This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/2016/aug/03/what-incentive-do-softbanks-advisers-have-to-question-arm-deal
The article has changed 2 times. There is an RSS feed of changes available.
Previous version
1
Next version
| Version 0 | Version 1 |
|---|---|
| What incentive do SoftBank's advisers have to question ARM deal? | What incentive do SoftBank's advisers have to question ARM deal? |
| (35 minutes later) | |
| The money involved in SoftBank’s takeover of tech giant ARM Holdings is extraordinary. As part of the £24bn deal, ARM’s 4,000 workers could share more than £300m. Simon Segars, the chief executive, and Mike Muller, the chief technology officer, are likely to get about £55m between them. | |
| But it is the size of the fees and expenses from the deal that really stand out – £349.6m. SoftBank will pay out between £247.2m and £284.6m, while ARM will pay £65m. SoftBank’s lenders will earn up to £110.4m, while the financial advisers on both sides will collect £96.4m, the lawyers £14.5m, and the PRs £6m. The companies in line for a windfall include Goldman Sachs, Barclays and City spinners Brunswick and Finsbury. | |
| These eye-watering fees remind me of the question that has been brought to the fore by the BHS scandal – what incentive do any of the advisers working on the deal have for it to fall over? | These eye-watering fees remind me of the question that has been brought to the fore by the BHS scandal – what incentive do any of the advisers working on the deal have for it to fall over? |
| Investment banks and PR advisers rely on transactions such as SoftBank-Arm to make their money. As Michael Sherwood, a vice-chairman of Goldman Sachs, told MPs investigating the collapse of BHS, Goldman was willing to advise Sir Philip Green for free so that it was in the “goalmouth” when he eventually did a “significant transaction”. | Investment banks and PR advisers rely on transactions such as SoftBank-Arm to make their money. As Michael Sherwood, a vice-chairman of Goldman Sachs, told MPs investigating the collapse of BHS, Goldman was willing to advise Sir Philip Green for free so that it was in the “goalmouth” when he eventually did a “significant transaction”. |
| I am not suggesting that SoftBank’s purchase of ARM is as dubious as Green’s sale of BHS to serial bankrupt Dominic Chappell. SoftBank has a track record as a responsible business owner and has offered to give a legal undertaking that it will double ARM’s workforce in Cambridge over the next five years. | I am not suggesting that SoftBank’s purchase of ARM is as dubious as Green’s sale of BHS to serial bankrupt Dominic Chappell. SoftBank has a track record as a responsible business owner and has offered to give a legal undertaking that it will double ARM’s workforce in Cambridge over the next five years. |
| But, with such an enormous pot of gold available for making takeovers like this happen, there is a notable lack of opposing forces. This is why the government should respond to the BHS scandal by introducing new rules that firmly establish the responsibilities of company directors to their employees, including pay, working conditions and pensions. | But, with such an enormous pot of gold available for making takeovers like this happen, there is a notable lack of opposing forces. This is why the government should respond to the BHS scandal by introducing new rules that firmly establish the responsibilities of company directors to their employees, including pay, working conditions and pensions. |
| Such a move could have wide-ranging implications in the future, such as ensuring that companies have a legal obligation to consider the impact of a takeover on employees. It could even provide the loophole that allows the government to step in and block the sale of strategic companies to foreign buyers. | Such a move could have wide-ranging implications in the future, such as ensuring that companies have a legal obligation to consider the impact of a takeover on employees. It could even provide the loophole that allows the government to step in and block the sale of strategic companies to foreign buyers. |
| Next shoppers prefer cash | Next shoppers prefer cash |
| Lord Wolfson, the chief executive of Next, has become renowned for his gloomy assessments of the British economy and the weather. In the clothing retailer’s latest trading update, Wolfson dedicated an entire segment to the “impact of the EU referendum”. | Lord Wolfson, the chief executive of Next, has become renowned for his gloomy assessments of the British economy and the weather. In the clothing retailer’s latest trading update, Wolfson dedicated an entire segment to the “impact of the EU referendum”. |
| However, the macro-economic uncertainty should not mask the structural challenge facing Next. | However, the macro-economic uncertainty should not mask the structural challenge facing Next. |
