Happy independence day everybody.
It is appropriate to mention that Authen Tec seems to have won its own continued independence.
Authen Tec a company headquartered in Melbourne, Florida, though I understand it has a parent corporation in Shanghai, China. It creates "smart sensor" products. This appears to mean that it sells components to computer manufacturers that allow those products to use smooth touch pads, rather than such grosser doohickies as track balls, mouse buttons, or joysticks.
Upek, a privately held company headquartered in Emeryville, California, is one of its rivals, and has long sought a combination. Under the Upek plan proposed in Januray of this year, stockholders of each company would have ended up with 50% of the stock of the combined entity, and the new entity would have been listed on the Nasdaq Stock Market.
Upek had combined its merger proposal with a proxy solicitation campaign. But it has now given up on both.
The catalyst for this decision was the resignation of Robert E. Grady from the Authen Tec board. As near as I understand, Grady was their friend on the inside. Yet he is now gone.
"My decision results from my increasing discomfort with the Company's de facto embrace of the status quo, and tolerance of management leadership's actions to resist value-creating transactions," Grady said as he left.
Anyway, Upek, while applauding Grady, has given up its own efforts at soliciting proxies or otherwise inducing a merger.
Upek and Authen Tec have also engaged in patent litigation, which is virtually inevitable nowadays among two firms both working within such a highly technical field.
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Sunday, July 4, 2010
Sunday, March 28, 2010
Stern Hu's admission
Word has been leaking out in drips and drabs all this week about the non-public trial of the four Rio Tinto executives I wrote about last weekend.
There has been no judgment yet, so far as I know, but Stern Hu is reported to have admitted accepting bribes. See Business Week's coverage here.
The prosecution has asked for leniency, so it would appear that Stern Hu's confession is part of a deal. It also seems that Stern Hu's case has outshined that of his co-defendants in the attention the matter is receiving, presiumably because he is the only one who is a citizen of another country (Australia), and thus his trial alone is a diplomatic issue.
What I would ask all to remember about this situation is that what looks like a bribe from one point of view looks a lot like the successful pay-off of extortion from another. Indeed, consider (just by way of hypothesis and clarification) the possibility of bribing a security guard at the border to get one's self and/or friends out of a country run by an oppressive regime.
Back to reality though: my understanding is that all four of the Rio Tinto defendants shall learn their fates on Monday -- and that it is also on Monday that Hu's wife Julie will be allowed to see him for the first time since his arrest in July 2009.
There has been no judgment yet, so far as I know, but Stern Hu is reported to have admitted accepting bribes. See Business Week's coverage here.
The prosecution has asked for leniency, so it would appear that Stern Hu's confession is part of a deal. It also seems that Stern Hu's case has outshined that of his co-defendants in the attention the matter is receiving, presiumably because he is the only one who is a citizen of another country (Australia), and thus his trial alone is a diplomatic issue.
What I would ask all to remember about this situation is that what looks like a bribe from one point of view looks a lot like the successful pay-off of extortion from another. Indeed, consider (just by way of hypothesis and clarification) the possibility of bribing a security guard at the border to get one's self and/or friends out of a country run by an oppressive regime.
Back to reality though: my understanding is that all four of the Rio Tinto defendants shall learn their fates on Monday -- and that it is also on Monday that Hu's wife Julie will be allowed to see him for the first time since his arrest in July 2009.
Sunday, March 21, 2010
China v. Four Rio Tinto Execs
On July 5, 2009, four Rio Tinto employees, one of whom is a citizen of Australia, were arrested in Shanghai for corruption and espionage. The Rio Tinto Group is a diversified, British-Australian, multinational mining and resources group with two headquarters -- one in the UK, the other in Melbourne, Australia. Rio Tinto was founded in 1873, and is named for the site of its first mine, on the Rio Tinto river, in Huelva, Spain.
The four defendants are to be put on trial this week. Their names: Liu Caikui, Ge Minqiang, Wang Yong, ands the Australian citizen, Stern Ho. They were initially charged with stealing state secrets, which is a capital offense. Perhaps in response to diplomatic protests from Canberra, that charge was dropped, and they stand accused now of taking bribes and related acts of corruption.
