Morning Agenda: Uber Garners $40 Billion Valuation

UBER GARNERS $40 BILLION VALUATION | Uber is amassing a war chest to be the world’s private driving service, Mike Isaac and Michael J. de la Merced report in DealBook. On Thursday, the start-up closed a new $1.2 billion round of financing, with investors valuing the company at a staggering $40 billion. This comes on top of the $1.5 billion that Uber had already raised. And Uber may not be done yet. The company may eventually sell an additional $600 million in stock, and it is working with Goldman Sachs to sell, potentially, another $1 billion in debt to some of the Wall Street firm’s wealthy private clients.

Uber’s ascent is one of the most rapid by a start-up in years. With the additional money, Uber is setting itself up for what its investors hope will be the next mammoth initial public offering, following in the footsteps of Facebook and the Chinese e-commerce giant Alibaba Group. The new money, however, comes in the face of a rash of fierce criticism about the company’s approach to users’ privacy. While people briefed on the fund-raising process said that the recent controversy did little to diminish enthusiasm among investors, Uber acknowledged on Thursday that it had more growing up to do.

When the latest fund-raising round is included, Uber is valued at $41.2 billion ‒ or more than Standard & Poor’s 500 components like CBS and the grocery chain Kroger. Still, Uber faces stiff competition from similar services, including Lyft and Hailo, an Uber-like app for summoning taxis that has focused much of its efforts in Europe. It will also face fights in Southeast Asia, where GrabTaxi already hosts more than 60,000 drivers on its ride-hailing platform. That is most likely where Uber will be spending a significant chunk of its newfound riches.

WHY THE 76ERS ARE SO BAD | The Philadelphia 76ers are the worst team in the N.B.A. this year after losing their first 17 games. But that may all be part of the owners’ plan, David Gelles writes in The New York Times. Instead of spending lavishly on star players, the owners have employed methods honed at the private equity firms where they made their fortunes. Josh Harris, a co-founder of Apollo Global Management who leads the new owners group, and his front office sized up the N.B.A. marketplace and discovered that the best route to the top just might be through the subbasement. The team’s goal is to improve their chances of getting a high draft choice.

“A franchise that has been to more N.B.A. finals than any team other than the Los Angeles Lakers and the Boston Celtics has become a test case for what happens when the cold, hard calculations of the business world are applied to the emotionally charged landscape of professional sports,” Mr. Gelles writes. When the owners group bought the 76ers in 2011, the team was overachieving in the weak Eastern Conference. Harris’s first big move was to bring in Andrew Bynum, a potential star. But the move was a disaster. Bynum did not play a game for the 76ers and signed elsewhere after the team paid him $17 million. After that, Harris and his co-owners changed tack, purging the roster of big names and costly contracts. They began amassing draft picks through trades. Last year, they brought in new management.

Harris and his co-owners may be taking a page out of the private equity playbook, but they are diverting from it in other ways. They are investing in some long-term assets, including a new practice facility. And despite an enormous potential profit, they do not plan to sell the team. To reach great heights, however, Scott O’Neil, the chief executive of the 76ers, said his team had to take big risks. “If you look at the fortunes that have been made in private equity and Wall Street, very few have been made going with the wind,” he said. “The great ones are the big bets, and this is a big bet.”

FEWER BIDDERS IN SECOND BITCOIN AUCTION | Is investor appetite for Bitcoin waning? The United States Marshals Service said that only 11 registered bidders took part in an auction on Thursday for 50,000 Bitcoins, worth around $19 million, seized in connection with the defunct online marketplace Silk Road, DealBook’s Sydney Ember reports. The service said it had received 27 bids, far fewer than the 45 bidders and 63 bids it received in its first Bitcoin auction in June. The winner, or winners, of the second auction will be notified on Friday by 5 p.m. In the auction five months ago, the Marshals Service sold nearly 30,000 Bitcoins.

