We hope you can join us for the first day of the DealBook Online Summit. The sessions start at 9 a.m. Eastern, and there is still time to register to receive updates and information about the two-day event. More details about today’s program are below.
The future of innovation, the pandemic and Washington policy
On the first day of the DealBook Online Summit, Andrew will interview some major newsmakers, at a crucial time for the economy, public health and policy. Here’s who will appear on our virtual stage, and one big question we have for each session:
9:00-9:45 a.m. Eastern: Masayoshi Son of SoftBank
Are we in a tech bubble?
11:00-11:30 a.m.: Dr. Anthony Fauci of the National Institute of Allergy and Infectious Diseases
At this time next year, will we still be wearing masks and social distancing?
1:00-2:00 p.m.: Albert Bourla of Pfizer, Bill Gates and Heidi Larson of the Vaccine Confidence Project
Even if multiple Covid-19 vaccines are deemed safe and effective, will enough people take them?
4:30-4:55 p.m.: Senator Elizabeth Warren
How will big business be treated by the Biden administration?
We hope to see you online. Register here and follow our live coverage of the summit throughout the day.
HERE’S WHAT’S HAPPENING
News Corp bids for Simon & Schuster. Rupert Murdoch’s media company, which owns HarperCollins, is one of two finalists to acquire the book publisher, The Times’s Ed Lee reports. (The other is Bertelsmann, which owns Penguin Random House.) A deal would drastically consolidate the book-publishing industry, giving Mr. Murdoch ownership of titles by top authors like Stephen King and several hit books critical of President Trump.
Amazon rolls out online prescription deliveries. The e-commerce giant announced Amazon Pharmacy, which lets U.S. customers order prescription medications. (Amazon Prime subscribers also get free delivery.) The move builds on Amazon’s 2018 acquisition of the start-up Pillpack, and presents a big competitive threat to CVS and Walgreens.
Airbnb opens its books for its I.P.O. The home-rental giant filed its offering prospectus yesterday, revealing how it has been affected by the pandemic. Revenue in the first nine months of 2020 was down 32 percent, to $2.5 billion, while net losses doubled, to $697 million. Like other tech companies, it has created multiple classes of stock that give its founders disproportionate control.
Judy Shelton’s Fed nomination grows shakier. President Trump’s controversial pick for the central bank faced new opposition, as Senator Lamar Alexander, Republican of Tennessee, said he would vote against Ms. Shelton’s nomination. A confirmation vote may come down to a tiebreaker decided by Vice President Mike Pence.
Tesla will join the S&P 500. S&P Dow Jones Indices said that the electric-car maker would be included in the index starting Dec. 21. That could give Tesla’s runaway stock price a bigger boost, as tracking funds add its stock to their holdings. (Elon Musk’s net worth rose $15 billion in after-hours trading.)
Biden flags the fight to come on stimulus
One of the most pressing issues facing President-elect Joe Biden, even before he takes office, is brokering a compromise on an economic rescue bill that has stalled for months among infighting between Democrats and Republicans. He was widely expected to seek a middle ground, in keeping with his reputation as a moderate. But that was not his message yesterday, in his first major policy speech as president-elect.
Mr. Biden threw his support behind House Democrats’ $3.4 trillion stimulus plan, which Senate Republicans have balked at since it passed in May. Within hours of Mr. Biden’s speech, Senator Richard Shelby, the Alabama Republican who is chairman of the Appropriations Committee, dismissed the chances of a vote on such a large bill. But Mr. Biden’s goal may have been making a point: He’s not shying away from a fight with Republicans, who back a narrower, $500 billion stimulus proposal, nor is he afraid to embrace progressive causes, like canceling some student debt.
He got backup from President Barack Obama. Mr. Biden’s former boss, who was criticized by progressives for not passing a larger stimulus bill when faced with a financial crisis, gave an interview to The Atlantic in which he didn’t sound optimistic about negotiations with the Senate majority leader, Mitch McConnell:
I’m enjoying reading now about how Joe Biden and Mitch have been friends for a long time. They’ve known each other for a long time. I have quotes from Biden about his interactions with Mitch McConnell. The issue with Republicans is not that I didn’t court them enough. We would invite them to everything: movie nights, state dinners, Camp David, you name it. The issue was not a lack of schmoozing. The issue was that they found it politically advantageous to demonize me and the Democratic Party.
Trade groups are still pushing for a deal. The U.S. Chamber of Commerce, which last week called on Congress to pass a lame-duck stimulus, has lent its support to the Problem Solvers Caucus, a bipartisan group of lawmakers pushing for a compromise. Two members, Representatives Tom Reed, Republican of New York, and Josh Gottheimer, Democrat of New Jersey, spoke to the Chamber’s board last week.
A top Goldman deal maker heads for the exit
Gregg Lemkau, one of Goldman Sachs’s most senior M.&A. bankers, is leaving to run a private equity firm linked to Michael Dell. His departure leaves one of the firm’s signature businesses without a homegrown advocate in its top ranks.
