Currencies

Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Financial

Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Property

Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Banks

RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

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Categorized | Banks

RBC loses Delaware Supreme Court M&A case


Posted on November 30, 2015

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Royal Bank of Canada has been ordered by the Delaware Supreme Court to pay more than $75m for giving tainted advice on a 2011 buyout deal, a decision that is likely to have far reaching consequences for Wall Street’s dealmakers.

The court upheld a 2014 ruling that found RBC had “aided and abetted breaches of fiduciary duty by former directors”, who should have secured the best deal possible for shareholders of Rural/Metro Corporation, when it was sold to Warburg Pincus, the private equity firm.

    In last year’s ruling, Judge Travis Laster said that the Canadian investment bank had pushed to close a quick sale rather than advising the seller to seek a higher price. The trial uncovered evidence that RBC had slanted its analysis and advice to secure lucrative financing assignments. RBC failed to disclose that it was also trying to secure a role in providing debt finance to Warburg for its acquisition. Rural/Metro, an ambulance operator, was sold for $728m.

    RBC said in a statement: “We are disappointed with the court’s determination but respect its decision.”

    The RBC case had drawn particular interest because the size of judgment was more than 10 times the fee of about $5m that RBC earned on the transaction.

    The decision to uphold the ruling is likely to send shockwaves across Wall Street as dealmakers are concerned about Delaware judges’ zeal to come after them for giving bad advice on deals.

    While shareholder lawsuits against boards of selling companies have become commonplace in Delaware, the legal home of most US companies, deal advisers have generally escaped financial sanction. However, in recent years, lawsuits have increasingly targeted bankers over potential conflicts of interest.

    In last year’s ruling the court said that “the threat of liability” would add pressure on “gatekeepers” — a code for bankers — to give sound advice on transactions to boards. The Delaware Supreme Court rejected such characterisation in its ruling on Monday.