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MAKOR VIEW
Today Saxo Bank announced a conditional agreement to acquire BinckBank for €6.35 (cum dividend) per BinckBank share. The transaction has been unanimously supported and recommended by BinckBank’s executive and supervisory board (conditional on works council clearance). The BinckBank Foundation has agreed to tender its shares to the Offer and propose certain resolutions at the EGM.
Saxo Bank will finance the Offer from available cash resources and through equity financing of €100m and has received binding equity commitment letters from Fournais Holding, Geely Financials Denmark and Sampo Plc
MAKOR COMMENTS
The draft memorandum will be submitted to the AFM no later than the end of Q1 2019 with the Offer expected to complete in Q3 2019. The BinckBank EGM will be held at least 6 business days prior to the closing of the Tender Offer period.
Assuming that the draft memorandum is submitted to the AFM by mid-February 2019, the AFM then has 10 business days (subject to extensions if further information is requested) to issue its decision on the Offer Document. The acceptance period under the Dutch Takeover Code typically lasts between 8 and 10 weeks (i.e. the Offer could close between early-mid May) with the EGM taking place the week prior to deal close.
BinckBank and Saxo Bank have also agreed to certain covenants in respect of, corporate governance, financing, organisation, offices & brands, integration, employees, redundancy arrangements, the social plan, retention and training & career opportunities for a 3 year duration after settlement.
If Saxo Bank acquires at least 95% of BinckBank’s shares, Saxo Bank intends to delist BinckBank as soon as possible and commence statutory squeeze-out proceedings. However, if Saxo Bank acquires more than 80% but less than 95% then Saxo Bank will be entitled to pursue a legal triangular merger of BinckBank with two of its subsidiaries. This post-closing merger will be subject to BinckBank’s shareholder approval at an EGM to be held prior to the closing of the tender offer period.
If Saxo Bank pursues the post-closing merger, it will enter into a share purchase agreement with BinckBank Holdco pursuant to which the shares in new BinckBank will be sold and transferred to Saxo Bank as soon as possible after the post-closing merger becomes effective against the payment of a purchase price equal to the Offer Price. Following completion of the share sale, BinckBank Holdco will be dissolved and liquidated. As soon as possible following the effectiveness of the Liquidation, an advance liquidation distribution will be made to the shareholders of BinckBank HoldCo consisting of a payment per share in the capital of BinckBank HoldCo equal to the Offer Price without any interest and subject to withholding taxes and other taxes.
The Offer is pre-conditional on the following:
- No material breach of the Merger Protocol having occurred;
- No revocation or amendment of the recommendation by the BinckBank executive board and the BinckBank supervisory board;
- No MAE having occurred;
- AFM approval of the Offer Memorandum;
- No superior offer having been announced or made;
- No 3rd party having announced or made a mandatory public offer;
- Trading in BinckBank shares not having been suspended or ended as a result of a listing measure by Euronext Amsterdam;
- No notification having been received from AFM stating that one or more investment firms will not be allowed to cooperate with the Offer;
- No order, stay judgement or decree having been issued prohibiting the making of the Offer and/or related transactions;
- Saxo Bank having received executed copies of resignation letter from the resigning members of the BinckBank supervisory board; and,
- The BinckBank foundation irrevocable undertaking being in full force and effect and being complied with.
If Offer Conditions are:
- Minimum acceptance condition of 95% of outstanding shares (reduced to 80% if the post-closing merger resolution is adopted at the EGM and can be waived if the acceptance level is at least 68%);
- Receipt of approval from the European Central Bank (in the form of a declaration of no objection for the (indirect) acquisition of the shares in BinckBank and approval from the Dutch Central Bank on related charges in the co-policymakers of BinckBank;
- Receipt of approval from the Dutch Central bank on the prospective appointment of new members of the BinckBank supervisory board;
- Receipt of approval and/or license from the Dutch Central Bank and/or European Central Bank in respect of the post-closing merger to the extent required;
- No material breach of the merger protocol;
- No revocation or amendment of the recommendation by the BinckBank executive board and the BinckBank supervisory board;
- No MAE;
- No superior offer having been announced or made;
- No 3rd party having announced or made a mandatory public offer;
- Trading in the shares on Euronext Amsterdam not having been suspended or ended as a result of a listing measure by Euronext Amsterdam;
- No notification having been received by the AFM stating that one or more investment firms will not be allowed to cooperate with the Offer;
- The BinckBank Foundation irrevocable undertaking being in full force and effect and being complied with; and,
- No order, stay judgement or decree having been issued prohibiting the making of the Offer and/or related transactions.
The latest date to satisfy the Offer Conditions is 17 December 2019. However, if the regulatory clearances are still outstanding by 1 December 2019, Saxo Bank or BinckBank may notify the other party on or before 10 December 2019 that the Long-Stop Date shall be 1 April 2020.
If a third party offer above €6.858 is received and is committed to be launched or is launched within 10 weeks of announcement (i.e. before 25 February 2019), then Saxo Bank has a matching right. If the Offer is matched by Saxo Bank then BinckBank cannot terminate the merger protocol. Any subsequent offer after this must be c.5% higher (i.e. €6.6675)
There is a reciprocal €4.3m termination fee.
MAKOR CONCLUSION
The expected closing timetable of Q3 2019 is lengthy, although no antitrust approvals are required the receipt of approvals from the Dutch Central Bank and/or the European Central Bank could be prolonged given the nature of the industry.