Some of the same investors who participated in the first auction submitted bids this time as well. The venture capitalist Timothy C. Draper, who was the first auction’s sole winner, said he planned to participate in Thursday’s auction. But the results of the Marshals Service’s first auction may have dissuaded some bidders from participating again. It is widely assumed among Bitcoin investors that Mr. Draper bid above Bitcoin’s market price in June. As a result, some investors who had hoped to get a bargain last time saw little point in participating in this auction.

IT’S JOBS DAY | Economists expect the unemployment rate to hold steady at 5.8 percent when the Labor Department releases its November figures at 8:30 a.m. The consensus is for employers to have added about 230,000 jobs in November, though economists say that preholiday hiring of workers makes a surprise possible.

ON THE AGENDA | In addition to the jobs report, the international trade report comes out at 8:30 a.m. Data on factory orders is released at 10 a.m. Data on consumer credit comes out at 3 p.m. Stanley Fischer, the Fed vice chairman, gives remarks at the International Monetary Fund Fiscal Affairs Department’s 50th Anniversary Conference at 2:45 p.m. in Washington.

MICROSOFT GIVES UP ON NOOK INVESTMENT | When Microsoft invested $300 million in Barnes & Noble‘s Nook division in 2012, the deal valued the business at $1.7 billion, more than the market capitalization of Barnes & Noble at the time. Since then, Microsoft’s investment has withered along with the Nook business, Alexandra Alter and David Gelles write. On Thursday, the two companies parted ways, with Barnes & Noble buying out Microsoft for about $120 million. In just over two years, the Nook business has lost more than half its value.

During a conference call with investors, Barnes & Noble’s chief executive said that ending the company’s partnership with Microsoft would help clear the way for the separation, and possibly attract new investors in the Nook. Some analysts said that reacquiring Microsoft’s stake in Nook could help Barnes & Noble redefine itself. What’s more, Microsoft’s initial $300 million investment gave the bookseller an infusion of cash when it needed it most, David Gelles writes in DealBook. And through revenue sharing agreement with Microsoft, Barnes & Noble received a couple hundred million dollars more, according to people briefed on the matter.

2014 DEALBOOK CONFERENCE LINEUP ANNOUNCED | On Thursday, December 11, The New York Times will hold its third annual DealBook conference at One World Trade Center. Here’s a partial rundown of speakers: Mary Jo White (Securities and Exchange Commission), Lloyd C. Blankfein (Goldman Sachs), Mary T. Barra (General Motors), Ray Dalio (Bridgewater); Jeff Bewkes (Time Warner); Kenneth I. Chenault (American Express), Jessica Alba and Brian Lee (The Honest Company); Hosain Rahman (Jawbone); Stephen A. Schwarzman (Blackstone Group), Paul Singer (Elliott Management); John Hering (Lookout); Laurence D. Fink (BlackRock); and Adam Silver (National Basketball Association).

A limited number of seats are still available. You can request an invitation on the conference site.

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DealBook »

Canary Wharf Owner Rejects Final Offer by Qatar and Brookfield | The latest all-cash offer valued Songbird Estates, which owns the operator of the Canary Wharf financial and retail complex in London, at about $4.1 billion.
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Canada Approves Burger King’s Deal for Tim Hortons | Canada’s government on Thursday approved Burger King’s takeover of the doughnuts-and-coffee chain Tim Hortons, which will result in a combined company based in Canada, Reuters writes.
REUTERS

Cheap Oil Could Lead to Big Mergers | With oil’s price down 40 percent since June, bankers and investors are betting that a wave of deal-making will reshape the industry, The Wall Street Journal reports.
WALL STREET JOURNAL

Keurig to Buy Rest of Bevyz | Keurig Green Mountain has agreed to acquire the rest of the drink system maker Bevyz for about $220 million, adding to its technology capabilities ahead of the introduction of its planned cold-drink platform, The Wall Street Journal writes.
WALL STREET JOURNAL

Cooper Tire Weighs Moving Production From China | Cooper Tire executives said the tire manufacturer was considering moving production out of China after selling its stake in a joint venture that was seized by workers last year, The Wall Street Journal writes.
FINANCIAL TIMES

