicon Valley and Washington's argument over whether tech firms should enable users to encrypt their digital lives so that not even the Federal Bureau of Investigation can unscramble the information has proved resistant to a solution. The lack of a specific government proposal, or vocal White House support, puts FBI Director James Comey in a tough spot as he plans to tell two congressional panels Wednesday that his agency needs access to things like suspects' iPhones and WhatsApp messages.
Major job cuts expected at Microsoft. Microsoft Corp. plans to announce a significant new round of job cuts as early as Wednesday, the New York Times reports. The layoffs come as the company seeks to further reduce costs amid a shifting technology landscape, and are in addition to the 18,000 employees that the company said a year ago that it planned to let go. The new job cuts are expected to hit Microsoft's hardware group, among other parts of the company, including its struggling smartphone business.
Technip shares plummet on restructuring. Shares in French oil services company Technip SA plummeted after it announced a major restructuring plan, including 6,000 job cuts world-wide, as falling energy prices force the company to drastically cut costs.
Oracle cuts value of stock-option grants to top executives. Oracle Corp. maintained the number of stock options it granted to its three top executives in 2015, but it altered the terms of its executive pay in a way that lowered the value of those awards. The executives' options will expire in five years, according to the Securities and Exchange Commission filings, rather than the 10-year term that has been customary for the Oracle executives. The effect is to cut the value of the option grant to founder and Executive Chairman Larry Ellison by about two-thirds from its fiscal 2014.
Meet the maker of the $100 drone. Paris-based Parrot SA has quickly captured the lower end of the consumer-drone market, but it's facing a new wave of competition. GoPro Inc., which made wearable cameras mainstream, selling 5.2 million of them last year, now plans to launch a flying camera for under $1,000 next year. Helen Greiner, co-creator of the Roomba robotic vacuum--effectively the first consumer robot--is leading a company behind a $500 six-rotor drone that she says users can fly without training. And three startups have plans for drones that can't even be piloted; they just follow users as they, say, ski down a mountain.
(MORE TO FOLLOW) Dow Jones Newswires
July 08, 2015 06:47 ET (10:47 GMT)
Subway, Jared Fogle suspend ties. Subway and its longtime pitchman Jared Fogle suspended ties after federal authorities raided his home. Mr. Fogle's attorney said, "He has not been detained, arrested or charged with any crime or offense." Subway said it believed the raid was related to a prior investigation of a former Jared Foundation employee. That was an apparent reference to the arrest two months ago of Russell Taylor, the former director of the Jared Foundation, a nonprofit Mr. Fogle established to end child obesity. Mr. Taylor was charged with seven counts of production of child pornography and one count of possession of child pornography.
"Fair trade" becomes a fashion trend. Fair Trade coffee and chocolate have become commonplace. Get ready for Fair Trade fashion and decor. Fair Trade USA's apparel certification now appears on 20 brands, up from just a handful before a garment-factory collapse in Bangladesh killed more than 1,100 people.
Time diversifies into digital sports businesses. Time Inc. has acquired three youth-focused digital sports firms and an events business as it aims to cut its dependence on print ads and circulation revenue. The company has purchased SportsSignup and LeagueAthletics.com, which provide online management tools for youth sports leagues that enable parents, coaches and players to check such information as team schedules and statistics. The third sports company, iScore Sports, sells apps priced at $9.99 each for fans of baseball, football, basketball and soccer.
Springer-ProSieben talks run counter to media trends. A merger of German broadcaster ProSiebenSat. 1 AG and publisher Axel Springer SE would run counter to media trends in Europe and the U.S. but still help the two companies face the challenges of new digital rivals. Combining so-called "old-media" titans isn't fashionable these days. Instead, companies have been succumbing to shareholder demands to spin off and sell unrelated media assets, particularly in print media.
Paradise lost: mounting problems stymie Baha Mar. The opening of Baha Mar in the Bahamas was supposed to be a showpiece that would help China's largest construction company win lucrative resort business across the U.S. But the $3.5 billion project has been beset with troubles.
REGULATION
No fix for Libor: benchmark still broken, regulators say. A top U.K. regulator says efforts to overhaul the London interbank offered rate, or Libor, haven't gone nearly far enough. The U.S. Federal Reserve says Libor is no longer fit to serve as the market's main benchmark. And Intercontinental Exchange Inc., which is in charge of reforming Libor, says it is struggling to get enough support from the industry to make the benchmark better.
