Commercial Awareness Update - February 2020

[HH]

Here is this week's Commercial Awareness Update. Hope all is going well with your applications

Covered in this week's update:

• BlackRock scold Siemens for questionable environmentally-responsible record (@Curtley Bale)
• The Petrol and Diesel Car Ban (@Alice Manners)
• Calisen’s IPO on the London Stock Exchange (@Rachel S)
• Coronavirus: An Act of God? (@Ayah)

BlackRock scold Siemens for questionable environmentally-responsible record​

By @Curtley Bale

The Story

The world’s largest asset management fund, BlackRock, has scolded Siemens for its role in financing the controversial Carmichael coal mine in Queensland, Australia. Siemens is one of Germany's largest industrial companies, yet BlackRock has suggested their A$2bn infrastructure deal highlights their lack of appreciation for climate change issues. Siemens’ decision to help finance the new coal mine in Australia sparked global campaigns and protests to force the German company to rethink their decision.


What is means for Businesses and Law firms

The asset management fund, with around $7tn in assets, issued its first warning following CEO Larry Fink’s recent commitment to climate change issues. Fink has suggested the company will drop some coal holdings due to the financial risk of climate change. BlackRock may have warned Siemens in this way as they aim to uphold their promises regarding climate change. Doing this becomes even more important after protests outside the HQs of both companies by climate change activists.


For Siemens, being called out by such a huge name may cause reputational damage. This is because they have strict 'green action' protocols, yet BlackRock does not think they're doing enough. With the asset manager putting more pressure on companies, Siemens may have to disclose climate-related risk and climate-related discussions. Whilst this may be seen as a step in the right direction, it could be costly for Siemens if they are forced to comply, or are seen to be being slow in the green space.


Law firms may have a role to play in situations like this in terms of helping to finance green projects. Moreover, both Siemens and BlackRock look set to drop out of some current commitments due to climate change risk. This could create potential litigation as the two firms seek an amicable exit from their standing agreements.

Petrol and Diesel Car Ban​

By @Alice Manners

The Story

The government have announced that they are bringing forward the ban on the sale of petrol, diesel and hybrid cars and vans, from 2040 to 2035.


This is part of the plan to ensure the UK produces net zero greenhouse gas emissions by 2050, a target legislated for in June last year.


Impact on Businesses and Law Firms

The decision to include hybrid cars in the consultation was unexpected and the announcement has been received with some negativity, particularly as the UK automotive industry suffered a decline in production and sales during 2019, with Brexit uncertainty taking much of the blame.


However, the transformation in the market will provide opportunity both within and outside the industry. Expertise in both electric and autonomous vehicles will be in high demand as manufacturers follow in Tesla’s footprints, or risk becoming irrelevant.


Law firms will be able to continue to assist manufacturers, insurers and businesses adapting to these new technologies as the market changes. Wide ranging practice areas including litigation, cyber security, data protection and intellectual property will all have a part to play. Car manufacturers may follow in Volkswagen and Ford’s footsteps, joining forces to collaborate and invest in new technologies, something law firms can assist on the regulatory implications of, predicting and managing the risk and regulations involved.


The infrastructure surrounding electric cars will also need to be developed in order to manage the vast increase in electric cars on the road. This will include longer-lasting batteries, increased charging points and more power, including solar or wind farms. This provides opportunity for businesses, those investing into them and law firms as they assist in the process.


Additionally, as the need for radical environmental change becomes more widely accepted, both law firms and businesses may feel heightened pressure to reduce and offset their own carbon footprint.

 

[HH]

Calisen’s IPO on the London Stock Exchange​

By @Rachel S (Rachel Strickland)

The Story

Smart meter company Calisen has successfully floated on the London Stock Exchange (‘LSE’) with a £1.3 billion valuation marking the biggest European Initial Public Offering (‘IPO’) of the year, and the first IPO of a British company on the LSE since Trainline last June. The IPO raises fresh stimulus for European equity capital markets which reached their lowest level in seven years in 2019 in part of a sustained period of low interest rates and cheap debt continuing to be seen as a favourable way to raise finance. The LSE in particular has seen previous poor IPO performances from Aston Martin Lagonda and fintech company, Funding Circle.


