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One thing to start: Airbnb revealed the scale of the financial hit to its business from the coronavirus pandemic on Monday, as it published the prospectus for its long-awaited stock market listing. The accommodation booking service recorded losses of nearly $700m on revenues of $2.5bn in the first nine months this year. More here

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Gregg Lemkau leaves Goldman for Michael Dell’s investment group

Anyone who has followed the recent run of bald chief executives at Goldman SachsHenry Paulson, Lloyd Blankfein and now David Solomon — will know that Gregg Lemkau, whose head of hair is envied by his sister, had reason to doubt his chances of getting the top job down the road. 

Jokes aside, Lemkau is a near-universally popular figure within Goldman. He spent almost three decades at the bank, leading several of its high-profile teams, most recently as co-head of investment banking and before that co-head of M&A. 

But on Monday, Goldman announced that the 51-year-old will “retire” from the bank at the end of the year. Whispers quickly started to swirl as to where Lemkau would be going next — some speculated a private equity group. 

David Solomon, left, and Lloyd Blankfein © FT montage; Bloomberg

Hours later, MSD Partners, an investment group set up by computing entrepreneur Michael Dell, announced it had hired Lemkau as chief executive. 

Once upon a time it may have come as a surprise to see an executive in the investment banking industry, particularly at one of the most lucrative and prestigious banks in the world, leave their post for a small investment company. But times have changed. 

There’s no doubt that investment bankers still earn an enormous amount of money but the kind of riches promised by private equity shops can go well beyond the realm of what your top-shelf bank executives earn.

MSD Partners and its sister operation, MSD Capital, which only manages Dell’s family fortune, together have about $15bn in assets — a drop in the ocean for Goldman. But Lemkau will have the opportunity to expand its existing strategies and move into new areas, while working in a sector that is not hampered by regulations in the same way banks are. 

Lemkau’s departure is also part of a broader shift going on at Goldman. DD was told that M&A bankers were shocked on Monday when they saw the memo from Solomon announcing that Lemkau was leaving.

They saw him as an advocate for their interests as Goldman tries to build its lending business, potentially at the expense of its ruthless focus on advising corporations on dealmaking. 

Gregg Lemkau joined Goldman as an analyst in 1992 and had been seen as a potential future chief executive © Bloomberg

This is perhaps evident in Lemkau’s replacement. Jim Esposito, currently co-head of the global securities division, will take his spot. The 52-year-old has risen through the ranks since he joined Goldman in 1995 as a salesperson for emerging markets debt. 

Lemkau and Dell won’t need to get acquainted. They’ve known each other for some time, have properties in close proximity in Hawaii and both count Silver Lake’s Egon Durban as a friend. 

Lemkau acted as a key adviser to Dell when he decided to take his eponymous personal computer company private in 2013 and then again when Dell went public five years later.

His experience with top tech CEOs such as Elon Musk, Jack Dorsey and Dara Khosrowshahi is sure to come in handy on the new job. 

Banking deal leads Monday merger mania 

When PNC Financial sold its stake in BlackRock after 25 years — at a huge profit — it left Wall Street wondering how the lender would spend its newly topped up $17bn war chest. 

We can stop guessing now. Just six months after exiting its 22 per cent stake in the world’s largest asset manager, PNC announced on Monday it has agreed to buy the US operations of Spanish bank BBVA for $11.6bn. 

© AFP via Getty Images

It is the second-largest deal in the banking sector since Lehman Brothers collapsed. The first being the $66bn deal between BB&T and SunTrust, which decided to go by the unfortunate name Truist

Here’s what the deal tells us. Consolidation in US regional banking is happening, albeit at a slower pace than many expected. Secondly, the great European banking retreat from the US market continues. 

BBVA wasted no time in finding a way to put the cash to good use. On the same day its deal with PNC was announced, BBVA said “it is holding talks” with smaller Spanish rival Banco de Sabadell

The deal will see PNC rank as the fifth-largest US lender by assets and help it expand beyond the mid-Atlantic and Midwestern markets it typically focuses on. Our colleagues at Lex think it’s a good move for both banks. 