Fed tells Santander's U.S. unit to shape up. The Federal Reserve issued a stinging lecture to Spanish bank Banco Santander SA, faulting the lender's U.S. unit for failing to meet regulators' standards on a range of basic business operations.
Beijing's response to stock selloff reveals deep insecurity. The Chinese government's response to falling stocks reveals an urgent impulse not only to protect investors but to shield the party from criticism. A raft of Chinese government agencies stepped up efforts to shore up plunging stock markets that the securities regulator described as facing panic and irrational selling. Many U.S.-listed Chinese firms recently received offers to go private, with a goal to relist on exchanges at home. But in light of the recent selloff, some are watching their share prices fall.
When global banking standards conflict with local needs. Central banks in the developing world are caught in a dilemma between adhering to international banking standards and serving potential customers who are unable to meet those standards, as greater access to banking services becomes a mainstream policy goal.
J.P. Morgan to settle credit-card probes for $125 million. J.P. Morgan Chase & Co. intends to pay at least $125 million to settle probes by U.S. state and federal authorities over the New York bank's collection and sale of credit-card debt.
Corzine, other ex-MF Global officials settle suit for $64.5 million. Jon S. Corzine and other former MF Global officials will pay $64.5 million to settle an investor lawsuit, according to a court filing. The money from Mr. Corzine and former CFO Henri J. Steenkamp will come from directors' and officers' insurance policies they had while working at MF Global. The Tuesday filing said the insurance money is "being rapidly and continually depleted" by the litigation. Messrs. Corzine and Steenkamp must provide proof of their reported net worth or the plaintiffs can cancel the settlement, according to the filing.
Malaysia orders freeze of accounts tied to probe of alleged transfers to Najib. Malaysian authorities said they have ordered six bank accounts to be frozen in connection with an investigation into alleged fund transfers to bank accounts of Prime Minister Najib Razak.
P&G settles suit on puffed-up packaging. Procter & Gamble Co. has agreed to change packaging for some Olay products to settle California accusations that it misled consumers with containers that were at times much larger than the face cream inside.
Carnival gets U.S. approval to start cruises to Cuba. Carnival Corp. said the U.S. Treasury Department granted the cruise-ship company approval to begin cruises to Cuba starting next May. The trips are planned under its new fathom brand, which targets travelers who want to combine volunteering with vacations. Carnival is still in talks with Cuban authorities to gain their approval.
ECONOMY
Eurozone sets Sunday deadline for Greece financing deal. Eurozone leaders set Greece a Sunday deadline to reach the outlines of a new financing deal that the German chancellor said would have to include even more economic overhaul measures than before. The ECB could force Greek banks into instant collapse if Athens doesn't make bond payments due on July 20, but it remains a question whether it would necessarily do so.
Trade gap widens as overseas headwinds gather. The U.S. trade gap expanded 2.9% to a seasonally adjusted $41.87 billion in May due to a slowdown in exports, suggesting a stronger dollar and global turmoil will weigh on economic growth this year.
IMF: U.S. economy at risk of stalling if rates raised too soon. The Federal Reserve risks stalling the U.S. economy by raising interest rates too early, the International Monetary Fund warned Tuesday as it detailed its call for the central bank to delay a move until 2016. IMF staff argue that, barring upside surprises, there is still too much uncertainty around inflation, employment and wage prospects for the Fed to pull the trigger in coming months.
CFO MOVES
Express Inc., a specialty apparel retailer based in Columbus, Ohio, promoted its vice president of finance, Periclis "Perry" Pericleous, to chief financial officer on Monday afternoon, effective immediately. Mr. Pericleous has worked at Express for 15 years, serving in both finance and accounting roles since he joined the company in 1999. Mr. Pericleous succeeds Paul Dascoli, who served as finance chief from fall 2011 until he left the company on Monday. Mr. Pericleous will receive an annual base salary of $420,000 a year, with the potential for an annual bonus equal to 50% of his salary. He will also receive $73,500 in common stock and $171,500 in restricted stock, according to a regulatory filing.
Creative Artists Agency, a Los Angeles-based entertainment and sports agency that represents industry professionals, named James Burtson its new chief financial officer, effective July 13. Mr. Burtson succeeds Jeff M. Berry, who is leaving the role to relocate from Los Angeles with his family, according to a CAA press release. CAA said Mr. Burtson would help it with its growth strategy, and noted he recently oversaw global mergers and acquisitions at Time Warner Inc. as its senior vice president.