We note that Saxo Bank is 52% owned by Zhejiang Geeley Holding Group Co. The transaction will allow Saxo Bank to increase its footprint in northern and southern Europe and to enable it to compete more effectively in the online trading and investment sector which is currently facing multiple challenges including challenging competition, increased regulation, low interest rates, considerable technology investment requirements and changing customer behaviour.
It is unclear if BinckBank ran a sales process prior to accepting the Offer from Saxo Bank but Saxo Bank has a matching right if a superior offer (10% higher for the first offer and 5% higher for subsequent offers) and if the superior Offer is matched by Saxo Bank then BinckBank is unable to terminate the merger protocol. However, should BinckBank terminate the merger protocol, there is a €4.3m termination fee payable by BinckBank to Saxo Bank.
The spread is currently €0.21 (3.3%), annualising to 4.5% assuming a mid-September closing date. We would therefore advise investors to build initial positions.
Is Online Shopping Better or Worse for the Environment?
Turns out there's no one-size-fits-all answer.
Lucy Huang feels guilty about shopping online. She gets about a box a week delivered to her apartment in New York City. During Black Friday she made four orders online. But the convenience trumps guilt.
“If you have time to go shopping, then you should probably go shopping, instead of doing it online,” Huang said. “But it’s way too time-consuming to shop the way we did before online shopping. Because you go, you browse, you try things on and then you wait in line to pay. I don’t have time for that.”
For busy individuals, the speed of Internet shopping can’t be beat.
Nearly every retailer delivers these days. Amazon, Target, Walmart, Macy’s and Nordstrom are just a few of the companies that offer same-day delivery, where boxes arrive in mere hours. Courier services like Postmates, Deliv and Zipments deliver almost anything — including apparel. Subscription-box services bring entire outfits in a box to shoppers’ doors each month.
But some consumers are left worrying about other issues: like seemingly endless piles of cardboard boxes and what effect fuel-guzzling delivery trucks will have on the planet.
In a May 2018 survey by the NPD Group, the research firm found that nearly a quarter of U.S. consumers are concerned about the environment and reported buying sustainable apparel as a result.
“It’s even more true for the newer generation, for Millennials, who have considerable spending power,” said Sophie Marchessou, a partner at McKinsey & Company, who focuses on retail. “They are willing to pay more for what’s sustainable.”
At the same time, online shopping is more popular than ever. While online shopping accounted for less than 10 percent of all retail sales so far this year, according to the U.S. Census Bureau, nearly all of the growth in retail is online. Some stores now exist exclusively on the Internet, leaving eco-conscious shoppers wondering if there are more cardboard boxes floating around as a result.
“There isn’t actually,” said Rachel Kenyon, vice president of the Fibre Box Association. Her organization has been tracking shipments of corrugated card boxes since 1940, those thicker cardboard boxes frequently used to transport things in the mail.
“There’s no data that shows that there’s a spike in box shipments equal to the spike in e-commerce growth,” Kenyon said. “E-commerce is not a pure additive to box shipments. Instead, there’s a trade-off.”
That trade-off translates to cardboard boxes full of clothes that once went to department stores like Sears or Macy’s now being shipped to consumers directly. While there might be more smaller boxes shipped, the total square footage of cardboard shipped is roughly the same. That means three or four smaller boxes with clothes inside might be equal to or even less cardboard than one big box sent to a store.
“The distribution methods have changed,” Kenyon said. “But not necessarily the amount of goods that need to be shipped.”
And the numbers prove it. U.S. shipments of corrugated cardboard boxes — which includes all industries, not just retail — reached its peak in 1999 in the United States when 405 billion square feet of cardboard was shipped. The volume leveled off for a few years as more and more manufacturing was moved outside of the U.S. to places like Asia. Not surprisingly, around 2008, the height of the recession, the number of cardboard box shipments reduced dramatically.
Last year, in 2017, there were 386 billion square feet of corrugated cardboard boxes shipped in the United States. Even the rise of cardboard shipments year-over-year has been slow and steady — only 2.5 percent growth in 2017, compared with a 15 to 17 percent growth in e-commerce during the same period, according to the U.S. Census Bureau.
“E-commerce has grown at 15 percent, so people assume there are 15 percent more boxes. But there aren’t, because there’s substitution,” Kenyon said. “You’re taking away that box that went to the store. At the end of the day, the total volume of shipments is not any larger.”
In addition, Kenyon pointed out that online shopping accounts for less than 10 percent of cardboard box shipments, while industries like manufacturing ship more than six times the amount of cardboard.
And, unlike in a retail store, where clothes arrive in a box and then go into a baler and no one ever sees the packaging, a consumer comes face to face with a cardboard box with every single purchase.
“What we’re finding is that with e-commerce, people are more aware of packaging,” Kenyon said.
Consumers seem willing to recycle if it’s convenient for them, according to a survey conducted by the Fibre Box Association. People in rural areas without access to recycling facilities or people in apartments who simply don’t have the space to recycle are the least likely to do it.
Meanwhile, other solutions are popping up. Some apparel doesn’t even come in boxes anymore; it’s shipped in envelopes instead. Amazon offers shoppers the option of consolidating orders in as few packages as possible. UPS delivery trucks have a practice of avoiding left turns, so delivery drivers don’t waste gas sitting idly at a traffic light.
