TOKYO (Reuters) - Toshiba Corp (6502.T) will decide on Monday to raise some $5 billion from overseas investors, allowing the troubled conglomerate to remain a publicly traded company even if the sale of a key business is delayed, two people with direct knowledge of the process said.
FILE PHOTO: A logo of Toshiba Corp is seen on a printed circuit board in this photo illustration taken in Tokyo July 31, 2012. REUTERS/Yuriko Nakao/File Photo
Toshiba, reeling from the bankruptcy of its U.S. nuclear unit Westinghouse Co in the wake of an accounting scandal, needs to raise 750 billion yen ($6.7 billion) by the end of March to avoid being kicked off the Tokyo Stock Exchange.
The laptops-to-nuclear-reactors company has agreed to sell its prized NAND semiconductor unit for $18 billion, and is planning to sell its TV business and reportedly looking to hive off its personal-computer unit to raise cash.
But with the March deadline looming to avoid delisting and the chip sale threatened by antitrust concerns from China and elsewhere, Toshiba’s board will on Monday approve a plan to raise 600 billion yen ($5.3 billion) by offering shares to a group of overseas investors, the sources said.
In addition, the sources told Reuters, Toshiba will agree to take upfront losses that will allow tax write-offs sufficient to boost its assets back above liabilities for the first time in two years - allowing the firm to remain listed.
Toshiba declined to comment on the plan.
To plug the huge hole in its balance sheet, Toshiba agreed in late September to sell its Toshiba Memory unit to a group led by Bain Capital for $18 billion.
But regulatory reviews globally threaten its ability to close the sale by the March end of the business year, which would put the company in negative net worth for a second year in a row, imperiling its TSE listing.
Without any gains from the chip unit sale, Toshiba forecasts it would post negative net worth of 750 billion yen at the end of March.
The company could use the proceeds from a share allotment to pay all at once the $5.8 billion in parent-company guarantees on Westinghouse’s much-delayed nuclear projects in the United States, one source said.
The current plan is to guarantee payments to two U.S. power utilities over six years. Paying them off in full now would allow Toshiba to book losses that would reduce its tax burden enough to ensure it has the cash to remain listed, the source said.
($1 = 112.6100 yen)
Reporting by Taro Fuse; Additional reporting by Makiko Yamazaki; Editing by William Mallard
WASHINGTON (Reuters) - The U.S. Supreme Court is set to consider a major cellphone privacy case later this month, but leading players in the wireless industry that is at the center of the closely watched dispute are keeping their distance.
FILE PHOTO: The Verizon logo is seen on the side of a truck in New York City, U.S., October 13, 2016. REUTERS/Brendan McDermid/File Photo
The case, to be heard by the justices on Nov. 29, involves whether a warrant is required for authorities to obtain cellphone location information that could implicate criminal suspects, the latest in a string of Supreme Court cases on privacy rights in the digital age.
It has become the latest example of how American phone carriers have been reluctant to engage in data privacy disputes -- especially those that may pit them against the U.S. government -- despite their role as custodians of customer data, legal experts and privacy advocates say.
Of the four major U.S. mobile phone carriers -- Verizon Communications Inc, AT&T Inc, Sprint Corp and T-Mobile US Inc -- only Verizon has taken a stand in the case. Verizon joined a legal brief with technology companies including Alphabet Inc’s Google and Apple Inc calling for stronger protections for the privacy of customer data.
Wireless industry trade group CTIA has shied away from the case, the most significant in years on phone privacy.
Digital right advocates have criticized the industry’s hands-off approach.
“Few private actors have been more involved in the erosion of Americans’ privacy than the telecoms, particularly over the last 15 years,” said Alex Abdo, a senior staff attorney at the Knight First Amendment Institute at Columbia University in New York, which filed a brief supporting expanded privacy rights in the case. “They have been silent for almost all that time.”
Despite massive growth in the amount and types of customer data stored by phone and tech companies, U.S. law on how to treat that information has barely changed during that period.
Some tech firms have urged reforms that would ensure privacy protections for customer data. Microsoft and Google both opposed the government’s attempts to obtain customer data stored on foreign servers, a central issue in the other major tech case currently before the Supreme Court.
CTIA, AT&T and T-Mobile declined to comment on the current case. Sprint spokeswoman Lisa Belot said the company had not taken a position on it.
Verizon spokesman Rich Young said the case “highlights the ever-existing need to find the right balance between law enforcement and privacy, and raises tough questions about how to apply old statutes and legal doctrines to modern technologies.”