The choice of a UK listing has been seen as a favourable sign of post-Brexit investor sentiment.

The LSE is set to file its $27 billion deal to buy Refinitiv with the European Commission which if successful, would triple the LSE’s revenues to £7 billion, increase data and trading capacity and shows the development of the stock exchange. Alongside this, the development of the Shanghai-London Stock Connect to facilitate trading of Shanghai listed companies on the LSE and vice versa arguably shows the global potential of UK listings.



Impact on businesses and law firms

The capital structure of each business will be carefully considered in any potential IPO decision and considering recent speculation over a further interest rate cut, debt finance may get even cheaper and lure investors over the prospect of equity funding through IPOs on the LSE. With that said, it will be interesting to monitor anticipated IPOs from the likes of Interswitch and cinema chain Vue.


Simpson Thatcher & Bartlett led this IPO due to a longstanding client relationship with private equity firm KKR who are exiting their investment in Calisen. Equity capital markets are a key focus for many city firms and lawyers will draft prospectuses, advise on disclosure regimes and register companies wanting to list on the LSE. Lawyers will also provide counsel to the underwriters. In 2019, DWF became the largest law firm to list on the LSE and in the face of increasing downward pressure on fees and the rise of legal technology investment; listing on the LSE could also serve another viable method for law firms to raise finance.

Coronavirus: An Act of God?​

By @Ayah (Ayah Reza)

The Story

As the coronavirus continues to spread across Mainland China, businesses are struggling to reopen despite the end of the extended New Year holiday.


The China Council for the Promotion of International Trade (CCPIT) has been issuing “force majeure” certificates to almost 100 Chinese companies that wish to avoid incurring penalties for breaching their contractual obligations because of the coronavirus outbreak.


The drastic reduction in demand for raw materials and reliance on “force majeure” clauses has shaken the global commodities market. Several Chinese companies have invoked force majeure clauses to cancel copper imports from suppliers in countries like Somalia. China’s largest importer of liquefied natural gas (LNG), CNOOC, declared force majeure over its delivery of shipments. However, this was swiftly rejected by Shell and Total. As OPEC mulls over further output cuts, the price of oil has dropped to its lowest since January 2019.


Impact on Businesses and Law Firms

Lawyers will find themselves at the centre of contractual disputes arising from the coronavirus outbreak. Whether force majeure can be invoked for the coronavirus will depend entirely on the wording of the contract in question. Many contracts of this nature stipulate to resolve such disputes through arbitration. A seat of arbitration in Mainland China is less than ideal for most foreign companies. Therefore, it is likely such disputes will be handled through negotiation, rather than arbitration or litigation.


The CCPIT issued certificates do not exempt a company from its contractual obligations, but merely serve as persuasive evidence to use during negotiations. Whilst the reliance on force majeure clauses may fall within a legal technicality, it has the potential to damage business reputation and working relationships in the future.

 

[Ayah]

Hi guys,

Please find this weeks commercial update below!


Retailers Call For Transitional Relief Reform

By Rachel Strickland (@Rachel S )

The Story

Coordinated by the British Retail Consortium, over 50 UK retailers including Asda and Primark have written to the Chancellor to reform business rates ahead of the March 11th budget. The retailers claim that since 2017 over £500 million has been lost due to the controversial transitional relief system.

Business rates are taxes on property that are used for business. These rates are based on a property’s ‘rateable value’; the market rent value multiplied by a Uniform Business Rate. The transitional relief system limits the speed at which a retailer’s rateable value changes when the property is re-evaluated every five years. This would be helpful for a business if the value of their property had increased as they would not immediately have to pay a higher rate. However, for those who are based in an area where the value of their trading location has decreased, transitional relief means they will not immediately have a lower bill. This is known as ‘downward phasing’ and has been suggested to exacerbate the economic divide between London and the North.

