is nearing a deal to combine with a big owner of medical practices and urgent-care centers in a transaction worth roughly $9 billion including debt, according to people familiar with the matter, the latest in a string of acquisitions by big consumer-focused companies aiming to delve deeper into medical care.
The drugstore giant’s primary-care-center subsidiary, Village Practice Management, would combine with Summit Health, the parent company of CityMD urgent-care centers, in an agreement that could be reached as early as Monday, the people said.
Health insurer
Cigna Corp.
CI 0.73%
is expected to invest in the combined company, the people said.
There is no guarantee the parties will reach a deal, the people cautioned, noting that they are still hammering out details of an agreement.
Summit Health, which is backed by private-equity firm Warburg Pincus LLC, has more than 370 locations in New York, New Jersey, Connecticut, Pennsylvania and Central Oregon, according to the company’s website. Current and former physicians also own a large interest in the business.
Village Practice Management, which does business as VillageMD, provides care for patients at free-standing practices as well as at Walgreens locations, virtually and in the home. In 2021, Walgreens announced it had made a $5.2 billion investment in VillageMD, boosting its stake to 63%. At the time, Walgreens said the investment would help accelerate the opening of at least 600 Village Medical at Walgreens primary-care practices across the country by 2025 and 1,000 by 2027.
The expected deal follows a string of mergers involving companies like VillageMD and CityMD as big healthcare providers seek more direct connections with patients.
Amazon.com Inc.
in July agreed to purchase primary-care operator
1Life Healthcare Inc.,
which operates under the name One Medical, for about $4 billion. In September,
CVS Health Corp.
struck a deal to acquire home-healthcare company Signify Healthcare Inc. for $8 billion.
Cano Health Inc.,
which operates primary-care centers, has attracted interest from both CVS and insurer
Humana Inc.
in recent months, The Wall Street Journal has reported.
Bloomberg a week ago reported VillageMD’s interest in Summit Health.
Walgreens appears to have pre-empted a sale process for Summit Health that was set to kick off next year, according to the people, who said the company was about to interview banks before it received interest from VillageMD.
Summit Health has been backed by Warburg Pincus since 2017, when it took a stake in CityMD, a large chain of New York City urgent-care centers.
Since that time, Warburg has helped the company complete multiple transformative acquisitions, including the 2019 merger of CityMD and multi-speciality medical-practice group, Summit Medical Group.
New York-based Warburg, which has more than $85 billion in assets under management, is no stranger to healthcare. The firm counts healthcare-IT business Modernizing Medicine Inc. and Ensemble Health Partners, a revenue-cycle management business for hospitals, among its portfolio companies.
RIYADH, Saudi Arabia—International business leaders brushed aside a diplomatic spat between the U.S. and Saudi Arabia, converging on the Saudis’ flagship investment conference in a kingdom riding high on an oil-price boom and trying to flex its geopolitical power.
Some 400 American executives descended on Riyadh’s Ritz-Carlton Hotel for the Future Investment Initiative, an annual event sometimes dubbed “Davos in the Desert,” along with European and Asian business leaders. Among them: JPMorgan Chase & Co. Chief Executive
Jamie Dimon,
David Solomon,
head of
Goldman Sachs
Group Inc., and
Blackstone Inc.’s
Stephen Schwarzman.
The large American presence—over 150 U.S. companies were represented—came three months after President Biden visited Saudi Arabia in a bid to reset relations that were badly damaged following the 2018 murder of dissident journalist Jamal Khashoggi by Saudi operatives. Many international firms had already turned the page on the outrage over Mr. Khashoggi’s death, which hung over subsequent runnings of the event. But for those that hadn’t, this year’s conference offered a chance to come back.
“Nobody is being told not to come to the kingdom,” said Tarik Solomon, a former chairman of the American Chamber of Commerce in Saudi Arabia. He said U.S. companies were unfazed by the political situation between Washington and Riyadh.