Elena Craft, senior health scientist at the Environmental Defense Fund said getting two- or three-day delivery is more efficient than two- or three-hour delivery, because then delivery drivers don’t have to interrupt their regular routes to make unplanned deliveries.
Still, the popular perception remains that extra delivery trucks on the streets could be causing even greater pollution problems.
Ilissa Ocko, a climate scientist at the Environmental Defense Fund, said this isn’t always the case.
“You can just imagine everyone having their own individual car, making a few trips here and there to get their gifts,” she said. “And all that being replaced with a couple of delivery trucks that are packed with gifts that are just dropping them off on a route.
“So even though we see these dirty trucks driving around, they actually can be very practical because they pack a lot of stuff into a small space,” Ocko said.
Instead, she said the situation varies case by case, with factors like distance traveled and type of vehicle used contributing to the overall emissions dispensed.
In some instances, courier services in large cities like San Francisco and New York might actually be better for the environment because the delivery person travels by bicycle or on foot to deliver products from a retail store directly to consumers, eliminating the need to both ship boxes and use gas-powered vehicles.
Combining shopping trips with other activities or making mass orders online are other practices that could potentially reduce one’s carbon footprint.
“You really can’t say that one [online shopping or shopping in real life] is necessarily better than the other overall,” Ocko said. “That would be misleading for individuals who have different lifestyles.”
The Fall of the House of Ghosn
Not everybody at Nissan was happy with their rock-star chairman, Carlos Ghosn. His high-living ways gave the company ammunition to take him down.
The house that helped trigger the downfall of Carlos Ghosn is a rose-colored mansion in one of Beirut’s most expensive neighborhoods.
Its walls were adorned with portraits of the automobile titan, who with his second wife had personally supervised the $15 million purchase and renovation of the property, people close to Mr. Ghosn say. Two ancient sarcophagi, unearthed during the remodeling, were visible through a glass floor leading to a wine cellar.
Earlier this year, a team of Nissan Motor Co. NSANY -1.54% executives working without Mr. Ghosn’s knowledge discovered that the Beirut house and other properties had actually been purchased by Nissan, using a network of shell companies. Nissan, which Mr. Ghosn has led since 1999 in an increasingly uncomfortable alliance with France’s Renault SA, RNO -0.05% also paid for the building’s renovation, according to people familiar with the matter.
The discovery of Nissan’s role in financing Mr. Ghosn’s jet-setting lifestyle ignited a powder keg of frustration and discontent that had long been building—and may have pre-empted a plan by Mr. Ghosn to move against management at the company himself.
This account, based on interviews with dozens of Nissan veterans and people close to the investigation, shows that accusations of hidden pay and lavish spending on the company dime were intertwined with a deep sense of discontent over Mr. Ghosn’s long reign over the auto maker. Nissan employees had groused that Nissan profits were propping up Renault, and many feared Mr. Ghosn was preparing a Renault takeover of its bigger Japanese partner.
For months, a group of Nissan executives secretly gathered information on Mr. Ghosn, laying the groundwork for a Nov. 19 strike against the executive and a top aide, Greg Kelly. The group even persuaded Mr. Kelly, who is based in the U.S., to fly to Japan on the same day Mr. Ghosn was expected. The maneuvering allowed Japanese prosecutors to swiftly arrest both men, then raid company offices and his Tokyo apartment in the space of hours, say people familiar with the events.
This $15 million Beirut mansion, bought and renovated with Nissan corporate funds, was used exclusively by former chairman Carlos Ghosn and his family.
This $15 million Beirut mansion, bought and renovated with Nissan corporate funds, was used exclusively by former chairman Carlos Ghosn and his family. PHOTO: DONNA ABU-NASR/BLOOMBERG NEWS
When Nissan CEO Hiroto Saikawa, who was Mr. Ghosn’s handpicked successor, held a town hall at headquarters to explain what had transpired, the assembled employees broke into applause, according to people who attended. The sentiment against Mr. Ghosn in Nissan had been building “like a volcano,” says one person familiar with Nissan’s probe.
It was a swift reversal for a man once revered as the savior of Nissan, and one of the auto industry’s most powerful leaders. After his November arrest, Nissan quickly removed Mr. Ghosn as chairman, and Renault, where Mr. Ghosn was chairman and CEO, put interim leaders in place. On December 10, Japanese prosecutors charged Mr. Ghosn with understating his compensation in Nissan’s financial reports. Renault is now pressing Nissan to call a shareholder meeting to deal with “significant risks” to the alliance.
Mr. Ghosn’s Japan-based attorney didn’t respond to requests for comment. A person familiar with his legal defense said Mr. Ghosn continues to maintain his innocence.
Meanwhile, Mr. Ghosn remains in detention, and under Japan’s criminal system, he could remain locked up well into 2019 as prosecutors add charges and he awaits trial.
Prosecutors haven’t filed charges or raised suspicions related to Mr. Ghosn’s expenses or his use of company property. But the Nissan-owned home he used in Beirut, and another in Rio de Janeiro, have become the subject of court battles, after Nissan took control of them and changed the locks. Members of Mr. Ghosn’s family have sued for access to retrieve personal belongings, artwork and cash.
Mr. Ghosn’s family argues that his arrest and allegations of his misuse of company funds are part of a broader battle for control.