Impact on Businesses and Law Firms

Retail accounts for 5% of the UK economy and employs 3 million people. If a reform is not organised, it is likely that an increasing number of businesses will close stores or even face insolvency. High UK property based taxes also act as a deterrent for foreign direct investment.

As a property tax, tax departments will play a role in advising retailers on their tax structure and any future tax changes they may face. Business rates have previously been a contentious issue with litigation over what constitutes rateable value and if a business could be exempt. Restructuring & insolvency departments will assess a retailer’s financial situation and offer some guidance on their options. This could involve reorganising a retailer’s balance sheet by closing down certain stores. Monsoon and Arcadia all relied on CVAs last year and restructuring lawyers will play a role in negotiating with businesses and their landlords.


Recent CMA Intervention in M&A

By Alice Manners (@Alice Manners )

The Story

The Competition and Markets Authority (CMA) has been taking an increasingly interventionist approach in UK mergers and acquisitions (M&A).

Ticket resale websites Viagogo and Stubhub have been told to stop any moves towards their integration whilst the CMA investigates, concerned that the merger would give the firm too much power in the market.

Furthermore, the Phase 2 investigation of JD Sport’s acquisition of Footasylum found that the takeover substantially lessens competition, with the deadline for the final report extended until the 11th May.

Amazon’s acquisition of Deliveroo is also being investigated, as is Takeaway.com and JustEat’s merger – a few days before the deal was scheduled to close.

Impact on Businesses and Law Firms

Whilst a final decision has not been reached on any of these deals, the CMA’s current approach - particularly as they stopped Sainsbury and Asda’s merger in 2019 - could be perceived as aggressive.

With Brexit uncertainty already reducing market moves, law firms may have less work in the area, or will need to consider the impact of the CMA’s more active approach when advising clients trying to remain competitive. If JD is now forced to sell Footasylum, calls for more predictable and quicker intervention by the CMA will likely arise.

The CMA is trying to maintain competition in the current uncertain economy, but as a result, companies may be disincentivised from continuing to operate in the UK. If M&A’s cannot proceed, there may be work for law firms in other areas such as business restructure or moving abroad. We could also see more companies, particularly on the high street, going out of business as they struggle to compete.

Early investors in Deliveroo have argued that the regulator is setting a “dangerous precedent”. Businesses may be deterred from starting up or investing in new businesses if CMA investigation could cause similar delay.


BP Pledges to Cut GHG Emissions to Net-Zero by 2050 or Before

By Curtley Bale (@Curtley Bale )

The Story

BP has pledged to cut its greenhouse gas emissions to net-zero by 2050 or before in a series of promises by new chief executive, Bernard Looney. These pledges come as the most ambitious of any oil and gas major so far and will lead to a revolution of the way BP operates internally. The company will focus on its 415m tonnes of emissions as well as those of its customers. Whilst there has been little detail released, it is expected that BP’s plan to reach net-zero will include offsetting as well as investing in new low-carbon start-ups.

Impact on Businesses and Law Firms

Mr. Looney has claimed it’s time for the company to ‘reinvent’ itself amid increasing pressure from those investors who are worried about the future of fossil fuel-based companies. The changes aim to encourage millennials to invest in the company and back its plan for the future. BP’s pledges say they will balance their focus on becoming more green with maintaining dividend levels. The company paid out $8.4bn in dividends last year and spent around $14bn on oil and gas expenditures.

The new chief executive has urged the need for a ‘rapid transition’ to zero carbon as he believes the oil and gas industry will soon fail. His promises have led to the biggest revamp in BP’s history with work streams focussed solely on ‘gas and low carbon’ and ‘innovation and energy’. This would suggest that BP realise their longevity as a company must be based on innovation rather than relying solely on offsetting. Law firms will likely be on hand to help with this restructuring across BP’s multiple jurisdictions.

