As China's economic growth declines, some analysts say Beijing may have to spend more on infrastructure, adding to concerns about high debts.China Economyread more
U.S. President Donald Trump said Tuesday that Washington and Beijing have a long way to go on trade, adding that America could place tariffs on an additional $325 billion...Asia Marketsread more
"The charts, as interpreted by Carley Garner, suggest that the upside in the stock market has gotten more limited," Jim Cramer says.Mad Money with Jim Cramerread more
John Paul Stevens, who served on the Supreme Court for nearly 35 years and became its leading liberal, has died.Politicsread more
The largest U.S. banks are scrutinizing members of the Federal Reserve for any insight into how the central bank will tinker interest rates.Banksread more
The U.S. and China restarted their trade talks, but signs are showing a comprehensive deal could be a long way off, if it happens at all.Marketsread more
The WTO ruling recognized that the United States had proved that China used state-owned enterprises to subsidize and distort its economy. But the U.S. must accept Chinese...World Economyread more
Facebook's cryptocurrency project has already been met with skepticism from policymakers around the world.Technologyread more
Stone, 66, a notorious Republican political operative who has described himself as a "dirty trickster," had previously been dressed down by the judge for his public remarks...Politicsread more
Delta is gathering more data from customers than ever in hopes of avoiding customer service problems and increasing customer satisfaction, its CFO says.At Workread more
The Biden team's second-quarter Federal Election Commission filing shows that the campaign wrote a check of just over $5,300 on June 28 to Sheehan Associates for "strategic...2020 Electionsread more
Lazard, the investment bank that advised SolarCity on its $2.6 billion sale to Tesla Motors, made an error in its analysis that discounted the value of the U.S. solar energy company by $400 million, according to a regulatory filing.
While the purchase price was within the valuation range that Lazard came up with for SolarCity even after accounting for the miscalculation, the error illustrates how even leading investment banks can make mistakes on some of the most high-profile deals.
The mistake came after Tesla and SolarCity co-founder Elon Musk, who is the largest shareholder in both companies, went out of his way to create processes and structures, including a special board committee at SolarCity, aimed at alleviating concerns that he used his influence to force the two companies into a deal.
An analysis by Lazard for SolarCity that indicated an equity value of between $14.75 and $34.00 per share was wrong because it double-counted some of the company's projected indebtedness, according to Tesla's filing with the U.S. Securities and Exchange Commission.
After identifying the computational error on Aug. 18, more than two weeks after the signing of the deal, Lazard realized the valuation range based on its discounted cash flow model was $18.75 to $37.75 per share.
SolarCity and Tesla agreed however that the error would not change their view of the deal, according to the filing. The purchase price, to be paid for with Tesla stock, equated to $25.37 per share.
Lazard and SolarCity representatives offered no immediate comment. A Tesla spokesperson declined to comment.
Lazard ranks No. 10 in the Thomson Reuters Americas M&A league table so far this year, down two spots on where it was last year.
This is not the first time that a major investment bank made a miscalculation on a big deal. An erroneous share count in the leveraged buyout of Tibco Software in 2014 by its financial advisor, Goldman Sachs, led to a Tibco shareholder lawsuit that was settled earlier this year.
Goldman discovered it had overstated the number of Tibco's fully diluted shares only after the company agreed to sell itself to private equity firm Vista Equity.
This had the effect of lowering the sale price to $4.14 billion from the $4.24 billion used in Goldman's fairness opinion. Nevertheless, Tibco decided not to ask Vista to pay the additional $100 million.
Goldman and Vista agreed to pay $30 million to the Tibco shareholders as part of the settlement, The Wall Street Journal reported at the time.