“The truth is his arrest is a result of a corporate dispute between Renault on one side and Nissan and Mitsubishi on the other,” the family’s lawyers said in court filings in Brazil, adding: “The surprising arrest of Carlos Ghosn is part of a sordid strategy by Nissan to undermine the Renault alliance.”
Mr. Ghosn’s children believe that the perks he enjoyed at Nissan should be weighed against the turnaround he led at the company and the wealth he created for others at the company over the past two decades, according to a person close to the Ghosn family.
“For as long as we can remember, we heard from our father every Sunday — no matter how busy he got with work,” according to a written statement from Mr. Ghosn’s four children, who used to joke that Nissan was his fifth child. “It’s now been four Sundays since we’ve been able to speak to him. We miss him so much.”
“The cause of this chain of events is Mr. Ghosn’s misconduct,” a Nissan spokesman said in an emailed statement. “During the internal investigation into this misconduct, the Tokyo Prosecutors Office began its own investigation and took action.”
A spokesman for Renault declined to comment.
After helping to engineer Renault’s $5.4 billion bailout of an ailing Nissan in 1999, Mr. Ghosn stitched the firms into a technology and platform-sharing alliance that later added Mitsubishi Motors Corp. to become the world’s largest, collecting compensation from each that totaled roughly $17 million in 2017, according to the companies’ public filings. While that is well above the salaries of his Japanese competitors, it is below that of American executives in his line of work, such as General Motors Co. Mary Barra’s $22 million.
For Mr. Ghosn, the properties, private planes and other perks were part and parcel of his life’s work, often spent on the road, away from his family. Until his arrest, Mr. Ghosn spent at least 100 days a year in the air, according to flight records and a person close to his family.
Only a handful of Nissan executives realized the extent to which the company was footing the bill for Mr. Ghosn’s use of the properties, people familiar with the matter say.
The most costly assets at Mr. Ghosn’s disposal were the series of private jets that Nissan had purchased over the last 18 years, each decked out with a vanity-plate registration number: N155AN.
The latest, a Gulfstream G650 with a list price of $64.5 million, according to trade publication Corporate Jet Investor, is fitted with a bedroom where he often sleeps, according to a person close to the Ghosn family.
“This kind of lifestyle can take a toll on you, both physically and socially. It is not without a price to pay, and you have to manage that,” Mr. Ghosn wrote in a recent autobiography posted on Nissan’s website. “It helps that I can sleep well on an airplane.”
This year the plane he uses departed from at least 35 different airports on over 80 travel days as he crisscrossed the globe. In the seven weeks before Mr. Ghosn’s arrest, the plane departed Beirut eight times, according to flight records.
Inside Nissan, Mr. Ghosn’s lifestyle stood in contrast with the cost-conscious management style he championed to boost the bottom line. After the allegations surfaced that his lifestyle was funded by Nissan, the sense of betrayal deepened.
“Transparency and frugality were the Nissan way,” says one former Nissan executive. “I want to ask: ‘Where did transparency go? Where did frugality go?’ ”
Mr. Ghosn came from relatively humble origins. His paternal grandfather moved from Lebanon to Brazil at the age of 13 with nothing but a suitcase, and started a handful of businesses in the country’s interior, where Mr. Ghosn was later born, according to Mr. Ghosn’s autobiography. When Mr. Ghosn was 6, his father sent him to Beirut, where he lived with his grandmother, mother and siblings.
His life in Beirut was modest, according to a person close to his family. Mr. Ghosn first went to a restaurant at the age of 15 or 16 and saw grapes as a luxury item. In his later years, Mr. Ghosn took pleasure in buying and displaying the fruit.
After attending two elite engineering schools in Paris, Mr. Ghosn joined French tire manufacturer Michelin. In 1996, Mr. Ghosn was hired by Renault SA, the French auto maker, and moved to France with his family. By the late 1990s, Nissan was on the brink of bankruptcy. Renault came to the rescue with a $5.4 billion bailout that Mr. Ghosn pushed for. The deal gave Renault a controlling 37% share in Nissan, later increased to 43.4%, while Nissan purchased a 15% stake in Renault.
Moving to Tokyo in 1999 as Nissan’s chief operating officer, Mr. Ghosn got the nickname “7-11” for the long hours he worked. He closed factories, slashed staff and cut off inefficient suppliers. When those steps let Nissan hit targets on profit and debt reduction a year ahead of schedule, he was feted in Japan as a management genius and featured in his own comic-book series.
In 2005, Mr. Ghosn added the CEO’s role at Renault. That is when Nissan bought for his use one of the apartments flagged in the recent investigation: a 4,300 square foot apartment located in Paris’s 16th arrondissement, one of the city’s richest, for $4.1 million, according to property records and the person familiar with the Nissan probe.
Three years later, the company bought 1,200 feet more space in the same building to create a multistory apartment, the person said.
Security concerns helped motivate the purchase, the person close to Mr. Ghosn’s family said. Two decades earlier, a Renault CEO had been murdered in Paris by left-wing terrorists.
Japanese executives fretted that Mr. Ghosn was increasingly absent. Still, he was making far more than others at Nissan. In the fiscal year that ended in March 2009, Nissan paid him $15 million—more than twice what the other nine top executives of the company were making together—according to a person familiar with Nissan’s probe.
When Japan changed corporate-disclosure rules in 2010 to require that all executives receiving more than about $880,000 had to reveal their compensation, Mr. Ghosn was worried about public-relations fallout, according to the person. He and other executives were already taking a pay cut amid a global recession. Mr. Ghosn nudged what he had to disclose lower still by asking Nissan to pay him the equivalent of about $7.8 million and postponing the payment of nearly $2 million, the person said.