Although the legal fight is about location information, “the Supreme Court’s decision is likely to impact how the government obtains other sensitive types of information from many other types of providers,” Young added.
UNREASONABLE SEARCH
The Supreme Court twice in recent years has ruled on how criminal law applies to new technology, both times ruling against law enforcement authorities.
Cellphone location records are becoming increasingly important in criminal investigations, with authorities routinely requesting and receiving this data from wireless providers. The four major wireless carriers handle thousands of requests from law enforcement annually for this data.
Such data shows which local cellphone towers that phone users connected to when they made calls. Police can use past data to determine if a suspect was in the vicinity of a crime.
The justices will hear an appeal by a man named Timothy Carpenter who was convicted in armed robberies in Ohio and Michigan. Police helped establish Carpenter was near the scene of robberies at Radio Shack and T-Mobile stores by securing past cell site location information from his cellphone carrier, MetroPCS, now owned by T-Mobile.
Carpenter’s American Civil Liberties Union lawyers argued that police need “probable cause,” and therefore a warrant, in light of the U.S. Constitution’s Fourth Amendment protections against unreasonable searches.
Based on a provision of a 1986 law called the Stored Communications Act, the Justice Department said probable cause was not needed, but rather the lesser “reasonable grounds,” to show that records are “relevant and material” to an investigation.
Civil liberties groups said that law did not anticipate the way mobile devices would become huge data depositories.
A ruling favoring Carpenter would set a precedent that could be applied to other forms of data. Investigations on a range of issues, including public corruption and identity theft, would be threatened if Carpenter wins, the National District Attorneys Association said in a legal brief.
Unlike internet firms, telephone providers require government licenses to operate and many have signed contractual agreements that mandate cooperation with the government on legal processes, said Albert Gidari, a lawyer who represented phone and internet companies on surveillance issues for 20 years.
Digital rights activists said this fact makes U.S. carriers reluctant to pick privacy fights with the government.
“On these issues,” Gidari said, “it does not serve them to be very vocal.”
Reporting by Lawrence Hurley and Dustin Volz; Editing by Jonathan Weber and Will Dunham
BARCELONA (Reuters) - T-Mobile US will propose a “significant” share buyback that could start in December, CFO Braxton Carter said on Thursday, a sign that the third biggest carrier in the United States is confident in its outlook after the collapse of a merger with Sprint Corp.
A T-Mobile sign on top of a T-Mobile retail store in Manhattan, New York, U.S., September 22, 2017. REUTERS/Amr Alfiky
T-Mobile’s shares have shed around 10 percent since the collapse of the Sprint merger, which promised estimated benefits of $40 billion. The buyback plan signals management’s strong conviction on the business outlook to investors.
Carter, speaking at a Morgan Stanley TMT conference in Barcelona, said the buyback proposal would be put to the board this month. He said Deutsche Telekom, which owns around 64 percent in T-Mobile, would not tender shares and may even buy stock itself.
The issue of control was one of several deal-breakers in the T-Mobile-Sprint talks. By participating in a buyback Deutsche Telekom would concentrate its T-Mobile holding, strengthening its hand in any future merger talks.
Carter said he was “excited about the potential in a rational way to start returning cash to shareholders”, citing T-Mobile’s strong free cash flow and manageable debt levels.
T-Mobile had briefed credit ratings agencies on the buyback, he said. Moody’s last week upgraded its rating on T-Mobile to Baa2 to reflect the company’s strong performance and improved financial leverage. Carter said he expected S&P to follow suit.
The shares would be held in treasury and deployed as acquisition currency for future M&A, Carter also said, highlighting interest in targets in the so-called Internet of Things or regional players.
T-Mobile expressed confidence in its ability to grow as a standalone company, having invested $8 billion in 600 MHz spectrum that will position it to launch countrywide fifth-generation coverage by the turn of the decade.
“We are committed to roll out 5G across the nation by 2020,” Chief Technology Officer Neville Ray also told the conference.
BEIJING (Reuters) - There are more cases against Alphabet Inc’s (GOOGL.O) Google to come, Margrethe Vestager, the European Commissioner for Competition, said on Wednesday during a trip to Beijing.
The Google logo is pictured atop an office building in Irvine, California, U.S. August 7, 2017. REUTERS/Mike Blake
The European Commission slapped a record 2.4 billion euro ($2.8 billion) fine on the world’s most popular internet search engine in June and told the firm to stop favoring its shopping service.
