June 11, 2012 nº 1,187 - Vol. 10


"The impossible missions are the only ones which succeed."

Jacques Cousteau

Read Migalhas LatinoAmérica in Spanish every Tuesday and Thursday. Visit the website at www.migalhas.com/latinoamerica.

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  • Top News

The global slowdown in I.P.O.'s

The dollar volume of initial public offerings worldwide totaled just $547.8 million this week, from seven new listings — the lowest level since January.

Merger lawsuits yield high costs and questionable benefits

Shareholder objections to mergers have become commonplace, requiring many companies to settle lawsuits for millions of dollars. Litigation can be effective in protecting shareholder interests in some deals, but questioning every deal seems to impose excessive costs on the companies involved and their shareholders. Shareholder plaintiffs now challenge virtually every large merger. According to a study, companies that were sold for more than $100 million in 2010 and 2011 reported more than 1,500 lawsuits filed against them and the directors of the target companies. At least 91 percent of these mergers were challenged. The allegations in each case are similar—the shareholders of the target company were paid too little and did not receive enough information about the deal, and their boards did not adopt a good sale process. Merger litigation intensified in the recent recession. Though deal activity slowed drastically in 2008 and 2009, more than 70 percent of large mergers in 2008 and more than 90 percent in 2009 were litigated. Merger activity recovered somewhat in 2010 and 2011, but plaintiff lawyers' strategy of challenging almost every deal persisted. The same merger deal is subject to filings by many plaintiffs and in multiple courts. In 2011, any given deal faced an average of six lawsuits. In an effort to avoid the extra cost of parallel litigation in multiple courts, some companies are changing their bylaws to mandate all shareholder litigation be brought in a court of their choosing. Still, boards face enormous pressure to complete the deal quickly, and plaintiffs capitalize on this time pressure when they request the courts to stop or delay the merger. More than 80 percent of lawsuits challenging deals in 2010 and 2011 were settled—20 percent in the first month and 60 percent before the deal was closed. Of the 36 companies announcing mergers in January to April 2012, 12 have already settled litigation. Most boards decide to settle for an amount covered by directors insurance. This is a significant change from 1999 and 2000, when less than 30 percent of merger-related lawsuits settled and more than half were dismissed by plaintiffs. The cost of these suits is pretty clear. Companies typically agree to pay plaintiffs' lawyer fees (about $1.2 million on average in the last two years) and must usually cover their own legal costs. What is less clear is how shareholders are benefiting from litigation. A decade ago, more than half of the settlements included cash payments to shareholders of the companies being acquired, while only a few—10 percent—required companies to make additional disclosures before a shareholder vote. However, in the last two years, these numbers have reversed: a modest 5 percent of settlements produce more cash for shareholders, while more than 80 percent of suits required only additional disclosures. In the last year, 162 such suits have been settled, but only two deals were voted down by shareholders after additional disclosures were made.

Court cancels Apple-Motorola patent trial

A judge for the US Court of Appeals for the Seventh Circuit on Friday dismissed a patent infringement lawsuit brought by Apple against smartphone rival Motorola. Judge Richard Posner, sitting in as a trial judge for the US District Court for the Northern District of Illinois, dismissed the case with prejudice, saying that neither party could establish a right to relief. Throughout the legal proceedings, Posner expressed frustration with both Apple and Motorola, implying that the companies were wasting the court's time with unclear arguments. Posner was also angered that neither party could justify the large sums they claimed that their patents were worth. He declared he would issue a longer opinion later in the week and that he could change his mind.

US drone attacks in Pakistan legally dubious

UN High Commissioner for Human Rights Navi Pillay declared on Friday that US drone strikes in Pakistan raise grave legal concerns under international law. Pillay expressed particular concern that the drone strikes do not comport with the international law principles of proportionality and distinction. Pillay also called for an investigation into civilian deaths caused by drone strikes, saying that such deaths are a violation of human rights. The US has attempted to justify its drone strike policy on the grounds that the strikes are necessary in order for the US to be able to defend itself.

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  • MiMIC Journal

China nuclear firm plans big IPO

China National Nuclear Power is planning a Shanghai initial public offering that will go toward financing five power projects worth $27 billion.

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  • Brief News

Spanish pride had to give way

On Saturday, eurozone ministers agreed to lend Spain's banks up to 100bn euros ($125bn;). Spain's weakest banks were left with billions of euros of bad loans following the collapse of a property boom and the subsequent recession. Markets in Europe and Asia have risen in response to the bailout of Spain's banks that was agreed over the weekend. Spain's credibility as a borrower could be further undermined by the eurozone's 100bn euros rescue of its banks - and Ireland could be prompted to demand a renegotiation of its bailout package.