The change was handled by Mr. Kelly, then in charge of the CEO’s office and human resources, whom colleagues describe as a fierce Ghosn loyalist and troubleshooter. It rested on an interpretation of a gray area of the new disclosure rules, concerning how to treat deferred compensation. Nissan’s audit firm, Ernst & Young ShinNihon LLC, didn’t agree with the company’s proposed interpretation of those rules, says a person familiar with the matter. Mr. Kelly had an opinion from outside experts supporting him, Mr. Kelly’s lawyer says.
Even so, Mr. Ghosn’s publicly disclosed compensation topped Japan’s charts and caused a furor at Nissan’s shareholders’ meeting. Mr. Ghosn defended his salary by saying Ford Motor Co.’s Alan Mulally made nearly twice as much.
Prosecutors suspect Mr. Ghosn continued to defer increasingly large portions of his compensation from then on—totaling more than half of what he said he was owed in recent years. Messrs. Kelly and Ghosn constructed detailed spreadsheets to keep track of the mounting IOUs and how they might be paid after Mr. Ghosn’s retirement from Nissan, said people familiar with the internal probe.
Only a handful of people at the company knew what was going on, Nissan says. There was no compensation committee of the board to oversee executive pay, and Mr. Ghosn had almost sole authority to decide how much money top officials made.
Then there were the perks. At the end of 2010, Nissan created a company named Zi-A Capital BV in the Netherlands, which Mr. Kelly told Nissan’s board would be used to make venture investments, according to company filings and people familiar with the matter. Zi-A, which eventually got $82.8 million in funding, became the vehicle through which Nissan would buy additional homes, including the one in Beirut, through multiple layers of shell companies registered in offshore locations.
Around that time, Mr. Ghosn separated from his first wife Rita—who wore recycled clothes and loved playing bridge—and began his new relationship with his current wife, Carole—who has a taste for designer dresses and fancy events, according to the person who has known Mr. Ghosn for years.
A lawyer for Rita Ghosn declined to make her available for an interview or answer questions on her behalf.
In 2012, Mr. Ghosn’s sister Claudine Bichara de Oliveira helped negotiate the purchase of a four-bedroom, beachfront apartment in Rio de Janeiro’s Copacabana neighborhood, according to a person familiar with the deal. A second-tier subsidiary of Zi-A named Hamsa 1 Ltd. paid $5.7 million for the apartment, making it company property.
Mr. Ghosn would sometimes stay in the Rio apartment while in town for business, according to the person close to the family. But it was also a site for Ghosn family holiday gatherings, capable of hosting about 10 people at a time, according to a person familiar with Mr. Ghosn’s trips to Rio and two of the building’s doormen.
“The most poetic moments for our family are the walks along Copacabana beach, where we have an apartment,” Nadine Ghosn, one of Mr. Ghosn’s three daughters, told the Brazilian edition of Vogue magazine.
In the fall of 2016, several months after Mr. Ghosn remarried, he and his new wife held a celebration to mark the event, as well as Mrs. Ghosn’s birthday, at one of the palaces on the grounds of France’s Château de Versailles, according to a person who attended. About 120 guests in black-tie attire sat at long tables adorned with candelabras under a giant chandelier. Pastries were piled higher than attendees’ heads. Golden trays spilled over with grapes.
Around that time, Nissan bought Mr. Ghosn a faster and more spacious corporate jet, the Gulfstream G650, according to Federal Aviation Administration records. Mr. Ghosn’s children would at times accompany their father on the jet, provided he was already heading in the same direction, said the person close to the family. “Being on the plane is a way to spend time with their dad,” the person said.
After Mr. Ghosn remarried, the jet also started making more frequent trips to Beirut, flight records show. The Beirut trips created extra costs because Nissan wouldn’t leave the plane on the tarmac there out of security concerns. Instead, the flight crew would fly 120 miles to Cyprus, and return when it was time to pick up Mr. Ghosn, according to flight records and people familiar with the matter.
“When he came, it would be a convoy,” said a local barber who works near the Beirut house. “There would be state security and intelligence jeeps accompanying him. He is a very big man.”
Back at Nissan, grumbling about Mr. Ghosn’s management grew. Some Nissan veterans worried Mr. Ghosn was promoting non-Japanese executives faster than their local peers.
As Mr. Ghosn pushed Nissan and Renault to cut costs by sharing parts and manufacturing platforms, engineers squabbled about whose technology and factories to use. Nissan staffers felt revenues from the Japanese company, which had grown bigger than its French controlling shareholder, were being used to prop up Renault.
Last year, a Nissan employee confronted Mr. Ghosn at a shareholders meeting and told him the company felt like “a wholly owned subsidiary” of Renault. “For the last 18 years, can you give me one fact illustrating your statement?” Mr. Ghosn answered angrily. “There is not one reality corresponding to what you’re saying.”
A person close to Renault said it was “excessive” to say Nissan propped up the French company. “If you speak to people at Renault they would say that Mr. Ghosn favored Nissan,” the person said. “The success of the alliance is about balance. Is this difficult to achieve? Yes.”