BP’s green pledges have now made it a market leader. The promises surpass those made by competitors such as Royal Dutch Shell who have tied executive pay to carbon emission targets. The only other company to make pledges similar to BP is the much smaller Spanish company, Repsol. BP’s move is also expected to worry US giants ExxonMobil and Chevron, who have been slow to take a stance on climate change. By coming out in front of the market, BP has the potential to become an industry leader whilst also securing its status as one of the world’s biggest companies.

 

[Ayah]

Softbank: The Latest Target of Activist Shareholders

By Brian Chiu (@Jiraiya )

The Story

The Japanese Conglomerate SoftBank group runs a $100 bn Vision Fund, the world’s largest venture capital fund with an investment focus in technology-based start-ups, the highlight of which is WeWork. After the office-sharing company’s listing fiasco, SoftBank’s third-quarter profits plummeted by 99%. The consecutive parlous quarterly performance led to questions whether the fund could ever deliver the high return.

American activist fund Elliot Management has obtained a 3% stake in SoftBank and is now taking the lead to urge the firm to buy back $20 bn of its shares to prop up the stock price. Underneath represents a broader trend of shareholder activism in corporate Japan.

Impact on Businesses and Law Firms

Shareholder activism generally refers to shareholders exercising their legal rights to demand changes in returns or strategy on the management level. Activist shareholders start by acquiring minority stakes in companies that they believe are significantly undervalued. By exercising minority shareholders’ rights under company law to appoint or remove directors, they privately pressure companies’ boards or threaten to replace board members by harnessing other shareholders’ votes or even launch public campaigns.

According to Lazard research, Japan has now been the highest priority outside the US for global activist funds, partly because half of the 3,700 listed companies are trading below their accounting value. In the backdrop of a corporate governance reform driven by Prime Minister Shinzo Abe to encourage private foreign investment, activist funds are now politically and legally empowered to drive changes. This latest attack against SoftBank is thus a litmus test for the corporate reform’s progress, a key to Japan’s shrinking economy’s recovery, some analysts suggested.

As the world's third-largest economy, most international law firms see Japan as integral to their Asia's strategies and would avoid taking in activist clients as it may jeopardise the long-term relationship with corporate clients. Lawyers could find themselves advising companies’ boards on shareholders' rights, securities legislation, and developing defence tactics like poison pills.


Goldman Sachs in Advanced Talks to Offer Loans on Amazon

By Heerim Hwang (@HH )

The Story

Amazon and Goldman Sachs are reportedly close to a deal which would allow Goldman Sachs to offer loans to small and medium businesses on Amazon’s existing small business lending platform as soon as March 2020.

Launched in 2011, it utilises algorithms to decide on which businesses to grant loans ranging from $1,000 to $750,000. While it is unclear if these algorithms will be used again, Goldman Sachs have reportedly already started to create the technology necessary to facilitate its loan lending through Amazon.

Impact on Businesses and Law Firms

The deal indicates a continued trend of banks seeking to collaborate with tech giants (e.g. Google and Citigroup) as opposed to the two competing against one another. News of the deal comes less than a year since Goldman Sachs launched Apple Card with Apple which was dubbed the “most successful credit card launch ever” by executives at Goldman.

Just as Apple Card provided a direct channel to Apple’s over 100 million US subscribers, Goldman Sachs are likely to benefit from having direct access to Amazon’s over 1.9 million small and medium sized businesses (SMBs). Unlike its rivals, the bank lacks a network of physical branches which most other banks typically utilise to attract SMBs.

