*CITIGROUP 1Q ADJ. EPS $1.30, EST. $1.14
TIAA-CREF is buying Nuveen Investments for $6.25 billion including debt, in the retirement- and financial-services behemoth's largest acquisition ever, according to top executives from both companies.
The transaction, set to be officially announced Monday, would create a firm with nearly $800 billion under management, moving TIAA-CREF up the ranks of the U.S.'s biggest money managers. It also would give Nuveen's owner, private-equity firm Madison Dearborn Partners LLC, a clean exit from a seven-year-old investment.
"This transaction takes us into the top ranks of mutual funds," TIAA-CREF Chief Executive Roger Ferguson Jr. said in an interview Sunday.
Nuveen was founded in 1898 as a bond underwriter. It focused on investing in municipal bonds, which still make up a big chunk of its $221 billion of assets under management, through the 1990s, when it started branching into other products. It has diversified into stocks, corporate credit and real estate, and is the largest manager of U.S. closed-end funds, a type of investment fund that is listed on a stock exchange.
Nuveen's revenue has grown to just over $1 billion last year from about $680 million in 2009, according to regulatory filings.
The deal marks the largest-ever acquisition for TIAA-CREF, a 96-year-old company that specializes in serving the academic and non-profit worlds, with many college professors and administrators putting their savings in its retirement-income vehicles. The company, with about $570 billion of assets, also sells low-cost mutual funds, life insurance and other products to the public, and has about 4.8 million individual clients.
TIAA-CREF has faced increased competition from other financial-services firms in its core higher-education business. Buying Nuveen would help diversify further its product offerings, and enable TIAA-CREF to boost payments to its clients, Mr. Ferguson said.
The firm had been looking for a splashy way to grow its mutual-fund business and recently had considered several acquisition targets, Mr. Ferguson said.
Then Nuveen "popped to the top of our list," he said.
Robert Leary, head of TIAA-CREF's asset-management division, got in touch with John Amboian, Nuveen's chief executive, in December, and Mr. Ferguson contacted Paul Finnegan, co-CEO of Madison Dearborn.
Nuveen had been private for seven years, on the long end for typical private-equity investments. Nuveen was considering its options, including going public, but was leery of what Mr. Amboian described as "short-term market pressures."
Being public is "not necessarily an end state that's optimal for the money-management business," he said. "There are some public asset managers, but there are many more private asset managers."
Chicago-based Madison Dearborn bought Nuveen for about $5.75 billion in 2007, using $2.7 billion of its own money and borrowing the rest, according to regulatory filings. Within a year, Nuveen's borrowing costs had risen as the financial crisis set in. The company eventually refinanced most of its buyout debt, which now stands at $4.5 billion and will be absorbed by TIAA-CREF.
With the TIAA-CREF deal, Madison Dearborn will have at least broken even on its Nuveen investment, a person familiar with the matter said.
It wasn't immediately clear how TIAA-CREF would finance the acquisition. The firm, which isn't publicly listed, doesn't report its finances but carries little debt, Mr. Ferguson said.
In a report last year, Fitch Ratings said TIAA-CREF had an "extremely strong balance sheet" and has been "conservative" in its capital structure. Its insurance unit has a triple-A rating from Fitch and Moody's Investors Service, one of few such strong ratings among financial-services companies.
The deal is expected to close by the end of the year, pending approval from existing Nuveen clients and antitrust regulators.
Outokumpu OYJ CEO: Sees modest improvements in market demand in Q1, reaffirms Q1 forecast --> +4% on the news
Early premarket gappers
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GM's Opel Could Break Even Ahead of Schedule
Unit Chief Karl-Thomas Neumann Is Cautiously Optimistic, Though Wary of Russia Situation
RÜSSELSHEIM, Germany— General Motors Co. GM -4.11% 's European unit, Adam Opel AG, appears to be on the cusp of breaking even before its 2016 target date—welcome news for GM Chief Executive Mary Barra amid the fallout from a massive recall that is expected to take a $1.3 billion bite out of GM's first-quarter profit.
For years, Europe was GM's biggest headache. The auto maker's main European business, Opel, posted declining sales, heavy losses and a depleted brand. Then, GM brought in a team of outsiders, led by former Volkswagen AG VOW3.XE -1.05% executive Karl-Thomas Neumann, and decided to shut down a plant in Germany, invest more than $6 billion in Europe and introduce 23 new models by 2016.
The changes are paying off. Opel's sales stopped falling last year and in the first two months of this year European Union sales of the Opel and the British Vauxhall brands rose 3%. Mr. Neumann said he is sticking to his official target to return Opel to break-even in 2016. But analysts suggested that Opel could reach profitability as early as next year.