Reporting by Seu-Lin Wong; Writing by Ben Blanchard; Editing by Muralikumar Anantharaman
(Reuters) - Mobile chipmaker Qualcomm Inc on Monday rejected rival Broadcom Ltd’s $103-billion takeover bid, saying the offer undervalued the company and would face regulatory hurdles.
Shares of Qualcomm were up 1.8 percent at $65.74 in early afternoon trading, while those of Broadcom were down 0.4 percent at $263.95.
Broadcom said it would seek to engage with Qualcomm’s board and management, adding that it had received positive feedback from key customers and stockholders.
“We continue to believe our proposal represents the most attractive, value-enhancing alternative available to Qualcomm stockholders and we are encouraged by their reaction,” the company said.
Both companies count Apple among their top customers. Analysts have said a deal between the two would help Qualcomm settle its legal battle with the iPhone maker as Broadcom has a closer relationship with Apple.
Broadcom made an unsolicited bid last week to buy Qualcomm in an effort to become the dominant supplier of chips used in the 1.5 billion or so smartphones expected to be sold around the world this year.
Analysts said Broadcom can now raise its bid, go for a proxy fight or launch a hostile exchange offer.
“Qualcomm’s ‘thanks, but no thanks’ response to the unsolicited bid by Broadcom isn’t surprising and we would be surprised if at this point, Broadcom didn’t move forward with a proxy fight,” Loop Capital analyst Betsy Van Hees told Reuters.
A sign on the Qualcomm campus is seen in San Diego, California, U.S. November 6, 2017. REUTERS/Mike Blake
If Broadcom makes a hostile bid, Qualcomm’s governance rules would allow the rival to submit its own slate for the entire 11-member board by the Dec. 8 nomination deadline.
The easiest option, however, would be to talk to Qualcomm’s board and agree on a higher price.
A sign to the campus offices of chip maker Broadcom Ltd, is shown in Irvine, California, U.S., November 6, 2017. REUTERS/Mike Blake
“We are well-advised and know what our options are, and we have not eliminated any of those options,” Broadcom Chief Executive Hock Tan told Reuters last week.
The right price for Qualcomm could be between $80 and $85 per share, and Broadcom could go up to $90, Susquehanna analyst Christopher Rolland told Reuters.
Any deal would face scrutiny from the antitrust regulators as the combined company would own the high-end WiFi business globally, analysts said.
Regulators are already scrutinizing Qualcomm’s $38-billion acquisition of automotive chipmaker NXP Semiconductors NV.
Broadcom has indicated it is willing to buy Qualcomm irrespective of whether it closes the NXP deal.
Qualcomm now needs to convince investors that they can create more shareholder value independently, Raymond James analyst Chris Caso said.
Reporting by Supantha Mukherjee in Bengaluru; additional reporting by Sonam Rai; Editing by Sriraj Kalluvila and Arun Koyyur
SAN FRANCISCO/NEW YORK (Reuters) - Uber Technologies Inc’s [UBER.UL] warring board members have struck a peace deal that allows a multibillion-dollar investment by SoftBank Group Corp to proceed, and which would resolve a legal battle between former Chief Executive Travis Kalanick and a prominent shareholder.
A photo illustration shows the Uber app on a mobile telephone, as it is held up for a posed photograph, in London, Britain November 10, 2017. REUTERS/Simon Dawson
Venture capital firm Benchmark, an early investor with a board seat in the ride-services company, and Kalanick have reached an agreement over terms of the SoftBank investment, which could be worth up to $10 billion, according to two people familiar with the matter.
The Uber board first agreed more than a month ago to bring in SoftBank as an investor and board member, but negotiations have been slowed by ongoing fighting between Benchmark and Kalanick. The agreement struck on Sunday removed the final obstacle to allowing SoftBank to proceed with an offer to buy to stock.
Uber confirmed the deal was moving forward.
“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment,” an Uber spokesman said. “We believe this agreement is a strong vote of confidence in Uber’s long-term potential.”
SoftBank, a Japanese conglomerate that has become a heavyweight in Silicon Valley tech investing, is joined by Dragoneer Investment Group in leading a consortium of investors that plans to invest $1 billion to $1.25 billion in Uber, and in addition, will buy up to 17 percent of existing shares from investors and employees in a secondary transaction. The terms were signed on Sunday, although the tender offer would likely take weeks to complete.
Uber is valued at $68 billion, the most highly valued venture-backed company in the world. SoftBank’s roughly $1 billion investment of fresh funding is expected to be at the same valuation. The secondary transaction, or the purchases from employees and existing investors, would be at a lower valuation.