Little did Mr. Ghosn know that the forces that would eventually topple him were gathering. Nissan’s audit firm, Ernst & Young, continued to raise questions each year about Zi-A Capital, the entity through which the homes for Mr. Ghosn were purchased, says a person briefed on the matter. Those flags came to the attention of Hidetoshi Imazu, a quiet manufacturing veteran at Nissan who became compliance auditor for the board in 2014—a job that involves policing the actions of directors, according to people familiar with the probe.
Mr. Imazu was trying to figure out what Zi-A was doing, but was stymied by the chain of shell companies it used in places like the British Virgin Islands, two of the people said.
So around June, Mr. Imazu sought help from one of Zi-A’s directors, a Malaysia-born British-educated lawyer named Hari Nada, who was running global compliance as well as the CEO’s office, two of the people said.
Mr. Nada was a protégé of Mr. Kelly and had been listed as a Zi-A director since 2012, along with Mr. Kelly, according to company filings. He took Mr. Imazu to talk to Zi-A’s third director, Toshiaki Onuma, a longtime support staffer for Mr. Ghosn who handled paperwork for the deferred compensation, according to corporate documents and a person with knowledge of Nissan’s probe.
As the three compared notes, Mr. Imazu began to get a fuller picture of the money Nissan was spending on Mr. Ghosn and the amount of deferred compensation, which by this year totaled around $80 million, according to prosecutors’ allegations and people familiar with the probe.
The group reached out to lawyers who could help them interpret what they were seeing and figure out whether any of it constituted criminal activity by Mr. Ghosn or others inside the company, said people with knowledge of the probe. Among the lawyers were ex-prosecutors who helped the executives take advantage of a new law that took effect in June and allowed criminal suspects to bargain for leniency in exchange for helping authorities.
By the end of the summer, the Nissan group had consulted informally with Japanese prosecutors, and in early October, those prosecutors decided they had a case, according to people familiar with the probe. Mr. Imazu and his group drew up a formal whistleblower report, stating that a Nissan unit was being used to provide homes for Mr. Ghosn at no cost, and that the directors’ compensation information on financial filings was incomplete, one of the people said.
Only then did they bring everything to Mr. Saikawa, who had taken over as Nissan’s CEO in 2017 as Mr. Ghosn’s handpicked successor, the person said. Mr. Saikawa had known nothing of the group’s maneuverings. Initially, Mr. Saikawa expressed incredulity at the allegations against his mentor, according to the person. Mr. Saikawa established a formal investigation that reported to him directly, the person said. Mr. Nada began collecting documents related to the properties, flying to Rio to seek deeds, according to emails viewed by The Wall Street Journal.
Mr. Nada also began laying the groundwork for an elaborate operation to seize Mr. Ghosn as well as evidence to help the prosecutors’ case.
Nissan’s investigators didn’t want to confront Mr. Ghosn directly since they were fearful that he would have the power to crush the probe once he found out, say several people with knowledge of the matter. Instead, they planned with prosecutors to detain Mr. Ghosn right after he landed at Tokyo’s Haneda airport on Nov. 19, ahead of the month’s board meeting. Mr. Nada choreographed schedules to ensure that everyone prosecutors would want to question was at Nissan’s office at around the time of Mr. Ghosn’s arrest, said people familiar with the events.
The team of Nissan investigators now needed to get Mr. Ghosn’s alleged co-conspirator, Mr. Kelly, to Tokyo. Mr. Kelly had been living in semiretirement in Florida since 2015, according to people familiar with the matter.
Mr. Nada called Mr. Kelly and told him he was needed for the board meeting, the people said. Mr. Ghosn was planning to call a vote to reshuffle the company’s top management—including removing Mr. Saikawa as CEO and reinstating Mr. Kelly in a management position, according to people familiar with the plans.
Mr. Nada insisted that Mr. Kelly, who normally attended Tokyo board meetings by videoconference, come in person on a private jet. Mr. Nada assured Mr. Kelly he would be back in the U.S. in time for a scheduled back surgery.
Mr. Kelly’s plane arrived at Tokyo’s Narita airport in the early afternoon of Nov. 19, according to flight records and people familiar with that day’s events, shortly before Mr. Ghosn touched down at Haneda airport. As soon as Mr. Ghosn was taken into custody, Mr. Kelly’s driver received a phone call and pulled into a rest area. Mr. Kelly was handed over to Tokyo prosecutors, said one of the people.
At 10 p.m. an unusually emotional Mr. Saikawa held a press conference.
“Beyond being sorry—I don’t know how to say this—I feel strong anger and despair,” he said.
As Mr. Ghosn’s detention nears the one-month mark, the legal skirmishes are continuing.
After a lawsuit filed in Lebanon, Mrs. Ghosn and one of Mr. Ghosn’s daughters won access to the Beirut mansion, the person close to the family said. The family has since removed everything that the family paid for, such as some family photos and clothing, the person added.
In Brazil, Mr. Ghosn’s daughter Caroline contended in a lawsuit there that Nissan cannot take possession of what is inside the Rio apartment because it was given to Mr. Ghosn for use as a home. On Thursday, Caroline Ghosn entered the apartment with officers of the Brazilian court and Nissan’s lawyers to open two safes and a small lock box in the apartment. One of the safes contained roughly $20,000 in Brazilian currency, another contained an empty wallet that a representative of the Ghosn family said was an unwanted gift given to Mr. Ghosn by his sister.
