Tuesday 19 March 2019
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What will it take to push May’s Brexit deal over the line?
PM needs to win over not just the DUP and Tory rebels, but also the House speaker HENRY MANCE
I
t is likely to be another frenetic week in the Brexit process. Last week MPs rejected prime minister Theresa May’s Brexit deal for a second time, and also voted to delay the UK’s departure from the EU beyond March 29 in order to avoid a no-deal Brexit. The prime minister is expected to try to win parliamentary support for her Brexit deal at least one more time before going to the EU council on Thursday to ask for an extension to Article 50, the formal exit process. Tuesday is seen as the most likely day for MPs to vote. The question is how Mrs May can turn a 149-vote loss last Tuesday into a victory, and thereby salvage her premiership. How will May approach the third meaningful vote? There will be no more concessions from Brussels. However, some of the Eurosceptic Tories who voted against the agreement may accept that it is the hardest form of Brexit they can now expect, after MPs voted last week to reject leaving the bloc without a deal. In addition, Mrs May is hoping to spook some Brexiters with the threat of a Brexit delay to beyond June, and possibly holding European elections in May, if they do not accept her deal. Gavin Robinson, the Democratic Unionist party MP, described holding European elections as “disastrous”. But the DUP’s main sticking point is the backstop, the controversial insurance mechanism to avoid a hard border on the island of Ireland, which the attorney-general Geof-
frey Cox has advised could endure “indefinitely”. Mr Cox will not issue new legal advice, but he is expected to flesh out on some of the more reassuring parts of last week’s opinion. On Monday, Lord Trimble and Lord Bew, who played a role in securing the Good Friday Agreement that ended the conflict in Northern Ireland, said in a research paper for the Policy Exchange think-tank that they believed the government could use an article in the Vienna Convention on international treaties to exit the backstop, if it had a “socially destabilising effect” on the 1998 peace deal. Can May still find a majority for her deal? To overturn her 149-vote deficit, she would have to win over at least 75 MPs. The most plausible route starts with the DUP’s 10 MPs. If they backed her deal, then some 50 of the nearly 70 Tory Eurosceptics who voted against it last week may change sides. Then Mrs May would need a further 15 Labour MPs, in addition to the five Labour and former Labour MPs who backed her last week. Even if she fails in the third meaningful vote, Mrs May could still try to bring back her deal a fourth time — perhaps even on Wednesday — ahead of the EU summit. That would be a desperate last effort to avoid MPs seizing control of the process the following week through indicative votes on options such as a soft Brexit. However, any plan to bring the deal back to parliament would have to reckon with the House of
Tech investors include #MeToo clauses in start-up deals Entrepreneurs forced to disclose sexual harassment complaints in due diligence exercises ALIYA RAM
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ech investors are increasingly including “#MeToo” clauses in deals with start-ups, forcing entrepreneurs to disclose complaints about sexual harassment in the workplace, as more women speak out about sexism in the industry. Lawyers and deal advisers said such clauses were being used in contracts, due diligence exercises and codes of conduct on both sides of the Atlantic, following highprofile allegations of harassment and discrimination at major tech companies including Google and Uber. One investor, who declined to be named, said similar clauses had also been used by asset owners that back venture firms, such as pension funds and family offices, after sexual misconduct allegations at US companies including 500 Startups, Binary Capital and Draper Fisher Jurvetson, and Israel’s Pitango Venture Capital. The wording, used in the “reps and warranties” that are part of dealmaking agreements, typically states: “There are no allegations, complaints or claims of sexual harassment made against any directors, officers or employees of the [company] and, so far as the [warrantors/sellers] are aware, there are no facts or circumstances likely
to give rise to any such allegations, complaints or claims.” Shing Lo, venture capital lawyer at Bird & Bird, the international law firm, said the clause was recently used by a British company developing “internet of things” technology when it invested in a UK start-up, as well as a European venture fund that invested in a retail and consumer start-up. Victor Basta, founder of Magister Advisors, a boutique investment bank, said a recent deal involving a large US acquirer of payment processing technology required a specific screening of employees for cases of harassment or improper conduct as part of its due diligence. Carson Burnham, co-chair of the mergers and acquisitions practice at Ogletree Deakins, the labour and employment law firm, said many firms disliked the clauses. “People are still grappling with the extent to which the issue itself is material and frankly, you know that many of the people involved in these transactions and corporate development are men,” she said. “But certainly for the more progressive firms, we are seeing that this is being included.” The Guardian Media Group’s venture capital fund has drafted a pledge about diversity and harassment for founders to sign, but declined to specify details, saying it had not been finalised.
