International Business Machines Corp. is exploring a potential sale of its IBM Watson Health business, according to people familiar with the matter, as the technology giant’s new chief executive moves to streamline the company and become more competitive in cloud computing.
IBM is studying alternatives for the unit that could include a sale to a private-equity firm or industry player or a merger with a blank-check company, the people said. The unit, which employs artificial intelligence to help hospitals, insurers and drugmakers manage their data, has roughly $1 billion in annual revenue and isn’t currently profitable, the people said.
Its brands include Merge Healthcare, which analyzes mammograms and MRIs; Phytel, which assists with patient communications; and Truven Health Analytics, which analyzes complex healthcare data.
It isn’t clear how much the business might fetch in a sale, and there may not be one.
IBM, with a market value of $108 billion, has been left behind as cloud-computing rivals Microsoft Corp. and Amazon.com Inc. soar to valuations more than 10 times greater. The Armonk, N.Y., company has said it’s focused on boosting its hybrid-cloud operations while exiting some unrelated businesses.
Saudi Arabia plans to increase its oil output in the coming months, reversing a recent big production cut, say advisers to the Kingdom, a sign of growing confidence over an oil-price recovery.
The world’s largest oil exporter surprised oil markets last month when it said it would unilaterally slash 1 million barrels a day of crude production in February and March in an effort to raise prices.
But the Kingdom plans to announce a reversal of those cuts when a coalition of oil producers meet next month, the advisers said, in light of the recent recovery in prices. The output rise won’t kick in until April, given the Saudis already have committed to stick to cuts through March.
The advisers cautioned the plans still could be reversed if circumstances change, and the Saudis’ intention hasn’t yet been communicated to the Organization of the Petroleum Exporting Countries, said the people and OPEC delegates.
“We are in a much better place than we were a year ago, but I must warn, once again, against complacency,” Prince Abdulaziz bin Salman, the Saudi energy minister, said at a conference Wednesday. “The uncertainty is very high, and we have to be extremely cautious.”
An executive at Tencent Holdings Ltd. , China’s most valuable publicly listed company, has been held by Chinese authorities, part of a probe into a high-profile corruption case involving one of the country’s former top law-enforcement officials, people familiar with the matter said.
Zhang Feng has been under investigation by China’s antigraft inspector since early last year for alleged unauthorized sharing of personal data collected by Tencent’s social-media app WeChat, the people said. They said Mr. Zhang was suspected of turning over WeChat data to former Vice Public Security Minister Sun Lijun, who is being investigated by Beijing for undisclosed violations of Communist Party rules.
Investigators are looking at what type of data Mr. Zhang allegedly might have shared with Mr. Sun and what Mr. Sun might have done with it, the people said.
Hong Kong-listed Tencent, which has a market capitalization of about $900 billion, confirmed Thursday that Mr. Zhang is under investigation. The case “relates to allegations of personal corruption and has no relation to WeChat or Weixin,” a spokesman said in a statement to The Wall Street Journal. Weixin is WeChat’s sister app for the Chinese market.
Mr. Zhang was referred to as a Tencent vice president in a statement released by the municipal government of Zhangjiakou, a city near Beijing, in which he was described as having met the city’s mayor in October 2018.
spoke about combining the oil giants after the pandemic shook the world last year, according to people familiar with the talks, testing the waters for what could be one of the largest corporate mergers ever.
Chevron Chief Executive
Mike Wirth
and Exxon CEO
Darren Woods
discussed a merger following the outbreak of the new coronavirus, which decimated oil and gas demand and put enormous financial strain on both companies, the people said. The discussions were described as preliminary and aren’t ongoing but could come back in the future, the people said.
Such a deal would reunite the two largest descendants of
John D. Rockefeller’s
Standard Oil monopoly, which was broken up by U.S. regulators in 1911, and reshape the oil industry.
A combined company’s market value could top $350 billion. Exxon has a market value of $190 billion, while Chevron’s is $164 billion. Together, they would likely form the world’s second largest oil company by market capitalization and production, producing about 7 million barrels of oil and gas a day, based on pre-pandemic levels, second only in both measures to Saudi Aramco.