The collaborative approach also benefits Amazon. The new lending opportunity with Goldman will allow the tech giant to expand its already vast marketplace, see growth in their Amazon sales, and avoid the heavy regulations that come with becoming a fully-fledged bank. By collaborating with Goldman, this also lowers Amazon’s credit risks which would allow Amazon to expand its lending offerings.

However, this may spell trouble for FinTech’s. With Amazon’s technology prowess and vast market combined with Goldman’s strong standing and regulatory approval, we may soon witness such collaborations offering digital financial products for much cheaper than FinTech’s. With greater emphasis being placed on regulating Big Tech, law firms are likely to advise such clients through complicated potential regulations placed upon banking, tech, and anti-competition.


Mastercard Gains Approval to Enter China’s Payments Market


By Ayah Reza (@Ayah )


The Story


After decades of attempting to enter the $27 trillion Chinese payment and clearing market, Mastercard has finally received in-principle approval from China’s central bank.


The People’s Bank of China announced that Mastercard’s joint venture with NetsUnion Clearing Corporation (NUCC), established in March 2019, will begin preparing a new institution to commence bankcard clearing services. Mastercard and NUCC will need to complete this preparation within a year, and will then be able to apply for formal approval to commence domestic bank card clearing activity.


Impact on Businesses and Law Firms


The approval comes just three weeks after the US and China signed their phase one trade agreement. China further opening up its financial industry is one of the first indications that the recent phase one trade deal agreed with the US is starting to take effect.


The American company will soon be able to offer Chinese consumers the option of providing and receiving payment for goods and services with Mastercard. Until just a few years ago, the state-run China UnionPay had a monopoly as the only credit clearing provider in the country.


The “Foreign Investment Market Entry Special Administrative Measures” (known as the “Negative List”) mandates that when it comes to financial services, foreign companies must form a joint venture. Mastercard is able to benefit from a recent change in rules which allow the foreign company to own a 51 percent shareholding in the joint venture. Chinese will be the governing language of many of the key contracts entered into so it is useful to have a local Chinese partnership to navigate the complexities. As Mastercard is the majority shareholder it is likely that they will have the right to appoint and remove the legal representative.

 

[HH]

Here is this week's commercial awareness update! Hope you guys enjoy it

Covered this week:

• HSBC cuts 35,000 jobs (@Alice Manners)
• Storm Dennis: An insurance perspective (@Rachel S)
• UK Government's New Immigration Policy (@Ayah)
• JPMorgan in talks to enter the UK’s consumer banking sector (@HH)
• Morgan Stanley agrees to buy ETrade @Jiraiya

HSBC cuts 35,000 jobs​

By @Alice Manners

The Story
After a fall in profits, HSBC has said that it will cut an estimated 35,000 jobs over the next three years, around 15% of the groups’ global workforce. This is an ambitious move to save costs and is on top of the 4,700 redundancies that HSBC last year blamed on an “increasingly complex and challenging global environment.”

The ‘delayering’ targets senior managers and comes after Morrisons and Asda’s decisions in January to remove hundreds of management roles.

Deutsche Bank has also pledged to cut 18,000 jobs by 2022.

Impact on Businesses and Law Firms
In the same media release HSBC warned about the economic disruption caused by coronavirus and predicted this impacting their performance in 2020. Alongside continued Brexit uncertainty (and historically low interest rates for banks) we will almost certainly see other businesses embarking on similar cost-saving drives.

Law firms will play a role as more companies choose to restructure. From an employment perspective, they will also be involved drafting settlement agreements or dealing with any litigation that may arise.

Through the restructuring, HSBC is dramatically reducing its presence in European equities, rates and derivatives. This is an area in which technology and artificial intelligence is having a significant impact - traders which rely almost entirely on machines have a significant share of the European stock-trading market. We may therefore see more financial institutions rethinking their strategy in this area.

Despite the risks stemming from coronavirus, HSBC are moving more resources to Asia and the Middle East and therefore work may increase for international law firms focusing on growth in this area.

