DealBook: Really? Is the White House Proposing to Buy Ericsson or Nokia?
The attorney general suggested that one way of opposing the Chinese tech giant Huawei would be for the U.S. to invest in a European rival.
February 7, 2020
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Attorney General Bill Barr Cliff Owen/Associated Press
Bill Barr’s striking plan to counter Huawei
President Trump has made it very clear that he is worried about Huawei’s leading role in 5G wireless technology. Now his attorney general, Bill Barr, has offered a radical solution: having the U.S. invest in the Chinese company’s European counterparts.
The U.S. doesn’t have a homegrown competitor to Huawei, Mr. Barr noted in a speech yesterday. The only viable rivals are Ericsson of Sweden and Nokia of Finland.
“Our economic future is at stake,” Mr. Barr said. “The risk of losing the 5G struggle with China should vastly outweigh other considerations.”
So he has an idea:
• “Some propose that these concerns could be met by the United States aligning itself with Nokia and/or Ericsson through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies.”
• “Putting our large market and financial muscle behind one or both of these firms would make it a more formidable competitor and eliminate concerns over its staying power,” Mr. Barr adds. “We and our closest allies certainly need to be actively considering this approach.”
Andrew’s take:
• The idea of the Trump administration buying a major telecom is a curious proposal from an administration that is currently decrying the rise of “socialism.”
• But watch this space. It wouldn’t be a surprise if an American telecom or a group of private equity firms bid for Nokia or Ericsson — with some kind of special subsidy or tax break provided by the White House.
More: President Trump was reportedly “apoplectic” in a call with Prime Minister Boris Johnson over the decision to permit Huawei technology into Britain’s 5G network.
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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York and Michael J. de la Merced in London.
Tidjane Thiam caught investors off guard this morning when he handed in his notice as Credit Suisse’s chief. He’s the biggest casualty of a spying scandal that shook up the Swiss bank last year.
It was a surprise because an internal inquiry into the case — in which Credit Suisse officials ordered the surveillance of an executive who was defecting to archrival UBS — had cleared Mr. Thiam of wrongdoing.
Mr. Thiam had made some progress in turning around Credit Suisse’s performance. He had overseen a shift to wealth management from investment banking, although late last year, he had to cut a profitability target.
But he had been in a power struggle with Credit Suisse’s chairman, Urs Rohner, over the fallout from the spying revelations. The board sided with Mr. Rohner, even though top investors publicly supported Mr. Thiam and called on Mr. Rohner to back him or step down.
Mr. Thiam will be replaced by Thomas Gottstein, a longtime Credit Suisse veteran who leads the bank’s Swiss operations.
More: Credit Suisse has reportedly introduced a new compensation plan for employees that includes provisions to reclaim bonuses from them if they leave for rivals.
Masa Son of SoftBank. Kazuhiro Nogi/Agence France-Presse — Getty Images
Elliott Management’s SoftBank push is already paying off
Shares in SoftBank soared by more than 7 percent today after the activist hedge fund confirmed that it had invested in the company with the aim of pushing up its stock price.
Elliott has taken a $2.5 billion stake in SoftBank, one of its biggest current investments, Michael reports, citing unnamed sources. It has been holding discussions about strategy changes with SoftBank officials — including Masa Son, the Japanese conglomerate’s founder — in recent months.
What the hedge fund is calling for:
• Up to $20 billion in stock buybacks
• Changes to SoftBank’s board
• More transparency in the operations of SoftBank’s $100 billion Vision Fund
What it means: Elliott sees an opportunity to make money. SoftBank’s market value as of yesterday was about $89 billion. By comparison, the combined value of its public holdings in its telecom affiliate, Alibaba of China and Sprint in the U.S., was about $210 billion.
What it might not: Though Elliott is known for a sometimes bare-knuckled approach to activist investing, it doesn’t yet look like it will go hostile with SoftBank. The talks are cooperative at this stage, sources told Michael — and simply having Elliott’s investment as public knowledge has already lifted SoftBank’s share price.
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Antitrust chief hits back at states trying to block T-Mobile deal
Makan Delrahim, the Justice Department’s antitrust chief, took an unusually active role in reaching a deal to save T-Mobile’s proposed $26 billion takeover of Sprint. Now he’s taking shots at several states that have sued to block it.
He noted in a speech on Wednesday that the Justice Department and 10 states had proposed letting the deal proceed so long as T-Mobile and Sprint sell “substantial” assets to Dish Network to create a new competitor in the telecom industry.
But he bemoaned efforts by several states — not named in his speech, but they include New York and California — to stop the merger anyway. The states argue that the deal would lead to higher prices for consumers.
From Mr. Delrahim’s prepared remarks:
“The scenario that has unfolded here is incompatible with the orderly operation of our antitrust merger laws and telecommunications regulations. It creates the risk that a small subset of states, or even perhaps just one, could undermine beneficial transactions and settlements nationwide.”
He added that letting states undo settlements struck by federal regulators “would wreak havoc on parties’ ability to merge, on the government’s ability to settle cases, and cause real uncertainty in the market for mergers and acquisitions.”
The federal judge in the states’ lawsuit is still weighing whether to block the deal.
Jeff Bezos is just asking. Instagram
Jeff Bezos trolls a Trump official on Instagram
This is 2020: The world’s richest man took to social media to post a “Seinfeld”-themed rejoinder to a federal official who complained publicly about not getting a meeting.
Here’s what happened:
• Peter Navarro, a top White House trade adviser, told the WaPo this week that Mr. Bezos had backed out of a promised in-person meeting to discuss trade and counterfeiting issues.
• Mr. Bezos posed a question to his 1.4 million followers on Instagram: What to do when a stranger accosts you at a party — the Alfalfa Club dinner in Washington, in this case — and asks for a meeting, while calling your subordinates “minions”?
• For good measure, Mr. Bezos tossed in a reference to the “Serenity Now” joke from “Seinfeld.”
Rana Yared, a Goldman Sachs partner who helped lead the company’s cryptocurrency-trading efforts, is leaving to join Balderton Capital, a London-based venture capital firm.
Amber Rudd, the former British lawmaker, is joining the consulting and P.R. firm Teneo as a senior adviser in its London office. (Her brother, Roland Rudd, founded the rival firm Finsbury.)
The speed read
Deals
• Intercontinental Exchange has dropped its efforts to buy eBay. (WSJ)
• Warner Music Group, the label that represents Cardi B and Ed Sheeran, has filed to go public. (Variety)
• Elon Musk’s SpaceX plans to spin off its satellite-based internet company, Starlink. (Bloomberg)
• The online mattress seller Casper ended its first day of trading on the N.Y.S.E. only a bit above its I.P.O. price. (NYT)
• ViacomCBS is reportedly considering a sale of CNET, its tech news site. (Bloomberg)
Politics and policy
• Mike Bloomberg is courting wealthy Democratic donors — but isn’t asking for their money. (NYT)
• The U.S. is starting trade talks with Kenya to counter China’s influence across Africa. (NYT)
• Your weekend long read: “An Algorithm That Grants Freedom, or Takes It Away.” (NYT)
Best of the rest
• New York’s real estate industry is still grappling with the ramifications of the new ban on rental apartment broker fees. (NYT)
• A New Jersey jury ordered Johnson & Johnson to pay $750 million in punitive damages in a lawsuit over the company’s baby powder, which is said to have caused cancer. (WSJ)
Thanks for reading! We’ll see you next week.
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