The news at a glance
Energy: GE makes a bet on oil’s recovery
General Electric is “muscling” its way into the No. 2 spot in the oil-field services industry—and on the cheap, said Jon Chesto in The Boston Globe. Instead of buying oil-and-gas services company Baker Hughes outright, GE is combining its own energy equipment business with the Houstonbased firm to create a new publicly traded company, behind only industry leader Schlumberger. As part of the deal, GE will pay $7.4 billion to Baker Hughes shareholders and receive a nearly two-thirds stake in the new company. Halliburton proposed acquiring Baker Hughes in 2014 for $35 billion, but the deal was nixed earlier this year in the face of regulatory pushback. With this purchase, GE CEO Jeff Immelt “is expanding his wager on the battered energy business,” said Ted Mann in The Wall Street Journal. Immelt has recently transformed GE into a key player in the energy business, with some $14 billion in oil-andgas equipment acquisitions over nearly a decade. But many of those deals were struck before the global oil glut that has seen prices plunge to around $50 per barrel, and last year, GE’s oil business sales fell 14 percent. The new company, which will keep the Baker Hughes name, will position GE to reap the benefits “if the oil-and-gas business rebounds.”
Economy: GDP surged in the third quarter
“An acceleration in the U.S. economy in recent months should relieve fears about the economic expansion losing steam,” said Eric Morath in The Wall Street Journal. Gross domestic product increased at an annual rate of 2.9 percent in the third quarter, the Commerce Department said last week, the strongest performance in two years. Economists caution, however, that the third-quarter surge probably won’t change the economy’s overall anemic growth. “Underlying data showed slower gains in consumer spending, sluggish business investment, and a housing sector subtracting from growth last quarter.”
Media: Gannett abandons deal for Tronc
“The biggest newspaper publisher in the U.S. has dropped its bid to buy the publisher of the Chicago Tribune and Los Angeles Times,” said Drew Harwell in The Washington Post. Gannett, which publishes USA Today and dozens of other newspapers, this week abruptly terminated its six-month pursuit of Tronc, the publishing giant formerly known as Tribune Publishing. Lenders that previously agreed to back the takeover “balked in recent days” after new data showed steep losses in Gannett’s print-advertising revenue, throwing doubt on the company’s ability to finance a deal.
Telecom: Business internet providers team up CenturyLink has inked a deal to acquire rival Level 3 Communications in “one of the biggest telecom deals of the year,” said Alex Sherman and Scott Moritz in Bloomberg.com. The $34 billion cash-and-stock agreement is a bid to grab a bigger share of the market handling internet traffic for businesses. Both firms have struggled against their much larger competitors, AT&T and Verizon. Monroe, La.–based CenturyLink is the third-largest telecom company in the U.S., while Broomfield, Colo.– based Level 3 is the No. 2 provider of ethernet services for midsize and large businesses, routing traffic for the likes of Netflix and Google.
Executives: Herbalife CEO to step down
Herbalife will soon “close a chapter on perhaps the most tumultuous stretch of the company’s 36-year history,” said Michael de la Merced in The New York Times. The nutritional supplement maker announced this week that CEO Michael Johnson, who led the firm through bruising battles with activist investors and regulators, will step down in June. Herbalife agreed to a $200 million settlement with the Federal Trade Commission over its business practices in July.
Prenups that protect ideas
Millennials getting hitched are turning to prenuptial agreements to protect more than just what’s in their wallet. Among other things, today’s young people want to safeguard their startup ideas, said Polly Mosendz in Bloomberg com. Just over half of matrimonial attorneys saw an increase in Millennials requesting prenups over the past three years, according to a recent survey by the American Academy of Matrimonial Lawyers. And instead of focusing on more traditional concerns like alimony and inheritances, Millennial prenups now most often “aim to protect intellectual property such as films, songs, screenplays, software, apps, and even ideas for technology concepts yet to be executed.” Putting a value on potentially profitable ideas that don’t yet exist is tricky business, but legally possible, says Randall Kessler, a family lawyer in Atlanta. “How do you know what it’s really worth?” he said. “It’s a gray area.”