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British Treasury Targets Banks to Increase Tax Revenue | George Osborne, the chancellor of the Exchequer, has outlined several measures aimed at increasing revenue from Britain’s financial sector.
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Three Former ICAP Brokers Plead Not Guilty in Libor Case | Danny Martin Wilkinson, Colin John Goodman and Darrell Paul Read are expected to face trial in September, along with three former traders from two British brokerage firms.
DealBook »

Elizabeth Warren Misfires in Latest Wall St. Salvo | Senator Elizabeth Warren’s opposition to a nominee for a role at the Treasury Department demonstrates her blatant political motivation, William D. Cohan writes in the Street Scene column.
DealBook »

JPMorgan Said to Put Mortgage Bond Trader on Leave | JPMorgan Chase is said to have put another mortgage bond trader on leave, the latest suspension in the face of regulatory scrutiny of the market, Bloomberg News writes, citing unidentified people familiar with the situation.
BLOOMBERG NEWS

Monroe Capital Drops Lawsuit Against Fired Banker | Monroe Capital said on Thursday that it would dismiss a lawsuit against a former employee, Warren Woo, signaling a quiet end to one of the stranger spats between a lender and one of its deal makers.
DealBook »

Richard Branson’s Virgin Empire to Offer Cruises on the High Seas | With backing from Bain Capital, Virgin Cruises aims to shake up the staid cruise industry, though it will take a number of years to build the ships.
DealBook »

Spain’s Bad Bank Picks Private Equity Firms to Sell Assets | Spain’s bad bank said on Thursday that it had selected Apollo Global Management, TPG Capital and Cerberus Capital Management to market and sell about $50.5 billion worth of property assets on its behalf, The Wall Street Journal reports.
WALL STREET JOURNAL

Brazil Firm Raises $309 Million for Education-Focused Fund | The success by Bozano Investimentos in raising money for its new private equity fund is another indication that some investors are looking beyond Brazil’s current economic travails.
DealBook »

Australia’s Bradken Considering Private Equity Offer | The mining products maker Bradken said it was weighing a cut-price $730 million takeover proposal from Bain Capital and Pacific Equity Partners, underscoring the urgency the sector faces as commodities prices fall, Reuters writes.
REUTERS

Prosecutor on Mathew Martoma Case Heads to Private Practice | Eugene Ingoglia, who worked on the government’s crackdown on insider trading at hedge funds, is the latest in a string of federal prosecutors to take a private sector job.
DealBook »

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DealBook »

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OnDeck, an Alternative Lending Platform, Sets I.P.O. Range | OnDeck Capital, an online site for lending to small businesses, said it planned to price its stock sale at $16 to $18 a share, a move that would value the company at about $1.1 billion.
DealBook »

Xfund Closes $100 Million Fund | Xfund, an investment firm based at Harvard, has closed a $100 million fund to finance new ideas ‒ particularly from college graduates who have engineering and computer science expertise ‒ and support start-ups it has already backed, The Wall Street Journal reports.
WALL STREET JOURNAL

Deal to Extend U.S. Terrorism Insurance Hinges on Dodd-Frank Changes | To sweeten the deal for conservatives, negotiators added a measure to mitigate the impact of the 2010 Dodd-Frank Act on unintended targets. It would give insurance companies more flexibility on capital standards that were initially intended for banks under the financial regulatory law., The New York Times writes.
NEW YORK TIMES

Antitrust Inquiry Opened Into Orange’s Proposed Telecom Deal for Jazztel | The European Commission said it was concerned that the proposed $4.1 billion acquisition of the Spanish cable provider by the French telecommunications giant may hamper competition in Spain.
DealBook »

E.C.B.’s Draghi Hints at More Stimulus in Future for Europe | Mario Draghi , the president of the European Central Bank, offered assurances on Thursday that more aggressive stimulus was just around the corner, perhaps the type of large-scale bond purchases used by the United States Federal Reserve, The New York Times reports.
NEW YORK TIMES

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NEW YORK TIMES UPSHOT