is ceding control of Ant Group Co., capping a tumultuous period for the Chinese fintech giant.
Mr. Ma will no longer be the controlling person of Ant, the company said in a statement on Saturday, confirming a previous report by The Wall Street Journal.
The changes are being made to reduce Ant’s reliance on the flamboyant Chinese billionaire, who co-founded
Alibaba Group Holding Ltd.
BABA 2.70%
and helped create Ant, the Journal reported previously.
Mr. Ma will continue to hold voting rights in an entity that controls Ant, alongside nine Ant executives and employees who will be also given voting rights.
Mr. Ma doesn’t hold an executive role at Ant or sit on its board, but is a larger-than-life figure at the company. He has controlled Ant via an entity in which he holds the dominant position. The agreements that allowed Mr. Ma’s dominance will be terminated. The nine other Ant executives and employees to be given the voting rights at the company can exercise their power independently of each other and of Mr. Ma, according to Ant’s statement.
Ant, which owns the popular digital-payment platform Alipay, has been forced to overhaul its operations amid a government crackdown that began with Beijing calling off the company’s multibillion-dollar initial public offering in November 2020. The IPO, which had been slated to happen in Shanghai and Hong Kong concurrently, would have raised more than $34 billion and valued Ant at more than $300 billion.
Ant has been revamping its various business lines, from consumer lending to insurance, and will eventually become a financial holding company subject to regulations in line with traditional financial firms.
The change of control moves Ant a step closer to finishing its overhaul. Yet it also could put back a potential revival of Ant’s IPO for a year or more. Chinese securities regulations require a timeout on public listings for companies that have gone through a recent change in control.
Regulators didn’t demand the change but have given their blessing, the Journal reported previously. Ant is required to map out its ownership structure when it applies to become a financial holding company.
The nine others who will hold voting rights include Chairman
Eric Jing,
Executive Vice President Xiaofeng Shao and Chief Technology Officer Xingjun Ni, in line with the details in the previous Journal report. Mr. Shao is also the general secretary of Ant’s Communist Party committee, according to people familiar with the matter. Mr. Ni was instrumental in founding Alipay in 2004.
Mr. Ma has all but vanished from the public spotlight since he laid into Chinese regulators in a controversial speech days before Ant’s planned IPO in 2020. He retired from Alibaba in 2019 but continued to control Ant. The two companies that Mr. Ma co-founded have been charting separate courses in light of Beijing’s crackdown on big internet platforms.
Mr. Ma’s control over Ant goes back more than a decade to the period when he was CEO of Alibaba. Throughout the years, he had contemplated giving up control of Ant out of corporate-governance concerns that risks may arise from Ant being too reliant on a single dominant figure atop the company, the Journal reported previously.
is changing its name to SLB, dropping the family name of the brothers who founded the oil-field services company nearly a century ago.
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The company said the punchier moniker, which is effective Monday, is meant to embrace its focus on newer energy services, such as clean hydrogen and carbon-capture technology. The rebranding includes a new logo and comes as the company said it would focus on creating and scaling new energy systems such as carbon solutions, hydrogen, geothermal and geoenergy, energy storage and critical minerals.
“It’s simple, it’s bold, it’s still related to our heritage,” Chief Executive
Olivier Le Peuch
said. “We have to find a path to keep this heritage and, at the same time, [it’s] an opportunity to draw a new north for the company.”
Brothers Conrad and Marcel Schlumberger founded the predecessor to the company that would carry their family name in France in 1926, when they created the Société de Prospection Électrique, or the Electric Prospecting Company, according to the company website.
Throughout the 1930s, the company grew rapidly and established international business units bearing the Schlumberger name. In 1940, the company moved its headquarters to Houston, the burgeoning center of the U.S. oil drilling industry.
Over the past century, the company has evolved from its roots doing surface prospecting for the metal-ore mining industry. By the 1960s, its deep-sea drilling equipment was used in the search for sunken vessels and the company began providing high-precision sensors to the National Aeronautics and Space Administration.
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The company has since grown aggressively through acquisitions, cementing its lead as the world’s largest oil-field services company through its 2010 acquisition of Smith International for over $11 billion.
More recently, Schlumberger has expanded into renewable-energy services along with the broader oil-and-gas industry. In 2020, Schlumberger launched a business unit to explore low-carbon and carbon-neutral technologies.
The following year, the company said it wanted to achieve net-zero greenhouse gas emissions by 2050, with minimal reliance on offsets. The company has since rolled out new offerings to reduce carbon dioxide and methane emissions from oil-and-gas operations.
Earlier this month, Schlumberger announced two partnerships, one meant to introduce sustainable technology into the production process for battery-grade lithium compounds and another to accelerate the industrialization of carbon-capture technology.
Shares of Schlumberger are up more than 68% so far this year, outperforming the S&P 500’s decline of 21% over the same period. Last week, the company posted third-quarter earnings that topped Wall Street expectations on 28% revenue growth from a year ago.
Write to Will Feuer at will.feuer@wsj.com and Benoît Morenne at benoit.morenne@wsj.com
is paying $17.90 a share in cash for Poshmark, the companies said. Poshmark priced its initial public offering at $42 a share in January 2021 and the shares more than doubled on their first day. The stock has slumped since and closed Monday at $15.57.
The transaction values Poshmark at about $1.6 billion, including about $580 million of cash reserves, Naver said. Poshmark’s peak market capitalization was $7.3 billion, which it hit on the day it went public, according to FactSet.