But a merger of the two largest American oil companies could encounter regulatory and antitrust challenges under the Biden administration. President Biden has said climate change is one of the biggest crises the country faces. In October, he said he would push the country to “transition away from the oil industry.” He hasn’t been as vocal about antitrust matters, and the administration has yet to nominate the Justice Department’s head of that division.
One of the people familiar with the talks said the sides may have missed an opportunity to consummate the deal under former President
Donald Trump,
whose administration was seen as more friendly to the industry.
Darren Woods, CEO Exxon Mobil Corp., at an industry conference in 2018
Photo:
Andrew Harrer/Bloomberg News
A handful of sizable oil and gas deals were completed last year, including Chevron’s $5 billion takeover of Noble Energy Inc. and
ConocoPhillips
COP -2.63%
’ roughly $10 billion takeover of Concho Resources Inc., but nothing close to the scale of combining San Ramon, Calif.-based Chevron and Irving, Texas-based Exxon.
Such a deal would significantly surpass in size the mega-oil-mergers of the late 1990s and early 2000s, which included the combination of Exxon and Mobil and Chevron and Texaco Inc.
It also could be the largest corporate tie-up ever, depending on its structure. That distinction currently belongs to the roughly $181 billion purchase of German conglomerate Mannesmann AG by Vodafone AirTouch Plc in 2000, according to Dealogic.
Many investors, analysts and energy executives have called for consolidation in the beleaguered oil-and-gas industry, arguing that cutting costs and improving operational efficiencies would help companies weather the pandemic-induced downturn and prepare for an uncertain future as many countries seek to reduce their dependence on fossil fuels to combat climate change.
In an interview discussing Chevron’s earnings Friday, Mr. Wirth, who like Mr. Woods also serves as his company’s board chairman, said that consolidation could make the industry more efficient. He was speaking generally and not about a possible Exxon-Chevron merger.
“As for larger scale things, it’s happened before,” Mr. Wirth said, referring to the 1990s and early-2000s megamergers. “Time will tell.”
Paul Sankey,
an independent analyst who hypothesized a merger of Chevron and Exxon in October, estimated at the time that the combined company would have a market capitalization of about $300 billion and $100 billion in debt. A merger would allow them to cut a combined $15 billion in administrative expenses and $10 billion in annual capital expenditures, he wrote.
An abundance of fossil fuels combined with advances in technology to harness wind and solar power has sent energy prices crashing around the world. WSJ explains how it all happened at once. Photo illustration: Carlos Waters/WSJ
Exxon was America’s most valuable company seven years ago, with a market value of more than $400 billion, nearly double Chevron’s. But Exxon has fallen from its heights following a series of strategic missteps, which were further exacerbated by the pandemic. It has been eclipsed as a profit engine by tech giants such as
Apple Inc.
AAPL -3.74%
and
Amazon.com Inc.,
AMZN -0.97%
in recent years and was removed from the Dow Jones Industrial Average last year for the first time since it was added as Standard Oil of New Jersey in 1928.
Exxon’s shares have fallen nearly 29% over the last year, while Chevron’s are down about 20%. Chevron briefly topped Exxon in market capitalization in the fall.
Exxon endured one of its worst financial performances ever in 2020. It is expected to report a fourth consecutive quarterly loss for the first time in modern history on Tuesday and already has posted more than $2 billion in losses through the first three quarters of 2020.
Chevron also has struggled, reporting nearly $5.5 billion in 2020 losses Friday. But investors have expressed more faith in Chevron because it entered the downturn with a stronger balance sheet—in part because it walked away from its $33 billion bid to buy Anadarko Petroleum Corp. before the pandemic, having been outbid by
Occidental Petroleum Corp.
OXY -4.25%
in 2019.
Exxon has about $69 billion in debt as of September, while Chevron has around $35 billion, according to S&P Global Market Intelligence.
Some investors have grown increasingly concerned about Exxon’s direction under Mr. Woods as the company faces a rapidly changing energy industry and growing global consciousness about climate change. Some are also worried that Exxon may have to cut its hefty dividend, which costs it about $15 billion annually, due to its high debt levels. Many individual investors count on the payments as a source of income.
Mr. Woods embarked on an ambitious plan in 2018 to spend $230 billion to pump an additional one million barrels of oil and gas a day by 2025. But before the pandemic, production was up only slightly and Exxon’s financial flexibility was diminished. In November, Exxon retreated from the plan and said it would cut billions of dollars from its capital spending every year through 2025 and focus on investing in only the most promising assets.