TearLab Corp., the maker of a diagnostic tear-testing device used by eye-care practitioners, announced Wes Brazell as its new finance chief, effective immediately. Mr. Brazell succeeds William G. Dumencu, who will now serve as an internal consultant of TearLab. Mr. Brazell most recently was the chief financial officer of Academic Partnerships LLC. Mr. Brazell's annual base salary will be $250,000, with an annual discretionary 50% bonus, as well as 200,000 shares of common stock. Mr. Brazell will also receive a $40,000 one-time, lump-sum payment to compensate the monetary loss incurred from his separation agreement with Academic Partnerships LLC, according to a regulatory filing.
The Morning Ledger from CFO Journal cues up the most important news in corporate finance every weekday morning. Send us tips, suggestions and complaints: james.willhite@wsj.com. Get The Morning Ledger emailed to you each weekday morning by clicking here: http://on.wsj.com/TheMorningLedgerSignup. Follow us on Twitter @CFOJournal.
(END) Dow Jones Newswires
July 08, 2015 06:47 ET (10:47 GMT)
Subway, Jared Fogle suspend ties. Subway and its longtime pitchman Jared Fogle suspended ties after federal authorities raided his home. Mr. Fogle's attorney said, "He has not been detained, arrested or charged with any crime or offense." Subway said it believed the raid was related to a prior investigation of a former Jared Foundation employee. That was an apparent reference to the arrest two months ago of Russell Taylor, the former director of the Jared Foundation, a nonprofit Mr. Fogle established to end child obesity. Mr. Taylor was charged with seven counts of production of child pornography and one count of possession of child pornography.
"Fair trade" becomes a fashion trend. Fair Trade coffee and chocolate have become commonplace. Get ready for Fair Trade fashion and decor. Fair Trade USA's apparel certification now appears on 20 brands, up from just a handful before a garment-factory collapse in Bangladesh killed more than 1,100 people.
Time diversifies into digital sports businesses. Time Inc. has acquired three youth-focused digital sports firms and an events business as it aims to cut its dependence on print ads and circulation revenue. The company has purchased SportsSignup and LeagueAthletics.com, which provide online management tools for youth sports leagues that enable parents, coaches and players to check such information as team schedules and statistics. The third sports company, iScore Sports, sells apps priced at $9.99 each for fans of baseball, football, basketball and soccer.
Springer-ProSieben talks run counter to media trends. A merger of German broadcaster ProSiebenSat. 1 AG and publisher Axel Springer SE would run counter to media trends in Europe and the U.S. but still help the two companies face the challenges of new digital rivals. Combining so-called "old-media" titans isn't fashionable these days. Instead, companies have been succumbing to shareholder demands to spin off and sell unrelated media assets, particularly in print media.
Paradise lost: mounting problems stymie Baha Mar. The opening of Baha Mar in the Bahamas was supposed to be a showpiece that would help China's largest construction company win lucrative resort business across the U.S. But the $3.5 billion project has been beset with troubles.
REGULATION
No fix for Libor: benchmark still broken, regulators say. A top U.K. regulator says efforts to overhaul the London interbank offered rate, or Libor, haven't gone nearly far enough. The U.S. Federal Reserve says Libor is no longer fit to serve as the market's main benchmark. And Intercontinental Exchange Inc., which is in charge of reforming Libor, says it is struggling to get enough support from the industry to make the benchmark better.
Fed tells Santander's U.S. unit to shape up. The Federal Reserve issued a stinging lecture to Spanish bank Banco Santander SA, faulting the lender's U.S. unit for failing to meet regulators' standards on a range of basic business operations.
Beijing's response to stock selloff reveals deep insecurity. The Chinese government's response to falling stocks reveals an urgent impulse not only to protect investors but to shield the party from criticism. A raft of Chinese government agencies stepped up efforts to shore up plunging stock markets that the securities regulator described as facing panic and irrational selling. Many U.S.-listed Chinese firms recently received offers to go private, with a goal to relist on exchanges at home. But in light of the recent selloff, some are watching their share prices fall.
When global banking standards conflict with local needs. Central banks in the developing world are caught in a dilemma between adhering to international banking standards and serving potential customers who are unable to meet those standards, as greater access to banking services becomes a mainstream policy goal.
J.P. Morgan to settle credit-card probes for $125 million. J.P. Morgan Chase & Co. intends to pay at least $125 million to settle probes by U.S. state and federal authorities over the New York bank's collection and sale of credit-card debt.