Poshmark looks and behaves much like Instagram, motivating sellers to give and receive comments and “likes” and allowing users to follow their favorite sellers. Similar to
eBay Inc.,
EBAY 1.11%
sellers take photos of their own items and sell them directly. Poshmark collects fees on sales on its marketplace but doesn’t hold any inventory.
While the Covid-19 pandemic gave a boost to online shopping, Poshmark’s losses have widened and its revenue growth has slowed this year. After reaching $90.9 million in revenue in the March quarter, revenue edged down to $89.1 million in the June quarter and Poshmark forecast it would come in between $85 million and $87 million for the September quarter.
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Naver is South Korea’s largest web portal and operates as a major search engine ahead of Google locally. It also offers mobile payments and online shopping. Outside Korea, Naver is behind the Line messaging app and is a major operator of webtoons, or digital comics made for reading on online and mobile platforms. In 2021, the South Korean company acquired Wattpad, a Toronto-based storytelling platform, for $600 million.
The companies said the Poshmark transaction is expected to close by the first quarter of 2023. The Redwood City, Calif., company will become a stand-alone U.S. subsidiary of Naver. Poshmark’s founder and Chief Executive
Manish Chandra
and his team will continue to lead the company.
Founded in 2011, Poshmark has billed itself as a way to marry sustainable commerce with social media and says it has more than 80 million registered users. The number of active buyers—people who purchased on the site in the past 12 months—was about 8 million in the last quarter, the company reported. It faces competition from
Etsy Inc.,
eBay,
ThredUp Inc.,
the
RealReal Inc.,
Facebook Marketplace and other marketplaces that let people buy or sell secondhand goods.
The companies said the combination would help Poshmark expand into Korea and other parts of Asia. Poshmark currently offers its app to users in the U.S., Canada, Australia and India. It would also give Naver a bigger foothold in the U.S. market.
Naver expects the deal will enable savings totaling around $30 million for the two companies. That includes gains from reducing redundant costs and Poshmark’s expected gains from accessing Naver’s live-commerce solutions and other technologies, said Kim Nam-sun, Naver’s chief financial officer, in a conference call.
Naver’s shares fell by nearly 9% on Tuesday following news of the Poshmark acquisition.
At a press conference in Seoul, Naver CEO
Choi Soo-yeon
played down the stock slide. The purchase was made at a very reasonable price, she said, expressing confidence that the so-called customer-to-customer market that Poshmark operates in would continue to grow in the years ahead.
With the acquisition, Naver expects to help Poshmark improve its marketing campaigns and to pursue partnerships with the South Korean company’s own offerings. As an example, Ms. Choi cited Weverse, an online marketplace for K-pop merchandise it jointly owns with HYBE Co., the agency behind boy band BTS.
“We will continue to pursue new projects and study the best ways to create service synergies between the two firms,” Ms. Choi said.
Ernst & Young’s leaders are expected this week to give the green light to splitting its auditing and consulting businesses, paving the way for the biggest shake-up in the accounting profession in more than 20 years, according to people familiar with the matter.
The accounting giant’s global executive committee, which oversees the firm’s 312,000-person worldwide network, met on Labor Day to put the finishing touches to the plan for a worldwide breakup, the people familiar with the matter said. The committee is expected to approve the plan later this week, which will trigger votes on the deal by EY’s roughly 13,000 partners, who stand to make windfalls averaging more than a million dollars each.
The split, penciled in for late next year, would separate EY’s accountants who check the books of companies such as
Amazon Inc.
from its faster-growing consulting business of advising on technology, deals and other issues.
EY’s move could radically reshape the accounting landscape if it goes to plan, industry watchers said.
An EY spokeswoman said that discussions were continuing and that “at this time, no decision has been made on moving to the next phase.”
EY is one of the Big Four firms that dominate auditing in major financial markets and whose multibillion-dollar consulting arms compete with the likes of Accenture PLC and International Business Machines Corp.
“There’s a good chance it will cause other big firms to follow suit,” said Martin White, a senior analyst at Source Global Research, a consulting-industry research company. “Who doesn’t want a massive payday if you think it’s there and it’s not going to cause [your business] longer-term harm?”
EY’s rivals say they intend to keep auditing and consulting under one roof. Deloitte held exploratory talks with bankers after news of the EY plan emerged, The Wall Street Journal previously reported, but says it isn’t planning a split. A spokesman said Deloitte “will not separate and split our businesses and we will not monetize our collective life’s work.” KPMG said in a statement that its current model brings a “range of benefits,” and PricewaterhouseCoopers said it is “fully committed” to its multidisciplinary strategy.
EY’s planned split would divide its $45 billion-revenue global network roughly 60:40 between the consulting business and the audit-focused partnership, which would retain the EY brand, according to a May version of the proposal reviewed by the Journal. The new consulting company was forecast to raise some $10 billion by selling a 15% stake to the public at the time of the split, in addition to borrowing $17 billion to help fund partner payouts.
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EY’s partners have a strong financial inducement to back the deal. The audit partners are in line for cash payouts, which were in June expected to average two to four times annual compensation. Those multiples may have declined as markets have fallen in recent weeks. Still, the windfalls are expected to be worth well over a million dollars for the typical U.S. and U.K. partners, who earn on average $850,000 to $900,000 a year, according to people familiar with the matter.
On the consulting side, partners are promised shares in the new company, which were in June expected to be worth typically seven to nine times their annual compensation, paid out over five years.
Carmine Di Sibio,
EY’s global chairman and chief executive who has spearheaded the proposed split, is in line for a windfall of tens of millions of dollars, the people familiar with the matter said.
