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Barclays Chairman Said to Be Poised to Resign After Libor Fine
Barclays Plc (BARC) Chairman Marcus Agius plans to resign after the bank was fined a record 290 million pounds ($455 million) for trying to rig interest rates, sparking a political outcry, according to a person briefed on the matter.
An announcement may come as soon as today, said the person, who asked not to be identified because the move hasn’t been made public. Agius, 65, has been chairman of Britain’s second-largest bank by assets since January 2007.
He is the most senior executive to offer to step down following probes by global regulators into whether lenders colluded to manipulate Libor. Chief Executive Officer Robert Diamond remains under pressure from lawmakers after U.K. and U.S. regulators found the lender “systematically” attempted to rig the London and euro interbank offered rates for profit.
“Politicians will see this as him taking a bullet for Bob Diamond,” said Christopher Wheeler, a London-based banking analyst at Mediobanca SpA. “They realized they needed to do something, and Agius was chairman during the time they got fined for -- but will it be enough?”
Both Diamond and Agius have been called to appear this week before British lawmakers on the Treasury Select Committee. Separately, the U.K. government is preparing an inquiry into the future of Libor, including introducing criminal penalties for people who breach rules surrounding the rate, said a Treasury spokesman, who declined to be named citing government policy.
David Cameron
Prime Minister David Cameron on June 28 called for accountability to go “all the way to the top,” while opposition Labour Party leader Ed Miliband has called for a full inquiry into the industry’s practices.
Barclays has tumbled 17 percent since the fine was announced on June 27, making it this year’s worst performer in the five-member FTSE 350 banks index.
Diamond, who built up and ran the securities unit during the period being probed by regulators, may keep his job because he has no obvious successor, according to Chirantan Barua, an analyst at Sanford Bernstein Research in London. None of the bank’s largest shareholders have publicly called for Diamond’s resignation so far.
“Shareholders will be worried that if Bob goes, the stock may go down another 10 percent,” Wheeler said.
Diamond, 60, his three top lieutenants, Chief Operating Officer Jerry del Missier, Finance Director Chris Lucas and corporate and investment banking chief Rich Ricci have already forfeited their bonuses for this year following the fines.
Michael Rake
Agius is likely to be replaced by Michael Rake, Sky News reported yesterday. Rake, 64, is chairman of BT Group Plc and has been a director of Barclays since 2008. Officials at Barclays declined to comment.
Agius joined Barclays after a 34-year career at Lazard Ltd., where he had been chairman of the firm’s London unit. There, he advised on banking takeovers including Halifax Group Plc’s 2001 merger with Bank of Scotland to create HBOS Plc. As non-executive chairman of BAA Plc, Agius helped the owner of London’s Heathrow airport negotiate a higher takeover price from Grupo Ferrovial SA in 2006.
He had already faced investor pressure when the lender raised more than 5 billion pounds in 2008 from a group of funds from Abu Dhabi and Qatar without giving existing shareholders the opportunity to buy new stock. Shareholders including Legal & General Group Plc complained at the time their pre-emption rights had been ignored, and in protest about 16 percent of investors opposed Agius’s re-election as chairman in April 2009.
BBC, BBA
He also had to apologize to shareholders for failing to communicate the firm’s pay plans to investors clearly in April after 27 percent of shareholders voted against Diamond’s 12 million-pound compensation package.
Agius is also a board member of the British Broadcasting Corp. and chairman of the British Bankers’ Association, the industry lobby group that oversees Libor.
Libor is determined by about 18 banks’ daily estimates of how much it would cost them to borrow from one another for different time frames and in different currencies. Because banks’ submissions aren’t based on real trades, the potential exists for the benchmark to be manipulated by traders.
At least a dozen firms, including Citigroup Inc., Royal Bank of Scotland Group Plc and UBS AG, are being probed by regulators worldwide for colluding to rig the rate, the benchmark for more than $360 trillion of securities, including mortgages, student loans and swaps.
False Submissions
Barclays traders routinely coordinated with counterparts from at least four other banks in an attempt to move interest rate benchmarks, according to documents released on June 27 by the U.S. Commodity Futures Trading Commission, the U.S. Justice Department and the U.K. Financial Services Authority.
Derivatives traders requested the false submissions in the Libor and Euribor setting process, as they were “motivated by profit and sought to benefit Barclays’ trading positions,” the U.K. Financial Services Authority said.
Andrew Tyrie, the chairman of Parliament’s Treasury committee, said Diamond will have to answer questions about who profited from the firm’s false submissions and who at Barclays knew about them, according to an interview with the Daily Mail.
“There appear to have been at least two motives for the rigging of Libor,” Tyrie was cited as saying in the interview. “The first was to enable traders to make a profit. The second was to support share prices at a crucial time -- and that is something that might reasonably be considered the responsibility of the relevant companies as a whole.”
SFO Probe?
The U.K. Serious Fraud Office is considering whether to open a formal investigation, its spokesman said last week. The U.S. Justice Department is conducting its own criminal probe into the attempted manipulation of interbank offered rates.
FSA Chairman Adair Turner said yesterday the Barclays fine shows regulator needs more powers to bring criminal charges.