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Meanwhile, the company’s woes have helped draw the attention of activist investors. One of them, Engine No. 1 LLC, has argued that the company should focus more on investments in clean energy while cutting costs elsewhere to preserve its dividend. The firm nominated four directors to Exxon’s board Wednesday and called for it to make strategic changes to its business plan.
Exxon also has been in talks with another activist, D.E. Shaw Group, and is preparing to announce one or more new board members, additional spending cuts and investments in new technologies to help it reduce its carbon emissions.
Rivals such as
BP
BP -2.80%
PLC and
Royal Dutch Shell
RDS.A -3.53%
PLC have embarked on bold strategies to remake their business as regulatory and investor pressure to reduce carbon emissions mounts. Both have said they will invest heavily in renewable energy—a strategy that their investors so far haven’t rewarded.
Exxon and Chevron haven’t invested substantially in renewables, instead choosing to double down on oil and gas. Both companies have argued that the world will need vast amounts of fossil fuels for decades to come, and that they can capitalize on current underinvestment in oil production.
Write to Christopher M. Matthews at christopher.matthews@wsj.com, Emily Glazer at emily.glazer@wsj.com and Cara Lombardo at cara.lombardo@wsj.com
The rally in Washington’s Ellipse that preceded the Jan. 6 riot at the U.S. Capitol was arranged and funded by a small group including a top Trump campaign fundraiser and donor facilitated by far-right show host
Alex Jones.
Mr. Jones personally pledged more than $50,000 in seed money for a planned Jan. 6 event in exchange for a guaranteed “top speaking slot of his choice,” according to a funding document outlining a deal between his company and an early organizer for the event.
Mr. Jones also helped arrange for
Julie Jenkins Fancelli,
a prominent donor to the Trump campaign and heiress to the Publix Super Markets Inc. chain, to commit about $300,000 through a top fundraising official for former President
Donald Trump’s
2020 campaign, according to organizers. Her money paid for the lion’s share of the roughly $500,000 rally at the Ellipse where Mr. Trump spoke.
Another far-right activist and leader of the “Stop the Steal” movement,
Ali Alexander,
helped coordinate planning with
Caroline Wren,
a fundraising official who was paid by the Trump campaign for much of 2020 and who was tapped by Ms. Fancelli to organize and fund an event on her behalf, organizers said. On social media, Mr. Alexander had targeted Jan. 6 as a key date for supporters to gather in Washington to contest the 2020-election certification results. The week of the rally, he tweeted a flyer for the event saying: “DC becomes FORT TRUMP starting tomorrow on my orders!”
Alex Jones addressed protesters on the Capitol grounds on Jan. 6.
Photo:
Jon Cherry/Getty Images
The Ellipse rally, at which President Trump urged supporters to march to the U.S. Capitol, was lawful and nonviolent. But it served as a jumping-off point for many supporters to head to the Capitol. Mr. Trump has been impeached by the Democrat-led House of Representatives, accused of inciting a mob to storm the Capitol with remarks urging supporters to “fight like hell.”
Few details about the funding and organization of the Ellipse event have previously been revealed. Mr. Jones claimed in a video that he paid for a portion of the event but didn’t offer details.
Messrs. Jones and Alexander had been active in the weeks before the event, calling on supporters to oppose the election results and go to the U.S. Capitol on Jan. 6. Mr. Alexander, for instance, tweeted on Dec. 30 about the scheduled Jan. 6 count for lawmakers to certify the Electoral College vote at the Capitol, writing: “If they do this, everyone can guess what me and 500,000 others will do to that building.”
Julie Jenkins Fancelli, shown in 2019, donated more than $980,000 in the 2020 election cycle to a joint account for the Trump campaign and Republican Party, records show.
Photo:
Barry Friedman/LKLND NOW
A hodgepodge of different pro-Trump groups were planning various events on Jan. 6. Several of them, led by the pro-Trump Women for America First, helped coordinate the Ellipse event; another group splintered off to lead a rally the night before, at which Mr. Jones ended up speaking, and the group organized by Mr. Alexander planned a protest outside the Capitol building.