EY’s leaders are expected to say the split will be good for the firm’s finances, as well as their own, according to the people familiar with the matter. They hope the breakup will free the consultants to win billions of dollars of new business, unfettered by independence rules that restrict the work accounting firms can do for audit clients, the people said.
Carmine Di Sibio, EY’s global chairman and chief executive, has spearheaded the proposed split.
Photo:
Hollie Adams/Bloomberg News
EY checks the books of a raft of Silicon Valley giants, including Amazon,
Salesforce Inc.,
Workday Inc.
and Google parent
Alphabet Inc.
That limits its ability to compete in the fast-growing area of consultants teaming up with tech giants to sell outsourced services to companies.
Once the carefully choreographed “go” decision has been announced this week, the firms that make up EY’s roughly 140-country global network are expected to vote on the plans this fall and early next year, according to the people familiar with the matter. The decision, originally scheduled for June, was delayed to make sure the leaders of the U.S. and other big member firms were happy with the proposal, the people familiar with the matter said. The sticking points included the treatment of around $10 billion of promised payments to retired partners, the Journal previously reported.
The decision is also expected to signal the start of negotiations with the Securities and Exchange Commission and other regulators worldwide who will need to sign off on the deal.
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The watchdogs are expected to be pleased by the reduction of potential conflicts of interest, a longstanding problem in the industry. They will want to be assured that EY’s audit-focused firm will be sufficiently resilient to withstand potential blockbuster litigation damages, despite its sharply reduced size.
EY is facing multibillion-dollar legal claims in Germany and the U.K. over its allegedly failed audits of two corporate blowups, fintech company
Wirecard AG
and hospital operator NMC Health PLC. EY has said it stands by its audit work.
Another issue that needs clearance by the regulators is branding. Paul Munter, the SEC’s acting chief accountant, said last month that after an accounting firm sells off part of its business, the new entity shouldn’t profit from the accounting firm’s name or logo. The two businesses can’t share any marketing or advertising, he added.
The new EY consulting company will have to spend heavily to build up its new brand, according to Tom Rodenhauser, managing director at Kennedy Research Reports, which analyzes the consulting industry.
Andersen Consulting,
the consulting arm of the former Big Five firm, spent “millions and millions and millions of dollars” on its successful rebranding as Accenture, Mr. Rodenhauser said. “EY consulting will have to make that same kind of investment.”
and is calling on the media company to buy the rest of Hulu, explore spinning off ESPN and refresh its board.
Mr. Loeb on Monday said his firm, which liquidated a large Disney stake earlier this year, has repurchased a “significant stake” in the company and sent a letter to Disney Chief Executive
Bob Chapek
urging the company to engage with Third Point on a number of issues.
Mr. Loeb praised growth in Disney’s streaming subscriber base, but also wanted Disney to more aggressively cut costs and consider a number of steps to shake up its portfolio.
The investor’s calls come at an inflection point for Disney and the streaming industry at large, which enjoyed torrential growth during Covid-19 but now face headwinds that include financial losses, domestic subscriber saturation and the introduction of new ad-supported tiers.
Mr. Loeb also now represents a fresh challenge for Mr. Chapek, who assumed the CEO job in February 2020, one month before Covid-19 shut down his company’s theme parks and the nation’s movie theaters. Earlier this year, Mr. Chapek found himself under fire from his own employees and Florida Gov.
Ron DeSantis
over his response to the state’s bill known by opponents as the “Don’t Say Gay” legislation.
Mr. Chapek was renewed to a three-year contract this summer, and recent subscriber growth in Disney’s flagship service, Disney+, has shown the company is advancing on the streaming industry’s dominant player,
Netflix Inc.
A spinoff of ESPN—itself a source of paying subscribers through its ESPN+ offering—would radically alter Disney’s presence in the streaming ecosystem.
“We welcome the views of all our investors,” Disney said in response to Third Point’s letter. The company said its board has been continuously refreshed, “with an average tenure of four years.”
Third Point is pushing Disney to “make every attempt” to buy up
Comcast Corp.’s
CMCSA 1.26%
remaining minority stake in the streaming giant Hulu before its contractual deadline in early 2024. Under a 2019 agreement, Comcast can require Disney to purchase its NBCUniversal subsidiary’s one-third stake in Hulu by that deadline for at least $9 billion, assuming the streaming service has an equity value greater than $27.5 billion.
“We believe that it would even be prudent for Disney to pay a modest premium to accelerate the integration but are cognizant that the seller may have an unreasonable price expectation at this time,” Mr. Loeb’s letter says.
Disney and Comcast have been in a dispute over the value of Hulu, The Wall Street Journal previously reported. When Disney took majority control of Hulu in 2019, the service was valued at a minimum of $27.5 billion. Comcast believes the value of Hulu is now closer to $70 billion, people familiar with the matter have said.
The two companies have already started to unwind some aspects of their partnership. Comcast’s NBCUniversal earlier this year exercised an option to exit its content-sharing agreement with Disney, the Journal reported. Content from NBCUniversal that previously would have gone to Hulu after airing on NBC and NBC-owned cable channels will now go directly to Peacock, NBCU’s streaming service.
Mr. Loeb’s letter also states that there is a “strong case to be made” that Disney should spin off its ESPN business to shareholders to alleviate leverage at the parent company, despite ESPN’s centrality to the company’s streaming offerings and the significant free cash flow it generates.
Mr. Loeb suggests that synergies between Disney and ESPN could be replicated through contractual arrangements. A spinoff would drive better long-term value for Disney shareholders and result in a business “no longer haunted by the specter of cord-cutting,” the letter says.
