The epic Pfizer pfat pfinger

One huge settlement to start: TD Bank has agreed to pay the US government $3bn to settle charges that it failed to block criminal organisations from using the Canadian lender to launder hundreds of millions of dollars through its accounts.

And a big European deal: US private equity firm CD&R’s €15.5bn offer has beaten rivals pursuing French pharmaceutical company Sanofi’s consumer healthcare division.

In today’s newsletter:

• Pfizer’s startling activist campaign

• HSBC’s plan to save $300mn 

• 7-Eleven tries to fend off bidder

The blank email that rocked Pfizer

Developing a top-selling vaccine for Covid-19 drove Pfizer’s profits. At least for a while.

But a few years on, the intense injection of cash that catapulted the 175-year-old drugmaker to one of the best performers on the S&P 500 hasn’t lasted.

Its market capitalisation has lost $180bn since its pandemic peak, basically creating an open invitation for an activist investor.

Over the weekend, one appeared.

Starboard Value, a hedge fund that has waged activist campaigns against some of corporate America’s biggest names, from Bristol Myers Squibb to News Corp, has quietly built a $1bn stake in the drugmaker.

The entrance of an activist investor is unpleasant enough for a chief executive and company board. But this campaign has an added rub: Starboard teamed up with Pfizer’s former finance chief Frank D’Amelio and former chief executive Ian Read for the plot.

The FT’s Oliver Barnes and DD’s Maria Heeter and James Fontanella-Khan spoke to investors, advisers and insiders involved in the campaign to get the behind-the-scenes story of how it all went down.

It all started with an apparent accidental email on Sunday. Pfizer chief executive Albert Bourla was in Ireland for a board off-site when he received an unexpected message in his email inbox.

The message was odd: it was from D’Amelio, who had abruptly left the company three years prior, and it was blank. Three other Pfizer board members received similar blank emails from D’Amelio in quick succession.

Soon, Bourla and three of his longest-serving directors — Adobe CEO Shantanu Narayen, erstwhile Deloitte boss Joseph Echevarria and Intuit chair Suzanne Nora Johnson — were fielding calls from the two former executives, who urged Bourla to listen to Starboard.

Then, just three days later, the ex-colleagues flipped, backing Bourla instead of Starboard. The move threatened to unravel the second-biggest investment the $8bn fund had ever made, and the bonuses riding on its position.

To one Wall Street veteran, the tumultuous events added up to “the worst first week in an activist campaign in the history of Wall Street”.

Whither HSBC’s investment bank?

The first signs of new HSBC chief executive Georges Elhedery’s plans for Europe’s biggest lender are emerging — and some bankers might be feeling particularly nervous.

Elhedery is working on plans to merge two of its three revenue-generating units: commercial banking, and global banking and markets. (The third is wealth and personal banking.)

The plan will aim to save as much as $300mn, DD’s Ortenca Aliaj and Kaye Wiggins report.

“[The merger] will reduce the top management layers,” said a person with knowledge of the draft plans. “It’s going to affect the senior people and some of the larger roles . . . That’s the most expensive layer and that’s where the costs are.”

It’s worth getting into the weeds a little bit on what would actually change, including for the balance of power within the bank.

Some of what the two units do is similar, but for clients of different sizes (the commercial banking unit works for smaller clients). Both provide “global trade solutions” such as trade financing, as well as lending and payments services.

On top of that, the global banking and markets unit includes HSBC’s investment bank and “markets and securities services”, which includes equities, foreign exchange and debt markets.

Against that backdrop, one option being considered is to put Surendra Rosha, co-chief executive of the bank’s Asia-Pacific business, in charge of commercial and global banking — which already have so much in common — and Patrick George, global head of markets and securities services, in charge of the markets business.

That could reduce the significance of HSBC’s investment bank, leaving it squished into an enormous business unit. It’s already tiny in the grand scheme of things: it accounted for just 1.5 per cent of HSBC’s $37.3bn total revenue in the first half of this year.

Another group of bankers who might be worried are the local heads of each unit, in countries where both have a presence. A lot of the two units’ back-office functions are already consolidated so the savings will come from the duplicate management layers.

In any case, the prospect of a restructuring is already weighing on morale within the bank and Elhedery will probably not want that to drag on for too long. He’s expected to make an announcement by the end of this month.

7-Eleven plans a break-up

Breaking up and changing your name is normally a pretty desperate move.

For Japanese conglomerate Seven & i it might be part of an effort to fend off an unsolicited $47bn buyout proposal from Alimentation Couche-Tard.

On Thursday, the Japanese owner of 7-Eleven said it was going to split its convenience store operations from non-core businesses and list the majority of the unwanted bits down the road.

It also said it was going to ditch the name Seven & i — the “i” coming from Ito-Yokado, the origin of the whole group but now part of the unwanted supermarket business — and “tentatively” (probably) switch to 7-Eleven Corporation.

But will it be enough to keep investors happy?

Remember, these are the same investors who have been pushing the group to concentrate on its convenience store empire, its beating heart for a very long time.

The problem, a few shareholders told the FT, is that the new proposal carries a value that demands serious consideration.

“Couche-Tard’s revised offer of ¥2,701.98 [$18.18 a share] is at a 13.1 per cent premium to the average sellside analyst price target of ¥2,390,” added Arun George of Global Equity Research.

Lacklustre second-quarter results will not help lower the pressure on management.

The stock price reaction on Friday in Tokyo will be the first clue as to whether the strategy push will alleviate pressure.

Job moves

• Ralph Hamers, the former chief executive of UBS, has become an external senior adviser at wealth management start-up Arta Financial. He was most recently in the running to become chief executive at Schroders, but lost out to chief financial officer Richard Oldfield.

• Darktrace co-founder Poppy Gustafsson has been appointed as the UK’s investment minister, according to officials.

• Morgan Stanley has appointed Julien Begasse de Dhaem, Mina Mitby and Rich Myers as co-heads of the bank’s new private capital markets group.

• Citigroup has appointed John Chirico and Jason Rekate as co-heads of corporate banking. The bank has also named Jens Welter head of North American investment banking, while Nacho Gutiérrez-Orrantia will lead investment banking for Europe, the UK, Middle East and Africa.

• Guggenheim Securities has hired Jeff Cohen as a senior managing director with the bank’s consumer and retail investment banking practice. He was most recently a senior adviser at UBS. 

Smart reads

Untenable hours Wall Street banks are notorious for their long hours, the FT reports. But as many companies try to curb 100-hour work weeks, they’re running into the realities of a cut-throat industry.

‘Mega trials’ London’s top lawyers are at the centre of a fee bonanza as lawsuits flood into the UK, the FT reveals. Lawyers are raking it in.

Lina’s grand plan FTC chair Lina Khan has had a no-holds-barred approach to antitrust regulation, Bloomberg Businessweek writes. She’s just getting started.

News round-up

Private equity groups’ assets struggling under hefty debt loads, Moody’s says (FT)

Unilever sells Russian business for €520mn (FT)

Liontrust chief warns uncertainty over tax changes in UK Budget hurting investment (FT)

Brookfield outbid Segro in takeover battle for warehouse owner (FT)

Cheapest UK mortgage deals hit by rise in government borrowing costs (FT)

Elizabeth Warren blasts accounting watchdog over BDO audit failures (FT)

AMD rolls out new AI chip to rival Nvidia (FT)