Bloomberg after Bloomberg
What will happen to Bloomberg L.P. after Mike Bloomberg steps away? That question resurfaced last week after the billionaire, 81, announced leadership changes and a new board for the company he founded in 1981 after leaving Salomon Brothers. (That said, he told employees that he’s “not going anywhere.”)
Publicly, Mr. Bloomberg has said that his 88 percent stake in the company behind Wall Street’s favorite data terminals will pass onto Bloomberg Philanthropies, his charitable giving arm. But what happens after that?
The Times’s Ben Mullin reports for DealBook that Bloomberg Philanthropies is likely to sell Bloomberg L.P. or take the company public at some point after the transfer, according to two people familiar with the matter. Here’s why.
Operating Bloomberg L.P. for the long run could be tricky for the nonprofit. For that to happen, Bloomberg L.P. would need to qualify as an independently operated philanthropic business, according to Richard Fox, the founder of a Philadelphia law firm who specializes in private foundations.
To do that, the company would have to meet several onerous requirements, and Bloomberg Philanthropies would have to donate to charity five percent of the fair-market value of Bloomberg L.P. each year, Mr. Fox said.
Bloomberg L.P.’s profit would be subject to income tax, even if it was owned by a nonprofit, said Jim Friedlich, executive director of The Lenfest Institute for Journalism, the nonprofit that owns the for-profit Philadelphia Inquirer. Bloomberg L.P. generated revenue of more than $12 billion in 2022, according to data from the research firm Burton-Taylor International Consulting.
There’s a way for Bloomberg to drastically cut his tax burden. If the billionaire sold the company for cash and then donated the deal’s proceeds to Bloomberg Philanthropies, the initial sale would be subject to taxes — reducing the value of his overall contribution to his charity.
But if he gave the company away, he could avoid paying taxes, Mr. Fox said. He could probably donate his controlling interest in Bloomberg L.P. without affecting the company’s other shareholders, who would have a new partner: Bloomberg Philanthropies. The nonprofit could then sell Bloomberg L.P. tax-free.
Finding a buyer could take time. Bloomberg L.P. is a rare blend of financial data, media and technology assets, narrowing the list of buyers. Any purchase would be expensive: Not many of those suitors have tens of billions of dollars in cash lying around.
But the law gives Bloomberg Philanthropies a 10-year grace period to sell the company before the I.R.S. begins assessing an onerous tax, allowing some breathing room to find the right buyer.
HERE’S WHAT’S HAPPENING
China unveils more moves to shore up its currency and economy. The country’s central bank said today it would reduce the amount of foreign reserves that financial firms are required to hold; that is meant to increase the amount of dollars available in the local market, allowing banks to cut interest rates on dollar deposits and making the renminbi more attractive. Authorities also lowered mortgage rates to ease pressure on the crucial property market.
Senator Mitch McConnell says he has been cleared to work after his freezing episode. The minority leader from Kentucky produced a letter from Congress’s attending physician that said “occasional lightheadedness” wasn’t uncommon when recovering from a concussion, which Mr. McConnell suffered in March. The news did not allay concerns among some Republicans about Mr. McConnell’s health and ability to serve.
Justice Clarence Thomas discloses trips taken with a billionaire. The Supreme Court justice reported three trips taken over the past year on a private jet owned by Harlan Crowe, after months of scrutiny over the men’s extensive ties and Justice Thomas’s failure to disclose them. Thomas included a statement in yesterday’s filing that suggested he had been advised to fly on a noncommercial flight for security reasons.
Taylor Swift sets her sights on movie theater dominance. A filmed version of her Eras Tour concerts will run in the U.S. starting Oct. 13, with AMC promising at least four showings a day, four days a week — including on premium screens and IMAX theaters. Shares in AMC jumped on the news, with ticket presales reportedly rivaling those of Marvel movies.
Hedge fund moguls get a new ally in a takeover fight
A group of high-profile financiers trying to break up Sculptor Capital Management’s deal to sell itself gained an important ally yesterday: Robert Shafir, the firm’s former C.E.O., reports DealBook’s Lauren Hirsch.
The decision by Mr. Shafir — one of the largest shareholders in the publicly traded Sculptor with a 6 percent stake — to join the opposition injects more drama into an already volatile takeover battle.
The backstory: Sculptor, previously known as Och-Ziff Capital Management, said in July that it would sell itself to the real estate investment firm Rithm Capital for $11.15 a share.
But a group of investors including Bill Ackman of Pershing Square, Boaz Weinstein of Saba Capital Management and Marc Lasry of Avenue Capital Group has sought to trump that bid, with its latest offer valued at $12.76 a share. Sculptor has rejected the approach, arguing that it’s less sure to close than the Rithm deal.