Foreign businesses will be looking carefully at the trial as an object lesson in the risks of doing business in the People's Republic.
Question: is this trial really just revenge for the failure of the Chinalco deal? Chinalco is the major Chinese state controlled mining enterprise that offered in early 2009 to make a major infusion of cash into Rio Tinto in return for ownership interest in certain assets. Stockholders in Rio Tinto didn't think they were getting a fair shake, and the deal never went through.
Hell hath no fury like a dragon scorned?
The four defendants are to be put on trial this week. Their names: Liu Caikui, Ge Minqiang, Wang Yong, ands the Australian citizen, Stern Ho. They were initially charged with stealing state secrets, which is a capital offense. Perhaps in response to diplomatic protests from Canberra, that charge was dropped, and they stand accused now of taking bribes and related acts of corruption.
Foreign businesses will be looking carefully at the trial as an object lesson in the risks of doing business in the People's Republic.
Question: is this trial really just revenge for the failure of the Chinalco deal? Chinalco is the major Chinese state controlled mining enterprise that offered in early 2009 to make a major infusion of cash into Rio Tinto in return for ownership interest in certain assets. Stockholders in Rio Tinto didn't think they were getting a fair shake, and the deal never went through.
Hell hath no fury like a dragon scorned?
Wednesday, May 13, 2009
Richard Li rebuked
On the "Asian values" front ....
Richard Li was rebuked by a court in Hong Kong last month, in a decision only made public this weekm for jiggering the voting rules in his favor at PCCW, the telecomm company once known as Pacific Century Cyberworks.
Li isn't satisfied with being the largest stockholder at PCCW. He wants, in conjunction with China Unicom, to buy out the others and take it private. He pushed the deal through a shareholder meetingm but then Hong Kong's Securities and Futures Commission stepped in, alleging unfair treatment of the minority shareholders.
It is intriguing that Li's partner in this, and PCCW's second-largest shareholder, is China Unicom. It implies that the HK regulators were standing up both to Li (the scion of a powerful family -- according to Forbes, Li's father is the world's 16th wealthiest man) and to Beijing -- a gutsy move. The lower court upheld Li's tactics as legal, but the SFC appeals.
At any rate, the Court of Appeals ruled on the case last month, and its decision is a pat on the back for the SFC, a sharp rebuke for Li. (Li has an option of appealing further, and is said to be considering it.)
You can read more about the case here.
And you can read about an earlier episode in the history of Richard Li and Pacific Century Cyberworks in my other blog.
Richard Li was rebuked by a court in Hong Kong last month, in a decision only made public this weekm for jiggering the voting rules in his favor at PCCW, the telecomm company once known as Pacific Century Cyberworks.
Li isn't satisfied with being the largest stockholder at PCCW. He wants, in conjunction with China Unicom, to buy out the others and take it private. He pushed the deal through a shareholder meetingm but then Hong Kong's Securities and Futures Commission stepped in, alleging unfair treatment of the minority shareholders.
It is intriguing that Li's partner in this, and PCCW's second-largest shareholder, is China Unicom. It implies that the HK regulators were standing up both to Li (the scion of a powerful family -- according to Forbes, Li's father is the world's 16th wealthiest man) and to Beijing -- a gutsy move. The lower court upheld Li's tactics as legal, but the SFC appeals.
At any rate, the Court of Appeals ruled on the case last month, and its decision is a pat on the back for the SFC, a sharp rebuke for Li. (Li has an option of appealing further, and is said to be considering it.)
You can read more about the case here.
And you can read about an earlier episode in the history of Richard Li and Pacific Century Cyberworks in my other blog.
Tuesday, May 5, 2009
Chinalco boss gives an interview
The Financial Times yesterday ran an interview with Wang Wenfu, president of Chinalco Overseas Holdings, with regard to the Rio Tinto deal.