“Further steps were made a few years ago to give us the ability to bring criminal charges in particular areas of market abuse, but they did not cover the Libor market,” Turner said in an interview on the British Broadcasting Corp.’s “Andrew Marr Show.” “We now have to look further and see whether we should strengthen these powers considerably.”
From Bloomberg
Linde to Buy Lincare Holdings for $3.8 Billion in Stock
Linde AG (LIN) agreed to acquire Lincare Holdings Inc. (LNCR) for about $3.8 billion to add U.S. oxygen and respiratory therapy services delivered to the home.
Linde will pay $41.50 a share for the company, the Munich, Germany-based producer of industrial and medical gases said in a statement yesterday. That’s 22 percent more than Clearwater, Florida-based Lincare’s closing price on June 29 and 64 percent more than the price on June 26, before the Financial Times’ FT Alphaville reported on talks between the companies.
Chief Executive Officer Wolfgang Reitzle has identified health care as a growth area for Linde and in January agreed to buy Air Products & Chemicals Inc. (APD)’s home-care business. The Lincare purchase will almost triple Linde’s home-care gas sales in the U.S. The medical-gas market will probably grow 50 percent to 16 billion euros ($20 billion) by 2020, according to Linde.
The total price is $4.6 billion including about $800 million in assumed debt, said Matthias Dachwald, a spokesman for Linde. The transaction will be paid for mainly with a $4.5 billion loan that will be refinanced through debt and equity issuances, Linde said. The company said it expects to complete the transaction in its fiscal third quarter.
Industry Consolidation
The Lincare purchase is Linde’s biggest since it bought BOC Group Ltd. in 2006 for 8.93 billion pounds ($13.9 billion). That acquisition trimmed to four the number of larger industrial gas companies, making further consolidation possible only in specialty areas.
Linde generated about 18 percent of its 300 million euros in home-care sales from the Americas last year. Analysts estimate Lincare sales will increase 10 percent this year to $2.04 billion, according to data compiled by Bloomberg.
The biggest competitors in the U.S. home respiratory market for Linde will be smaller, independent firms. Lincare was the biggest with 26 percent of the 2009 respiratory market, followed by Apria Healthcare Group Inc., Rotech Healthcare Inc. (ROHI), and American Homepatient Inc., according to a 2010 presentation by Rotech.
Apria is owned by the private-equity firm Blackstone Group LP, and Highland Capital Management LP owns American Homepatient.
The transaction reunites two distant corporate cousins after almost a century apart. Carl von Linde, who founded his German firm in 1879, created a related U.S. company known as Linde Air Products with partners in 1907, according to a history of Linde on the company’s website. Union Carbide Corp. acquired the U.S. operation in 1917. It later created a unit called Linde Homecare Medical Systems, subsequently shortened to Lincare.
Union Carbide sold Lincare to a group of investors in 1990, and they sold shares to the public in 1992.
From Bloomberg
Linde will pay $41.50 a share for the company, the Munich, Germany-based producer of industrial and medical gases said in a statement yesterday. That’s 22 percent more than Clearwater, Florida-based Lincare’s closing price on June 29 and 64 percent more than the price on June 26, before the Financial Times’ FT Alphaville reported on talks between the companies.
Chief Executive Officer Wolfgang Reitzle has identified health care as a growth area for Linde and in January agreed to buy Air Products & Chemicals Inc. (APD)’s home-care business. The Lincare purchase will almost triple Linde’s home-care gas sales in the U.S. The medical-gas market will probably grow 50 percent to 16 billion euros ($20 billion) by 2020, according to Linde.
The total price is $4.6 billion including about $800 million in assumed debt, said Matthias Dachwald, a spokesman for Linde. The transaction will be paid for mainly with a $4.5 billion loan that will be refinanced through debt and equity issuances, Linde said. The company said it expects to complete the transaction in its fiscal third quarter.
Industry Consolidation
The Lincare purchase is Linde’s biggest since it bought BOC Group Ltd. in 2006 for 8.93 billion pounds ($13.9 billion). That acquisition trimmed to four the number of larger industrial gas companies, making further consolidation possible only in specialty areas.
Linde generated about 18 percent of its 300 million euros in home-care sales from the Americas last year. Analysts estimate Lincare sales will increase 10 percent this year to $2.04 billion, according to data compiled by Bloomberg.
The biggest competitors in the U.S. home respiratory market for Linde will be smaller, independent firms. Lincare was the biggest with 26 percent of the 2009 respiratory market, followed by Apria Healthcare Group Inc., Rotech Healthcare Inc. (ROHI), and American Homepatient Inc., according to a 2010 presentation by Rotech.
Apria is owned by the private-equity firm Blackstone Group LP, and Highland Capital Management LP owns American Homepatient.
The transaction reunites two distant corporate cousins after almost a century apart. Carl von Linde, who founded his German firm in 1879, created a related U.S. company known as Linde Air Products with partners in 1907, according to a history of Linde on the company’s website. Union Carbide Corp. acquired the U.S. operation in 1917. It later created a unit called Linde Homecare Medical Systems, subsequently shortened to Lincare.