Corzine, other ex-MF Global officials settle suit for $64.5 million. Jon S. Corzine and other former MF Global officials will pay $64.5 million to settle an investor lawsuit, according to a court filing. The money from Mr. Corzine and former CFO Henri J. Steenkamp will come from directors' and officers' insurance policies they had while working at MF Global. The Tuesday filing said the insurance money is "being rapidly and continually depleted" by the litigation. Messrs. Corzine and Steenkamp must provide proof of their reported net worth or the plaintiffs can cancel the settlement, according to the filing.
Malaysia orders freeze of accounts tied to probe of alleged transfers to Najib. Malaysian authorities said they have ordered six bank accounts to be frozen in connection with an investigation into alleged fund transfers to bank accounts of Prime Minister Najib Razak.
P&G settles suit on puffed-up packaging. Procter & Gamble Co. has agreed to change packaging for some Olay products to settle California accusations that it misled consumers with containers that were at times much larger than the face cream inside.
Carnival gets U.S. approval to start cruises to Cuba. Carnival Corp. said the U.S. Treasury Department granted the cruise-ship company approval to begin cruises to Cuba starting next May. The trips are planned under its new fathom brand, which targets travelers who want to combine volunteering with vacations. Carnival is still in talks with Cuban authorities to gain their approval.
ECONOMY
Eurozone sets Sunday deadline for Greece financing deal. Eurozone leaders set Greece a Sunday deadline to reach the outlines of a new financing deal that the German chancellor said would have to include even more economic overhaul measures than before. The ECB could force Greek banks into instant collapse if Athens doesn't make bond payments due on July 20, but it remains a question whether it would necessarily do so.
Trade gap widens as overseas headwinds gather. The U.S. trade gap expanded 2.9% to a seasonally adjusted $41.87 billion in May due to a slowdown in exports, suggesting a stronger dollar and global turmoil will weigh on economic growth this year.
IMF: U.S. economy at risk of stalling if rates raised too soon. The Federal Reserve risks stalling the U.S. economy by raising interest rates too early, the International Monetary Fund warned Tuesday as it detailed its call for the central bank to delay a move until 2016. IMF staff argue that, barring upside surprises, there is still too much uncertainty around inflation, employment and wage prospects for the Fed to pull the trigger in coming months.
CFO MOVES
Express Inc., a specialty apparel retailer based in Columbus, Ohio, promoted its vice president of finance, Periclis "Perry" Pericleous, to chief financial officer on Monday afternoon, effective immediately. Mr. Pericleous has worked at Express for 15 years, serving in both finance and accounting roles since he joined the company in 1999. Mr. Pericleous succeeds Paul Dascoli, who served as finance chief from fall 2011 until he left the company on Monday. Mr. Pericleous will receive an annual base salary of $420,000 a year, with the potential for an annual bonus equal to 50% of his salary. He will also receive $73,500 in common stock and $171,500 in restricted stock, according to a regulatory filing.
Creative Artists Agency, a Los Angeles-based entertainment and sports agency that represents industry professionals, named James Burtson its new chief financial officer, effective July 13. Mr. Burtson succeeds Jeff M. Berry, who is leaving the role to relocate from Los Angeles with his family, according to a CAA press release. CAA said Mr. Burtson would help it with its growth strategy, and noted he recently oversaw global mergers and acquisitions at Time Warner Inc. as its senior vice president.
TearLab Corp., the maker of a diagnostic tear-testing device used by eye-care practitioners, announced Wes Brazell as its new finance chief, effective immediately. Mr. Brazell succeeds William G. Dumencu, who will now serve as an internal consultant of TearLab. Mr. Brazell most recently was the chief financial officer of Academic Partnerships LLC. Mr. Brazell's annual base salary will be $250,000, with an annual discretionary 50% bonus, as well as 200,000 shares of common stock. Mr. Brazell will also receive a $40,000 one-time, lump-sum payment to compensate the monetary loss incurred from his separation agreement with Academic Partnerships LLC, according to a regulatory filing.
The Morning Ledger from CFO Journal cues up the most important news in corporate finance every weekday morning. Send us tips, suggestions and complaints: james.willhite@wsj.com. Get The Morning Ledger emailed to you each weekday morning by clicking here: http://on.wsj.com/TheMorningLedgerSignup. Follow us on Twitter @CFOJournal.
(END) Dow Jones Newswires
July 08, 2015 06:47 ET (10:47 GMT)
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