Does SoftBank want WeWork to postpone its I.P.O.?
As WeWork continues to struggle with a cool reception to its forthcoming initial public offering, one of its biggest investors, SoftBank of Japan, is reportedly urging the company to put the stock sale on hold, Eric Platt and James Fontanella-Khan of the FT report.
WeWork has weighed proceeding with the I.P.O. at a low valuation. It has considered going as low as $15 billion to $20 billion, the FT reports, citing unnamed sources. That’s a far cry from the $47 billion that SoftBank’s most recent investment valued the company at earlier this year.
SoftBank has a big reason for wanting to avoid that. It’s in the middle of raising its next Vision Fund, which it hopes will surpass the current one’s $100 billion in assets. Having a prominent investment from the first Vision Fund suffer a huge markdown could hurt its fund-raising efforts.
The Japanese conglomerate has influence at WeWork. It has invested about $10.5 billion in the co-working company from its Vision Fund and its own coffers, giving it a roughly 29 percent stake. And SoftBank helped WeWork in its efforts to expand in Asia.
Any I.P.O. delay will raise questions about how WeWork will fund itself. The company had been counting on raising at least $3 billion from the I.P.O. If it postpones the stock sale, it would probably lose access to $6 billion worth of financing from banks that was tied to the deal.
For now, it may need to rely on junk bonds to pay for its breakneck growth, Bloomberg reports, citing an unnamed source. But that is not a long-term solution.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Lindsey Underwood in London.
AT&T faces investor heat over its deals
Over the past decade, AT&T has spent hundreds of billions of dollars assembling a telecom and media empire. Those splurges have now drawn the attention of Elliott Management, one of Wall Street’s top activist hedge funds, Michael de la Merced and Ed Lee of the NYT write.
Elliott disclosed a $3.2 billion stake in AT&T yesterday, and in a sharply worded letter to the company’s board said that it had “transformed itself into a sprawling collection of businesses battling well-funded competitors.”
The hedge fund asked AT&T to stop striking new deals, raise its dividend, buy back more shares and cut costs. To add pressure on the company, Elliott said that it would seek seats on the board.
The campaign drew praise from President Trump, who used it as fuel for his longstanding grudge against CNN, which AT&T acquired as part of the Time Warner deal. But it seems unlikely that the hedge fund will use his support to power what’s essentially an argument about AT&T’s financials.
The campaign sets up a battle of giants. AT&T’s market capitalization is $271 billion, and it has the money to defend itself in a prolonged battle. But Elliott is a veteran of proxy fights with a track record of winning. Neither side will want a lengthy battle, but they may end up in one anyway.
Juul is rebuked over vaping claims
The F.D.A. issued a warning letter to Juul Labs yesterday, saying the company violated federal regulations by selling its vaping products as a safe alternative to cigarettes without approval from the agency, Sheila Kaplan and Matt Richtel of the NYT write.
• “The F.D.A.’s action dealt a setback to the company’s efforts to rebrand itself after public outrage erupted over a surge in teenage vaping.”
• “And it served as a reminder that the health effects of e-cigarettes are not established at a time when more than 400 people have been sickened by vaping-related illnesses. Five deaths have been linked to vaping, and hundreds of people have been hospitalized.”
• “The agency ordered the company to submit its plan to correct the issues outlined in the warning within 15 days.”
More: In an NYT Op-Ed, Michael Bloomberg and Matt Myers, who runs the Campaign for Tobacco-Free Kids, announced a $160 million campaign to ban flavored e-cigarettes in order to reduce youth vaping.
How Uber and Lyft missed out on a deal on driver protections
California lawmakers are set to approve a bill that would force gig-economy businesses, like Uber and Lyft, to give their workers protections like a minimum wage and benefits. Earlier this year, the ride-hailing giants had been close to a compromise that would have been more favorable to them, Kate Conger and Noam Scheiber of the NYT report.
• Gov. Gavin Newsom urged the ride-hail companies to strike a deal with California’s labor unions on an alternative to the legislation, known as A.B. 5.
• Executives from Uber and Lyft spent months negotiating with labor officials, and by late May they believed a settlement was near.
• But opponents to a deal within the labor movement began to prevail, and by the summer unions had withdrawn from the talks.
• Uber and Lyft had one last chance to reach a compromise, by getting lawmakers to pass a supplemental bill that would roll back parts of the proposed legislation. Those efforts went nowhere, however, and Mr. Newsom then backed A.B. 5.
The state Senate is expected to pass the bill before the end of the week, and Mr. Newsom has said he will sign it into law.
The bill could affect millions of workers, including ride-hail drivers, janitors, nail salon workers and cable-TV installers.
And it could herald a change of laws elsewhere in the country. “What happens here is likely to affect what other states do and — depending on what happens in the upcoming elections — what Congress does,” Ken Jacobs, a labor expert at the University of California, Berkeley, told the WSJ.
California may have broken the N.C.A.A.’s business model
A bill passed by California’s State Assembly would allow college athletes in the state to be paid for endorsements, “be they basketball stars signing their own marketing deals or water polo players advertising offers of swim lessons,” Billy Witz of the NYT writes.
It’s “the latest tussle in a longstanding debate about the commercial spoils of N.C.A.A. amateurism, a model that has largely survived court challenges even as it has been whittled at the margins,” Mr. Witz writes.