Cord-cutting has driven Disney to make drastic changes to its business model in the past. In the summer of 2015, former Disney CEO
Robert Iger
acknowledged that the company was seeing “some subscriber losses” to ESPN. One year later, ESPN lost two million subscribers, dropping to its lowest count since 2005.
That steady decline became an albatross on Disney’s stock price, which fell as investors feared a future in which ESPN—once a top moneymaker—fell in relevance and revenue.
ESPN’s troubles—and Wall Street’s response to them—were one reason Mr. Iger would decide to launch his own streaming service. Disney+ premiered in the fall of 2019, and its rocketing growth in its first 18 months caused Disney shares to rise even as Covid-19 wrecked other parts of the business.
Hollywood has been rampant with rumors about the future of ESPN since those first indications of subscriber losses, with rivals speculating that a spinoff or sale was in its future. Today, the sports network is one of three core components of Disney’s streaming bundle, along with Disney+ and Hulu.
Disney+ has 152.1 million subscribers as of the most recent quarter, ESPN+ has 22.8 million and Hulu has 46.2 million.
Mr. Loeb’s letter also urges the company to rethink the makeup of its board and consider a list of potential new members that Third Point has compiled. It also advocates for a wide-ranging cost-cutting program and the continuation of Disney’s pandemic-era suspension of cash dividend payments.
Mr. Loeb has been a thorn in the side of studio chiefs before. In 2013, he bought a stake in
Sony Group Corp.
and publicly criticized the company’s movie arm, Sony Pictures Entertainment. He called on the company to make cuts to the division and introduce “discipline and accountability.”
Soon after Mr. Loeb’s disclosure of a 7% stake, Sony Pictures’ then-CEO pledged to find at least $350 million in annual savings. Mr. Loeb sold his stake about a year later, but has called on Sony to make changes to its entertainment division in the years since.
Last week, Disney reported better-than-expected earnings and added 14.4 million new subscribers to its Disney+ streaming service, many of which came to the service amid its expansion internationally.
The company’s new customer additions brought its total at all of its streaming services, including Disney+, Hulu and ESPN+, to 221.1 million subscribers, which puts Disney’s streaming total narrowly ahead of rival Netflix Inc., which last month reported it had 220.67 million subscribers.
Disney’s share price is up more than 12% in the past week, but remains down about 20% since the start of the year, amid a broad pullback in technology and media stocks.
Last week, Disney also announced price increases to its streaming services, including for its planned ad-supported tier of Disney+, a move that industry executives and analysts said is intended to help drive profitability at its streamers.
Disney, whose direct-to-consumer segment has lost more than $7 billion since Disney+ launched in late 2019, predicts that Disney+ will achieve profitability by September 2024.
“We have plenty of room on price value,” Mr. Chapek said last week.
Third Point previously held 4.1 million shares of Disney and successfully pushed the company to suspend its $3 billion annual dividend and plow the funds instead into the streaming business.
But by the first quarter of this year, the hedge fund had completely exited its position. Mr. Loeb had become worried that it would take years for Disney’s streaming business to reap the profits needed to boost the company’s share price, a person familiar with his thinking told The Wall Street Journal in May.
Since 1967, the Florida land housing Disney’s theme parks has been governed by the company, allowing it to manage Walt Disney World with little red tape. WSJ’s Robbie Whelan explains the special tax district that a Florida bill would eliminate. Photo: AP
Write to Dean Seal at dean.seal@wsj.com and Erich Schwartzel at erich.schwartzel@wsj.com
HONG KONG—Billionaire Jack Ma plans to relinquish control of Ant Group Co., people familiar with the matter said, part of the fintech giant’s effort to move away from affiliate Alibaba Group Holding Ltd. after more than a year of extraordinary pressure from Chinese regulators.
The authorities halted Ant’s $34 billion-plus IPO in 2020 at the 11th hour and are forcing the technology firm to reorganize as a financial holding company regulated by China’s central bank. As the overhaul progresses, Ant is taking the opportunity to reduce the company’s reliance on Mr. Ma, who founded Alibaba.
Mr. Ma, a 57-year-old former English teacher and one of China’s most prominent entrepreneurs, has been the target of government action that appears designed to reduce his influence and the power of his companies. He has controlled Ant since he carved its precursor assets out of Alibaba more than a decade ago. Over time he built it into a company that owns the Alipay payments network with more than one billion users, an investing platform that houses what was once the world’s largest money-market fund, and a large microlending business. Ant was expected to be valued at more than $300 billion had it gone public.
Diminishing his ownership could put back a potential revival of Ant’s IPO for a year or more. Chinese securities regulations require a timeout on public listings for companies that have gone through a recent change in control.
Mr. Ma doesn’t hold an executive role at Ant or sit on its board, but is a larger-than-life figure at the company and currently controls 50.52% of its shares via an entity in which he holds the dominant position. He could relinquish his control by transferring some of his voting power to other Ant officials including Chief Executive
Eric Jing,
after which they would collectively control the company, some of the people said.
Ant told regulators of Mr. Ma’s intention to cede control as the company prepared to convert into a financial holding company, the people familiar with the matter said. Regulators didn’t demand the change but have given their blessing, the people said. Ant is required to map out its ownership structure when it applies to become a financial holding company.
The People’s Bank of China has yet to officially accept Ant’s application to become a financial holding company. Any change of control isn’t likely to materialize until Ant’s restructuring is complete.