Union Carbide sold Lincare to a group of investors in 1990, and they sold shares to the public in 1992.
From Bloomberg
Dell Said to Near Buying Quest to Gain Data-Center Software
Dell Inc. (DELL) is near an agreement to buy Quest Software Inc. (QSFT), a maker of programs to manage corporate computer systems, prevailing in a bidding contest with Insight Venture Partners, people with knowledge of the matter said.
The acquisition may be announced as soon as tomorrow, said the people, who spoke on condition of anonymity because the talks are private. Aliso Viejo, California-based Quest said last week that it received an offer for $27.50 a share, or about $2.32 billion, from a company that it didn’t identify. Dell is that company, the people said.
The purchase would cap a months-long bidding war for Quest and fits with Dell’s aim to add technology that helps customers outfit data centers for handling storage and cloud computing. Quest’s software lets companies administer databases and servers, as well as back up information and recover lost data.
Several companies made offers for Quest since it said on March 8 that it had agreed to be bought by Insight Venture Partners, a private equity firm, for about $2 billion, or $23 a share. Earlier talks between Dell and Quest about an acquisition broke down, a person with knowledge of the matter said June 1.
Quest shares rose less than 1 percent to $27.81 on June 29 and have surged 50 percent this year amid speculation that another company might top Insight’s earlier bid. Dell, the world’s third-largest PC maker, climbed 4.7 percent to $12.51 on June 29. The shares have declined 14 percent this year.
Kelly McGinnis, a spokeswoman for Dell, didn’t immediately respond to a request for comment. Quest spokesman Tom Johnson declined to comment.
Software Takeovers
There have been 530 takeovers of U.S. software companies announced so far this year, according to data compiled by Bloomberg, on pace to break the record 923 transactions set last year. The largest is SAP AG’s planned $4.3 billion acquisition of Sunnyvale, California-based Ariba Inc., announced in May.
Dell told analysts at a June 13 meeting that it plans to use deals to boost revenue from data-center hardware, software and services by 45 percent to $27.5 billion by fiscal 2016, reducing the company’s reliance on the slow-growing desktop and notebook computer businesses.
The last time Dell engaged in a public takeover fight was in 2010, when it lost storage company 3Par Inc. to Hewlett- Packard Co. (HPQ), which bought it for $2.35 billion. That 18-day bidding contest tripled 3Par’s market value.
Michael Dell, founder of the Round Rock, Texas-based company, told Bloomberg News last year that Hewlett-Packard overpaid for 3Par, and he made the right decision in dropping out of the process.
Insight first invested in Quest in 1999 and was the company’s largest institutional investor at the time of its IPO that year, according to a regulatory filing at the time. Insight co-founder Jerry Murdock also served on Quest’s board of directors.
From bloomberg
The acquisition may be announced as soon as tomorrow, said the people, who spoke on condition of anonymity because the talks are private. Aliso Viejo, California-based Quest said last week that it received an offer for $27.50 a share, or about $2.32 billion, from a company that it didn’t identify. Dell is that company, the people said.
The purchase would cap a months-long bidding war for Quest and fits with Dell’s aim to add technology that helps customers outfit data centers for handling storage and cloud computing. Quest’s software lets companies administer databases and servers, as well as back up information and recover lost data.
Several companies made offers for Quest since it said on March 8 that it had agreed to be bought by Insight Venture Partners, a private equity firm, for about $2 billion, or $23 a share. Earlier talks between Dell and Quest about an acquisition broke down, a person with knowledge of the matter said June 1.
Quest shares rose less than 1 percent to $27.81 on June 29 and have surged 50 percent this year amid speculation that another company might top Insight’s earlier bid. Dell, the world’s third-largest PC maker, climbed 4.7 percent to $12.51 on June 29. The shares have declined 14 percent this year.
Kelly McGinnis, a spokeswoman for Dell, didn’t immediately respond to a request for comment. Quest spokesman Tom Johnson declined to comment.
Software Takeovers
There have been 530 takeovers of U.S. software companies announced so far this year, according to data compiled by Bloomberg, on pace to break the record 923 transactions set last year. The largest is SAP AG’s planned $4.3 billion acquisition of Sunnyvale, California-based Ariba Inc., announced in May.
Dell told analysts at a June 13 meeting that it plans to use deals to boost revenue from data-center hardware, software and services by 45 percent to $27.5 billion by fiscal 2016, reducing the company’s reliance on the slow-growing desktop and notebook computer businesses.
The last time Dell engaged in a public takeover fight was in 2010, when it lost storage company 3Par Inc. to Hewlett- Packard Co. (HPQ), which bought it for $2.35 billion. That 18-day bidding contest tripled 3Par’s market value.
Michael Dell, founder of the Round Rock, Texas-based company, told Bloomberg News last year that Hewlett-Packard overpaid for 3Par, and he made the right decision in dropping out of the process.
Insight first invested in Quest in 1999 and was the company’s largest institutional investor at the time of its IPO that year, according to a regulatory filing at the time. Insight co-founder Jerry Murdock also served on Quest’s board of directors.
From bloomberg
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