Opponents of the measure include the N.C.A.A., the University of California and California State University systems, who say it could create complications. “We’re firmly against anything that would lead to a pay-for-play system,” Larry Scott, the commissioner of the Pac-12 Conference, told Mr. Witz.
LeBron James and Senator Bernie Sanders tweeted their support for the bill this week. “College athletes are workers,” Mr. Sanders wrote. “Pay them.”
The measure, which would go into effect in 2023, has passed in the Senate and is expected to reach the desk of Gov. Gavin Newsom soon.
Alibaba’s founder is stepping down
In 1999, a former English-language teacher named Jack Ma co-created a Chinese online marketplace called Alibaba in his apartment in Hangzhou. Twenty years later, that company is worth $458 billion, and Mr. Ma is retiring as executive chairman — though he’s still expected to weigh in on how the company is run.
The tech entrepreneur is now China’s richest man, with an estimated net worth of $38 billion. He has also become the most visible face of the country’s business class, championing an open economy and the rise of the Chinese tech industry.
Alibaba will celebrate his retirement (and his 55th birthday) today in style. It will throw a celebrity-studded farewell party in Hangzhou’s Olympic Sports Center stadium, which has 88,000 seats, according to Reuters.
But the company faces big challenges. Its core e-commerce business is slowing down, forcing it to buy into newer, faster-growing areas. It’s still accused of letting sellers peddle counterfeit goods on its platforms. And many of its efforts to grow outside China are lagging behind competitors.
Hiroto Saikawa has resigned as Nissan’s C.E.O. after admitting that he improperly received payments from the carmaker well beyond his earnings.
The communications firm Abernathy MacGregor will announce this morning that it is opening a Washington office. It has hired Sarah Knakmuhs, a former top government affairs executive at Altria; Mike Hotra, a former executive at the trade group PhRMA; and Liz Sidoti, the former head of U.S. communications for BP.
Lazard promoted Cyrus Kapadia to head of its investment banking division in Britain. His predecessor, William Rucker, was named chairman.
Olly Robbins, who was chief Brexit negotiator under Prime Minister Theresa May, is joining Goldman Sachs as a managing director in its investment bank.
Morgan Stanley has hired Umi Mehta, an investment banker focused on internet companies, from Bank of America.
The law firm King & Spalding has rehired Zack Harmon, who was most recently chief of staff to the director of the F.B.I., as a partner on its special matters and government investigations team.
The speed read
• Saudi officials have reportedly asked some of the kingdom’s wealthiest families to become anchor investors in Saudi Aramco’s I.P.O. (Bloomberg)
• Bunge, one of the world’s biggest grain traders, has taken a 1.6 percent stake in the plant-based food maker Beyond Meat. (Reuters)
• A lawsuit accusing Oracle of underpaying in its takeover of NetSuite has unearthed details about how the transaction went down. (Business Insider)
• The hedge fund Paulson & Company has publicly opposed Callon Petroleum’s $1.2 billion deal to buy Carrizo Oil & Gas, arguing that it should instead sell itself. (Bloomberg)
Politics and policy
• Commerce Secretary Wilbur Ross is said to have threatened to fire top employees at NOAA on Friday after the agency’s Birmingham office contradicted President Trump’s claim that Hurricane Dorian might hit Alabama. (NYT)
• A 1987 trip to study Canada’s health care system helps explain why Senator Bernie Sanders has staked his presidential campaign on transforming America’s. (NYT)
• The total amount of debt in the U.S., including that of federal, state and local governments, could amount to 2,000 percent of America’s G.D.P., according to analysts at AllianceBernstein. (CNBC)
• The N.R.A. sued San Francisco after the city’s board of supervisors declared the group a terrorist organization. (NYT)
• The financier is said to have aggressively sought a meeting with Bill Gates — and got one in 2013. A year later, Mr. Gates donated $2 million to the M.I.T. Media Lab at Mr. Epstein’s direction. (CNBC)
• A former fund-raiser for the M.I.T. lab was suspended by his current employer, Brown University, after emails were published that suggest his involvement in efforts to disguise donations to the lab from Mr. Epstein. (NYT)
• American colleges are buying insurance policies to protect against declining revenue from international students amid the trade war with China. (FT)
• British lawmakers rejected Boris Johnson’s bid to hold a new national election yesterday, as a new law blocking a no-deal exit from the E.U. before January went into effect. (NYT)
• John Bercow, the speaker of Britain’s House of Commons, will leave his post and his seat in Parliament by the end of October. (NYT)
• Forty-eight states officially unveiled their investigation into Google’s competitive practices. Related: Here’s why tech giants shouldn’t count on consumers to save them from politicians and regulators. (NYT, Bloomberg Opinion)
• Need a job? Amazon has 30,000 openings. (NYT)
• “Can India’s richest man take on Amazon and Walmart?” (WaPo)
Best of the rest
• The fracking industry is changing its lingo to pacify disillusioned investors. (WSJ)
• How the mortgage giants Fannie Mae and Freddie Mac quietly transformed themselves since being seized by the U.S. government during the 2008 financial crisis. (WSJ)
• Moody’s cut Ford’s credit rating to junk, citing doubts that the carmaker’s turnaround plan will improve earnings quickly enough. (Bloomberg)
• A Dallas man attacked the Wall Street bull with a banjo, damaging one of its horns. (NBC New York)