Ant owns the Alipay payments network that has more than one billion users.
Photo:
Qilai Shen/Bloomberg News
Mr. Ma has personally contemplated ceding control of Ant for years, some of the people said. He has been concerned about the corporate-governance risks arising from being too reliant on a single dominant figure atop the company, those people said.
The charismatic founder addressed those risks at Alibaba years ago by setting up a partnership structure to ensure a sustainable succession as its first generation of leaders moved on. He gave up the CEO job at Alibaba in 2013 and stepped down as chairman in 2019 when he retired from the company. He currently holds less than 5% of Alibaba’s shares.
American depositary shares of Alibaba traded in the U.S. fell 2.2% on Thursday. They have lost nearly half their value over the past 12 months.
The need to end Mr. Ma’s control at Ant gained new urgency as the souring regulatory environment spurred Ant and Alibaba to cut their ties. On Tuesday, Alibaba revealed seven top Ant executives had stepped down from the Alibaba partnership, the top echelon of management at Alibaba and its subsidiaries. The two companies also terminated long-running commercial and data-sharing agreements that had given Alibaba an edge.
Mr. Ma previously held back from giving up control of Ant because he didn’t want to delay the company’s plans for an initial public offering, some of the people familiar with the matter said. The scuttling of those plans—after Mr. Ma laid into financial regulators in a speech—removed that obstacle and created a fresh opportunity for Mr. Ma to resolve the matter, those people said.
A change in control could mean that Ant will have to wait a while longer before it tries going public again. Chinese securities regulations state that companies can’t list domestically on the country’s A-share market if they have had a change of controlling shareholder in the past three years—or in the past two years if listing on Shanghai’s Nasdaq-like STAR Market.
In less than six months, China’s tech giant Ant went from planning a blockbuster IPO to restructuring in response to pressure from the central bank. As the U.S. also takes aim at big tech, here’s how China is moving faster. Photo illustration: Sharon Shi
Hong Kong also imposes a waiting period but only for one year. Ant’s scuttled IPO plan included simultaneous listings in the former British colony as well as Shanghai.
Ant is in no rush to attempt an IPO again and intends to keep its options open, some of the people said. The company could consider other moves including spinning off units that could in turn be listed themselves, those people said.
Mr. Ma controls Ant through an entity called Hangzhou Yunbo Investment Consultancy Co., which in turn controls two vehicles that together own a little more than half of Ant’s shares.
Mr. Ma has a 34% stake in Hangzhou Yunbo. The other 66% is split evenly among Ant’s CEO, Mr. Jing, former CEO
Simon Hu
and veteran Alibaba executive and former Ant nonexecutive director Fang Jiang.
The billionaire originally owned all of the entity. He transferred two-thirds of the shares to the three executives in August 2020 before Ant filed its IPO prospectus. At the same time, Mr. Ma was given veto power over Hangzhou Yunbo’s decisions, according to the prospectus. The arrangement was designed to give the other executives more say in Ant’s affairs without triggering an effective change in control that could delay the IPO, a person familiar with the matter said.
Jack Ma doesn’t hold an executive role at Ant or sit on its board but controls 50.52% of its shares via an entity in which he holds the dominant position.
Photo:
bobby yip/Reuters
Mr. Ma could cede control of Ant by diluting his voting power in Hangzhou Yunbo via giving up his veto and transferring some of his stake to other executives, the person said.
Mr. Hu, who resigned as Ant’s CEO last year and recently retired, and Ms. Jiang, who left Ant’s board last year, will likely exit Hangzhou Yunbo and be replaced by other Ant executives. In addition to Mr. Jing, Ant’s most senior executives are now Executive Vice President Xiaofeng Shao and Chief Technology Officer Xingjun Ni. Mr. Shao is also the general secretary of Ant’s Communist Party committee, according to people familiar with the matter. Mr. Ni was instrumental in founding Alipay in 2004.
Mr. Ma’s control over Ant goes back more than a decade to the period when he was CEO of Alibaba. In 2011, it emerged that he had carved the payments business Alipay out of Alibaba without the knowledge of key shareholders including Yahoo Inc. and
SoftBank Group Corp.
9984 0.37%
Alibaba argued the transfer was needed for Alipay to secure a Chinese license that might not have been granted if the company had foreign shareholders. Following the move, China’s central bank in May 2011 gave Alipay a license to operate as a payment-services company. Yahoo and SoftBank were later compensated by an agreement that allowed them to share economic interests in Ant through their ownership in Alibaba.
In 2014, Ant Financial Services Group was created to hold Alipay and other financial businesses including consumer lending. The company in 2020 changed its name to Ant Group.
Write to Jing Yang at Jing.Yang@wsj.com and Raffaele Huang at raffaele.huang@wsj.com
joined forces with labor leaders to oust Chief Executive Officer
Herbert Diess,
who was in the midst of a push to turn the German auto company into a top maker of electric vehicles.
Mr. Diess will be succeeded by
Oliver Blume,
CEO of VW’s sports-car maker Porsche AG and long an ally of the Porsche-Piëch family that controls a majority of VW voting rights. Mr. Blume will retain his job running Porsche, which is slated for an initial public offering this autumn.
The departing chief executive had repeatedly clashed with unions, which hold half the seats on the German equivalent of the company’s board of directors. Until now he had retained the support of the family, heirs to the VW Beetle inventor, Ferdinand Porsche.
Mr. Diess was informed around midday Thursday that the company’s core shareholders and labor representatives had decided to fire him. The broader supervisory board learned of the decision at a meeting at around 4:30 p.m. Friday local time, according to a person familiar with the proceeding.