At Nissan, employees are adjusting to life without Mr. Ghosn. In Japan, prosecutors have a conviction rate of more than 95% once a defendant is indicted. But even if he is acquitted, the sense that he took advantage of his position atop the company remains.
Outside a Nissan factory south of Tokyo, one 42-year company veteran who now works for an affiliate says it is a shame what happened with Mr. Ghosn.
“In the beginning I thought it was natural that he got a billion yen,” or nearly $10 million, he said, crediting Mr. Ghosn with Nissan’s revival. After Mr. Ghosn’s arrest, the employee says, “I don’t have hard feelings, but his time is over.”
Asos shares plunge as profit warning shakes retail sector
Online fashion retailer reveals ‘significant deterioration’ in sales ahead of Christmas
Shares in Asos tumbled more than 35 per cent on Monday morning after the online fashion retailer known for its fast growth warned on profits, adding to fears that the crucial Christmas trading period has been tough for UK retailers.
Showing that the consumer slowdown that has weighed on high street chains is now also hitting the previously stronger online sector, Asos warned of a “significant deterioration” in trading during November.
This came after a blunt warning from Sports Direct chief executive Mike Ashley, who said last week that Christmas shopping had been so bad for retailers it would “literally smash them to pieces”.
Over the weekend, consultancy Springboard also said that the number of people visiting British shops in November was the worst since the 2008 recession, with so-called footfall at retail parks and high streets down 3.2 per cent on the year before.
“2018 has been progressively worse and weaker [for retailers] as the year has unfolded but this accelerated from October,” said Richard Hyman, a retail consultant.
“We had very mild weather in October and that was exacerbated by widespread uncertainty. Stuff that goes on in Westminster . . . the endless uncertainty has affected people.”
Asos’ shares fell £14.65p to £27.21p, triggering a sell-off across the UK fashion sector. Shares in Next fell 3 per cent to 4,214p, while Marks & Spencer was down 3.5 per cent at 254.2p.
Shares in other online European retailers also dropped as investors grew nervous over potential contagion from the high street to the online retail sector. Shares in Berlin-based online fashion retailer Zalando tumbled as much as 16 per cent. Swedish fashion retailer H&M Hennes & Mauritz also saw shares decline by about 3 per cent in early London trading.
Boohoo.com, a rival to Asos that sells cheap-priced fast fashion, rushed out its own update in response, reassuring shareholders that it “continues to trade comfortably in line with market expectations”.
Asos said on Monday that “whilst trading in September and October was broadly in line with our expectations, November, a very material month for us from both a sales and cash margin perspective, was significantly behind expectations”.
The group added it had “reduced [its] expectations for the current financial year,” and downgraded its adjusted profit margin forecast to 2 per cent, from 4 per cent the year before.
Asos also forecast that its sales growth for the year to August 2019 would be around 15 per cent, down from the 20 per cent to 25 per cent it had been expecting. The group said its retail gross margin, reflecting the net profit from selling a product, would fall 1.5 percentage points from its previous expectation that it would be flat at 49.9 per cent. Asos, which has been ploughing investment into its business to drive growth, added that it would also cut capital expenditure to £200m.
In October, as Asos published its results for the year to August 2018, chief executive Nick Beighton talked up the company’s growth potential.
On Monday, in a marked change of tone, Mr Beighton commented that “in the light of a significant downturn in November, we think it’s prudent to recalibrate our expectations for the full year”.
The reversal in its fortunes, according to Asos, was partly driven by what it called the “high level of discounting and promotional activity” by rivals, which had forced it to step up its own price cuts “leading to a higher discount and continued high clearance mix”.
Asos added that while its UK trading was continuing to outperform the market, with a 19 per cent increase in the three months to November 30, compared to the same period last year, “this has been achieved at the cost of more promotional activity than initially planned and consumers buying into lower priced product”.
Analysts at Berenberg said they remained unsure whether Asos’ warning “was driven by market-wide conditions or operational issues within the business”, particularly as the retailer has been rolling out international distribution centres.
Asos also warned that UK consumer confidence, which has been hit by high personal debt levels and economic uncertainty driven by Brexit fears, was “increasingly fragile”.
Comment Iliad a dynamité le marché du cellulaire italien
Avec plus de deux millions d'abonnés en Italie en quatre mois, Iliad, la maison mère de Free, y fait une entrée fracassante. Retour sur une opération rondement menée.
Comment Iliad Italia, qui s'est lancé le 29 mai dernier, est-il parvenu à conquérir plus de 2,2 millions d'abonnés en quatre mois ? Retour sur une success story minutieusement préparée même si le démarrage en Italie est un peu moins fringuant que celui de Free Mobile en France en 2012.
Pour comprendre, un petit retour en arrière. A la mi-2015, Xavier Niel, le propriétaire d'Iliad, s'offre progressivement, potentiellement et à titre personnel, jusqu'à 15,1% de Telecom Italia à travers des options d'achats à long terme. Sachant que Vivendi détient alors 20,1% de l'opérateur historique italien dont il a depuis perdu le contrôle opérationnel au profit du fonds américain Elliott.
L'opération sur Telecom Italia tournera court sauf que l'année suivante, Iliad – et non plus Xavier Niel à titre personnel – commence à s'intéresser de près à la fusion en cours entre Wind et 3 Italia, deux des quatre opérateurs transalpins. Là, changement de stratégie, Iliad se porte candidat à l'acquisition des fréquences que les deux opérateurs fusionnés vont être obligés de céder (soit 2x 5 MHz en 900 MHz, 2x 10 MHz en 1800 MHz, 2x10 MHz en 2100 MHz et 2x 10MHz en 2600 MHz), ainsi que 300 sites d'émission (plusieurs milliers ultérieurement), avec obligation pour sa filiale italienne d'en déployer 6 000 en propre en trois ans.