| The company’s success in recent years has been underpinned by its online and catalogue credit service. This service allows shoppers to buy clothing from Next that they may not otherwise be able to afford, but also ensures a windfall for the company due to the 22.9% interest it charges on offering customers credit. In the year to the end of January, Next had 2.6 million credit customers and recorded net income on the interest charges of £188m. | The company’s success in recent years has been underpinned by its online and catalogue credit service. This service allows shoppers to buy clothing from Next that they may not otherwise be able to afford, but also ensures a windfall for the company due to the 22.9% interest it charges on offering customers credit. In the year to the end of January, Next had 2.6 million credit customers and recorded net income on the interest charges of £188m. |
| However, the number of customers using credit with Next is now falling. The company has pencilled in a decline of 5% in credit customers this year and warned it will “take a number of years for our credit customer base to stabilise”. Consumers are increasingly keen to pay upfront when shopping online and are reluctant to take on more debt. | However, the number of customers using credit with Next is now falling. The company has pencilled in a decline of 5% in credit customers this year and warned it will “take a number of years for our credit customer base to stabilise”. Consumers are increasingly keen to pay upfront when shopping online and are reluctant to take on more debt. |
| This decline means Next is losing competitive advantage over other high street chains. Shares in the company are down 27% in 2016 and are trading at levels not seen for three years. | This decline means Next is losing competitive advantage over other high street chains. Shares in the company are down 27% in 2016 and are trading at levels not seen for three years. |
| Wolfson is a shrewd operator, and Next’s sale rose slightly in the past three months after a fall in the previous quarter. But the company, which was a stock market darling not so long ago, now looks as vulnerable to the fluctuations of fashion as Marks & Spencer, its great rival. | Wolfson is a shrewd operator, and Next’s sale rose slightly in the past three months after a fall in the previous quarter. But the company, which was a stock market darling not so long ago, now looks as vulnerable to the fluctuations of fashion as Marks & Spencer, its great rival. |
| Berkeley bosses are their own best customers | Berkeley bosses are their own best customers |
| If you judge the health of a company by whether its bosses buy the products or use the services, then Berkeley Group Holding is in good shape. | If you judge the health of a company by whether its bosses buy the products or use the services, then Berkeley Group Holding is in good shape. |
| The London-focused housebuilder published its annual report on Wednesday and the section on related party transactions is a fascinating read. | The London-focused housebuilder published its annual report on Wednesday and the section on related party transactions is a fascinating read. |
| It reveals that Tony Pidgley, the founder and chairman, and Rob Perrins, the group chief executive, paid £378,593 and £155,167 respectively for Berkeley to carry out work at their own homes. | It reveals that Tony Pidgley, the founder and chairman, and Rob Perrins, the group chief executive, paid £378,593 and £155,167 respectively for Berkeley to carry out work at their own homes. |
| Berkeley assures us that these transaction took place through a scheme whereby “eligible employees” can enter into an arrangement with the company “at commercial rates, in accordance with the relevant policies of the group”. | Berkeley assures us that these transaction took place through a scheme whereby “eligible employees” can enter into an arrangement with the company “at commercial rates, in accordance with the relevant policies of the group”. |
| Berkeley’s directors are also buying new homes from the company. Karl Whiteman, head of its East Thames division, has agreed to pay £650,000 for an apartment at its Royal Arsenal Riverside development. | Berkeley’s directors are also buying new homes from the company. Karl Whiteman, head of its East Thames division, has agreed to pay £650,000 for an apartment at its Royal Arsenal Riverside development. |
| This transaction is so large that Berkeley shareholders will have to approve it at the annual meeting in September. But Whiteman is not the only director to have bought a home from Berkeley in the past three years. Perrins paid £2.1m for a new apartment on the Strand, while non-executive Diana Brightmore-Armour paid £3m for an apartment in the same development and executive director Greg Fry bought flats in two other projects. | This transaction is so large that Berkeley shareholders will have to approve it at the annual meeting in September. But Whiteman is not the only director to have bought a home from Berkeley in the past three years. Perrins paid £2.1m for a new apartment on the Strand, while non-executive Diana Brightmore-Armour paid £3m for an apartment in the same development and executive director Greg Fry bought flats in two other projects. |
| If Brexit does stop foreign investors buying luxury property in London, at least Berkeley knows it can rely on its board. | If Brexit does stop foreign investors buying luxury property in London, at least Berkeley knows it can rely on its board. |
Previous version
1
Next version