Delaware fires back at corporate lawyers

Three scoops to start, first: ByteDance’s US investors are reviewing a range of options to address US government concerns over TikTok while salvaging their investments, including steps to take voting control of the popular video-sharing app, said people familiar with the matter.

Second: RedBird IMI is leaning towards a full sale of the Telegraph Media Group following the UK government’s decision to block its Abu Dhabi-backed takeover of the rightwing newspaper. More details here. 

And: Hong Kong-based activist fund Oasis Management has built a stake in the UK’s largest sandwich maker Greencore, raising the spectre of a shake-up at the London-listed food company.

In today’s newsletter: 

• Hostilities build in M&A world

• China’s next property problem

• In memoriam: Ira Millstein

Corporate lawyers get their ‘kvetch’ on

Delaware judges, as it turns out, don’t appreciate being browbeaten by self-important lawyers. 

Last week, DD told of the anguished transaction attorneys at a prominent New Orleans industry conference who claimed that a set of decisions — including one that invalidated Elon Musk’s $56bn pay package — had made Delaware’s corporate law court too unpredictable for dealmaking undertaken by their boards-of-director clients.

On Wednesday, Travis Laster, a vice-chancellor on the Delaware Court of Chancery, took aim at the corporate bar.  

“If the kvetching sessions at Tulane [conference] taught us anything, it’s that many people are exercised about these issues and want greater certainty and additional answers, or at least they say that as a way to hold the sword of Damocles of asserted uncertainty over the heads of Delaware judges . . ,” he drily noted.

Laster, as the FT has previously profiled, is an outspoken jurist. The Wednesday hearing at which he spoke was over an activist settlement that the military contractor L3Harris had recently struck with hedge fund DE Shaw. Such “co-operation agreements’‘ between boards and dissident shareholders have been threatened by recent Delaware rulings. 

Plaintiffs lawyers have been incredulous over the big corporate law firms’ grievance that Delaware had suddenly become too hostile towards companies. These shareholder advocates have laughed at any suggestion that Nevada or Texas courts could soon steal Delaware’s thunder.  

One well-known plaintiffs lawyer sent DD’s Sujeet Indap an activist settlement struck this week between Advance Auto Parts and Third Point, which had a one-sentence legal drafting solution to the ostensibly problematic activist settlements seen recently in L3Harris and DE Shaw, as well as in the Crown Castle and Elliott Management kerfuffle.

As for Laster, he was anxious to lay down the law for everyone’s benefit, setting upcoming spring trial dates in both the L3Harris and Crown Castle disputes. 

“I think it’s good that we try to provide some answers to these things. And [L3Harris] is a nice targeted case where people have a focused issue to address. We can get a ruling, and then people can do with it what they will.”

One of China’s strongest developers begins to show cracks

“We are one of the few companies that can still rely on its own creditworthiness,” China’s state-linked developer Vanke said in early 2023 after a series of defaults shook the country’s property sector. 

A year later, Moody’s downgraded the company, estimating that sales fell 40 per cent in January and February. 

Issues at Vanke matter because it’s one of China’s largest and most trusted players. Difficulties there would indicate that even a developer with substantial state backing isn’t immune to the country’s property crisis, the FT’s Thomas Hale and Hudson Lockett report.

The state-backed group is the second-largest developer by sales in China and is one of the companies that has helped build modern China. But while Evergrande collapsed in 2021, underscoring the pressures across the Chinese property market, Vanke has been seen as a haven of strength.

In addition to sprawling commercial and residential developments in China, it has worked on big international projects, including a mixed-use residential project in Shoreditch, London, that preserved the remnants of a 1577 Shakespearean theatre.

While Vanke’s balance sheet is attracting more questions from rating agencies, it pales in comparison to the debts Evergrande carried on its books. Vanke has just $2.6bn of total debt offshore, compared with more than $20bn at Evergrande, which was this year ordered to wind up by a Hong Kong court. 

Some of Vanke’s offshore bonds have been trading at distressed levels. But they are “still too expensive”, said one offshore bond trader at a Chinese state bank in Hong Kong. “The risks are not commensurate with the rewards.”

Whether Vanke can stem the tide will be yet another focus of investors looking for a gauge on the health of the world’s second-largest economy, which typically generates more than a quarter of its economic activity from the property sector.

Famed lawyer Ira Millstein dies

Ira Millstein, the legendary corporate lawyer and legal scholar, has died at age 97. 

Millstein spent decades at Weil, Gotshal & Manges, starting in the early 1950s and turning the firm into a powerhouse in Fortune 500 boardrooms. He was a pioneer in corporate governance thinking and authored several books and articles on the role of directors and chief executives. 

“The legal community has lost a true visionary,” Weil executive partner Barry Wolf said in a statement. “We mourn the loss of our partner and friend, and celebrate his achievements and his role in shaping Weil into the firm it is today.” 

Millstein was part of a coterie of superstar advisers such as Marty Lipton and the late Joe Flom who became all-around CEO whisperers amid the 20th-century deal boom. 

Additionally he was active in numerous civic and non-profit groups such as the Central Park Conservancy and Columbia Law School.

Among Millstein’s survivors is his son Jim Millstein, the well-known investment banker who served in the Obama administration. 

Job moves

• Goldman Sachs has appointed Jane Dunlevie as global head of investment banking services for tech, media and telecoms. She will remain global head of internet investment banking. Jason Rowe has been named to co-lead software investment banking.

Smart reads

Goldman’s women problem The Wall Street giant pledged to bring more women into its senior ranks. Instead, Goldman’s top talent says better opportunities are elsewhere, The Wall Street Journal reports. 

Urban doom loop Losses in commercial real estate are hitting more than just investors. Cities that rely on taxes associated with valuable commercial property are now facing shortfalls, The New York Times writes. 

Family connections Viktor Orbán’s son-in-law has emerged as Hungary’s most prominent investor in the tourism industry, Bloomberg reports.

News round-up

China hits out at US push to ban TikTok as Steven Mnuchin plots bid (FT)

Nationwide has a lot to lose in its unwise bet on Virgin Money (FT)

Joe Biden declares opposition to Nippon Steel’s takeover of US Steel (FT)

Deutsche Bank cuts cash bonuses by up to 50% over Postbank IT fiasco (FT)

Will Douglas IPO be a dog or a darling? (FT)

Reliance buys out Paramount’s stake in Indian TV business for $500mn (FT)

Financial Times