A spokeswoman for Benchmark did not immediately respond to a request for comment, and a spokesman for Kalanick declined to comment.
Completing the SoftBank deal would allow Uber to open a new chapter after a year of controversy, including the resignation of Kalanick, the ouster of several top executives, sexual harassment and discrimination allegations, and multiple federal criminal probes. The deal is also tied to new governance rules that aim to distribute power more equally and bring more oversight to the company.
The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato
‘FULL RESET’
“Uber had a remarkable first six or seven years, a bumpy past two years, and now the SoftBank deal allows for a full reset,” said Bradley Tusk, an Uber investor and political strategist who works with tech companies.
It would also be a major victory for Uber’s new CEO, Dara Khosrowshahi, who often served as a mediator to help broker the agreement, according to a third person familiar with the matter.
To allow the deal to go forward, Benchmark has agreed to immediately suspend its lawsuit against Kalanick, which it filed in August in an effort to diminish the ex-CEO’s power at the company and force him off the board, one of the sources said.
On the successful completion of the SoftBank investment, Benchmark would drop the lawsuit entirely, the person said.
In turn, Kalanick must receive majority board approval should he want to replace the board seats over which he has control, according to the source. In addition to his own seat, Kalanick controls two more, which are occupied by Ursula Brown, the former Xerox Corp CEO, and former Merrill Lynch & CO Inc [BACML.UL] CEO John Thain. Kalanick appointed them in September without first consulting with the board.
“Ending the litigation is a big step forward if it finally ends the specter of Kalanick retaking control,” said Erik Gordon, an entrepreneurship expert at the University of Michigan’s Ross School of Business.
Uber’s board already approved a slate of governance reforms that are contingent on completion of the SoftBank deal. They include removing super-voting rights that gave Kalanick and his allies outsized power, adding new independent directors and increasing the size of the board to 17.
Uber plans to run newspaper ads informing investors about the share purchase, and SoftBank will propose a price at which it will buy stock. The company has threatened to invest in ride-hailing rival Lyft if it does not get the Uber deal done.
The deal gives early investors such as Benchmark, whose Uber stake is worth nearly $9 billion, the opportunity to cash out a very lucrative investment.
Reporting by Heather Somerville in San Francisco and Greg Roumeliotis in New York; Additional reporting by Liana Baker in San Francisco; Editing by Diane Craft and Peter Cooney
LONDON (Reuters) - Amazon.com Inc is expanding its nascent European product insurance business, according to recent job adverts, which industry watchers say could signal the start of broader ambitions in insurance.
The logo of Amazon is seen at the company logistics center in Lauwin-Planque, northern France, February 20, 2017. REUTERS/Pascal Rossignol
Amazon Protect, which provides extensions to manufacturers’ warranties for items like mobile phones or washing machines bought on Amazon’s website, launched last year in Europe.
It is Amazon’s only insurance business globally.
Recent job advertisements for the EU product insurance division described “launching a new business” and “creating a new palette of services”.
“This is a sure sign disruption is on the way for the UK insurance market,” said Patricia Davies, financial services analyst at data and analytics firm GlobalData.
An Amazon UK spokesman declined to comment.
Specialist insurers are concerned that Amazon and other online players will encroach on their territory, and are looking to partner with them.
Investment in insurtech firms in Europe has risen sharply in the first half of 2017, often with the backing of big insurers. [nL5N1LW28W]
Amazon Protect launched in Britain in April 2016, quickly expanding to the firm’s main European markets of France, Germany, Italy and Spain.
Its policies give customers an extension on manufacturers’ two-year warranties for up to five years, insuring against accidental damage, breakdown and theft.
The Warranty Group, which underwrites Amazon Protect policies, did not respond to a request for comment.
Amazon posted the jobs on LinkedIn and “Where Women Work” in recent weeks.
“Along with internal and external partners, we are re-defining the warranties and product insurance experience, disrupting the way traditional product insurance services are acquired and delivered and creating a new palette of services,” one job ad, which is no longer accepting applications, said.
Another asked: “Would you like to take part in launching a new business?”
Insurers have been looking at ways of tapping into the so-called connected home, for instance by offering home insurance cover which will alert you if your pipes have sprung a leak.
Amazon’s launch of voice-activated home personal assistant Alexa could give an opportunity for it to expand into this area of home insurance, Davies said.
“I don’t expect them to come up with traditional insurance products,” she said.
Reporting by Carolyn Cohn and Noor Zainab Hussain; Editing by Elaine Hardcastle