The sudden ouster comes after renewed internal strife over the slow progress developing core software for the company’s new generation of electric vehicles. The delays have caused the launches of some models to be pushed back, raising doubts among the Porsche-Piëch family about Mr. Diess’s ability to deliver on his promises, people familiar with the situation said.
Herbert Diess is leaving VW as it struggles in developing core software for its new generation of electric vehicles.
Photo:
Ralph Orlowski/Reuters
VW’s leadership crisis has plunged the company’s electric-vehicle strategy into uncertainty and has raised questions about the company’s governance, which is dominated by a triumvirate of family shareholders, the German state of Lower Saxony and the country’s biggest trade union.
“The hope of the supervisory board must be for new group CEO Blume to have more success in guiding the software strategy of the group,” Daniel Roeska, analyst at Bernstein Research, said in a note to clients. “However, it will take months to come up with a new plan, and creating unrest as the group is heading into a challenging 2023 is the wrong time, in our view.”
Mr. Diess couldn’t be reached to comment. Mr. Diess has said that before joining VW, he had turned down a job offer from
Elon Musk,
which has fueled speculation that he could join
Tesla Inc.
if he left VW.
Auto-industry CEOs around the world are wrestling with how best to transition to new technologies—much of which isn’t core to their companies’ expertise and requires different thinking, cost structures and skill sets.
Car executives are under pressure to get ahead of new rivals, many of them in Silicon Valley, which have deeper pockets and are unencumbered by a capital-intensive legacy business focused on making gasoline-powered vehicles.
In Detroit, the leadership at
General Motors Co.
and
Ford Motor Co.
have outlined bold moves in recent years to transform their operations, including the creation of new supply chains for batteries and the hiring of new kinds of talent. Ford this year took the unusual step of splitting its gas-engine and EV operations into two separate divisions, a move that executives have said will help it be more agile in its shift to new technologies.
Meanwhile, investors are aggressively betting on the EV space, trying to figure out who will be the next Tesla.
With gas prices on a wild ride, many consumers are exploring whether buying an electric vehicle could save them money in the long run. WSJ’s George Downs breaks down four factors to consider when buying a new car. Photo composite: George Downs
Mr. Diess has defined the industry’s challenge as shifting from banging metal into cars to developing the skills, resources and vision to create software-defined cars, vehicles that in many ways have more in common with an iPhone than a conventional car. His attempt to catch up with Tesla was hampered by difficulties turning VW into a developer of software, which is the heart of modern electric vehicles and future self-driving cars.
In recent weeks, people familiar with the company said it had rebooted its plan to develop a unified operating system for its cars after trouble delivering the code led VW’s Audi and Porsche brands to postpone the launch of new premium electric models.
It couldn’t be determined whether Mr. Blume would continue to pursue Mr. Diess’s strategy of keeping core software development in-house or whether he would turn to
Alphabet Inc.’s
Google or
Apple Inc.
as some rivals have.
In March, Mr. Blume said he and his management team met senior Apple executives for a meeting at which they discussed a range of potential projects. Mr. Blume disclosed no further details, and it couldn’t be determined what was discussed.
Ferdinand Dudenhöffer,
director of Center for Automotive Research in Duisburg, Germany, said it was to be expected that Mr. Blume would present a new software strategy for the company.
“This big issue of the software-defined car is a huge challenge for conventional auto makers,” Mr. Dudenhöffer said. “Either auto makers will become tech companies like Google, Apple and Microsoft, or they will become dependent on the tech giants.”
Mr. Diess survived several challenges to his position. In December, following a clash with labor representatives, directors stripped him of some of his responsibilities and reshuffled his management team. But this week’s move to push him out came suddenly and wasn’t linked to any single incident, people familiar with the decision said.
At the supervisory-board meeting on Friday afternoon,
Hans Dieter Pötsch,
chairman of the supervisory board and a key ally of the Porsche heirs, presented a deal reached previously with top officials of the IG Metall trade union in a smaller meeting.
The families and union leaders agreed to remove Mr. Diess in the belief that Mr. Blume, 54 years old, who became CEO of Porsche in 2015, would lead with more consensus among management and VW stakeholders, people familiar with the decision said. Mr. Blume, an engineer by training, has long been a favorite of the Porsche-Piëch families and union leaders as a successor to Mr. Diess. But Mr. Blume has repeatedly said he was happy at Porsche.
Once the controlling families decided Mr. Diess had to go, they approached Mr. Blume, people familiar with the family said, and urged him to take the job. Mr. Blume agreed, they said.
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“Blume is seen as someone with a more congenial personality and management style,” one of the people said. “He speaks to his colleagues on the executive board differently and has had success at Porsche.”
According to the people with knowledge of the decision, the Porsche-Piëch family concluded that Mr. Diess’s personality led to repeated conflict within the company and that he didn’t appear to have the software problems under control. While not the only issue that weighed on the family’s mind, the software troubles began to affect new models and eroded the confidence that Mr. Diess could get the issues under control.
Hours before his ousting, Mr. Diess, who will step down on Sept. 1, posted a holiday message to workers ahead of the summer breaks.
“After a really stressful first half of 2022 many of us are looking forward to a well-deserved summer break,” he wrote on LinkedIn. “Enjoy the break—we are in good shape for the second half.”
Mr. Diess joined VW in 2015 from
Bayerische Motoren Werke AG
, initially as chief of the VW brand. In that role, he began to lay the groundwork for VW’s electric-vehicle strategy, a plan that has seen VW’s brands, including Porsche, Audi, Seat, Škoda, Lamborghini and Bentley, develop core electric models with a plan to shift fully to EVs this decade.