The executives arrived amid a low point in relations between the Biden administration and Saudi leadership, including Crown
Prince Mohammed
bin Salman, who The Wall Street Journal reported Monday has mocked the U.S. president in private. The Saudis frustrated the Biden administration by orchestrating an oil-production cut earlier this month with the Organization of the Petroleum Exporting Countries and its Russia-led allies, prompting the U.S. to threaten retaliatory measures.
The U.S. perceived the production cut as supporting Russia’s war effort in Ukraine by allowing Moscow to sell oil at inflated levels. Riyadh has said the move was a technical decision that was needed to prevent a drop in crude prices amid gloomy economic predictions.
Messrs. Dimon and Schwarzman were two of the executives who backed out of the 2018 event in Saudi Arabia. JPMorgan and Goldman are among the Western banks that have profited from a buoyant Saudi initial-public-offerings market at a time when IPOs globally have stagnated. Citigroup Inc., JPMorgan and Goldman also were among the banks that helped PIF with a debut bond sale earlier this month, which raised $3 billion for the fund.
Mr. Dimon said he believed the problems between the U.S. and Saudi Arabia were overblown and would eventually be worked out. “I can’t imagine every ally agreeing on everything all the time,” he said.
“American policy doesn’t have to be everything our way,” Mr. Dimon added later. “You can learn from the rest of the world.”
High-level U.S. officials were missing from the conference, which promoted the slogan: “A New Global Order.” Throughout the first morning of the conference, Saudi officials stressed the importance of building relations with powers around the world while saying the U.S. relationship remained important.
Khalid al-Falih,
the Saudi minister responsible for luring foreign investment, said the dispute with Washington was “a blip.”
“We’re very close and we’re going to get over this recent spat that I think was unwarranted but it was a misunderstanding hopefully,” he said on a panel.
The Saudi energy minister,
Prince Abdulaziz bin Salman,
struck a more defiant note, defending the oil-production cut as a necessary move—not only to stabilize the oil market as the global economy cooled but also to keep the kingdom on track to meet its economic goals.
President Biden met with Crown Prince Mohammed bin Salman in Saudi Arabia, as the U.S. looks to reset relations and prod the kingdom to help control oil prices. Biden said he confronted the crown prince about the killing of journalist Jamal Khashoggi. Photo: Bandar Aljaloud/EPA/Shutterstock
“We keep hearing, you are with us or you are against us,”
Prince Abdulaziz
said. “Is there any room for: ‘We are for Saudi Arabia and for the people of Saudi Arabia?”
The kingdom is flush with cash from high oil prices and is intent on seeing through Prince Mohammed’s transformational economic plans. The conference is organized by the Saudi Public Investment Fund, a sovereign-wealth vehicle that has grown from a sleepy holder of state-owned companies to a $600 billion global investment powerhouse that is increasingly a source of capital for Wall Street.
Saudi Arabia, in recent years, has tried to use the conference as an annual marker of the progress of economic and social changes first announced by Prince Mohammed in 2016. The summit has often been overshadowed by geopolitical events, most notably in 2018 when Western senior executives canceled participation following Mr. Khashoggi’s killing.
Former President
Donald Trump
stood by Prince Mohammed even after the U.S. intelligence community said he likely ordered the killing—a charge he denies. Mr. Trump’s son-in-law,
Jared Kushner,
developed a strong tie with the prince and this year received a $2 billion injection from PIF. Mr. Kushner spoke Tuesday at the conference in remarks full of praise for the Saudi leadership.
The U.S.-Saudi tensions are a reason for companies to be concerned, said Hasnain Malik, a Dubai-based equities analyst at Tellimer Research, citing businesses that fell out of favor because of disagreements between the American government and Russia and China.
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“Foreign financial actors still regard Saudi as an opportunity for taking capital out of Saudi and putting it into the rest of the world, rather than looking at Saudi as an interesting opportunity,” Mr. Malik said.
