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Emerson Electric’s decision to withdraw its $29bn bid for rival US industrial group Rockwell Automation is a reminder that hostile bids rarely succeed. Since 2010, 57 per cent of global hostile takeover approaches have failed, according to Dealogic. 

So, should Broadcom think twice about going hostile on its chipmaker rival Qualcomm after its $130bn unsolicited offer was rejected? The above stats would suggest that it would be better off walking away but the situation here is somewhat different from Emerson’s hostile bid for Rockwell. 

Rockwell had a staggered board, meaning that only three directors (out of 11) were eligible for election each year. Such a defence mechanism made it impossible for Emerson to carry out a shareholder coup via a proxy fight and replace Rockwell’s existing board with a more deal friendly one. 

That’s not the case at Qualcomm, which makes it a little more vulnerable to a hostile bid as Broadcom could replace the entire board with a more deal friendly group of people. 

Hock Tan, the chip industry’s arch consolidator and chief executive of Broadcom, is planning to do exactly that. On Tuesday CNBC reported that Broadcom was finalising a full slate of nominees for Qualcomm’s board. The deadline to nominate 11 new directors is December 8. 

Obviously, changing the board isn’t a sufficient condition to win a hostile bid but it gives the acquirer a better shot than in a case where you can’t change all the board members. 

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 

European Investment Bank and Brexit

With all the focus on investment banks and Brexit, there’s one institution that seems to have made an early decision about how to handle the UK’s departure from the EU. 

The FT’s Kate Allen reports that the European Investment Bank — the EU’s infrastructure investment vehicle — has scaled back its sterling-denominated debt issuance; it has also put the brakes on new financing for UK borrowers. 

The bank is backed collectively by the EU’s 28 member states, enjoys one of the highest credit ratings in the world (higher than most of its backers) and can borrow and lend at ultra-cheap rates. The EIB has in recent years been the world’s biggest issuer of sterling-denominated debt other than the UK government itself, not to mention being one of the biggest investors into the UK, financing housing and infrastructure projects.

Replacing this poses a headache for Whitehall, which is unlikely to be able to continue to participate in the EIB after the UK leaves the EU. Instead the Treasury is mulling over setting up a domestic equivalent, but that will take considerable time — EIB president Werner Hoyer estimates it would take a decade to reach full scale. Meanwhile, UK infrastructure could face a deals drought.

Vantiv / Worldpay fees

Big deals have all but dried up in the UK, so DD’s heart was warmed to see megabucks being splashed out to advisers on Vantiv’splanned takeover of UK payments group Worldpay on Tuesday.

So you don’t have to scan the whole document, we’ve taken a snapshot of everyone’s favourite section from the scheme of arrangement. 

As a reminder, Vantiv was advised by Morgan Stanley ($35m) and Credit Suisse ($10m) with the exact financial advisory fee breakdown courtesy of documents filed in the US this week. Skadden were the lead lawyers to Vantiv, while PR advice came from Smithfield. Worldpay worked with Goldman Sachs and Barclays. Its legal team was lead by Allen & Overy, while Finsbury handled the PR. 

Join the private equity club

Private equity groups are ganging up to buy increasingly expensive assets. 

If this line sounds familiar it is because we have been here before. Back in the crazy days leading up to the crisis, two, three or in some cases more private equity companies would team up to buy gigantic assets. Things didn’t end up well and some worry they will end up badly in years to come.

There are plenty of examples in the market today, in this report from Javier Espinoza. 

French drugmaker Sanofi is looking to sell its €3bn generic drugs business, drawing interest from a consortium made up of Cinven and Bain Capital. Akzo Nobel is also shopping for a buyer for its €9bn specialty chemicals business, luring in joint interest from KKR and CVC.

According to Preqin, deals made by two or more private equity firms grew from 247 in 2015 to 270 last year. The pace has slowed a bit in 2017 — there have been 160 so far.

Why do the PE guys like it? For one, it means they can stomach bigger deals while at the same time spreading their bets. They also see the appeal of them because it reduces competition and keeps prices in check.

Investors, on the other hand, dislike club deals because it means they are exposed to one large transaction through a number of managers they invest in. People are also uncomfortable with club deals because private equity groups often differ on strategy and simple things like when they will sell an asset.

Take the recent example of Toys R US, previously owned by KKR and Bain. The groups disagreed on when to sell, according to a person familiar with the matter. In the end, the business collapsed leading to $1.3bn in losses for all owners. Still, catastrophes like this have not managed to deter people from getting together.

“People are happier working together,” says Marco Compagnoni, a senior partner at Weil, Gotshal & Manges.

Job moves

  • FT ExclusiveSungmahn Seo, chief operating officer of Deutsche Bank’s global transaction banking division, is leaving to join JPMorgan Chase as the US bank looks to expand its European payments business. Seo joined Deutsche in October 2014 and was previously a partner at consultancy McKinsey for 11 years. His title at JPMorgan will be head of Emea (Europe, Middle East and Africa) for payments and business transformation.

  • French private equity firm Eurazeo said that Virginie Morgon (who tweets!) will replace Patrick Sayer as the chief executive and chair of the group’s executive board. Morgon is Eurazeo’s deputy chief executive. 

  • Debra Crew will step down from tobacco group Reynolds American, which was acquired by British American Tobacco in July, at the end of the year despite the company having announced she would stay on after the deal. She will be replaced by Ricardo Oberlander, who is regional director for the company in the Americas.

  • Sidley Austin has hired Wim De Vlieger and Till Lefranc as partners in its private equity practice in London. Both previously worked at Simpson Thacher & Bartlett.

Smart reads

  • Jack Ma used to chastise MBA grads in interviews. Now Alibaba’s business development managers are touring campuses such as the China Europe International Business School in Shanghai and the London School of Economics, and the company is showing an eagerness to hire top MBA talent. (FT)

  • India/China border dispute The governments in Delhi and Beijing might act like enemies but India is growing increasingly reliant on trade with, and investment from, China. Entrepreneurs in India will probably continue to look to China for investments despite the risk of a border war between the countries. (FT)

  • Koch brothers and Time Best known for their funding of conservative causes, the octogenarian brothers behind one of America’s largest private companies and private fortunes also have a rather large private equity unit. All the usual suspects in US wealth circles feature in this must read. (WSJ)

News round-up

HNA to seek Swiss public listing for Gategroup (FT)

HNA considers asset sales, signals reversal of buying spree (BBG)

Emerson walks away from $29bn Rockwell bid (FT)

Corvex/Clariant: riverine solution (FT Lex)

Great Wall AMC invites banks to work on $2bn Hong Kong float (FT) 

Unilever to delay picking UK or Netherlands for sole base (FT)

SoftBank share purchase discounts Uber by 30% (FT)

WeWork keeps up buying spree with Meetup (Axios)

Arby’s owner to buy Buffalo Wild Wings in $2.9bn deal (FastFT)

BoE chief Mark Carney pushes back on call to resolve LSE row (FT)

Scotiabank offers $2.2 billion for stake in BBVA’s Chilean unit (Reuters)

Follow the FT’s deals team

Arash Massoudi in London — @ArashMassoudi

Javier Espinoza in London — @JavierespFT

James Fontanella-Khan in New York — @JFK_America

Sujeet Indap in New York — @sindap

Don Weinland in Hong Kong — @donweinland

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