A round up of some of the week’s most significant corporate events and news stories.
Burger King’s Canada deal reignites tax debate
Burger King’s $11.4bn takeover of the coffee and doughnuts chain Tim Hortons sparked controversy on both sides of the US-Canadian border this week, writes Stephen Foley in New York.
In the US, the deal was condemned by politicians and boycott-threatening burger customers as another “tax inversion” because Burger King is relocating its headquarters to Toronto, which would help it save taxes on future international profits.
In Canada, where Tim Hortons is the largest fast-food chain, the company took out a double-page advert in a national newspaper to reassure an anxious nation that Tim Hortons will stay the same despite the takeover.
Corporate Person in the News
Emmett Shear, above, and co-founder Justin Kan sold their start-up Twitch to Amazon for almost $1bn this week, writes Tim Bradshaw.
Tax inversion deals have incurred the wrath of the White House, which wants to ban them, so some observers were surprised to discover Warren Buffett – an Obama administration confidante and supporter of higher taxes on the rich – providing $3bn in financing for Burger King’s purchase.
In an interview with the Financial Times, Mr Buffett said that shifting the headquarters north of the border was not a “tax-driven“ decision. “I just don’t know how the Canadians would feel about Tim Hortons moving to Florida. The main thing here is to make the Canadians happy,” he said.
Brazilian private equity firm 3G Capital Management, which took Burger King private in 2010 before relisting it, will retain 51 per cent of the combined group.
● Related Gary Silverman Comment: Burger King’s way is no longer mine
● Related Comment: Person in the News
● Related Lex note: Burger King – Doughnuts are sugary
Shell consortium nears $5bn Nigeria oilfields sale
A consortium led by Royal Dutch Shell is close to selling four Nigerian oilfields and a key pipeline for about $5bn to domestic buyers, as foreign companies retreat from a region plagued by theft and sabotage, writes Anjli Raval in London.
The sales also highlight the growing presence of Nigerian oil companies
in sub-Saharan Africa’s oldest oil industry, amid a government initiative to spur domestic ownership and availability of financing.
Shell is selling its 30 per cent stake in the blocks and a key oil transport artery it co-owns with France’s Total and Eni of Italy that are set to profit from their 10 per cent and 5 per cent shares respectively. The Nigerian National Petroleum Corporation will keep hold of the remaining 55 per cent.
Although all buyers have been selected, two bidders are still negotiating contracts, according to people familiar with the matter, after which government approval is required for all parties. These people said the tally, that could amount to $5.2bn, may still change as details are negotiated.
Nigerian traders-cum-producers Taleveras and Aiteo have offered $2.6bn for the largest field, known as Oil Mining Licence 29, according to the people familiar with the situation. The 60-mile Nembe Creek Trunk Line, regularly attacked by oil thieves, is being sold as part of this package.
Separately Shell has asked Washington for permission to drill in the Arctic, off the coast of Alaska, which keeps open the possibility the group may resume its exploration campaign there next year.
● Related Lombard: Oil auction may end badly for Nigeria
Telefónica enters exclusive talks on Vivendi Brazil unit
In a deal likely to reshape Brazil’s telecoms landscape, Spain’s Telefónica this week improved its earlier August offer to buy GVT, Vivendi’s Brazilian fixed-line, broadband and pay-TV unit, writes Adam Thomson in Paris.
The improved offer came as Telecom Italia weighed in with an offer of its own.
On Thursday, Vivendi, the Paris-based conglomerate, board voted – unanimously, said a person with knowledge of the matter – to enter exclusive negotiations with Telefónica in a deal that represents an enterprise value of €7.45bn.
Telefónica plans to fold GVT into its existing Brazilian mobile business Vivo, already the country’s wireless market leader, setting the Spanish group up to be the dominant telecoms operator in Brazil.
But for Vivendi, the deal, in which the group stands to receive €4.663 in cash and a 12 per cent stake of the Spanish operator’s Telefónica Brasil, is arguably even more transformational.
Two years ago, the group had interests spread across telecoms, gaming, recorded music and television. It also had a heavy debt burden its share price had long suffered from a conglomerate discount.
By year end, assuming the GVT deal goes through and that it completes an agreement signed in April to sell its SFR French telecoms unit, Vivendi will be a smaller but more coherent pure player in media and entertainment.
It will also be sitting on a cash pile that is close to €8bn.
● Related Lex note: Brazilian telecoms – crowded line
RBS under fire for ‘serious failings’ on mortgage advice
Revelations that Royal Bank of Scotland advisers were selling mortgages without properly checking whether customers could afford them marked an embarrassing setback to the bank’s efforts to clean up its image, writes Sam Fleming in London.
Ross McEwan, who joined the bank two years ago and took over as chief executive last October, has pledged to improve customer service.
But on Wednesday the Financial Conduct Authority slapped a £14.5m fine on RBS, criticising the firm for “serious failings” in its mortgage business between June 2011 and March 2013. RBS staff were found to have failed to advise customers on mortgage terms, provided inadequate advice to individuals attempting to consolidate their debts, and failed to fully consider borrowers’ budgetary positions.
Some workers even offered customers their own personal predictions about movements in official interest rates, something the FCA described as “highly inappropriate” given the impact it could have on a borrower’s decision.
One told a customer that rates could reach 5.5 per cent, recommending a five-year fixed-rate mortgage. The Bank of England’s official rate stands at 0.5 per cent.
RBS sold about 30,000 mortgages on an advised basis during the period examined by the FCA. Of 164 sales reviewed only two were judged to have met overall sales standards. The bank is now contacting customers who received its advice to see if they have any concerns.
And finally … the lighter side of the news
● The battle to own an iconic piece of the London skyline is hotting up with property investors lining up their bids for 30 St Mary Axe, which is better known by its affectionate nickname of the Gherkin. One outside contender that ought to have been involved in the race, pushing up the price tag: Branston Pickle.
● Passengers with a penchant for the window seat will not need to race to be at the head of the queue in the future. Windowless aircraft with the interior fuselage covered in screens projecting images of the sky outside will give everyone a view. Although you have to pity the poor blighters stuck in a holding pattern over Luton.
● Cybercriminals targeted Sony’s PlayStation Network and Microsoft’s Xbox online gaming services with denial of service attacks, preventing gamers from merrily shooting each other. Parents with little tech savvy have been practising denial of service attacks for years: unplugging the console when they want to talk to an engrossed teen.
Zara suffered a wardrobe malfunction with its efforts to evoke the spirit of the Wild West with a “sheriff” shirt for youngsters. Unfortunately, the main thing it triggered was a social media lynch mob that complained the garment bore a resemblance to the uniforms Jews were forced to wear in Nazi concentration camps.