Foreign investment in Saudi Arabia has remained stubbornly low in recent years, despite Prince Mohammed’s efforts to restructure his economy. International firms have complained about slow payment from government contractors, retroactive tax bills and archaic bureaucracy.
Domestically, PIF has launched dozens of projects, including plans to build a futuristic city in the northwest of the kingdom that will require billions of dollars of outside capital alongside investment from the sovereign-wealth fund. The government announced national strategies in the past week aimed at attracting billions of dollars in investments from the industrial and supply-chain sectors by offering companies massive incentives. With one of the fastest-growing economies in the world, the Saudi government is racing to achieve its goals now.
One bright spot, so far, is PIF’s attempts to support car manufacturing in the kingdom: An investment in electric-vehicle maker Lucid Motors has resulted in plans to set up a factory domestically to reassemble the company’s luxury sedan that is pre-manufactured in its Arizona plant. The company aims eventually to produce complete vehicles in Saudi Arabia, and the government hopes it will draw in other industrial firms to create a domestic supply chain.
Lucid opened a Riyadh showroom on Monday. “It’s a chicken and egg problem, isn’t it? If we haven’t got suppliers, we haven’t got a car company, so we’re gonna break that,” said Lucid Chief Executive
Peter Rawlinson.
Write to Rory Jones at rory.jones@wsj.com, Stephen Kalin at stephen.kalin@wsj.com and Summer Said at summer.said@wsj.com
Group Inc. Chief Executive Kewsong Lee is leaving the private-equity firm, as it struggles to expand and its shares lag.
Carlyle said late Sunday after The Wall Street Journal inquired about the matter that Mr. Lee will step down as CEO immediately and will leave the firm when his five-year employment agreement ends at the end of this year. William Conway, a co-founder and former co-CEO of the firm, will serve as interim chief executive until a permanent successor can be found.
Shares of the Washington, D.C., firm have lagged behind its publicly traded peers since its 2012 initial public offering. Carlyle was slow to branch out beyond the volatile private-equity business and into others, such as credit and insurance, that generate the steady, predictable management fees prized by shareholders.
Mr. Lee’s departure marks a rare instance in which a handpicked successor to a private-equity firm’s founders has been shown the door. Firms such as
Blackstone Inc.
and
KKR
& Co. worked for years on their succession planning, telegraphing it to fund investors and shareholders long before a formal announcement was made.
Mr. Conway and a fellow co-founder,
David Rubenstein,
served as the firm’s co-CEOs until 2018 when they handed the title to Mr. Lee and firm veteran
Glenn Youngkin.
Daniel D’Aniello,
the third co-founder, was chairman until the start of 2018. Mr. Lee, 56 years old, became sole CEO in 2020 when Mr. Youngkin, now governor of Virginia, stepped down to focus on public service.
At the time, Mr. Rubenstein said Mr. Lee was “extremely well positioned to serve as our CEO.”
Mr. Lee set to work simplifying the firm’s structure and streamlining its sprawling private-equity business, trimming the number of funds and integrating its infrastructure and energy businesses into one platform. He focused on expanding Carlyle’s credit platform and bringing the firm into the business of managing insurance assets through the purchase of a big stake in Fortitude Re.
Mr. Lee had successfully launched Carlyle’s long-term fund strategy, and in 2015, the founders granted him authority over the direction of the credit business. The following year, Mr. Lee orchestrated an exit from Carlyle’s struggling hedge-fund business and hired
Mark Jenkins
from Canadian Pension Plan Investment Board to build and lead a stand-alone credit-investment platform.
Assets under management for Carlyle’s credit segment nearly doubled year-over-year to $143 billion in the second quarter, surpassing the firm’s private-equity segment for the first time. Fee-related earnings climbed 65% to $236 million.
Despite these efforts, shares of Carlyle have significantly underperformed those of its peers since Mr. Lee assumed the top spot. Carlyle stock, including dividends, nearly doubled over the period, beating the S&P 500 but falling short of the performance of KKR and Blackstone, whose shares have nearly tripled and quadrupled, respectively.