Tout va alors s'accélérer dans un marché en ébullition où Xavier Niel trouve rapidement un accord avec l'Agcom, l'autorité de régulation locale, pour décrocher une licence ainsi qu'un accord d'itinérance avec le nouvel ensemble Wind/3 Italia. "Cet accord est extrêmement plus favorable que celui négocié en France", observe Erik Lambert, un consultant basé à Rome, tout en soulignant qu'il concerne aussi bien "la rétrocession de sites d'émission, l'accès à d'autres sites ou pylônes de Wind ainsi que l'itinérance proprement dite" (dont le contrat de cinq ans est renouvelable une fois à l'initiative d'Iliad). Xavier Niel, début 2018, ne disait pas autre chose parlant alors de "conditions financières bien plus avantageuses qu'avec Orange lors du lancement de Free Mobile". Autre atout dans sa manche, la signature début 2018 d'un accord-cadre avec Cellnex, la principale "tower company" italienne avec près de 9 000 points d'émission.
"Basta cosi"
Lors de son lancement, Iliad Italia frappe un grand coup avec une offre promotionnelle à 5,99 euros par mois (et 9,99 euros de frais d'activation de la carte SIM) avec SMS et appels illimités ainsi que 50 Go de datas, dont 4 en Europe. Avec un slogan "basta cosi" asséné par Benedetto Levi, son jeune PDG de 29 ans, lors de l'inauguration de son réseau fin mai 2018. Et ce diplômé de l'Ecole polytechnique de Turin et de l'ESCP Europe, également ancien directeur général de Captain Train en Italie, de juger :" Les gens en ont assez de payer trop cher et ils ont raison". Selon Xavier Niel, interrogé quelques semaines auparavant par Le Monde, "si on intègre tous les coûts cachés, les prix italiens sont une fois et demi supérieurs à ceux de la France".
Conséquence de ce lancement en fanfare, Iliad Italia affiche un million d'abonnés dès le 18 juillet. L'offre promotionnelle est alors prolongée aux 200 000 prochains abonnés (les prix sont ensuite remontés à 7,99 euros par mois). Début septembre, le parc dépasse un million et demi d'abonnés pour atteindre 2,23 millions d'abonnés à la fin du même mois de septembre. Certes, le chiffre d'affaires de ce trimestre est assez faible (45 millions d'euros) mais ce lancement – initialement attendu plusieurs mois auparavant – est jugé plutôt encourageant.
L'organisation mise en place ne doit rien au hasard. L'équipe dirigeante, extrêmement jeune, est rompue au marketing. Il faut y ajouter un directeur financier, Paolo Percuoco, ancien de Sky Italia, Vodafone Italia et Pirelli et diplômé de la prestigieuse Université de Bocconi (Milan). Côté distribution, rien n'a été improvisé : neuf boutiques en propres fin juillet, 133 corners avec plus de 500 distributeurs de cartes SIM dans des centres commerciaux ou des gares et deux réseaux de distribution nationaux : Sisal, un spécialiste des jeux et des paris sportifs comportant 48 000 points de vente, et Lottomatica, un autre distributeur spécialisé dans les jeux. Sans oublier la distribution en ligne. Iliad avait d'ailleurs bien anticipé son arrivée en lançant plusieurs mois à l'avance divers relais de type "Freenaute", comme des forums ou des réseaux sociaux spécifiques.
Globalement, Iliad indique avoir investi (hors achats de fréquences) 300 millions d'euros en Italie en 2017 et autant cette année. Côté fréquence, l'opérateur vient de mettre près de 1,2 milliard d'euros pour des fréquences 5G (dont un bloc de 10 MHz dans la bande des 700 MHz. Mais l'essentiel du règlement (soit 993 millions d'euros) ne s'effectuera qu'en 2022...
Quels appuis industriels ?
Reste une inconnue et non des moindres. Sur qui Xavier Niel va-t-il pouvoir réellement s'appuyer à moyen terme dans son aventure transalpine, alors que l'épisode Telecom Italia s'est terminé sur un échec relatif. Sachant qu'il est primordial d'avoir à moyen terme en Italie de solides appuis industriels locaux. C'est la principale inconnue de cette aventure avec le sort qui sera réservé au réseau d'infrastructures de l'opérateur historique.
"C'est très ambitieux de vouloir parvenir à l'équilibre avec 10% de parts de marché à moyen terme", relève Jean-Luc Lemmens, directeur du pôle télécoms de l'Institut de l'audiovisuel et des télécommunications en Europe (IDATE). Un constat largement partagé par Erik Lambert : "C'est un coup de poker, on se demande un peu quel est son modèle économique. Hormis les clients ou le réseau, les actifs dans les télécoms sont très volatils", rappelle-t-il. "Iliad fait sans doute le pari de la 5G avec des équipements complètement standardisés et dont les prix devraient significativement baisser par rapport aux générations précédentes. Sachant qu'on basculera alors vers un modèle dominé par le software compte-tenu du phénomène de virtualisation croissante des réseaux", poursuit-il.