"If everything goes well, theoretically that can't be ruled out," Mr. Neumann said in an interview.
His cautious outlook is a sign of a cultural change at Opel, which is based here. In the past, GM's European executives often turned in ambitious targets but failed to deliver, rushing to move the goal posts after it was too late to intervene and fix the business. In his first year, Mr. Neumann delivered above-budget results.
"That is something new at Opel," he said.
He also is wary about promising too much too soon because he knows there are factors beyond his control that could slow Opel's progress.
The recovery of car sales in Europe is gathering steam, but it remains unclear how sustainable the European recovery is. Sanctions against Russia or a shooting war in Ukraine could hamper GM's business in Russia. Opel sold 81,421 vehicles in Russia last year, around 8% of the unit's total sales of 1.06 million vehicles. Over the past few months, the plant has canceled shifts and worked shorter hours as car sales in Russia fell.
"We're careful now with new investment and are trying to understand and monitor the situation as it develops," he said. "Of course, [development of the] Russian economy is a cause of concern."
In the long-term, Mr. Neumann sees Russia and Turkey as growth markets for Opel. That is why he pulled the plug on China last month. Opel sells fewer than 5,000 cars in China through a costly network of 22 dealerships. Instead of investing hundreds of millions of dollars to build an Opel franchise in China, Mr. Neumann decided to use the company's funds to focus on Europe. Before joining Opel, Mr. Neumann was chief of VW's business in China.
" 'Now Opel has a great strategy for China' is what a lot of people thought," he said, chuckling. "As GM, we are still bullish about China. But for Opel it is just a fact that our resources are better used somewhere else."
The 115-year-old Opel was acquired by GM in 1929 and for decades was an innovator. In the 1990s, Opel lost its mojo and GM's European business began bleeding cash, prompting unsuccessful restructurings and a revolving door for top management in Europe.
But Mr. Girsky's boldest move was bringing outsiders with no ties to GM. In addition, to Mr. Neumann, who arrived in March of last year, the company hired Peter Küspert, a 19-year veteran of Daimler AG DAI.XE -1.04% , to oversee sales, and Michael Lohscheller, formerly the chief finance officer of VW's U.S. business.
New models such as the Adam, a sporty compact that is especially popular with young women; the Mokka, a small sports-utility vehicle; and pepped up versions of Opel's Insignia, Astra and Corsa models are bringing customers back.
"The brand was a big problem," Mr. Neumann said. "The brand should help, but in our case it was like an insurmountable wall."
Mr. Neumann hired an outsider to rebuild the Opel brand. Tina Müller was head of marketing at Henkel HEN3.XE +1.95% KGaA, a maker of personal-care products that owns Dial soap, and had no experience in the car industry.
"Everyone said, 'A car is not shampoo,' " Mr. Neumann recalled of discussions with colleagues. "But a car is also a consumer product. We spoke to her, and it was immediately clear to me that she's the one I want."
Opel hired the German ad agency Scholz & Friends, which came up with a campaign through posters, television advertisements and YouTube videos to encourage Germans to reconsider their prejudices. The ultimate aim is to get consumers to change their attitudes about the Opel brand.
Claudia Schiffer was hired as Opel's brand ambassador in Europe, saying the supermodel embodies what it means to be German. A key part of the effort is to shed Opel's image as a failed American company that shut down plants and fired German workers.
Ms. Müller described Opel as the biggest marketing challenge in Europe today and said marketing is about the brand, not the product. "We had similar problems" at Henkel, she said. The brand "was a little dusty, it became a little boring. It's a similar task now with the Opel brand."
Opel isn't out of the woods. The company still is unprofitable and sales have only just started to rise slightly.
But back in Detroit, executives are closely following what is going on in Rüsselsheim. After taking the helm at GM, Ms. Barra's first trip abroad was in January to visit the Opel plant, where she pledged further investment.
"At the moment we are seen as a benchmark because of the holistic way with which we have approached the turnaround," Mr. Neumann said. "Last year, for the first time in years, we not only met our targets, we surpassed them."
In the boardroom brawl between Dan Loeb and Sotheby’s, both are punching with panache.
Just hours after the auction house attacked the activist investor’s track record in a sleek PowerPoint presentation, Loeb launched a website with a Damien Hirst image of a pill-lined medicine cabinet to blast Sotheby’s poison-pill defense.
Loeb is waging a proxy fight to gain three seats on Sotheby’s board and has nominated himself and two other candidates ahead of the company’s annual meeting in May. He also has sued Sotheby’s over its poison pill.