A relative newcomer to Carlyle, having joined in 2013 from private-equity firm Warburg Pincus LLC, Mr. Lee’s ascension and strategic shift ruffled some feathers at the hidebound firm. A handful of senior investment professionals—some with tenures of two decades or more—left amid the changes.
Before Mr. Lee’s arrival at Carlyle, Messrs. Rubenstein, Conway and D’Aniello had made most of the big decisions. The men remain on the board, with Messrs. Conway and Rubenstein serving as nonexecutive co-chairmen and Mr. D’Aniello as nonexecutive chairman emeritus.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
U.S. stocks gave up early gains to turn lower Tuesday after a consumer-confidence reading came in weaker than expected.
What’s happening
The Dow Jones Industrial Average
DJIA,
-0.69%
was down 185 points, or 0.6%, at 31,253.
The S&P 500
SPX,
-1.03%
fell 38 points, or 1%, to 3,862.
The Nasdaq Composite
COMP,
-1.79%
dropped 202 points, or 1.8%, to 11,323.
On Monday, major indexes drifted to a modestly lower close. The S&P 500, which has slid into a bear market, is down 18% year to date,
What’s driving markets
The Conference Board’s consumer-confidence index dropped in June to a 16-month low of 98.7, as Americans grew more worried about high gas and food prices and the health of the economy. Economists polled by The Wall Street Journal had forecast the index to drop to 100 from a revised 103.2 in May.
“The persistent weakness in confidence surveys suggests a recessionary environment can become self-fulfilling,” said John Lynch, chief investment officer for Comerica Wealth Management, in emailed comments.
“While cash on household balance sheets and two job openings for every job seeker are supportive of economic activity, inflation has pressured sentiment and can weigh on consumption and investment decisions,” Lynch said. “For equity investors, this has been reflected in the persistent leadership of defensives relative to cyclicals in the first half of the year.”
Global equities, particularly travel stocks, got a lift early Tuesday, with analysts tying support to moves by the Chinese government, which said it would shorten the quarantine time for international travelers and those who have come into close contact with COVID-19 patients to 10 days from 21 days.
Beijing will also loosen its testing requirements for people in quarantine.
Also, six of the biggest U.S. banks said they have enough capital to either maintain or hike their dividends to shareholders after setting enough aside to handle the most extreme economic conditions expected in the coming year.
Wells Fargo & Co.
WFC,
+0.92%
and Goldman Sachs Group Inc.
GS,
+0.41%
both increased their payouts by 20%, while Morgan Stanley
MS,
+2.03%
delivered an 11% rise. Bank of America Corp.
BAC,
+0.79%
increased its dividend by 5%, while Citigroup Inc.
C,
-0.83%
and JPMorgan Chase & Co.
JPM,
+0.38%
held their dividend flat.
Need to Know: Oaktree’s Howard Marks is finding bargains. ‘I am starting to behave aggressively,’ he says
U.S. stocks were weighed down on Monday after a rise in bond yields. Analysts had been anticipating that month and quarter end rebalancing of portfolios would be supportive of stocks this week, though doubts over the durability of the bounce off recent lows remain.
“It is difficult to draw any concrete conclusions so close to quarter end, when rebalancing flows are muddying the waters,” said Marios Hadjikyriacos, senior investment analyst at XM.
The yield on the 10-year Treasury note BX:TMUBMUSD10Y was up 1 basis point at 3.205%. Yields and debt prices move opposite each other.
New York Fed President John Williams, in a television interview, said he expected the U.S. economy would see a slowdown but not a recession as the central bank aggressively tightens monetary policy in an effort to rein in inflation. Williams said he expected policy makers to debate whether to hike rates by another 50 or 75 basis points when they meet in July, after delivering a 75 basis point increase this month — the largest since 1994.
Data showed the U.S. trade deficit in goods narrowed by 2.2% in May to $104.3 billion.