US urges action on insider leaks

US Attorney General Eric Holder has appointed two prosecutors to lead an investigation into the suspected leaking of government secrets. Recent news articles have included classified information on cyber attacks against Iran and the foiling of a bomb plot by al-Qaeda in Yemen. Holder said the leaks could compromise national security. Obama has rejected Republican allegations that he sanctioned the leaking to boost his image.

Health care decision hinges on a crucial clause

Constitutional scholars know there's much more at stake in the Supreme Court's decision on the Obama health care overhaul than one election. The case could mark a major turning point in how the Supreme Court interprets the Commerce Clause of the US Constitution.

Iata: EU airline losses to surge

The Iata - International Air Transport Association has almost doubled its forecast for losses at European airlines to $1.1bn for 2012. It said that the rapidly deteriorating business environment in the region was hurting growth. The association had previously forecast a loss of $600m. Iata also warned that the eurozone debt crisis could escalate further and have an adverse impact on the airline industry.

Oil prices hit a 17-month low on China slowdown fears

US benchmark oil price was also lower, falling to 1.4% to $82 in early trade before recovering to $84.10. Oil prices dropped to $98.06 in London - their lowest in 17-months on fears of waning economic growth in China. Prices are more than 25% below their March peak. The fall comes as traders bet on reduced demand from Chinese factories with eurozone woes adding extra pressure.

Bankers can't always hide behind bad legal advice

Passing the buck is a Wall Street pastime, but it can be a risky game to play in court.

Switzerland court partially rules for Google in privacy case

The Supreme Court of Switzerland announced Friday that it has ruled partially for Google in a case over privacy violations through its Street View service. The federal tribunal based in Lausanne held that Google is not compelled to completely blur all faces and license plates but should do so manually if someone files a complaint. In sensitive areas, such as schools, hospitals, courts and prisons, Google is compelled to conduct a full anonymization of all persons and indications. Additionally, the court ruled that Google must cease to automatically publish pictures of private gardens and courtyards taken with cameras positioned higher than 2 meters (6 1/2 feet). This decision partially reversed a ruling by the Swiss FAC - Federal Administrative Court, which held that the service constituted a breach of privacy and ordered the company to take extra steps to ensure adequate protection for Swiss citizens. Google had appealed. The initial complaint was brought by the Swiss Data Protection Ombudsman and Public Domain (FDPIC).

Employment for 2011 law grads hits record low

Graduates nine months out of law school had an 85.6 percent employment rate, the lowest recorded since 1994, according to a report from the National Association for Law Placement.

Kerviel ordered to back up his SocGen subprime conspiracy theory in appeal

Jerome Kerviel was told to present documents to back his claim that Societe Generale SA let him build massive trading positions because it planned to use them later to mask losses linked to US subprime mortgages.

Return to Alcatraz: will a legend end after 50 years?

One of the most daring prison escapes in US history happened 50 years ago Monday. Legend has always held that if the three men who escaped from Alcatraz are still alive, they will return on this anniversary. Unlikely as it seems, the US Marshals plan to be there.

Arizona sheriff seeks dismissal of discrimination suit

Lawyers for Maricopa County Sheriff Joe Arpaio asked the US District Court for the District of Arizona in a motion on Friday to dismiss the lawsuit pending against him that claims his office discriminated against Latinos and disregarded their constitutional rights. The motion to dismiss the case comes a month after the US DOJ - Department of Justice filed suit against Arpaio for allegedly racially profiling Latinos, punishing Spanish speaking inmates, and conducting immigration patrols based solely on reports that there were Spanish speaking individuals with dark skin. As part of its suit, the DOJ requested that officers at the Maricopa County sheriff's office receive training on how to conduct constitutional traffic stops and protect Latinos as much as other citizens of the county.

ICC staff members detained in Libya

The ICC - International Criminal Court said Saturday that four ICC staff members have been detained in Libya since Thursday. They traveled to Libya Wednesday to meet with Saif al-Islam Gaddafi, the son of former Libyan leader Muammar Gaddafi. Reportedly among the detainees are Melinda Taylor, an Australian lawyer working for the ICC. A representative for the Libyan courts said that Taylor attempted to give documents to Saif al-Islam that were from his former aid, Mohammed Ismail, who has been in hiding since the Libyan conflict began, and posed a threat to Libyan safety.

Military judge denies motion to dismiss Wikileaks charges

Army Col. Denise Lind on Friday denied a motion to dismiss eight of the 22 charges against Pfc. Bradley Manning for allegedly transferring vast amounts of classified information to Wikileaks. The defense had argued that the charges against Manning were unconstitutionally vague. Manning's trial is scheduled to begin in September, but Lind indicated it could be delayed until November. Manning's defense has argued that he never should have been deployed to Iraq or entrusted with confidential information because he is emotionally troubled since he was barred from openly serving as a gay man, and the leaks did not hurt US national security. The US Army has responded that Manning's actions indirectly aided al Qaeda. The US military court referred Manning's case for court-martial in February.

