These are stories Report on Business is following Thursday, May 17, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Saverin on Saverin The other Social Network guy is trying to set the record straight.
In an interview with The New York Times today, co-founder Eduardo Saverin speaks out on everything from his relationship with Mark Zuckerberg, to controversy over his citizenship, to his perceived playboy lifestyle.
It's said that Mr. Saverin, who with Mr. Zuckerberg co-founded the enterprise when he was just 21, will be worth more than $3-billion (U.S.) tomorrow when Facebook begins trading on Nasdaq. He is said to own some 4 per cent of the company.
After markets closed today, Facebook unveiled an IPO price of $38 a share. That's the top end of its previously announced range, and puts a value on the company of $104-billion, The Globe and Mail's Omar El Akkad reports.
Among the issues Mr. Saverin faces is all the chatter over the fact that renounced his U.S. citizenship and now lives in Singapore, raising questions about taxes. It wasn't a tax move, he told the newspaper, and he did pay an exit levy. He'd actually started the process in January of last year, but it was only reported recently. He also said he's able to do more now in the emerging markets of China, India and Indonesia.
He has invested in companies in the U.S. and Singapore.
"I was born in Brazil, I was an American citizen for about 10 years," Mr. Saverin said. "I thought of myself as a global citizen."
As for Mr. Zuckerberg, the movie's take that he betrayed Mr. Saverin was inaccurate, he said.
"There was no burning there," Mr. Saverin told The Times. "Mark is a phenomenal guy."
Then there's his so-called playboy life of women and the finer things. Yes, he dates, he said. And, yes, he drives a glitzy car. But the perception is wrong.
"It’s a misperception, especially the playboy," Mr. Saverin said. "I do have a Bentley. I do go out. I’d rather not go into personal details."
In a separate interview with Bloomberg News, he remarked how he never could have imagined the outcome of it all.
"Something I would’ve never imagined was when I put all my life savings into the company, that it would have been an IPO at this level," he said.
"You never imagine that $30,000 accumulated through your life, through gifts and birthday parties and other events, and investing it in the company would create this type of returns."
- The New York Times interview
- Omar El Akkad: Facebook's $18.4-billion problem
- Why Facebook's friends will be winners on IPO day
- Facebook investors gamble on a company where user loyalty means everything
- Facebook co-founder ditches U.S. citizenship to avoid tax hit on IPO
- What will Zuckerberg do at 30?
CP board buckles The board and management of Canadian Pacific Railway Ltd. buckled at the 11th hour today, heading off what was shaping up to be a humiliating defeat in a proxy battle in Calgary.
Fred Green is stepping down as chief executive officer, while several board members, including chairman John Cleghorn, said they would not stand for re-election, The Globe and Mail's Jacquie McNish, Brent Jang and Nathan VanderKlippe report. Stephen Tobias, one of the new directors and a former executive at Norfolk Southern, was named interim CEO.
"This decision was made after taking into account the views expressed by shareholders about the desire for board change," Canada's oldest railway said in a statement.
The dramatic turn of events came just hours before what would have been the climax of one of the greatest proxy battles ever waged in Canada.
One of the country's blue-chip boards was facing activist investor Bill Ackman of Pershing Square Capital Management, who has become the railway's biggest shareholder and has been pushing for massive change, including the replacement of Mr. Green with Hunter Harrison, the former chief of rival CN.
Mr. Ackman had won widespread support for his dissident slate of shareholders, and never let the pressure on the board ease, gaining support from major players day after day.
The board responded at every move, urging shareholders to support the status quo until today. Of course, CP shareholders have already gained from the fight, given the run-up in the share price since Ackman became the biggest stockholder.
I'm not surprised that the board caved, only that it waited until the last minute.
The focus now turns back to the operational issues at the railway.
"We continue to believe that most of the operational upside is already priced into the shares at current levels," said analyst Benoit Poirier of Desjardins.
"As a result, we maintain our Hold--Average Risk rating on CP. We currently prefer CN over CP - there is more potential upside to CN’s share price at current levels and CN has more growth opportunities and a stronger balance sheet."
When all was said and done today, they all said the right things, though bitter feelings must remain no matter what was said, given the intensity of the fight.
"We came in peace, and I’m delighted to say that we’re at peace once again," Mr. Ackman said. "Proxy contests are never fun for anyone involved, but they're critical to the proper functioning of the capital system."
- Fred Green exits as CP chief, dissident slate joins board
- Tim Kiladze's Streetwise: Was Ackman really needed to shake up CP?
- Boyd Erman's Streetwise: At Sears, a reminder of another victory for Ackman
- Lines drawn for Canadian Pacific showdown
RBC eyes wealth unit Royal Bank of Canada is among the financial institutions bidding to pick up parts of the wealth management business of Bank of America , The Globe and Mail's Tara Perkins reports today.