The S&P CoreLogic Case-Shiller 20-city index posted a 21.2% year-over-year gain in April, up slightly from 21.1% in the previous month. In April, the 20-month index rose a seasonally adjusted 2.3%. A separate report from the Federal Housing Finance Agency showed a 1.6% monthly gain. And over the last year, the FHFA index was up 18.8%.
Companies in focus
Nike Inc. NKE shares fell 5.2% after the apparel maker beat earnings estimates but was cautious on margins and on China in particular. But Chinese stocks advanced after a loosening of quarantine requirements in the world’s second-largest economy.
JetBlue Airways Corp.
JBLU,
+0.63%
once again raised its offer for discount carrier Spirit Airways Inc.
SAVE,
+2.13%
as it attempts to outbid rival Frontier Group Holdings Inc.
ULCC,
+2.99%.
JetBlue shares rose 0.5%, Spirit shares gained 1.4% and Frontier shares were up 2.2% amid a positive tone across the airline sector. The popular U.S. Global Jets ETF
JETS,
+1.10%
rose 1.6%.
Other assets
The ICE U.S. Dollar Index
DXY,
+0.47%,
a measure of the currency against a basket of six major rivals, rose 0.5%.
Bitcoin
BTCUSD,
-1.03%
was down 0.6% nea5 $20,600.
Oil futures rose, with the U.S. benchmark
CL.1,
+1.92%
up 1.1% near $111 a barrel. Gold futures
GC00,
-0.15%
were off 0.1% near $1,822 an ounce.
The Stoxx Europe 600
SXXP,
+0.27%
rose 0.7%, while London’s FTSE 100
UKX,
+0.90%
advanced 1.3%.
The Shanghai Composite
SHCOMP,
+0.89%
and Hong Kong’s Hang Seng Index
HSI,
+0.85%
each ended 0.9% higher, while Japan’s Nikkei 225
NIK,
+0.66%
rose 0.7%.
U.S. stocks struggled for direction Monday afternoon, trading near unchanged, as investors weighed stronger-than-expected data on durable-goods orders against expectations for a slowing economy that could limit the magnitude of Federal Reserve rate increases.
What’s happening
The Dow Jones Industrial Average
DJIA,
+0.09%
was almost unchanged at 31,503.
The S&P 500
SPX,
+0.01%
was down 4 points, or 0.1%, at 3,907.
The Nasdaq Composite
COMP,
-0.35%
shed 71 points, or 0.6%, at 11,537.
Last week, the S&P 500 jumped 6% to snap a three-week losing run. The Dow Jones Industrial Average rose 5% and the tech-heavy Nasdaq Composite gained 7%.
What’s driving markets
Stocks struggled to hang on to gains after data showed U.S. durable-goods orders rose by 0.7% in May, versus forecasts for a 0.2% rise, and pending home sales rebounded last month, reversing a six-month decline. Investors were caught between recession and inflation fears.
“Stocks can’t win right now, either the economic data softens and the economy is much weaker than we thought or robust readings pave the way for the Fed to be more aggressive with their inflation fight,” said Edward Moya, senior market analyst at Oanda, in a note.
Stocks had bounced last week in a move analysts credited to expectations a slowing economy could see the Federal Reserve hike rates less aggressively than previously expected. Fed Chairman Jerome Powell warned lawmakers that achieving a so-called soft landing for the economy as the Fed tightens interest rates would be “very challenging.”
JPMorgan quantitative strategist Marko Kolanovic published a note saying the market could rise 7% this week, due to the need for portfolios to rebalance as the month, quarter and first-half closes. That effect already played out near the end of the first quarter, and near the end of May.
“The S&P 500 is nearly 8% up from its lows at the start of the month and rallied 3% on Friday,” according to analysts at ING, in a Monday note. “Helping the rally has no doubt been last week’s repricing of tightening cycles around the world where 25-50 basis points of expected tightening were removed from some money market curves in just a few days. Driving that pricing seemed to be the much broader discussion — including from Federal Reserve Chair Jerome Powell — over the risks of recession.”
