AT&T + BS - Cingular = ?
March 6, 2006 | Filed Under Regulation, In the News
So AT&T is set to acquire BellSouth for $67 billion in stock.
I previously thought that eBay wildly overpaid for Skype.
But that deal, at a potential $4 billion or so, looks like a steal. There’s something vaguely reminiscent of AOL’s “acquisition” of TimeWarner. Verizon is allegedly under the gun if this deal goes through. I think my favorite wireless carrier could be secretly banging the drum and smoking a victory cigar this morning.
I’m sure a bunch of smart people signed off on this one. However, when two large regulated companies merge, it’s often not immediately clear what will happen.
I think the government will approve this transaction. But not just because it is probably pro-competitive. And not because the Bush Administration allegedly always approves communications industry mergers.
Rather, it will be approved because it may prove to be irrelevant.
Think in terms of branding:
– Old AT&T was American Telephone & Telegraph. Think: Ma Bell.
– New AT&T faces cable, wireless and VOIP challenges. So perhaps think: Grandma Bell.
And the one brand that is raising the bar with growing appeal to consumer and business markets, Cingular, is to be discarded.
Updates: Kirkendall, Ribstein and the omnipresent WSJ Law Blog. 8 Mar 06: Holman Jenkins of the WSJ ($) playfully calls AT&T CEO Ed Whitacre “Mr. T. ” and suggests his forthcoming nightmare goes by the name of WiMax. 10 Mar 06 BusinessWeek has an interview suggesting that AT&T make be making a brand new mistake.
Advising the Strong-Willed CEO
February 8, 2006 | Filed Under Regulation, Managing
What do you do when the CEO calls an audible with a regulator?
The New York times reported last week on challenges that medical device maker Boston Scientific is facing with the FDA. The Times mentioned previous issues faced by Schering-Plough a few years ago. Specifically noted was a meeting that then CEO Raul E. Cesan had with FDA officials at a company plant under scrutiny in Puerto Rico:
As the executives recall that day in Puerto Rico, Mr. Cesan, a take-charge man known for a somewhat autocratic style, with his color rising told subordinates to leave the room, saying that he wanted to talk to the regulators alone.
“Raul is an extremely aggressive guy,” one of the executives recalled, “but that kind of behavior doesn’t go over well with regulators. I don’t know what he said, but the next week we had inspectors crawling all over every one of our plants.”
There’s no sign that a Schering-Plough corporate attorney was present at the meeting. The challenge is to remind the CEO that dealing with key regulators is a martial art and brute force rarely works over the long run. If you haven’t done this before the meeting, there’s no real way to do it once it’s underway. Unless you pull the old spill-the-water-on-the-CEO trick.
That one’s usually reserved for a potential antitrust violation where you want to leave and you want everyone to remember that you left.
Thus this becomes a key item for any GC briefcase before big off-site meetings:
IP and Sarbanes-Oxley
December 14, 2005 | Filed Under Technology, Regulation, Compliance
Intellectual property is yet another area caught in the SOx net.
In an article at the Sarbanes-Oxley Compliance Journal website, Hogan & Hartson partner Kenneth Hautman describes some of the issues that arise when examining the controls surrounding how a company maintains its IP portfolio. While the method described by Mr. Hautman is directly applicable to SEC registrants, it also forms a best practices checklist that is helpful to all companies with material IP assets.
Here are Mr. Hautman’s five steps:
Step 1 – Inventory Intellectual Property Assets
Step 2 – Determine the Value of Each IP Asset
Step 3 - Establish an IP Protection Plan
Step 4 – Implement the Plan and Audit/Monitor Compliance
Step 5 – Establish Internal Procedures to Ensure Material Changes to IP Assets Materially Affecting Financial Performance are Reported
Mr. Hautman’s conclusion is familiar to any attorney seeking to comply with regulations before they have been adequately explained by an agency or extensively interpreted by the courts:
“… [I]n the absence of any clear direction from the Act, the courts or the SEC, the prudent course for a public company to follow is to adopt IP “best practices,” including implementation of adequate disclosure controls and procedures, and assume reporting responsibility to the company’s management regarding material changes in the value or other features of IP Assets that could materially affect the company’s business and financial performance.”
Outside the regulatory arena, IP issues can also arise when certain employees are terminated. Attorney Caroline Horton Rockafellow describes some of these issues here in IPFrontline.
The SEC Search of Google
August 15, 2005 | Filed Under Regulation, In the News
Reporter Verne Kopytoff of the San Francisco Chronicle wrote a fascinating article yesterday about Google’s arduous quest to get SEC clearance to launch their IPO last year. The paper had filed an FOIA request with the SEC, and was able to review the extensive correspondence that took place between the agency and the search giant.
The SEC apparently took a dim view of the idealism that Google founders Larry Page and Sergey Brin wanted to convey in the S-1 (an early version of which is here). The SEC didn’t like use of the first names of key Googlers, wanted more disclosure on privacy issues related to Gmail, and was not amused by the interview Larry and Sergey gave to Playboy (work-safe link here courtesy of Jason Kottke for those who don’t read it for the articles). The auction-style offering terms undoubtedly also gave the SEC pause.
And Mr. Kopytoff reports that before the IPO could proceed, the SEC needed something more:
… Google’s attorneys were required to draft a letter agreeing that anything said by regulators in prelude to the IPO could not be used later as a defense in any trial.
So as we head to the first anniversary of the Google IPO on August 18th, thank goodness the SEC dragged them around Wall Street by the ear for awhile. Many investors (such as yours truly) thought it might be just another dot-bomb. The 52-week range is 95 on the low side and 317 on the high side. GOOG opens today at 289 and change.
I would hate to have this sort of nonsense mucking up my portfolio.
Update (18 Aug 05 AM): Broc Romanek at TheCorporateCounsel.net Blog provides additional information (see entry at the bottom of the page) and a kind link. More on the Tandy letter concept is provided by Mr. Romanek here.
Update II (18 Aug 05 PM): Google announces this morning plans to raise an additional $4 billion with a follow-on stock sale of over 14 million shares. The Google form S-3 explains more, as does their press release. When an audience is clamoring for an encore, give it to ‘em.
Sea Change
July 22, 2005 | Filed Under Regulation, In the News
Sometimes life has a way of making you stop and reflect.
The New York Times has a profile of Margaret Cole, the new director of enforcement for the FSA, the regulator of the London stock market.
Ms. Cole came from the London office of White & Case. What prompted the career change, according to the article, was her proximity to a tsunami:
Fleeing the island of Phuket, Thailand, as the Indian Ocean tsunami hit last December, she recalled that she was moved by the “complete randomness” of the disaster. “I asked myself, When are you going to do something useful?” she said in a interview.
The NYT can’t resist the obligatory comment that Ms. Cole’s new postion involved taking a pay cut of 80%; perhaps to control a potential stampede out of law firms and into regulatory agencies.
Ms. Cole had a very successful career as a corporate litigator, earning this distinctly British compliment from an adversary:
“When I litigated against Margaret, she was a formidable opponent, quite tenacious and she didn’t let go,” said David Gold, a partner with Herbert Smith in London. “She was a bit like a dog with a bone.”
Those sort of comments get you on double-secret probation at major US law firms.
Best wishes to Ms. Cole in her new position. Having different phases to a career is getting more common, but it takes courage to swim against the current.
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