Businesses cutting jobs at management level may need to consider the recent government plans to only allow high-skilled workers into the UK through a points-based immigration system, and the rise in the national living wage. However, the use of technology and artificial intelligence could play a role in reducing the need for operations staff.

Storm Dennis: an insurance perspective​

By @Rachel S (Rachel Strickland)

The story
Storm Dennis swept across the UK on the 15th and 16th of February leading to hundreds of flooded properties and significant travel disruption. Storm Ciara wreaked similar havoc a week before, raising fear that climate change is making extreme weather conditions the norm.

Insurance company Aon reported $82 billion of economic damage from flooding last year, the greatest of any natural peril. The UK government has been criticised for lack of preparation with the £4 billion pledge for flood defences within the conservative manifesto yet to materialise. The mismatch in government funding and the increasing risks of extreme weather conditions presents opportunities for insurers and reinsurers (insurance cover bought by insurers) to underwrite flooding insurance policies.

Impact on businesses and law firms
Significant weather will interrupt businesses’ operations and disrupt supply chains. It will also mean expensive property damage claims. For example, Reinurance group, Swiss Re missed analyst’s expectations for the year after a string of expensive natural catastrophes.

Insurtech companies and the growth of sophisticated catastrophe models are increasing insurers’ willingness to underwrite the unpredictable and destructive effects of flooding. Similarly, parametric (a predetermined pay-out if the insured risk occurs) insurance as opposed to traditional indemnity insurance provides greater certainty for insurance companies.

Insurance lawyers will play a role in determining if a client is liable for damages and drafting and negotiating insurance policies. Property damage claims are complex and lawyers will have to scrutinise wording, or consider multiple events and occurrences and how to allocate losses. While business interruption claims require extensive documentation of the perceived income on businesses’ profitability. With more claims, lawyers may also aid insurance companies issue catastrophe bonds (debt funding based on the occurrence of a catastrophe). Firms like RPC and HFW have strong insurance sector focuses, and Clyde & Co has launched a cross-practice Climate Change Resilience Initiative to help clients identify and mitigate associated risks.

 

[HH]

UK Government’s New Immigration Policy​

By @Ayah (Ayah Reza)

The Story
Last week, a move towards a points based immigration system was announced by the UK government. The government seeks to attract English speaking skilled workers who hold job offers, in addition to either earning more than £25,600 or holding a PhD relevant to the job. The salary threshold can also be circumvented if the job is in a designated “shortage occupation”, such as engineers and paramedics.

A cap on the number of visas that can be handed out to skilled workers who fit the criteria has been removed. The aim is to fill the shortage of skilled workers such as physics and Mandarin secondary school teachers. While such opportunities are created, the changes to the UK immigration rules present a new set of challenges.

Impact on Businesses and Law Firms
Undoubtedly, law firms with strong employment practices will find themselves engaged by clients who seek to obtain visas to work in the UK. However, they are unlikely to see many clients from those seeking to be employed in the sectors most affected by the immigration policy. Namely sectors such as hospitality, social care and agriculture.

The biggest hurdle faced by these sectors is the imposed salary required of holding a job offer with an annual salary of more than £25,600. ABTA, a UK travel trade association, released a report detailing the impact the rules will have on the tourism sector. The report calls for points system to take into account foreign language skills.

Despite ABTA highlighting the changes risk “undermining the business model of many UK companies”, the government has already made it clear that the immigration system overhaul is not intended to mean business as usual. The sectors struggling to recruit staff on low salaries will be forced to radically alter the way they operate.

JPMorgan in talks to enter the UK’s consumer banking sector​

By @HH (Heerim Hwang)

The story
It has been reported that JPMorgan Chase & Co are currently in talks with UK regulators to break into the UK’s consumer banking sector later this year with a digital bank and a range of savings and loan products.