The back and forth showed just how bitter the battle has become.
Loeb’s Third Point said the website is for “shareholders who support increased growth and a new agenda for Sotheby’s.” So far, it serves mostly as a repository for Loeb’s letters to the board.
The site was in response to Sotheby’s 41-page presentation on Tuesday that argued Loeb is only in it for the short term.
The billionaire hedgie stayed around a year or less on the boards of Yahoo!, Massey Energy, Pogo Producing and Enphase Energy and only two years on Ligand and Biofuel Energy.
During his tenure at Ligand and Biofuel, shares underperformed the S&P 500 index, while at Massey shares fell 30 percent.
“Mr. Loeb’s board experience highlights the short-term nature of his representation of shareholders as a director,” Sotheby’s said in its Securities and Exchange Commission filing.
The giant auction house also called out what it described as Loeb’s “self-interested transaction with Yahoo!”
Loeb and two directors with Third Point ties left the board after Yahoo! agreed to repurchase about 40 million of his shares, giving him a windfall profit of more than $500 million, which critics called greenmail.
(Reuters) - Microsoft Corp's board faces a lawsuit over the way it handled an error with its Internet Explorer browser that ended up costing the company a record-breaking $731 million fine by European antitrust regulators.
The lawsuit, brought by shareholder Kim Barovic in federal court in Seattle on Friday, charges that directors and executives, including founder Bill Gates and former Chief Executive Officer Steve Ballmer, failed to manage the company properly and that the board's investigation was insufficient into how the miscue occurred.
The legal action is the first to emerge from a humiliating episode for Microsoft, which the software company has never fully explained and has accounted for only as a "technical error."
In March last year, the European Union levied its largest ever antitrust fine against Microsoft for breaking a legally binding commitment made in 2009 to ensure that consumers in Europe had a choice of how they access the internet, rather than defaulting to Microsoft's Internet Explorer browser.
Its investigation found that updated software issued between May 2011 and July 2012 meant that 15 million users were not given a choice. It was the first time the European Commission, the EU's antitrust authority, handed down a fine to a company for failing to meet its obligations.
In her lawsuit, Barovic says she asked Microsoft's board to fully investigate how that mistake occurred and to take action against any directors or executives that had not performed their duties. She says Microsoft replied that it found no evidence of a breach of fiduciary duty by any current or former executives or directors.
In a statement on Friday, Microsoft repeated that stance.
"Ms. Barovic asked the board to investigate her demand and bring a lawsuit against the board and company executives," said an emailed statement from Microsoft. "The board thoroughly considered her demand as she requested and found no basis for such a suit."
The problem on European computers prevented the so-called "ballot" screen from appearing. Sources close to the company have said it was connected to updated Windows 7 software.
Ballmer, who was CEO at the time, and Steven Sinofsky, then the head of the Windows unit, both had their bonuses cut in 2012 after the error came to light.
The case is Barovic v Ballmer et al in U.S. District Court, Western District of Washington, No. 14-00540
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BFW 04/14 09:19 *SYMRISE PLANS NO `MAJOR' DIVESTMENTS FROM DIANA ACQUISITION BN 04/14 09:19 *SYMRISE CEO, CFO COMMENT ON CONFERENCE CALL WITH ANALYSTS BN 04/14 09:19 *SYMRISE TO ADD DIANA FIGURES TO 2020 FINANCIAL TARGETS
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*SYMRISE CONSIDERS 10% CAPITAL INCREASE AFTER DIANA ACQUISITION 2014-04-14 09:19:00.410 GMT
--SHEENAGH MATTHEWS
-0- Apr/14/2014 09:19 GMT
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Belgian Cable M&A to Increase Pressure on Belgacom: Goldman 2014-04-14 06:49:59.485 GMT
By Sam Chambers April 14 (Bloomberg) -- Pricing pressure in Belgian mobile has raised expectations of consolidation, although Telenet has little incentive to acquire mobile assets as it has access to Mobistar’s network until 2017, Goldman says. * Goldman: consolidation of the country’s fragmented cable mkt is more probable in S/T, with Telenet and Altice the likely drivers * Cable consolidation would strengthen Telenet’s structural quality and put Belgacom’s premium pricing strategy under pressure * Rates Belgacom conviction sell, Mobistar sell, Telenet buy * NOTE: Broadband mkt share here; TV mkt share here * NOTE: In Oct., ABN Amro said Mobistar is an attractive target for Telenet
For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>
To contact the reporter on this story: Sam Chambers in London at +44-20-7673-2021 or schambers7@bloomberg.net To contact the editor responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net