The bank has for a number of years been looking to expand its global wealth management operations, and has been on a regular hunt for acquisitions. In 2010 it paid $1.6-billion for U.K.-based Blue Bay Asset Management.
Aside from Europe, executives have recently said that RBC has also been looking to buy operations in Asia. The assets that Bank of America is looking to sell include businesses in both those regions, as well as the Middle East and Latin America.
Wealth management businesses have become particularly appealing to banks and other financial institutions since the financial crisis, in large part because they require less capital to back them up.
Imperial weighs refinery future Canada's Imperial Oil Ltd. is looking to sell its almost century-old Dartmouth refinery.
"We recognize the refinery’s long history of supplying customers in this region and we know that these jobs are important to the community," said chief executive officer Bruce March.
"We are grateful of the relationship we have built with the community, our customers, and suppliers, and we recognize the potential for uncertainty that this evaluation may create."
Imperial said it would put the refinery, and the associated supply terminals, on the auction block, while also considering simply converting it to a terminal.
Citing "signficant global competition" in the Atlantic region, it plans to decide by the first quarter of next year, The Globe and Mail's Shawn McCarthy reports.
The refinery began operating in 1918. Its capacity is some 88,000 barrels a day, creating several products, including gasoline, diesel, jet fuel, home heating fuel.
The terminals are in the Nova Scotia centres of Dartmouth and Sydney, Corner Brook in Newfoundland and Labrador, Sept-Ilses, Quebec, and Cap aux Meules in the Magdalen Islands.
Sears cutting stake in Canada Sears Holdings Corp. may be on the verge of a retreat from Canada.
Sears said in a statement today it plans to spin off a huge chunk of stake in its publicly traded subsidiary, Sears Canada Inc. , reducing its ownership to about 51 per cent from 95 per cent.
After that, the parent company could sell even more, The Globe and Mail's Marina Strauss writes.
Sears Canada has been a laggard. Just today, the parent reported that the Canadian operation's same-store sales, a key measure in the retail industry, slipped 6.3 per cent in the first quarter of the year.
"Holdings believes that the spin-off will permit each of Sears Canada and Holdings to focus on their respective businesses and allocate resources to best optimize returns on assets employed," the parent company said in a statement.
Many observers had believed Sears would go in the other direction, and move to take the Canadian unit private.
"While all options to realize value from Sears Canada still remain open to Sears Holdings, it appears to us that the new executive management of Sears Canada has been granted at least a couple of years to establish if its plan can turn operating results around," said analyst Keith Howlett of Desjardins.
"This was not necessarily what minority investors in Sears Canada had expected. However, it should boost management and employee morale as the organization girds itself for battle with Target, Lowe’s and Wal-Mart."
Spain in the headlights The focus of the euro crisis is back on Spain, where the economic outlook is ever bleaker and where one of the country's major banks is being slaughtered in the market.
Bankia, the financial institution partly seized by the government last week, suffered heavily in the market today amid reports that depositors are pulling out. Spain denied this, and the shares regained some ground.
That's similar to the situation in Greece, where depositors have also fled, as The Globe and Mail's Barrie McKenna writes today in Report on Business.
Spain did pull off a succesful debt auction today, though it's questionable how much solace that provides. And after North American markets closed, Moody's Investor Service downgraded several Spanish banks.
"In a wider context, Spanish bonds are now trading with quite high yields: Generic three-year paper is yielding 4.9 per cent, up from a low of 2.7 per cent in early March," said Derek Holt and Dov Zigler of Scotia Capital
"That is more of a move than what we’ve seen in the Spanish 10-year sector, where yields have increased from 4.9 per cent in early March to 6.3 per cent today," they said in a research note.
"Curve flattening at higher yields is disconcerting as it implies something irrational: Higher risk premia for shorter term bonds than longer term ones (inflation expectations have not changed markedly and in fact inflation is lower now than it was in March). That is the same type of move that occurred in the run-up to wider stresses in Europe during 2010 and 2011, with the yield curves of the weakest countries even inverting in some places."
- HP weighing up to 25,000 job cuts: Sources
- Jeremy Torobin's Economy Lab: Bank of Canada fears weak growth in global economy
- CPP posts 6.6-per-cent annual return
- Pinterest worth $1.5-billion in Valley's latest sky-high valuation
- U.S. jobless claims hold steady
- Japanese consumers lead rebound in first quarter
|CP-T Canadian Pacific Railway||230.03||
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|IMO-T Imperial Oil||55.42||
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|BAC-N Bank of America||17.12||
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|SHLD-Q Sears Holdings||36.31||
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|SCC-T Sears Canada||10.72||
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|RY-T Royal Bank of Canada||82.53||
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