Under Mr. Diess’s leadership, VW embarked on a plan to build battery cell manufacturing companies around the world to power its new generation of EVs. It recently announced that it would create a new company in the U.S. under the Scout brand to build rugged, off-road electric trucks and SUVs. The move is part of a focus to rebalance the company’s heavy reliance on the Chinese market, where it makes 40% of sales.
While union leaders have acknowledged Mr. Diess’s strategic vision and his achievement in transforming VW’s culture for the EV age, they have questioned his ability to execute, as highlighted by the software problems.
Daniela Cavallo,
the head of VW’s works council, has said Mr. Diess had failed to involve employees in key decisions. She criticized him on his warning to the supervisory board last year that 30,000 jobs at its flagship plant were at stake if VW failed to accelerate its EV shift.
In a statement, Ms. Cavallo said the VW group “wants to emerge strengthened from the historical change in the world of mobility in a leading position. However, it is also our aim that, despite the great challenges, job security and profitability remain equal corporate goals in the coming years.”
Mr. Blume joined Volkswagen in 1994 and has held management positions for the brands Audi, Seat, Volkswagen and Porsche.
“Oliver Blume has proven his operational and strategic skills in various positions within the group and in several brands and has managed Porsche AG from a financial, technological and cultural standpoint with great success for seven years running,” Mr. Pötsch said. VW said Mr. Blume would continue as chief executive of Porsche after a possible IPO.
—Christina Rogers contributed to this article.
Write to William Boston at william.boston@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com
SINGAPORE—Chinese regulators are concluding yearlong probes into ride-hailing giant
Didi Global Inc.
DIDI -3.14%
and two other U.S.-listed tech firms, preparing as early as this week to lift a ban on their adding new users, people familiar with the discussion said.
The regulators plan as well to allow the mobile apps of Didi, logistics platform
Full Truck Alliance Co.
YMM -3.09%
and online recruitment firm
Kanzhun Ltd.
BZ -2.40%
back on domestic app stores, also as early as this week, the people said. The apps were removed last July when Chinese authorities opened data-security probes into the companies, citing national-security reasons.
With concerns growing over a rapid deterioration in China’s economic outlook, Beijing has moved to pause its campaign to tighten its grip on homegrown tech giants and their troves of data.
After Chinese ride-hailing giant Didi made its Wall Street debut, Beijing said it plans to tighten rules for homegrown companies looking to raise money overseas. WSJ’s Yoko Kubota takes a Didi ride to explain what the crackdown means for China’s tech titans and investors. Photo illustration: Ang Li
The three companies went public in the U.S. last June and raised nearly $7 billion in total. Shortly afterward, China’s internet regulators began cybersecurity reviews. Didi was hit particularly hard—its market value plummeted in the following months, and less than a year after listing its shares in the U.S., the Beijing-based company decided to delist from the New York Stock Exchange.
The three have a combined market capitalization of about $25 billion, compared with around $115 billion last July 1—just before the investigations were announced—according to FactSet.
Chinese government authorities including the Cyberspace Administration of China conveyed the plan in meetings last week with executives from Didi, Full Truck Alliance—also known as Manbang Group—and Kanzhun, the people said.
Authorities are expected to deliver a conclusion of the probes into these companies around the same time, the people said. The three companies are expected to face financial penalties, they said—a relatively large fine for Didi, relatively lenient for the other two, some of the people said.
The companies are also expected to offer 1% equity stakes to the state and give the government a direct role in corporate decisions, some of the people said.
The Cyberspace Administration didn’t immediately respond to written questions. The companies didn’t immediately reply to requests for comment.
Last July, China’s internet watchdog ordered the companies to stop adding users and app-store operators in China to remove their mobile apps, saying they were collecting personal data illegally. The companies said at the time that they would fully cooperate with the review.
Cybersecurity agents launched monthslong on-site inspections, people familiar with the issue have said. Agents have questioned senior executives, downloaded internal records and collected emails and internal communications, they have said.
Some people familiar with the investigations said the authorities didn’t find substantial problems with the companies.
Around October, the Cybersecurity Administration suggested the three companies explore separate listings in Hong Kong. In May, Didi said its shareholders approved its plan to delist from the New York Stock Exchange. Didi had told shareholders it needed to delist before it could resolve a cybersecurity probe in China, and that it would pursue a listing in Hong Kong.
Full Truck Alliance is also pushing ahead with a Hong Kong share-offering plan, with the goal of listing by year-end, according to a person familiar with the matter. The company is likely to raise less than it did in the U.S., the person added.
At an April Politburo meeting, Chinese leader
Xi Jinping
said that any oversight of the technology sector would be more standardized to support the “healthy development” of tech firms. At a May meeting with attendees including tech executives, China’s top political advisory body, the Chinese People’s Political Consultative Conference, expressed support for a stronger digital economy, signaling a regulatory reprieve for tech giants.
Correction U.S.-listed Chinese companies Didi Global, Full Truck Alliance and Kanzhun had a combined market capitalization of about $115 billion last July 1, before China’s cybersecurity regulator said it was investigating Didi. An earlier version of this article incorrectly cited a figure from July 2, after the investigation was announced. (Corrected on June 6)
Write to Keith Zhai at keith.zhai@wsj.com and Liza Lin at Liza.Lin@wsj.com
Bausch + Lomb Corp. priced its IPO at $18 a share Thursday, falling short of expectations as it became the first big company in months to try going public into a turbulent stock market.