While PNC/BBVA was the largest deal announced on Monday, it wasn’t the only one. News of two successful vaccines and a future Joe Biden presidency has sent many companies to the negotiating table. 

As team DD reports, there were nearly $40bn worth of deals struck in 24 hours. Home Depot agreed to pay $9.1bn for its former subsidiary HD Supply 13 years after it disposed of the business. Canada’s Endeavour Gold agreed a $1.86bn all-stock deal to merge with rival Teranga Gold, while over in Europe, payments provider Nexi offered to buy Danish rival Nets in a €7.2bn all-share transaction. 

It turns out M&A agreements are watertight 

For M&A litigators, a once promising 2020 is ending with a whimper. 

On Sunday, mall operators Simon Property Group and Taubman Centers agreed to revise their February merger agreement lowering Simon’s purchase price for Taubman from $52.50 per share to $43 per share, or roughly $3bn in total. 

That agreement came just one day before a trial in Michigan was set to begin over whether the pandemic was severe enough to allow Simon to walk away scot-free. Rather than risking an adverse ruling, the sides decided on the price cut.

We’ve seen this play out in two other high-profile deals struck before the pandemic hit the US in March — LVMH agreed a slightly lower price for Tiffany while Forescout and Advent also managed to short-circuit a trial over so called material adverse effects by agreeing to a discount. 

Lawyers were hoping that these three trials and eventual judicial decisions would have added some more understanding of laws around deal terminations, and how selling companies should behave between signing and closing (for example, Simon accused Taubman of not slashing expenses and executive bonuses once the pandemic hit). 

But settlements are instructive in their own ways. Buyers probably didn’t believe they could get off unscathed so were happy to get discounted prices even if they were getting slightly damaged goods. Sellers are getting their cash, even if it isn’t as much as they expected, quickly. 

Lawyers will not get any courtroom glory anytime soon. But at least they have some more free time to look forward to.

Job moves

  • Jay Clayton, the former Sullivan & Cromwell attorney, is stepping down as chairman of the US Securities and Exchange Commission at the end of the year. 

  • UK outsourcer Capita said its chief financial officer Patrick Butcher is stepping down from his role and would be replaced on an interim basis by Gordon Boyd

  • Shopping mall operator Unibail-Rodamco-Westfield SE named Léon Bressler, a former chief executive of the group, as its new supervisory board chairman following the resignation of Colin Dyer

  • Law firm White & Case has hired Grzegorz Abram as a partner in Warsaw to join its global debt finance practice. He joins from Clifford Chance

Smart reads

Cometh the tax man Taxing “carry” in private equity funds as a capital gain rather than income is impossible to justify, argues the FT’s Jonathan Ford, as the debate over UK tax reform heats up. (FT)

East-West divide HSBC’s destiny is in China, though you wouldn’t know that by the composition of its 14-person board. Only two members are Chinese. (WSJ)

The insider-outsider Xavier Niel is well known inside his native France for his tech and telecoms investments. But the billionaire, who is married to Bernard Arnault’s daughter, has a side hustle of real estate investing that is in focus after his campaign at Unibail-Rodamco. (FT)

News round-up

Saudi Aramco to sell billions of dollars in international bonds (FT) 

UK targets big business in latest move on tax avoidance (FT) 

Kaz investor seeks help to oppose £3bn buyout bid (FT)

Walmart sells majority stake in Japanese supermarket chain (FT) 

European banks need cost-cutting not cross-border M&A (FT) 

Stephen Schwarzman defended Donald Trump at CEO meeting on election results (FT) 

Trustpilot shakes up top team as regulators and IPO loom (FT) 

Goldman Sachs: ruff justice (FT Lex) 

Tata Steel in talks to sell Dutch arm to Sweden’s SSAB (FT)

EG Group’s owners cash out ahead of £6.8bn Asda deal (FT)

Due Diligence is written by Arash Massoudi, Kaye Wiggins and Robert Smith in London, Javier Espinoza in Brussels, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde and Francesca Friday in New York and Miles Kruppa in San Francisco. Please send feedback to due.diligence@ft.com


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