Chinalco is a state-owned Chinese mining concern, and in February it struck a "strategic partnership" deal with the Melbourne-Australia based mining Rio Tinto Group.
As part of that deal, Chinalco is paying Rio Tinto US$7.2 billion for convertible bonds. If Chinalco were then to convert those bonds into equity, its equity share of the Rio Tinto Group would double, from the present 9% to 18%.
Many shareholders are ticked off, because of the obvious dilution effect such newly-created equity will have upon the value of their own shares.
Their concern has been sharpened by the recent increase in the value of their (and Chinalco's) shares. The shares (which are denominated in pounds and traded on the LSE) become convertible -- or, the first $3.1 billion tranche becomes convertible -- if the price gets to 30 pounds. That seemed somewhat theoretical in February, but the price is now at 28.50 pounds, so the threshold is within striking distance.
So what did Wang Wenfu have to say? Two things:
1) "This investment is a package. It is a result of two months of very intensive negotiations. It cannot be viewed separately."
2) "We respect the rights of shareholders. Shareholders should have the right to help their company and Rio management has to assess the situation and it is their judgment that this transaction is in the best interest of all shareholders."
It does not sound like he plans to do any re-negotiating. In still blunter western-world language, "A deal's a deal, suckahs."
Chinalco is a state-owned Chinese mining concern, and in February it struck a "strategic partnership" deal with the Melbourne-Australia based mining Rio Tinto Group.
As part of that deal, Chinalco is paying Rio Tinto US$7.2 billion for convertible bonds. If Chinalco were then to convert those bonds into equity, its equity share of the Rio Tinto Group would double, from the present 9% to 18%.
Many shareholders are ticked off, because of the obvious dilution effect such newly-created equity will have upon the value of their own shares.
Their concern has been sharpened by the recent increase in the value of their (and Chinalco's) shares. The shares (which are denominated in pounds and traded on the LSE) become convertible -- or, the first $3.1 billion tranche becomes convertible -- if the price gets to 30 pounds. That seemed somewhat theoretical in February, but the price is now at 28.50 pounds, so the threshold is within striking distance.
So what did Wang Wenfu have to say? Two things:
1) "This investment is a package. It is a result of two months of very intensive negotiations. It cannot be viewed separately."
2) "We respect the rights of shareholders. Shareholders should have the right to help their company and Rio management has to assess the situation and it is their judgment that this transaction is in the best interest of all shareholders."
It does not sound like he plans to do any re-negotiating. In still blunter western-world language, "A deal's a deal, suckahs."
Tuesday, November 4, 2008
Election Day thoughts
First, I hope for my own sake and that of my fellow countrymen and women that the decision today isn't especially close so we don't end up spending the next two months debating about hanging chads, butterfly ballots, disputed absentee ballots from military bases, or whatnot.
It appears, from what little we know so far (I'm writing a little after 9:30 AM in the east) that this will not be the case. Senator Obama seems likely to end the night with a mandate.
I'm not especially trusting of polls, but I do have a high opinion of the efficacy of prediction markets such as this one. Intrade is showing as I write that you have to pay more than 91 cents for a chance to win a dollar on the bet that Obama will become President. You can buy onto McCain's Straight Talk bandwagon for just 9 cents. It is petty clear what that means.
In terms of economic/financial policy, I suspect a Prsident Obama would go along with the rising call in Europe and East Asia for a new Bretton Woods-style conference to develop a global system for the co-ordination of monetary policies, exchange rates, etc. What would come out of such a conference? One likely result would be the formalization of a new role for the Chinese yuan as the central pillar in this new system. It is the only currency that could possibly hold the position that the US dollar once did.
That's an index of the size of the changes underway and the changes to come.
It appears, from what little we know so far (I'm writing a little after 9:30 AM in the east) that this will not be the case. Senator Obama seems likely to end the night with a mandate.
I'm not especially trusting of polls, but I do have a high opinion of the efficacy of prediction markets such as this one. Intrade is showing as I write that you have to pay more than 91 cents for a chance to win a dollar on the bet that Obama will become President. You can buy onto McCain's Straight Talk bandwagon for just 9 cents. It is petty clear what that means.