Mr. Shafir said he won’t support the sale to Rithm, calling the consortium’s offer “clearly superior.” In a letter to a special committee of Sculptor’s board, the financier said that it’s “not credible” to claim that the group of hedge fund moguls “does not have the funds and resources to complete this transaction.”
Mr. Shafir isn’t the only former Sculptor executive to criticize the Rithm deal. Daniel Och, the firm’s co-founder who stepped down as C.E.O. in 2018, this month wrote to the special board committee that the transaction “substantially undervalues” the hedge fund. Sculptor has rebuffed Mr. Och’s criticisms, calling them “based upon distortions and misrepresentations.”
A big question in any deal is the future of Sculptor’s management team, including its C.E.O., James Levin. The financier consortium has proposed replacing him.
There’s some extra dramatic context to the fight. Mr. Shafir and Mr. Levin competed to succeed Mr. Och as C.E.O. in 2018; despite Mr. Levin widely being seen as the co-founder’s heir apparent, Mr. Och threw his support behind Mr. Shafir. Mr. Levin eventually took over the reins in April 2021.
Inside Elon Musk’s power play to buy Twitter
Elon Musk’s $44 billion takeover of Twitter was a tale full of twists that not even veteran Wall Street deal makers could have predicted. In an excerpt in The Wall Street Journal from his forthcoming biography of the billionaire, Walter Isaacson reveals some of the chaos behind the acquisition, including Mr. Musk’s impulsive decision to bid for the social network.
Mr. Isaacson also sheds light on a coldhearted move by Mr. Musk: accelerating the deal’s closing by several hours, allowing him to seek to fire Twitter’s top management “for cause” before their stock options could vest.
It was audacious, even ruthless. But it was justified in Musk’s mind because of his conviction that Twitter’s management had misled him. “There’s a 200-million differential in the cookie jar between closing tonight and doing it tomorrow morning,” he told me late Thursday afternoon in the war room as the plan unfolded.
At 4:12 p.m. Pacific time, once they had confirmation that the money had transferred, Musk pulled the trigger to close the deal. At precisely that moment, his assistant delivered letters of dismissal to Agrawal and his top three officers. Six minutes later, Musk’s top security officer came down to the second-floor conference room to say that all had been “exited” from the building and their access to email cut off.
The instant email cutoff was part of the plan. Agrawal had his letter of resignation, citing the change of control, ready to send. But when his Twitter email was cut off, it took him a few minutes to get the document into a Gmail message. By that point, he had already been fired by Musk.
Hybrid work is winning
Chief executives aren’t letting up on their push to get workers back to the office. Andy Jassy, Amazon’s C.E.O., told employees last month that if they failed to return, “It’s probably not going to work out for you.” Meta announced managers would review entry badge data and consider firing those who failed to show up at the office. And even Zoom, a symbol of remote work, has ordered some of its employees to work in the office.
A number of companies have set deadlines for returning around Labor Day. Yet despite the tough talk, many are actually embracing a hybrid model: Amazon and Meta want workers in the office three days a week; Zoom wants some of them to return for two days.
Hybrid work is becoming the new normal. In July, 44 percent of employees whose jobs could be done remotely had a hybrid arrangement, 34 percent were working from the office full-time and 22 percent were working remotely, according to a survey by researchers at Stanford University.
The views of employees and employers are converging. Workers able to do their jobs from home said they preferred to operate remotely about 2.8 days per week and their employers are willing to let them do it about 2.25 days per week, the survey found.
Not all hybrid policies look the same. Some companies require employees to come into the office on specific days, others for a minimum number of days each week. J.M. Smucker, the food company based in Orville, Ohio, requires workers based at its headquarters to be on site for 22 “core” weeks per year. During these periods, the company says the office is 70 percent to 80 percent full and employees tend to log more hours.
But not everyone is convinced. Meta’s former director of remote work, Annie Dean, who is now at the software company Atlassian, has said a hybrid approach removes many benefits of remote work for employees and companies. She told Fortune: “This is a watershed moment of innovation of how work gets done,” and that we shouldn’t be obsessing about getting back around the watercooler.
THE SPEED READ
Deals
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The chip designer Arm will reportedly start its road show with potential investors for its blockbuster I.P.O. after Labor Day. (Reuters)
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Millennium Management, Izzy Englander’s hedge fund, has built a $320 million short position in Carlos Slim’s telecoms empire. (FT)
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The electric scooter company Lavoie agreed to buy VanMoof, the bankrupt Dutch e-bike maker with a zealous following, for an undisclosed amount. (NYT)
Policy
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