Good Friday morning. Steve Schwarzman of Blackstone and other wealthy supporters of President Trump are trying to tweak the tax overhaul. Elliott’s activism at Alexion will prove to be an interesting challenge. And Britain struck an important agreement in its Brexit talks.
Steve Schwarzman and Richard LeFrak privately made the case to President Trump that removing the deduction for state and local taxes from federal tax bills would hurt New York’s economy. Paul Singer and Ken Griffin want to change a provision that prevents hedge fund executives like themselves from taking advantage of a lower rate for pass-through partnerships.
So far, it isn’t clear whether being Trump supporters will help their causes.
From Shane Goldmacher, Maggie Haberman and Kate Kelly of the NYT:
The hit to New York City: Ken Moelis told Bloomberg that the elimination of so-called SALT deductions could meaningfully shift business out of New York and to low-tax states like Florida and Texas.
The tax flyaround
• The Senate’s requirement that investors with taxable brokerage accounts to sell their oldest stock holdings first, known as first-in-first-out, is creating headaches for brokers and tax lawyers. (Bloomberg)
• The renewable energy industry had been on a tear. But the Republican tax overhaul could take a whack at its ascendancy. (NYT)
• Family-owned businesses — including conservative darlings like Hobby Lobby — are worried that the tax bills put them at a meaningful disadvantage because of the way the businesses are structured. (WSJ)
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.
Michael broke the news yesterday that Paul Singer’s $34 billion hedge fund is going after Alexion Pharmaceuticals, whose main drug, Soliris, is used to treat two rare blood disorders. The move again shows the power of activist investors.
But the drugmaker will prove to be an interesting test for Elliott. The hedge fund is taking an iron-fist-in-a-velvet-glove approach. Over the past several months, Elliott executives have met with Alexion to make a variety of suggestions, from setting higher financial performance targets to considering exploring strategic alternatives.
But the activist firm is prepared to take a number of steps if it feels that the company isn’t complying, including running a proxy fight for board seats.
A big question: How much more can Alexion do? Analysts have praised the company and its management team. “I absolutely think they’re doing everything that investors could ask of them,” the research analyst Geoffrey Porges of Leerink told Michael.
Another big question: If Alexion were for sale, who would buy it? Many biotech companies would be interested, especially since Soliris treatments cost patients hundreds of thousands of dollars a year. And if Alexion’s next drug, ALXN 1210, works out in clinical trials, it would be patent-protected for another 20 years.
Extra credit: Fortune took a look at Elliott and some of the tactics it uses in its activism, from private investigators to hard-nosed negotiating.
After several weeks of drama, Britain and the European Union have reached an important accord that will allow them to advance to the next stage of discussions.
Here’s what Friday’s deal includes:
• An agreement that Britain will contribute to the E.U.’s budget for the next two years and commit to paying its share of any future liabilities that arise before 2020, even if they come due in subsequent decades.
• A path for E.U. nationals living in Britain to become permanent residents.
• A compromise on the jurisdiction of the European Court of Justice over both enforcement of any Brexit deal and the rights of E.U. citizens living in Britain.
• A compromise on the border controls between Northern Ireland and Ireland.
The pound rose a little, but trading was volatile.
What’s next: The European Commission will recommend that E.U. leaders proceed to the next stage of Brexit talks, which are expected to begin early next year. Then, Britain will finally begin negotiations over a new trade deal with the bloc.
• Morgan Stanley fired Harold Ford Jr., the former lawmaker who became a Wall Street rainmaker, “for conduct inconsistent with our values and in violation of our policies.” (NYT, HuffPo)
• Sam Isaly, one of the most prominent investors in biotech companies, has been accused by former employees of verbally abusing and harassing female workers and playing pornography at the office. (STAT)
• Laura Fitton, an early Twitter employee turned entrepreneur, became the first woman to go on the record with accusations of misconduct against the investor Shervin Pishevar. (Axios)
• David Boies, who took criticism as his role in Harvey Weinstein’s network of protectors emerged, said he wasn’t worried about his business. (Bloomberg Businessweek)
• Ellen Pao says that companies must have greater accountability for the actions of their executives, and that C.E.O.s and boards need to recognize that harassment and discrimination are crimes. (FT)
• Disney has lost John Lasseter, the Pixar executive who has taken a six-month sabbatical amid allegations of misconduct, at a crucial time for the media giant. (NYT)
The political misconduct roundup
• Senator Al Franken will resign. (NYT)
• The House Ethics Committee will investigate Representative Blake Farenthold of Texas, who is accused of harassing a former employee, retaliating against her, and then using money from a Congressional office to settle the claim. (Axios)
• Representative Trent Franks of Arizona will resign after harassing two former female staffers by asking them to bear his child as surrogates. (NYT)
That’s when the trial for the Justice Department’s lawsuit to block AT&T’s bid for Time Warner will begin.