Bausch Health
BHC -7.40%
Cos., the parent company, raised $630 million in the offering. It had been aiming to raise as much as $840 million and sell the stock at $21 to $24 a share, according to a regulatory filing. The Wall Street Journal had previously reported the deal was likely to price at the low end or below the range.
The debut of the eye-care company, a spinoff of Bausch Health Cos., is being watched closely as a bellwether for the IPO market, which has been virtually shut down since stocks started falling earlier this year. It is the first big initial public offering since private-equity firm
TPG Inc.
went public in mid-January. After a record year in 2021, traditional IPOs have raised less than $3.3 billion in 2022, the slowest start since 2016, according to Dealogic.
Bausch is a fitting test case for the IPO market, which provides a crucial spigot of cash and visibility to startups and Wall Street alike. The company is profitable and a well-established name in its industry.
“It’s a real critical week for the IPO market,” said
Jeff Zell,
senior research analyst at IPO Boutique. With so few IPOs so far this year, “It’s extremely important that this one not only gets out on the right foot but trades steady in the aftermarket,” he said.
Among those who will be watching closely are others on the IPO runway. Fund managers say they have met this year with executives at companies including
Intel Corp.’s
$50 billion-or-more self-driving car unit Mobileye and Steinway Musical Instruments Holdings Inc., which have said they are pursuing IPOs. Other companies considering listings later this year include ServiceTitan Inc. and Quick Quack Car Wash Holdings LLC, according to people familiar with the matter.
It doesn’t help that markets have whipsawed lately, with the technology-stock-heavy Nasdaq Composite up more than 3% Wednesday and down 5% Thursday. The index has moved at least 1% in either direction in 11 of the past 13 trading sessions.
Traditionally, volatility has been considered the most crucial indicator for the IPO market. When a company launches its IPO, the management team and its advisers spend several days on a so-called roadshow, meeting with fund managers to entice them to buy the stock. A volatile market, with little visibility into the next day let alone week, makes that tricky.
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There has been another, less well-appreciated factor gumming up the gears of the new-issue market, bankers say. Correlation between individual stocks in the S&P 500 has risen dramatically in recent months as fears that rising interest rates could spark a recession lead to across-the-board selling. That makes it harder for stock pickers, and makes IPOs less attractive, some analysts say. Fund managers expect outperformance from IPOs, and if stocks are nearly all moving in unison, the odds of achieving that become longer.
Over the three months before technology stocks started falling in December on inflation and interest rate fears, the average stock moved in the same direction as the S&P 500 39% of the time, according to Ned Davis Research. Since then, that has jumped to 61%.
Some fund managers welcome the air coming out of the IPO market.
Jonathan Coleman
at Janus Henderson Investors, who oversees more than $14 billion across two funds, said last year the IPO market got so heated, it became hard to receive meaningful allocations in offerings. In the past, Mr. Coleman said he thought the market was frothy when there were orders for 10 times the number of shares available in an average offering. In late 2020 through late 2021, order books were routinely 30- to 40-times oversubscribed, he said.
“My experience is, if we’re lamenting the lack of IPOs now, we’ll be lamenting the flood when the windows open back up,” he said.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
AT&T Inc. detailed its plans for the spinoff of WarnerMedia on Friday, with investors eventually expected to receive a share of the new streaming-media entity for every four AT&T shares they own.
AT&T
T,
+2.19%
is in the process of spinning off its WarnerMedia business in a combination with Discovery Inc.
DISCA,
+0.85%,
which executives have said would allow AT&T to refocus attention on core telecommunications efforts. The company expects the deal to close in April, and executives declared plans for a stock dividend to its investors for April 5 at the close of business.
AT&T explained in a Friday release that those who own AT&T shares as of the end of trading April 5 will be able to receive shares of WarnerMedia SpinCo representing 100% of AT&T’s interest in the business. After the transaction closes, expected sometime in April, investors will receive an estimated 0.24 shares of the newly created WarnerBros. Discovery for each share of AT&T they own.
See also: AT&T issues new guidance as WarnerMedia spin draws nearer
The shares created represent about 71% of WarnerBros. Discovery, which will trade under the ticker symbol “WBD” after the spinoff completes. Shareholders “do not need to take any action” as the SpinCo shares will be automatically exchanged on the date the transaction closes, the company reported.
The potential period between the stock dividend and the closing of the deal could create confusion for anyone who wants to buy or sell the stock. The company noted that between April 4, the trading day before the record date for its spinoff distribution, and the closing of the combination with Discovery, there will be two markets for AT&T’s common stock on the New York Stock Exchange.
Those who choose to sell a share of AT&T’s common stock through the “regular way” market will sell both the AT&T share and the right to receive WarnerBros. Discovery shares through the transaction. Those who participate in the “ex-distribution” market will be selling AT&T’s stock while keeping the right to receive WarnerBros. Discovery shares.
Additionally, in the two-way trading window, those who wish to keep AT&T shares while selling the right to receive WarnerBros. Discovery can use a temporary when-issued option that will be available on the Nasdaq.
While AT&T shareholders will still own the same number of AT&T shares after the transaction close that they did just before the transaction close, the company’s stock price is expected to adjust after the deal is complete, reflecting the spinoff.
AT&T’s board of directors also declared a second-quarter dividend of 27.75 cents a share, the first quarterly dividend under a reduced annual payout that executives outlined last month. The dividend will be payable on May 2 for shareholders of record as of April 14.
