Listen to this article
This is an experimental feature. Give us your feedback. Thank you for your feedback.
What do you think?
Two things to start: As we have flagged a few times in recent weeks, the US Department of Justice moved to block AT&T’s planned $85.4bn takeover of US media group Time Warner. Read our news story here, which includes comments from AT&T’s chief executive who went on the offensive yesterday to criticise the government’s case, which you can find in full here.
Elsewhere, Amanda Staveley has tabled a £300m bid for Mike Ashley’s premier league club Newcastle United. Details here.
Now back to our regularly scheduled programming:
The announcement late on Sunday that Japan’s Toshiba was planning a ¥600bn ($5.4bn) issuance of new shares to raise capital and clear its delisting risk was not exactly a shock: the FT, and others, had been told something like this was in the works a couple of weeks ago, though even then the scale seemed top-of-the-range punchy.
What was surprising, though, was how neatly Toshiba (with more than a little help from Goldman Sachs) tucked this away, and with whom: the entire sale of new shares will be gobbled up by 60 funds (representing about 35 non-Japanese institutions), and will be done and dusted by early December.
The hedge funds involved include Elliott, Farallon and Effissimo — a Singapore-based fund founded by partners of one of Japan’s most famous activist investors, Yoshiaki Murakami.
It is a fascinating moment for three reasons.
The first is how much things have changed — mighty Toshiba getting its lifeline from a bunch of grasping foreign capitalists, rather than the friendly Japanese that might have stepped up in the past.
Second is how canny and light-footed Toshiba now seems, after months of looking like the woolliest, slowest mammoth on the tundra.
The third, least visible but most intriguing bit, is who exactly is pulling the strings at Toshiba, and who has the most leverage now that its finances are back on a stable footing?
A Tale of Deux Tweets
Is Paris open or closed for business?
A former Rothschild banker is the president and has already shown his knack for playing a role in dealmaking with the takeover of Alstom by Germany’s Siemens. Meanwhile, Goldman Sachs’ boss recently took to Twitter to declare that the city is buzzing.
And now Lloyd Blankfein confirmed on Monday that Goldman would have two hubs on the continent — one in Paris and one in Frankfurt — as it prepares to shift jobs out of the UK in response to Brexit.
But for those hoping for a bonanza of dealmaking as bankers are set to hit the town, French prime minister Edouard Philippe weighed on some issues critical to the country’s corporate psyche that he warned remained off limits: yoghurt (Danone) and shampoo (L’Oréal).
Intelligent curation and exclusive information: This is Due Diligence, the FT’s daily briefing on corporate finance, private equity and M&A. DD is delivered to your inbox Tuesday-Friday at 5am UK time. Meet the team, catch up on previous editions and sign up here. Get in touch with us: Due.Diligence@FT.com
Many thanks to everyone who came out last night in Hong Kong. It was great to meet you — Don, Arash and Sujeet (who made a surprise appearance).
Alibaba starts buying up good, ol’ fashion retail
Ever heard of offline retail? That’s what a consumer uses when they walk into a store and buy something instead of making the same purchase online. It used to be a thing people did.
Many following the story of Alibaba and ecommerce in China may have taken brick-and-mortar shopping for dead. Yet, Jack Ma’s (pictured) online shopping powerhouse — which hosted $25bn in sales in one day last week — is now pushing aggressively into physical shopping space instead of focusing solely on online shopping.
Alibaba said on Monday that it would fork out $2.9bn for a stake in one of China’s biggest supermarket chains, Sun Art Retail Group, in an attempt to combine ecommerce and physical stores.
That follows Alibaba’s move last week to launch a 20-strong chain of hybrid grocery stores, called Hema.
Ecommerce has proven a hugely lucrative business in China, and has developed along with the country’s online and mobile payments market. Many analysts view China’s biggest cities of Beijing, Shanghai and Shenzhen as the world’s best examples of cashless societies. Some even joke that you can’t buy noodles without your phone in many places.
Jokes asides, Lex points out that Alibaba and its investing partners are paying an aggressive 23 times forward earnings multiple for control of Sun Art.
The push back into physical shopping spaces demonstrates how ecommerce may have gotten ahead of itself. At the very least the latest acquisitions show that there is still money in operating a real store.
Tom Birtwhistle, consulting director at PwC Consulting in Hong Kong, had this to say about China’s $1.3tn grocery market, and the potential for digital companies to revitalise the industry:
“It’s an enormous market with enormous challenges … If I’m an internet company these are the crosshairs I’m looking at because that’s where I can play and generate significant value.”
● Former US Treasury secretary Jack Lew has joined private equity firm Lindsay Goldberg as a partner. Prior to joining the administration of former president Barack Obama, Lew had worked as chief operating officer at Citigroup. Read more here on FT and at WSJ
● Germany’s ProSiebenSat1 announced that chief executive Thomas Ebeling would step down effective February 2018. FT story here.
● Temasek, the Singaporean state investment firm, has hired Sebastien Floch from Citigroup as part of its Europe team, Private Equity News reported and DD confirmed. Floch was involved in the $1.2bn sale of shoemaker Jimmy Choo from European investment fund JAB to Michael Kors. He has also been an advisor to Chow Tai Fook Enterprises, a Hong-Kong based holding company, on the purchase of high-end Italian fashion house Roberto Cavalli.
● Manny Maceda is set to be named the new global head of consultancy at Bain & Company. He will replace Bob Bechek who has led the Boston-based firm for the past six years. Read more here.
● KKR has hired David Katz as its new head of public affairs in Asia-Pacific. He joins from PayPal in Singapore where he worked on government relations.
● Jeff Chen, former head of TMT M&A advisory for HSBC in Asia, has joined WeDoctor as chief strategy officer. WeDoctor is a Hangzhou-based online medical services provider that builds information systems for Chinese hospitals and also helps people make medical appointments. Tencent and Hillhouse Capital have stakes in the company.
● Smarter chips Consolidation has been the name of the game among the world’s leading chipmakers, but it also reflects their desire to move out of smartphones and gain a foothold in artificial intelligence (FT)
● Patrick Drahi’s Altice The ultra-acquisitive telecoms roll-up and its founder have been humbled by a sharp downturn in the company’s share price. Here’s what happened and why the market has turned sour (FT)
● Brookfield’s Bermuda Vehicle John Dizard examines the Canadian group’s investment in North American natural gas transmission (FT)
● Fireworks at Paternoster Square Read the following if you haven’t been following the dramatic fight between the board of the London Stock Exchange and its long-time chief executive. (FT News, FT Analysis, FT View)