The judge presiding over the trial, Richard Leon, said that the trial would likely last three weeks. But while AT&T has said that its merger agreement with Time Warner would expire on April 22, Judge Leon suggested pushing that back, since he wouldn’t reach a verdict in time.
Extra credit: Read more about Judge Leon, whom the WaPo says “is considered a maverick in the legal world, having strong opinions and no clear political allegiance.”
It passed $16,000 yesterday — and, on some exchanges, reached $20,000. As of this morning, it hovered around $15,000.
Bad stuff has happened to Bitcoin this week: There have been security breaches, a note of skepticism from a major online retailer and warnings by Wall Street analysts. Digital currency enthusiasts haven’t cared.
Companies in each industry are poised to take money from Masa Son’s SoftBank, and specifically from its $98 billion Vision Fund.
Compass, a real estate listings service, said yesterday that it had raised $450 million from the Vision Fund at a $2.2 billion valuation — just a month after raising $100 million from Fidelity. SoftBank hailed the investment as the biggest ever in a real estate technology company.
Also yesterday, Recode reported that SoftBank was in talks to invest about $300 million in DoorDash, one of the big food delivery services.
Worth pondering: Both companies already compete in highly crowded industries, so it will be interesting to watch whether SoftBank showering them with riches helps them vault over more established rivals.
Huh: Bloomberg reported that the Vision Fund was in talks to invest in two companies owned by the Chinese insurer Ping An. And Dan Primack of Axios reported that SoftBank was weighing an investment in Wag, an on-demand dog-walking service with a history of controversy.
The tech flyaround
• That attractive person at that tech company’s holiday party? It could be a hired model. (Bloomberg)
• Didi Chuxing, Uber’s biggest frenemy, is expanding into Mexico — and becoming more of a threat to the American ride-hailing giant. (Reuters)
Prince Bader bin Abdullah bin Mohammed bin Farhan al-Saud executed the purchase of Leonardo da Vinci’s “Salvator Mundi.” But the true buyer was Crown Prince Mohammed bin Salman, who used his relative as a proxy.
Here’s what Bruce Riedel of the Brookings Institution told the WSJ:
A busy shopper: A little over a year ago, Prince Mohammed spent about $550 million on a yacht.
• Is the heir to Warren Buffett becoming more apparent? Two Berkshire Hathaway executives, Ajit Jain and Greg Abel, were praised in a letter from Charles Munger as examples of the company’s “world-leading” managers who are in some ways better than the boss. (Bloomberg)
• Credit Suisse’s return to its Alpine roots, with a focus on building its Swiss unit and management of wealthy clients’ money, has paid off. (WSJ)
• G.E.’s decision to cut 12,000 jobs in its power unit takes it closer to its lowest overall head count since 2000, but it may not be the last cut over the coming months as Chief Executive John Flannery reviews every dollar the company spends. (Gadfly)
• Central bankers and regulators in Frankfurt signed off on the final chapter of a ranking rule book that they began writing after the financial crisis in 2008, and took a step toward averting future financial meltdowns. (NYT)
• Ford Motor Company said that it intended to assemble new battery-powered cars in Mexico, rather than in Michigan, a year after criticism from Mr. Trump prompted it to cancel plans for a Mexican plant and to announce that it would equip a Michigan factory to make electric and hybrid models. (NYT)
• A unit of Caterpillar conceded that it had cheated customers by performing unnecessary repairs and had pleaded guilty to dumping brake shoes and other parts into the ocean to hide evidence, according to court documents. (WSJ)
• Steinhoff International, a retailer based in South Africa, is enmeshed in an accounting scandal and the related losses have hit global banks, asset managers, the European Central Bank and the retailer’s main shareholder. (FT)
• Mick Mulvaney is reviewing whether Wells Fargo should pay tens of millions of dollars over purported mortgage-lending abuse, according to three people familiar with the matter. (Reuters)
• The credit trading desk at Goldman Sachs is caught in the middle of a battle among hedge funds over the debt of the homebuilder Hovnanian Enterprises. (Bloomberg)
• Mr. Trump plans to publish his long-promised infrastructure proposal next month, according to a senior administration official. (Bloomberg)
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