Impact on businesses and law firms
Taking note of the departure of two German digital banks (N26 GmbH, Fidor Bank) from the UK’s banking market, it is fair to say that the US bank’s latest venture enters a difficult marketplace. However, JPMorgan’s entrance into the market may benefit London as many banks (such as N26) have sought to relocate elsewhere following Brexit.

JPMorgan will compete against digital banks such as Monzo, Starling, and, most notably, Goldman Sachs’ online-only bank called Marcus. JPMorgan previously launched its own digital bank, “Finn”, in 2018, however, it was shut down soon after due to a lack of customers. This pales in comparison to Marcus which gained 250,000 British customers in its first year and currently holds more than £13 billion in UK deposits. Goldman’s successfully achieved this by attracting customers with high-interest rates for savings accounts which allowed the bank to then lower its group funding costs.

Even with JPMorgan’s appointment of a former head of supervision at the Financial Conduct Authority to head its new venture, the bank will need careful legal advice to comply with the FCA’s regulations, the UK’s complicated banking laws, GDPR, and preventative measures for cyber-security risks.

Morgan Stanley agrees to buy ETrade​

By @Jiraiya (Brian Chiu)

The Story
Morgan Stanley agrees to acquire ETrade, an online brokerage in the US, as the bank set its goal to become “an industry leader in wealth management across all channels”. Why is a prestigious investment bank moving out of its playfield and paying $13 bn in shares for an online brokerage firm?

Impact on businesses and law firms
Investment banking is no longer as profitable. Research results showed that the revenues at 12 of the world’s largest investment banks fell to the lowest point since 2008. Banks are seeking to diversify their businesses before the next recession hits. This trend can be confirmed by its rival Goldman Sachs which has recently partnered with Apple and Amazon on its foray to offer consumer banking service. Morgan Stanley, on the other hand, decided to go for wealth management, which is essentially investing wealthy individuals’ money on their behalf.

There are three benefits for Morgan Stanley to go with this acquisition apart from the obvious reason that wealth management’s income streams are steadier. It will have access to a less-rich yet younger clientele: ETrade’s 5.2m customers with $360 bn assets, compared to its current 3m clients with$2.7trn assets. With technology lowering the cost of financial services, the bank is now able to serve a larger pool of customers that was deemed unprofitable in the past. Secondly, this signifies a long-term strategic shift to investors as its wealth management business will account for 57% of its profits. Thirdly and most importantly, ETrade has gathered more than $50 bn in consumer deposits which could be used as a source of cheaper funding, once acquired, by Morgan Stanely to lend to its wealthy clients for further profit-making.

With all the appeals, this deal’s fate falls on the US regulators as this is the largest acquisition attempted by a “systemically important” US bank since the 2008 crisis. Due to its systemic importance, the US Federal Reserve and the Office of the Comptroller of the Currency will closely scrutinise the deal. M&A lawyers would play a key role in persuading regulators that the acquisition will not breach the relevant competition laws.

 

[Jaysen]

A few things I found interesting to note this week:

1. "Morgan Stanley’s acquisition of E*Trade Financial Corp. specifically carves out the COVID-19 virus from the scope of the definition of “material adverse effect” (MAE). This exclusion indicates that the parties have factored risks associated with the global coronavirus crisis into the deal—including the price."

https://news.bloomberglaw.com/bloom...m_campaign=newsletter_axiosprorata&stream=top

Blackstone have also made reference to the coronavirus in their recent annual filing.

2. Activist fund Elliot Management has acquired a 5% stake in Twitter and is pushing for the replacement of Jack Dorsey as CEO: https://www.nytimes.com/reuters/2020/02/29/business/29reuters-twitter-elliott.html. Consider what your view is on this - do you think someone can be a good CEO even if they run two companies? What are activist investors and what do they seek to do? Why is their role in the market increasing? Note Matthew Dow has a brilliant article on this within our premium section: https://classes.thecorporatelawacademy.com/p/tcla-weekly-report/?preview=logged_out.