Strategists at Credit Suisse say bond yields may have seen their peak, particularly for Treasury-inflation protected securities, which in turn means the dollar
DXY,
-0.34%
is close to its summit. They say their lead indicators are consistent with 0% GDP growth, as evidenced by the collapse in housing affordability, the weakness of corporate confidence and the weakness in the employment gauge of the Institute for Supply Management manufacturing index.
Group of Seven economic powers are meeting in Germany where they expect to announce an agreement on a price cap on Russian oil.
Companies in focus
Frontier Airlines parent Frontier Group Holdings Inc.
ULCC,
-11.01%
issued a letter to Spirit Airlines Inc.
SAVE,
-7.55%
shareholders, urging them to support the air carriers’ agreed upon merger deal. In the letter, Frontier Chairman William Franke and Chief Executive Barry Biffle said the recently amended Frontier-Spirit deal offers Spirit shareholders value “well in excess” of JetBlue Airways Corp.’s
JBLU,
+1.86%
“illusory proposal, which lacks any realistic likelihood of obtaining regulatory approval.” Frontier shares fell more than10%, while Spirit shares dropped 8% and JetBlue shares gained 1.3%.
Other assets
The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.186%
rose 4 basis points to 3.166%. Yields and debt prices move opposite each other.
The ICE U.S. Dollar Index
DXY,
-0.34%
edged down 0.4%.
Bitcoin
BTCUSD,
-3.09%
fell 3.4% to trade near $20,675.
Oil futures traded higher in choppy trade, with the U.S. benchmark
CL.1,
+2.24%
up 1.3% near $109.04 a barrel. Gold
GC00,
-0.21%
was off 0.2% below $1,827 an ounce.
The Stoxx Europe 600
SXXP,
+0.52%
finished 0.5% higher, while London’s FTSE 100
UKX,
+0.69%
gained 0.7%.
The Shanghai Composite
SHCOMP,
+0.88%
ended 0.9% higher, while the Hang Seng Index
HSI,
+2.35%
jumped 2.4% and Japan’s Nikkei 225
NIK,
+1.43%
rose 1.4%.
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
Construction is expected to begin this spring on one of the largest renewable energy projects in New York since Niagara Falls was harnessed for hydropower more than a half-century ago.
By late 2025, a 339-mile high-voltage transmission line is expected to deliver enough hydropower from Quebec’s remote forests to supply about 20% of New York City’s needs. The first electricity will finally flow 17 years after developers set out to bury a power line along the bottoms of Lake Champlain and the Hudson River, assuming they clear one last regulatory hurdle and encounter no further challenges. Opponents still have concerns about the project’s environmental impacts.
WASHINGTON—Regulators proposed expansive new requirements for private investment funds Wednesday as part of a widening effort to police a rapidly growing but relatively opaque corner of the capital markets.
In a Wednesday morning meeting, the Securities and Exchange Commission passed a proposal that would force hedge funds and private-equity funds to provide basic disclosures to their investors and guard against conflicts. The Democratic-controlled commission approved the proposal by a 3-to-1 vote, signaling a strong chance that a final version will be adopted. The agency will now seek public comments for at least two months before issuing a final rule.
Elliott Management Corp.’s private-equity arm, Evergreen Coast Capital, and Vista Equity Partners are near an agreement to pay $104 a share for the software company, according to people familiar with the matter.
The deal could be announced Monday, the people said, assuming the talks don’t fall apart or drag out.
Should it go forward, the takeover would be the biggest leveraged buyout in recent months, ending the lull that followed a flurry of them in 2021.
With interest rates near historic lows, private-equity firms have amassed billions of dollars of cash from investors that they must put to work to begin earning fees on it.
In all, private-equity firms announced more than $900 billion worth of deals in the U.S. last year, including buyouts and exits, according to Dealogic.
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Software companies like Citrix, with their predictable revenue, have become some of the most sought-after targets for private-equity firms because they can carry significant amounts of debt.