Theresa May is facing another week of knife-edge politics © Reuters
Commons speaker John Bercow, who has a record of defying the government. Under a parliamentary convention, MPs cannot normally be asked to vote on the substantially same matter twice in the same parliamentary session. Unless Mrs May can point to substantive changes, Mr Bercow could block a third or fourth meaningful vote. Will the EU agree to an extension to Article 50? Yes, but for how long and with what conditions is unclear. Any extension has to be agreed unanimously with all 27 member states. If Mrs May’s deal passes the Commons by Wednesday, she will ask to delay Brexit from March 29 to June 30 to pass the necessary legislation.
That would be relatively straightforward for the EU to agree to. But if her deal hasn’t passed, EU countries will want more clarity about her plans to build a consensus — and may propose a longer extension than Mrs May wants. The Netherlands is minded to support only a shorter extension, while Germany’s Angela Merkel and France’s Emmanuel Macron see advantages in a longer delay. Any extension would have to be approved by both the Commons and the House of Lords. Will May offer to resign to win over MPs? Mrs May’s political demise has been much predicted, including after the June 2017 election, in the wake of her disastrous October 2017
party conference speech and at numerous moments since. She has survived because Tory MPs cannot agree an alternative leader. After surviving a confidence vote three months ago, Mrs May cannot formally be challenged as Conservative leader until December. Some Tory MPs say that her deal would stand more of a chance if she promised to resign immediately after Brexit and leave the next phase of negotiations to someone else. It would be a high-risk gambit for the prime minister, whose authority would seep away further once she set her departure date. But if the parliamentary maths is nearly on her side, a promise to quit could win her the final few MPs she needs.
Payments group Worldpay to be taken over in $43bn deal Financial services technology group FIS seeks scale with acquisition NICHOLAS MEGAW, ARASH MASSOUDI AND SARAH PROVAN
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IS, a US-based financial services technology company, has unveiled plans to buy Worldpay in a $43bn deal that would create one of the largest providers of the plumbing and infrastructure that powers banks and payments. The latest deal in a wave in the payments industry marks the second time the Worldpay business, which was spun out of Britain’s Royal Bank of Scotland as a condition of its bailout during the financial crisis, has been acquired. Worldpay became the UK’s largest payments firm before it was taken over by US-based Vantiv in a $10.4bn deal last year, after which the US company took its name. Worldpay shareholders will receive 0.9287 FIS shares and $11 in cash under the terms of the offer. The bid values Worldpay’s shares at roughly $112, a premium of just over 13 per cent from its close last week. In pre-market trading on Wednesday morning Worldpay
shares were up 11 per cent at $109.60. The combination values Worldpay at about $43bn, which includes the payment group’s net debt of $7.7bn. FIS shareholders will own about 53 per cent, while Worldpay holders will own the remainder. The combined group would have generated revenues of $12.3bn and adjusted earnings before profit, tax, interest, depreciation and amortisation of $4.9bn in 2018. “Scale matters in our rapidly changing industry,” said FIS’s Gary Norcross, who will remain chairman of the board of directors, president and chief executive. FIS said it will look to reap $700m of ebitda synergies from cost cutting and cross-selling over the next three years. The deal will see Jacksonvillebased FIS retain its headquarters and get to name seven directors to a 12 member board, while Worldpay will get the other five. Worldpay boss Charles Drucker will become executive vice-chairman. FIS develops technology ranging from the core banking plat-
forms that power retail lenders’ systems to software for asset managers. The company has grown through more than a dozen acquisitions in the last 15 years. Worldpay specialises in services that enable merchants to take digital payments. Worldpay processes some 40bn transactions annually in 146 countries and 126 currencies. The New York and London listed group is based in Ohio after the Vantiv deal, though it retains an international base in the UK. FIS made no mention of the UK base in its announcement. Changing consumer habits have driven rapid growth in the payments sector in recent years, a trend which has encouraged a wave of merger and acquisition activity. Most recently, US payments processor Fiserv agreed to purchase rival First Data in a $39bn deal. Several private equity-backed companies are also planning initial public offerings in the coming months, including Italy’s Nexi and UAE-based Network International, which last week named former Worldpay chief Ron Kalifa as its new chairman.