In terms of economic/financial policy, I suspect a Prsident Obama would go along with the rising call in Europe and East Asia for a new Bretton Woods-style conference to develop a global system for the co-ordination of monetary policies, exchange rates, etc. What would come out of such a conference? One likely result would be the formalization of a new role for the Chinese yuan as the central pillar in this new system. It is the only currency that could possibly hold the position that the US dollar once did.
That's an index of the size of the changes underway and the changes to come.
Tuesday, December 4, 2007
BHP/ Rio Tinto
The BHP/Rio Tinto saga is complicated but important. Its important because it involves nothing less than control of a large chunk of the worlds active mines excavating iron ore, copper, coal, and a variety of other minerals.
Its complicated because the word "control" in the above sentence has both a corporate and a national significance, and because the laws of several different nations will play a part in helping determine this.
A little less than a month ago, on November 8, BHP Billiton announced a bid for control of Rio Tinto. In a sense there would be four companies involved in any such acquisition because both Rio and BHP have a dual identity: each is both a British and an Australian corporation -- with separate sets of shareholders but with only one board of directors and managerial structure.
BHP is the larger of the two, but Rio has the more illustrious history. It began with Spanish mines so old the ancient Roman empire had minted coins from the metal taken from that earth. In 1873, two Rothschild firms -- the Parisian and the London -- joined with other investors to buy the Spanish government's interest in these mines. They restructured the company and turned it into a profitable business run from London.
The dual national nature of the company came about in the 1960s, when BHP bought a majority stake in the Aussie firm Consolidated Zinc.
But, to the point: the board of directors of Rio has resisted BHP's offer, claiming that it significantly undervalues the company.
It is often the case that when the directors of a target company resist such an overture, they realize and accept the fact that they are "in play," they their days as an autonomous operation are nearing an end, but their looking for a "white knight," a friendlier company willing to make a higher bid for the damsel.
The government of China, and corporations it sponsors, may be about to put on the white shining armor in this scenario. China Investment Corp. has US$200 billion at its disposal. Yet so large is the scale of Rio's assets and prospects that there is also talk that by the time the auction is over, that might not be enough.
There's much more that might be said about this matter, but I've just offered you a score card -- or at least sketched the outlines of the score card -- for what may be a long game. We'll see how it fills in.
Its complicated because the word "control" in the above sentence has both a corporate and a national significance, and because the laws of several different nations will play a part in helping determine this.
A little less than a month ago, on November 8, BHP Billiton announced a bid for control of Rio Tinto. In a sense there would be four companies involved in any such acquisition because both Rio and BHP have a dual identity: each is both a British and an Australian corporation -- with separate sets of shareholders but with only one board of directors and managerial structure.
BHP is the larger of the two, but Rio has the more illustrious history. It began with Spanish mines so old the ancient Roman empire had minted coins from the metal taken from that earth. In 1873, two Rothschild firms -- the Parisian and the London -- joined with other investors to buy the Spanish government's interest in these mines. They restructured the company and turned it into a profitable business run from London.
The dual national nature of the company came about in the 1960s, when BHP bought a majority stake in the Aussie firm Consolidated Zinc.
But, to the point: the board of directors of Rio has resisted BHP's offer, claiming that it significantly undervalues the company.
It is often the case that when the directors of a target company resist such an overture, they realize and accept the fact that they are "in play," they their days as an autonomous operation are nearing an end, but their looking for a "white knight," a friendlier company willing to make a higher bid for the damsel.
The government of China, and corporations it sponsors, may be about to put on the white shining armor in this scenario. China Investment Corp. has US$200 billion at its disposal. Yet so large is the scale of Rio's assets and prospects that there is also talk that by the time the auction is over, that might not be enough.
There's much more that might be said about this matter, but I've just offered you a score card -- or at least sketched the outlines of the score card -- for what may be a long game. We'll see how it fills in.