Mr. Lemkau is one of Wall Street’s best-known rain makers. A Goldman lifer — he joined as an analyst in 1992 — he made his name as a tech deal specialist before becoming co-head of the investment banking division in 2017. Among his clients were Tesla, Uber and Mr. Dell.
But he may have hit a ceiling. While Mr. Lemkau had been heralded as a potential C.E.O. candidate, it’s not clear he was genuinely in the running. David Solomon took over the top job only two years ago, and his most likely successor is Goldman’s president, John Waldron.
Goldman’s M.&A. bankers may have less sway now, despite leading Wall Street’s rankings of deal advisers this year. The Wall Street Journal notes that, with the selection of Jim Esposito from the trading division to replace Mr. Lemkau, Goldman’s investment-banking unit won’t have a deal-maker as a leader for the first time in years — just as M.&A. advisers expect a rebound in takeovers.
Private equity invests in divided government
Two runoff elections in January will decide Georgia’s senators, the Senate majority and potential limits on President-elect Joe Biden’s agenda. Private equity’s preference for the Republican contenders shows up in campaign contributions in races there, noted Ricardo Valadez of the nonprofit Americans for Financial Reform.
Government gridlock protects private equity’s business model, ensuring that major changes proposed by Democrats, like Senator Elizabeth Warren’s Stop Wall Street Looting Act, won’t become law, Mr. Valadez told DealBook.
While Mr. Biden got the most direct contributions associated with private equity in 2020, the Republican senators Mitch McConnell of Kentucky, John Cornyn of Texas and Susan Collins of Maine were the next-biggest recipients, reflecting the sector’s preference for divided government.
In Georgia, donations linked to people at Apollo and KKR were in the top 10 contributions for the Republican incumbent David Perdue. His Democratic challenger, Jon Ossoff, appears to have no private equity ties among top donors.
Contributions linked to Blackstone and Roark Capital were among the top donations to the Republican incumbent Kelly Loeffler, who previously worked on Wall Street. Her Democratic challenger, the Rev. Raphael Warnock, counts donors from Insight Partners among his top five givers.
A lucrative tax break is at stake, said Eileen Appelbaum, the co-director of the nonprofit Center for Economic and Policy Research. With Senate control, Democrats could eliminate the favorable tax treatment of carried interest, which would put a big dent in private equity executives’ earnings, she told DealBook. Although President Trump has denounced the carried interest loophole, lobbying helped fend off any changes. A Republican-controlled Senate would most likely continue to resist changes to the treatment of investment gains.
What a difference 13 years makes
In 2007, Home Depot sold its commercial supply business to private equity. Flash forward to this year, and the home-improvement giant has decided that it should own its former division again.
Home Depot will pay about $8 billion for HD Supply, a 25 percent premium on the target company’s shares before the announcement. HD Supply sells industrial building materials to professional contractors.
It’s a tale of two eras:
In 2007, cleaving off HD Supply was all about simplifying Home Depot’s complicated set of businesses. But the mounting credit crisis forced Home Depot to lop nearly $2 billion off the price to sell the business to Carlyle, Bain Capital and Clayton Dubilier & Rice.
In 2020, HD Supply represents a growth opportunity for Home Depot, which had sought to build up a competing offering. Buying its former unit, the company reasons, would get it to a top position in the professional market more quickly.
During this crisis, Home Depot is in a position of strength. It has benefited from consumers starting home-improvement projects during the pandemic, a stark contrast to the housing-driven credit crunch of the last financial crisis. And shareholders haven’t minded when companies deploy cash or take on debt for acquisitions. Shares in Home Depot closed up yesterday.
THE SPEED READ
Huawei sold its Honor line of budget phones to a consortium backed by the Chinese government, as curbs on its access to American technology have hurt the business. (Bloomberg)
The master recordings of Taylor Swift’s first six albums were sold to Shamrock Capital, an investment firm founded by Roy Disney, for $300 million. Ms. Swift protested the deal. (FT)
Politics and policy
The Trump administration plans to sell oil rights in the Arctic National Wildlife Refuge in Alaska. (NYT)
Delta averts U.S. tariffs on European-built Airbus jets by basing them abroad, even though they fly to American cities. (Bloomberg)
Apple is violating E.U. law by letting iPhone users be tracked without their consent, a privacy activist asserted to the authorities. (FT)
Jeff Bezos announced nearly $800 million in grants to environmental nonprofits from his $10 billion Bezos Earth Fund. (Recode)
Best of the rest
Federal prosecutors charged a former Harvard fencing coach with taking $1.5 million in bribes to help a businessman’s sons into the university. (NYT)
New York City’s tourism industry may not recover from the pandemic until 2025. (NYT)
Why the Hollywood actors Ryan Reynolds and Rob McElhenney are buying the oldest soccer club in Wales. (FT)
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