By Danica Bennewies
Happy Friday and welcome back to another installment of Friday Finds. This is the weekly series on the CBLB where we share five of the top corporate and securities law news stories that grabbed our attention over the past week. Today we’re talking about Newmont Mining Corp, Bitcoin, Deutsche Bank, and more. Is your interest piqued yet? Keep reading to find out what’s been going on in the securities and corporate law world lately.
If you’ve been keeping up with Friday Finds recently, you’ll know that we’ve been following M&A activity in the gold mining sector quite closely. There are two major deals that we’ve been keeping an eye on: the Barrick Gold/Newmont Mining deal and Newmont’s takeover bid for Goldcorp Inc. Last week Barrick agreed to drop its hostile takeover bid for Newmont, with the two mining companies instead settling on a joint venture agreement. However, Newmont’s acquisition of Goldcorp is still up in the air. In a statement released this Thursday, one of Newmont’s major shareholders, Paulson & Co., announced its opposition to the proposed takeover of Goldcorp. The New York-based hedge fund called the large premium being offered by Newmont “unjustified”. As the current deal stands, Newmont is offering 0.328 of a Newmont share and US$0.02 cash for each Goldcorp share. In its statement, Paulson urged Newmont to renegotiate the deal, saying that it should pay no more than 0.254 of a Newmont share per Goldcorp share. Paulson currently holds 14.2 million Newmont shares, making it one of the top 10 Newmont shareholders. Opposition from such a significant shareholder injects an element of uncertainty into the Goldcorp acquisition, and the decision date for the takeover bid is approaching quickly. Goldcorp shareholders will convene on April 4th to discuss the deal, and Newmont shareholders will meet for a similar discussion on April 11th. Stay tuned to the CBLB for updates on this unfolding story.
Moving to regulatory news, the Ontario Securities Commission (OSC) has set a date for a hearing that could be central to the development of regulated cryptocurrency investments in Canada. On Thursday, the OSC said that it will hear an application from 3iQ Corp, a Toronto-based investment fund manager, on April 3rd. A month ago, the OSC denied regulatory approval for 3iQ’s Bitcoin investment fund. The regulator ruled that approving a fund based on Bitcoin would not be in the public interest given the current concerns about the suitability of cryptocurrency as an investment. The OSC also cited the lack of regulation for cryptoassets and liquidity and security concerns in its decision. 3iQ is now seeking an order to set aside the OSC’s ruling and an order approving the prospectus. In its application, 3iQ said that its fund addresses the OSC’s concerns and argued that the OSC was using a tougher standard for its fund compared to existing alternative asset funds. Furthermore, 3iQ claimed that gaining exposure to Bitcoin through a regulated investment fund, as opposed to on an unregulated exchange, better serves retail investors. We’ll see how these arguments play out at the hearing. However, regardless of the result, this hearing will be an important step in addressing regulatory concerns about cryptoassets in Canada.
A few weeks ago, we discussed the OSC’s initiative to reduce regulatory burden on market participants. In the US, the Securities and Exchange Commission (SEC) is also taking action to reduce unnecessary regulatory steps. On Wednesday, the SEC voted to adopt measures to streamline disclosure requirements for public companies, as well as investment advisors and investment companies. The updates come under the Fixing America’s Surface Transportation (FAST) Act, which is based on a broader review of the Commission’s disclosure rules. The mandate of the FAST Act is to eliminate outdated disclosure, making it easier for investors to access and analyze information, and to discourage repetition and disclosure of immaterial information. In a press release this week, SEC Chairman Jay Clayton said that these amendments “…demonstrate [the SEC’s] focus on modernizing our disclosure system to meet the expectations of today’s investors while eliminating unnecessary costs and burdens.” The SEC is clearly making headway on its regulatory burden reduction goals, and the OSC isn’t too far behind. The Ontario regulator announced that its Burden Reduction Roundtable has been scheduled for next Wednesday (March 27th). Check back in with us next week to hear what comes out of these discussions.
The SEC has also been looking into revamping the proxy voting system and, in particular, looking at whether additional regulation of proxy-advisory firms is necessary. These efforts were discussed by SEC commissioner Elad Roisman at the Investment Company Institute conference on Monday. Roisman recognized that proxy-advisory firms provide valuable services and, for this reason, the agency won’t impose additional regulations without thorough consideration. However, it is also important to ensure that asset managers are using these services responsibly. One specific issue that Roisman brought up was robo-voting, which is the practice of investors’ automatically relying on the proxy advisor’s recommendations, often through pre-populated electronic proxy cards, without performing their own evaluation. Roisman said that the SEC is investigating how much instruction asset managers give to proxy advisors regarding how to pre-populate the proxy card, and how often investment advisors override these pre-populated suggestions. Its evident that proxy voting has become a core issue for the SEC. We’ll keep you posted on any new rules that come out of these evaluations.
Let’s finish off with some international news. Germany’s two largest banks – Deutsche Bank and Commerzbank – confirmed on Sunday that they have been discussing a potential merger. Though both banks say that a deal is “far from certain”, the formal public confirmation of these talks appears to be a step toward reaching an agreement. The German government has also expressed its support for such a merger, as there have been concerns over Deutsche Bank’s financial health since the 2008 financial crisis. However, two of the top shareholders in Deutsche Bank are not so convinced. A combination of Deutsche Bank and Commerzbank would require significant time and money and would not guarantee higher returns. Other skeptics have raised questions regarding the strength of this merged banking operation given Deutsche Bank’s shaky financial position, as well as concerns over the potential job cuts that could result from the merger. Evidently, a number of questions must be addressed before a deal can be reached. If the two banks can come to an agreement, the resulting merged bank would have one-fifth of the German retail banking market with €1.8-trillion in assets.
That’s all of your major news for this week. Come back to the CBLB next week for another round-up of the top corporate and securities law news stories.