Tuesday, November 27, 2007
Harry Potter and the structured investment vehicles
I wrote yesterday about HSBC and a dissident investor, Eric Knight, and promised I'd get back to the subject today. That, as it turns out, was a good bit of timing.
At about the time I was writing that post, HSBC's London office was making an announcement: its going to bail out two of its structured investment vehicles (SIVs). Those of you who don't know the jargon: please don't let those eyes glaze just yet. This is big.
An SIV is sponsored by a larger organization, but its assets and liabilities are kept off the larger institution's balance sheet.
The sponsoring organization isn't required to rescue SIVs. The fact that HSBC has voluntarily done so, and is taking their troubled assets ($45 billion in mortgage-backed securities) onto its own balance sheet means something because it is the first of the world's major banks to do so in the current credit crunch.
HSBC isn't acting altruistically of course. It's protecting its brand name. Outsiders are often confident in investing in, or becoming the counter-party of, an off-balance-sheet vehicle with a big name sponsor, precisely because they feel that the big sponsor won't allow it to default. HSBC wants them to continue to feel that way -- at least, when it's the sponsor. This is worth what may end up being a big hit.
Still, HSBC's brass deserve some credit for corporate statesmanship here. They're the first of the major banks to take this hit. An alternative might have been for their troubled SIVs to liquidate themselves into the market, with an asset fire sale. But that might have triggered imitators, and a rush for the exits.
What happens in a building with narrow doors when everyone tries to exit at once?
This time, the world of finance might not have to find out.
All that said, what were Mr. Knight's contentions about the failings of the bank? His ad in yesterday's WSJ said that HSBC has perennial stock market underperformance compared to its peers. It has pursued geographical diversification instead of comparative advantage, it has never achieved the optimal scale in key markets -- the UK, the USA, and France. According, he thinks, HSBC should play to its strength and its origins. It should move its headquarters away from London, into China. The People's Republic has rules limiting the activities of "foreign" banks and the HSBC could have much more freedom of action in the region it knows best if it ceased to be "foreign" there.
He is also unhappy with the way in which the top execs of HSBC decide upon their compensation. He wants the bank to make public minutes of all meetings in which they discussed their bonuses. So far, they've refused.
As far as I can tell, if they have helped avert the worsening of the credit squeeze by their announcement yesterday, they've earned something of a bonus.
Okay, the "Harry Potter" reference above was a bit misleading. Still, I was going to write "HSBC and the structured investment vehicles" but that just triggered the association to the characteristic Rowling's titles and I couldn't resist.
At about the time I was writing that post, HSBC's London office was making an announcement: its going to bail out two of its structured investment vehicles (SIVs). Those of you who don't know the jargon: please don't let those eyes glaze just yet. This is big.
An SIV is sponsored by a larger organization, but its assets and liabilities are kept off the larger institution's balance sheet.
The sponsoring organization isn't required to rescue SIVs. The fact that HSBC has voluntarily done so, and is taking their troubled assets ($45 billion in mortgage-backed securities) onto its own balance sheet means something because it is the first of the world's major banks to do so in the current credit crunch.
HSBC isn't acting altruistically of course. It's protecting its brand name. Outsiders are often confident in investing in, or becoming the counter-party of, an off-balance-sheet vehicle with a big name sponsor, precisely because they feel that the big sponsor won't allow it to default. HSBC wants them to continue to feel that way -- at least, when it's the sponsor. This is worth what may end up being a big hit.
Still, HSBC's brass deserve some credit for corporate statesmanship here. They're the first of the major banks to take this hit. An alternative might have been for their troubled SIVs to liquidate themselves into the market, with an asset fire sale. But that might have triggered imitators, and a rush for the exits.
What happens in a building with narrow doors when everyone tries to exit at once?
This time, the world of finance might not have to find out.
