DealBook Briefing: Why Are the Kochs Backing a Bid for Time Inc.?

Good Thursday morning. Breaking: The WSJ has reported that Emerson Electric plans to raise its takeover bid for Rockwell Automation to $29 billion, or $225 a share. We’ve confirmed that. More to come on DealBook. A note to readers: Many of you have written to us about the blue hyperlinks. We’ve heard you and are working on the issue.

Sydney Ember and Andrew Ross Sorkin of the NYT broke the news last night that Koch Industries has tentatively agreed to invest more than $500 million into Meredith’s latest effort to buy the publisher of Time and People magazines. But what does the private industrial conglomerate — whose leaders are known for backing conservative causes — hope to gain?

It isn’t clear what influence the Kochs would have should Meredith prevail, the NYT reports. But Charles and David Koch have been interested in media investments before, having explored a deal for the business now known as Tronc (including the L.A. Times and the Chicago Tribune) four years ago.

Peter Kafka of Recode says there’s a case for this being a financial investment:


Today’s DealBook briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.


P. & G.’s news release on Oct. 10, immediately after its annual shareholder meeting: “P.& G. Shareholders Elect All 11 P. & G. Directors at 2017 Annual Meeting.”

P. & G.’s news release yesterday, after a count showed that Nelson Peltz had indeed won election to its board: “P. & G. Updates Preliminary Proxy Vote Tabulation Results.”

Mr. Peltz and his Trian Partners haven’t won yet — the consumer goods giant may demand a recount — but they have struck another blow for the power of activist investors.

A narrow victory, we suggested, was already an embarrassment for P. & G., which had argued strongly against giving Mr. Peltz even one seat on the board. Actually seating the activist shareholder would be even more humiliating. (Even worse for the company is that its shares rose 2.3 percent in after-hours trading following the news.)

Lex points to a broader question about the electoral integrity of American corporate votes:

Extra credit: The London Stock Exchange, which is fighting The Children’s Investment Fund about the departure of Xavier Rolet as its C.E.O., shows how not to deal with an activist investor, according to the WSJ.

The House is expected to approve its tax legislation today. But Republicans in the Senate must now deal with even more uncertainty over the fate of their bill.

Opposition from Senator Ron Johnson, Republican of Wisconsin, has considerably narrowed the margin of error for the Senate majority leader Mitch McConnell. He can afford to lose only one more vote — and Susan Collins, Bob Corker, Jeff Flake, John McCain and others have yet to commit their support.

Bob Rubin weighs in: “We can only hope that responsible elected officials will prevent this irresponsible tax plan from being adopted,” he writes in a WaPo op-ed.

The tax flyaround

• That change to the taxation of stock options that Silicon Valley hated is gone. (NYT)

• Lobbyists for smaller trade groups are struggling to be heard because of the speed of the legislative process. (NYT)

• Mark Cuban asserts that a cut in the corporate tax rate wouldn’t change how he does business. (CNBC)

• Check out this fascinating visual breakdown of the House tax bill. (NYT)

The Office of the Comptroller of the Currency was once one of the friendliest regulators in Washington, but after the financial crisis of 2008, it became one of the fiercest. It’s different again under President Trump, according to the NYT.

The changes are happening not by congressional action or a rule-making process, but through the pen of the agency’s interim leader, Keith A. Noreika, who has deep connections to the industry. Among the shifts: making it easier for Wall Street to offer payday-style loans and clashing with the Consumer Financial Protection Bureau.

But changes may be coming soon to the C.F.P.B. after its director, Richard Cordray, said he would step down this month. Mr. Cordray was appointed by President Obama to a five-year term that was to end in July 2018. Under his leadership, the agency has extracted nearly $12 billion in refunds and canceled debts for 29 million consumers — and become loathed by Republicans and industry alike.

Now President Trump can reshape the agency, while Mr. Cordray may run for governor in Ohio, his home state.

Expect plenty of questions for Makan Delrahim, the Justice Department’s antitrust chief, when he speaks at the American Bar Association’s Fall Forum conference in Washington at 11 a.m. (There’s a chance the regulator will file a lawsuit to block the transaction by then, though we’re hearing that’s unlikely.)