Vista is among the firms that specialize in software buyouts, and this would be among its biggest deals. Based in Austin, Texas, Vista manages more than $86 billion in assets and its chief executive,
Robert Smith,
is the wealthiest Black person in the U.S., worth $6.7 billion, according to Forbes. Founded in 2000, Vista is known for using a detailed playbook aimed at maximizing profits at the companies it buys.
The firm has been relatively quiet on the large-buyout front since October 2020, when Mr. Smith admitted to criminal tax evasion and agreed to pay $139 million in back taxes and penalties.
Citrix makes software that allows users to virtually access desktops as well as other cloud-computing capabilities.
Citrix, like many legacy software companies, has had a rocky transition to a subscription-based model for its core virtual-desktop services. Converting customers into subscribers instead of licensees provides more recurring revenue, which investors like and have come to expect from software companies.
Citrix’s
David Henshall
in October stepped down as president and chief executive after investor pressure to explore a sale of the company. He also left as a director along with another board member, a move that reduced the board’s size to eight. The company tapped Chairman
Bob Calderoni
as interim CEO.
But Citrix has had some success lately, benefiting along with peers as more daily life takes place on the cloud and as the number of people working remotely soars. The company said in November that annualized recurring revenue in its third quarter grew 13% from a year earlier.
Its shares closed Friday at $105.55, and had already jumped on speculation of a deal over the past few months. Bloomberg reported Jan. 14 that Elliott and Vista were in advanced talks to buy Citrix.
The hardware and software infrastructure
Amazon.com Inc.,
Microsoft Corp.
, Google and others provide is commonly referred to as the cloud.
The migration to the cloud has been happening for about a decade as companies have opted to forgo costly investments in in-house, information-technology infrastructure and instead rent hardware and software from the likes of Amazon and Microsoft, paying as they go for storage and data-processing. That has made cloud computing one of the most fiercely contested battlefields among business-IT providers and the companies that provide it a hot commodity among investors and acquirers.
That trend appears poised to continue.
Citrix’s modest size compared with that of peers such as
VMware Inc.
and spotty results over the years have made it the subject of periodic takeover speculation. Indeed, it has drawn the attention of private-equity firms and industry competitors in the past, though no deal was struck.
Citrix is expected to be combined with Tibco, a software company Vista agreed to buy in a $4 billion deal in 2014 and has tried to sell multiple times since then, some of the people said. That could afford opportunities to cut costs from overlapping functions and create a company more attractive to another buyer down the road or to public investors if and when the buyout firms decide to take it public again.
Elliott, founded by billionaire
Paul Singer,
manages roughly $48 billion in assets and has been one of the most visible activist investors in recent years, challenging companies including
AT&T Inc.
and
Duke Energy Corp.
While best known for its activist investments, Elliott has been expanding its private-equity practice. Outside of Evergreen, which focuses on technology investments, Elliott owns other companies including bookseller Barnes & Noble Inc.
Elliott has a long history with Citrix. It holds a more than 10% stake worth over $1 billion and had been pushing it to take steps to boost its share price, The Wall Street Journal reported in September.
Elliott took a stake in Citrix in 2015 and held a seat on its board until last spring. The hedge fund has gone on to buy other companies it agitated at, including health-data company Athenahealth Inc., which it agreed to sell last year.
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Write to Cara Lombardo at cara.lombardo@wsj.com and Miriam Gottfried at Miriam.Gottfried@wsj.com
International Business Machines Corp. agreed to sell the data and analytics assets from its Watson Health business to investment firm Francisco Partners, the companies said Friday.
The deal is the latest step by IBM to refocus its core business around the cloud. The Wall Street Journal reported last year that IBM was exploring a sale of its healthcare-analytics business as a way to streamline the computing giant’s operations and sharpen its focus on computing services provided via the internet. The Watson Health business uses artificial intelligence to analyze diagnostic tests and other health data and to manage care.