Mr. Jones, who has publicized discredited conspiracy theories, has hosted leaders of the Proud Boys and the Oath Keepers, two extremist groups prominent at the riot, on his popular radio and internet video shows.
Mr. Jones declined to respond to requests for comment. In a statement, Mr. Alexander said Stop the Steal’s motto is “peaceful but rowdy,” that the violence at the Capitol wasn’t planned by his group and said none of his rhetoric incited violence. Messrs. Alexander and Jones said on Mr. Jones’s show that they tried to prevent protesters from entering the Capitol and sought to de-escalate the riot. Neither has been accused of wrongdoing.
A spokesman for the Trump campaign said it had no role in financing or organizing the Ellipse event and didn’t direct former staffers to do so. A spokeswoman for Mr. Trump declined to comment. At least five former Trump campaign staffers besides Ms. Wren assisted on the logistics of the Jan. 6 rally, according to the permit and Federal Election Commission records.
Ali Alexander, activist and leader of the ‘Stop the Steal’ movement, helped coordinate planning of the Ellipse rally.
Photo:
carlos barria/Reuters
Starting in mid-December, Mr. Alexander began publicizing plans “to march and peacefully occupy DC with #StopTheSteal,” according to organizers and a message saved by
Devin Burghart,
who directs an organization that tracks extremist groups. Mr. Trump on Dec. 19 urged supporters through Twitter to come for Jan. 6 protests that he said would be “wild.”
Mr. Alexander created a website called WildProtest.com, writing: “We the People must take to the US Capitol lawn and steps and tell Congress #DoNotCertify on #JAN6!” He planned and publicized a rally to take place on the Capitol grounds that day. The website was taken offline after the riot.
A representative of Women for America First had applied for a permit to host a separate rally just after the inauguration in January, but the group rescheduled for Jan. 6 after the Dec. 19 Trump tweet, organizers said.
Women for America First’s permit for the Ellipse rally listed several names and positions, including Ms. Wren as “VIP coordinator.” In the 2020 election cycle, the Trump campaign and a joint GOP committee paid Ms. Wren and her fundraising consulting firm $730,000, according to FEC records.
The Ellipse rally, during which Donald Trump spoke, was lawful and nonviolent, but it served as a jumping-off point for his supporters to head to the Capitol.
Photo:
Shawn Thew/Bloomberg News
Ms. Wren had been tapped to handle funding by Ms. Fancelli, the major donor to the Ellipse event, according to organizers. Ms. Fancelli, who didn’t respond to several requests for comment, donated more than $980,000 in the 2020 election cycle to a joint account for the Trump campaign and Republican Party, records show.
Ms. Fancelli, daughter of the Publix Super Markets founder, contacted Mr. Jones and offered to contribute to a Jan. 6 event, organizers said. Mr. Jones connected her to an organizer through Ms. Wren, who handled the funding as she helped coordinate the logistics of a rally with Women for America First. A Publix spokeswoman said Ms. Fancelli isn’t involved in the company’s business operations and doesn’t “represent the company in any way.”
The Ellipse setup cost roughly $500,000, with a concert stage, a $100,000 grass covering and thousands of feet of security structures.
Ms. Wren played a central role in bringing together the disparate group of activists planning events on Jan. 6. She suggested to Mr. Alexander that he reschedule his Capitol rally to 1 p.m. and put into place a list of about 30 potential speakers, including Messrs. Alexander and Jones, who had been listed on websites as associated with the day’s events, according to organizers.
In a statement, Ms. Wren said her role for the event “was to assist many others in providing and arranging for a professionally produced event at the Ellipse.”
The involvement of Messrs. Jones and Alexander triggered debate among the organizers.
Amy Kremer,
chairwoman of Women for America First, said in a statement: “We were concerned because there was an aggressive push to have fringe participation in our event.”
In text messages Ms. Wren sent to another organizer and reviewed by the Journal, Ms. Wren defended Mr. Jones. “I promise he’s actually WAY nicer than he comes off…I’m hoping you’ll [sic] can become besties,” Ms. Wren wrote.
Ms. Wren’s spokesman said the message is “evidence of Ms. Wren assisting in executing an event while also having to diplomatically get people with different agendas on the same page.”
None of the groups obtained a march permit, though Women for America First called the event “March to Save America Rally” and Mr. Alexander’s Stop the Steal promoted a march to the Capitol online.