Real estate giant Domus Holdings files for an I.P.O.

By taking the parent of Century 21 and Coldwell Banker public, the company's majority owner, Apollo Global Management, is betting that the American housing sector is finally ready for an upswing.

  • Weekly Magazine Review

Time
The decider. What Will Justice Kennedy Do? The fate of Obamacare, gay marriage and other key cases rests with the straitlaced Sacramento native and his pragmatic take on the Constitution

Newsweek
Behind the Mary Kenedy tragedy

BusinessWeek
How to sell drugs

The Economist
Start the engines, Angela

Der Spiegel
Schade. Obamas missglückte Präsidentschaft

L'Espresso
Chi ha paura di Saviano. Le voci su una sua candidatura. Le smentite ignorate. Il malaffare dilagante. Le domande inevase dei trentenni. Lo scrittore racconta il suo rapporto con la politica. E fa alcune rivelazioni.

  • Daily Press Review

Emergency in Myanmar state following riots
Al Jazeera, Doha, Qatar

Saudi women in the security field: Tradition vs. Necessity
Asharq Al-Awsat, Pan-Arab daily, London, England

Church attacks kill at least 3, wound dozens in Nigeria
Egyptian Gazette, English-language, Cairo, Egypt

Iran denies IAEA reports of nuclear cleanup at Parchin military base
Haaretz, Liberal daily, Tel Aviv, Israel

Virus attacking Iran given 'self destruct' order
JPost, Conservative, Jerusalem, Israel

Markets welcome Spain bank deal
BBC News, Centrist newscaster, London, England

World markets cheer Spain's call for bank bailout
CNN International, London, England

Five killed as ambulance hits bomb
Daily Express, Conservative tabloid, London, England

Brown to renew his war of words with Murdoch as former PM appears at Leveson
Daily Mail, Conservative daily, London, England

Georgina Dorsett is whisked away on romantic holiday to Dubai by toyboy Manchester United footballer Tom Cleverley
Daily Mail, Conservative daily, London, England

Markets react postively to Spanish bailout
EuroNews, International news, Ecully Cedex, France

FRENCH ELECTIONS 2012: French Socialists poised for parliamentary triumph
France 24, Issy-les-Moulineaux, France

To solve or not to solve the Kurdish problem
Hurriyet Daily News, (Liberal, English-language), Istanbul, Turkey

Stock markets surge on news of Spanish bailout
Independent The, London, England

The end of the affair
Moscow News The, Independent, Moscow, Russia

Stephen Lawrence profile: the ambitious teenager with a fun-loving streak
Telegraph The, Conservative daily, London, England

Tom Cruise and Russell Brand rock London for Rock of Ages premiere
Telegraph The, Celebrity news, London, England

Disaster zone declared in Surat Thani
Bangkok Post, Independent, Bangkok, Thailand

Taiwan probes 'stealth' boat's missing computer
China Post, English-language daily, Taipei, Taiwan

Passengers of Missing Peru Helicopter Found Dead
Chosun Ilbo, Conservative daily, Seoul, South Korea

Pakistan 'trashed' and insulted, Kayani won't meet US official
Hindustan Times, New Delhi, India

Matters got ugly after lovers fell out
India Times, Conservative daily, New Delhi, India

Fukushima takes women's 200 meters for double at nationals
Japan Times, Independent centrist, Tokyo, Japan

Mexican presidential candidates clash in debate
New Zealand Herald, Conservative daily, Auckland, New Zealand

Innocent photography: Sleeping baby
People's Daily Online, English-language, Beijing, China

Pro-Hitler graffiti found at Israel's Holocaust museum
Straits Times, Pro-government, Singapore

The Boss of Evil
Sydney Morning Herald, Centrist daily, Sydney, Australia

D'Arcy, Monk to face no further sanctions
Taiwan News, English-language daily, Taipei, Taiwan

China welcomes Spanish bank bailout
The Economic Times, Business, Mumbai, India

France to begin Afghan pullout in July
Canadian Broadcasting Centre, Toronto, Ontario

The Arab diaspora finds its voice
Globe and Mail The, Centrist daily, Toronto, Canada

Mitch Daniels Says Public-Sector Unions Should Be Abolished
International Business Times, Business news organization, New York, U.S

Chile's Smog Still Deadly
IPS Latin America, International cooperative of journalists, Rome, Italy

Stock futures point to higher open
Reuters, Business News, New York, U.S

Insight - Liechtenstein prince faces vote over veto power
Reuters, World News, New York, U.S

Dying man fights to get experimental drug from Bristol-Myers Squibb
Toronto Star, Toronto, Ontario

US issues Somali sanctions threat
BBC News, Centrist newscaster, London, England

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