All that said, what were Mr. Knight's contentions about the failings of the bank? His ad in yesterday's WSJ said that HSBC has perennial stock market underperformance compared to its peers. It has pursued geographical diversification instead of comparative advantage, it has never achieved the optimal scale in key markets -- the UK, the USA, and France. According, he thinks, HSBC should play to its strength and its origins. It should move its headquarters away from London, into China. The People's Republic has rules limiting the activities of "foreign" banks and the HSBC could have much more freedom of action in the region it knows best if it ceased to be "foreign" there.
He is also unhappy with the way in which the top execs of HSBC decide upon their compensation. He wants the bank to make public minutes of all meetings in which they discussed their bonuses. So far, they've refused.
As far as I can tell, if they have helped avert the worsening of the credit squeeze by their announcement yesterday, they've earned something of a bonus.
Okay, the "Harry Potter" reference above was a bit misleading. Still, I was going to write "HSBC and the structured investment vehicles" but that just triggered the association to the characteristic Rowling's titles and I couldn't resist.
Wednesday, November 7, 2007
Hank Greenberg's Resources
Now to the big question, to cap off this week's entries.
If Greenberg's filing means that he does plan a comeback, putting himself once again at the helm of AIG, then what are his chances of pulling that off?
The most obvious point is that he still has admirers. There are people who believe AIG's stock price has suffered from his absense, and who'd love to have him back. The price was above $70 before Spitzer pressed the issue that led to his departure. It immediately sank to $50, although it didn't stay that far down for very long. There's been a lot of zig-zagging since, but as of the close of business yesterday, Nov. 6, the price was at $62.05.
Of course, Greenberg's admirers might be wrong. For all we know the stock price might have been at $62.05 right now even if Spitzer had never interested himself in AIG, and Greenberg had never left. Or, it might be at $100. Alternative-universe hypotheses are difficult to test. Still, there is some sentiment in his favor.
There is also the China connection. Recall that the company got its start there. More important, the whole world seems to be heading to China right now. Optimism about China is the engine that has kept the world economy moving over the past few months as the US and the European nations have suffered through mortgage-market related problems.
Greenberg is said to feel quite at home in China. He helped the PRC get into the World Trade Organization. Last year, Long Yongtu, the chief negotiator for China's entry into the WTO, said to an interviewer: "Mr. Greenberg is the most famous U.S. business leader in this country. Perhaps most important, he is a long-standing friend of the Chinese people."
That's the sort of connection one has to count as a resource in a struggle for corporate control.
(This post will be my last on Proxy Partisans until Sunday. I'll confine my blogging for the remainder of the week to Pragmatism Refreshed. cfaille.blogspot.com Feel free to drop by.)
If Greenberg's filing means that he does plan a comeback, putting himself once again at the helm of AIG, then what are his chances of pulling that off?
The most obvious point is that he still has admirers. There are people who believe AIG's stock price has suffered from his absense, and who'd love to have him back. The price was above $70 before Spitzer pressed the issue that led to his departure. It immediately sank to $50, although it didn't stay that far down for very long. There's been a lot of zig-zagging since, but as of the close of business yesterday, Nov. 6, the price was at $62.05.
Of course, Greenberg's admirers might be wrong. For all we know the stock price might have been at $62.05 right now even if Spitzer had never interested himself in AIG, and Greenberg had never left. Or, it might be at $100. Alternative-universe hypotheses are difficult to test. Still, there is some sentiment in his favor.
There is also the China connection. Recall that the company got its start there. More important, the whole world seems to be heading to China right now. Optimism about China is the engine that has kept the world economy moving over the past few months as the US and the European nations have suffered through mortgage-market related problems.
Greenberg is said to feel quite at home in China. He helped the PRC get into the World Trade Organization. Last year, Long Yongtu, the chief negotiator for China's entry into the WTO, said to an interviewer: "Mr. Greenberg is the most famous U.S. business leader in this country. Perhaps most important, he is a long-standing friend of the Chinese people."
That's the sort of connection one has to count as a resource in a struggle for corporate control.
(This post will be my last on Proxy Partisans until Sunday. I'll confine my blogging for the remainder of the week to Pragmatism Refreshed. cfaille.blogspot.com Feel free to drop by.)
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