In the meantime, the Justice Department has reached out to several attorneys general — nearly 20 participated in an investigation into the transaction — to see if they would join a lawsuit against the Time Warner deal, CNBC reported. (Michael has heard the same thing.) So far, it’s unclear whether any have signed on.

At the same time, AT&T has deployed its army of Washington lobbyists. From Todd Shields and Ben Brody, Bloomberg:

Critics’ corner

• Michael Santorelli of New York Law School writes, “The Justice Department should approve the merger and get to work policing the real threats to competition and consumer welfare.” (NYT)

• Tara Lachapelle writes, “The good news for Time Warner shareholders is that there probably isn’t much, if any, downside from here.” (Gadfly)

Fake job interviews and undercover agents who formerly worked for the Israeli military. These are among the tools of trade used by Black Cube, the firm hired by Harvey Weinstein to look into the backgrounds of women who had accused him of sexual assault and harassment.

From the front-page investigation by Matt Goldstein and William Rashbaum of the NYT:

The WSJ took a closer look at Stella Penn Pechanac, a Black Cube employee identified as involved in Mr. Weinstein’s assignment.

Masayoshi Son’s conglomerate is set to begin an offer to buy Uber shares, but at two different valuations: about $50 billion for stock bought from shareholders, and $68 billion for new stock. That raises the question of what the ride-hailing giant is actually worth, according to the WSJ.

In other SoftBank news: The company is planning to invest up to $25 billion into projects in Saudi Arabia — the same kingdom that has invested $45 billion in its Vision Fund — according to Bloomberg, citing unidentified people.

Another publication has followed Forbes in declaring that the commerce secretary is not a billionaire. Bloomberg cut its estimates of his net worth to $860 million from $3 billion.

And three former employees of his investment firm, W.L. Ross & Company, sued Mr. Ross and the firm in New York State Court, according to the WSJ. They have accused the financier of improperly taking at least $48 million in management fees from the general partnerships that oversee W.L. Ross’s private equity investments.

• Landscape Acquisition Holdings, a so-called blank check company run by Man GLG founder Noam Gottesman and former Vornado president Mike Fascitelli, is raising $500 million to hunt for buyouts in hospitality and real estate. (CNBC)

• Square is testing support for Bitcoin in its payment app after users said they wanted an easy way to buy and sell the cryptocurrency. (CNBC)

• Jerry Jones of the Dallas Cowboys has been told by fellow N.F.L. owners that his “antics” are “detrimental to the league’s best interests.” (NYT)

• Leonardo da Vinci’s “Salvator Mundi” sold for a record $450.3 million with fees. And that was for a damaged painting whose authenticity has been questioned. (NYT)

• Justin Caldbeck, who resigned from Binary Capital after women accused him of unwanted advances, plans to teach young men about the dangers of “bro culture.” Diversity advocates aren’t impressed. (Bloomberg)

• Economists and central bankers say Europe’s recovery could be stunted by so-called zombie companies — unprofitable, highly indebted, but propped up by lenders and shareholders. (WSJ)

• The agreement between Goldman Sachs and China’s sovereign wealth fund to make up to $5 billion of deals in the United States has highlighted divisions in Washington over Chinese trade and investment. (NYT)

• If Facebook can crush Snap — a wildly creative company with an app used by 178 million people a day — then how is anyone supposed to succeed? (NYT)

• Vancouver has moved to limit Airbnb-style short-term rentals, hoping to ease a severe housing shortage. (NYT)

Each weekday, DealBook reporters in New York and London offer commentary and analysis on the day’s most important business news. Want this in your own email inbox? Here’s the sign-up.

You can find live updates of DealBook coverage throughout the day at

Follow Andrew Ross Sorkin @andrewrsorkin, Michael J. de la Merced @m_delamerced and Amie Tsang @amietsang on Twitter.

We are experimenting with the writing, format and design of this briefing (and about the blue hyperlinks, we have definitely heard from many of you). We’d love to hear your continued feedback. Please email thoughts and suggestions to