The Women for America First Ellipse permit said the group wouldn’t conduct a march but noted: “Some participants may leave to attend rallies at the United States Capitol to hear the results of Congressional certification of the Electoral College count.”
Kylie Kremer,
co-founder of Women for America First, said the group didn’t file for a march permit because it went against Covid-19 guidelines and a march wasn’t in its plans.
When Mr. Trump met on Jan. 4 with former campaign adviser
Katrina Pierson,
who had begun working with rally organizers, he said he wanted to be joined primarily by lawmakers assisting his efforts to block electoral votes from being counted and members of his own family, aides said.
Messrs. Alexander and Jones spoke instead at a Jan. 5 rally organized by the Eighty Percent Coalition, a group founded by
Cindy Chafian,
an early organizer of the Jan. 6 event who struck the initial deal with Mr. Jones.
She said she was willing to work with Mr. Jones because “it’s unreasonable to expect to agree with everything a group or person does.”
Mr. Jones’s seed money in the end was used for that Jan. 5 rally, for which he ultimately paid about $96,000, an organizer said. In his speech at that event, Mr. Jones said: “I don’t know how all this is going to end but if they want to fight, they better believe they’ve got one.”
The next day, Ms. Wren personally escorted Mr. Jones and Mr. Alexander off the Ellipse grounds before the two men marched to the U.S. Capitol, according to organizers. She had provided them and many others VIP passes that morning for Mr. Trump’s speech.
Messrs. Alexander and Jones were at the Capitol grounds together on Jan. 6, and Mr. Jones supported protesters with a bullhorn, video footage shows. He urged them to be peaceful and proceed to the area on the Capitol grounds where Mr. Alexander had secured a demonstration permit, according to Mr. Alexander and the footage.
Write to Shalini Ramachandran at shalini.ramachandran@wsj.com, Alexandra Berzon at alexandra.berzon@wsj.com and Rebecca Ballhaus at Rebecca.Ballhaus@wsj.com
The Biden administration has imposed a temporary freeze on U.S. arms sales to Saudi Arabia and the United Arab Emirates as it reviews billions of dollars in weapons transactions approved by former President
Donald Trump,
according to U.S. officials.
The review, the officials said, includes the sale of precision-guided munitions to Riyadh as well as top-line F-35 fighters to Abu Dhabi, a deal that Washington approved as part of the Abraham Accords, in which the Emirates established diplomatic relations with Israel.
U.S. officials said it isn’t unusual for a new administration to review arms sales approved by a predecessor, and that despite the pause, many of the transactions are likely to ultimately go forward.
But in line with campaign pledges made by President
Biden,
Washington is seeking to ensure that American weapons aren’t used to further the Saudi-led military campaign in Yemen, where its conflict with the Iranian-aligned Houthis has resulted in thousands of civilian deaths and widespread hunger.
Mr. Biden “has made clear that we will end our support for the military campaign led by Saudi Arabia in Yemen, and I think we will work on that in very short order,” Secretary of State
Antony Blinken
said at his confirmation hearing last week. Washington will continue to help defend the Saudis against Houthi attacks, Mr. Blinken said.
Officials at the Saudi and Emirati embassies in Washington didn’t immediately comment on the developments.
Congress and the U.S. defense industry were informed of the review in recent days, one U.S. official said. It is unclear how long the review will last.
Officials couldn’t offer a precise dollar figure for the weapons sales under review. But the review, they said, includes a $23 billion deal between Washington and the Emirates for the F-35 jet fighters, Reaper drones and various munitions that was finalized on Mr. Trump’s last full day in office, according to a statement on the website of the UAE’s Washington embassy.
It also includes billions in contracts with Riyadh, including a deal for $290 million in precision-guided munitions that the U.S. government approved in late December.
“The (State) Department is temporarily pausing the implementation of some pending U.S. defense transfers and sales under Foreign Military Sales and Direct Commercial Sales to allow incoming leadership an opportunity to review,” a department spokesman said.
Calling it “a routine administrative action,” the spokesman said the review “demonstrates the administration’s commitment to transparency and good governance, as well as ensuring U.S. arms sales meet our strategic objectives of building stronger, interoperable, and more capable security partners.”
Write to Warren P. Strobel at Warren.Strobel@wsj.com
