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 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.
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
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
TOKYO—After a deal that could have been worth $80 billion to his company fell apart,
SoftBank Group Corp.
9984 5.85%
Chief Executive
Masayoshi Son
is playing salesman for Plan B—an initial public offering of chip designer Arm.
Mr. Son sounded as if he were on a roadshow for investors at a news conference in Tokyo on Tuesday. He said Arm is entering a “golden period” of high demand for the chips it helps create in smartphones, electric vehicles and computer-server farms operated by the likes of
Amazon.com Inc.
The pitch came hours after the Japanese investment and technology conglomerate said it was abandoning plans to sell Arm to Nvidia Corp.—in what would have been the largest semiconductor deal on record—because antitrust concerns stood in the way.
Mr. Son said he was surprised to see the backlash not only from U.S. regulators who sued to block the deal in December but also big tech companies that rely on Arm’s chip designs.
“We saw strong opposition because Arm is one of the most important and essential companies that most companies in the IT industry or in Silicon Valley rely on, either directly or indirectly,” he said.
SoftBank paid $32 billion when it acquired the U.K.-based chip business in 2016. Mr. Son said the sale to Nvidia, under which SoftBank would have received both cash and Nvidia shares, could have been worth $80 billion because of a rise in Nvidia’s share price.
SoftBank now plans to pursue a public listing of Arm by March 2023. Arm shares will most likely be listed on the tech-heavy
Nasdaq Stock Market
in the U.S. because many of Arm’s clients are based in Silicon Valley, Mr. Son said.
He said SoftBank didn’t intend to keep Arm for itself because he wanted outside investors in the SoftBank-led Vision Fund, which owns a quarter of Arm, to be able to cash in through an IPO and because he wanted to give stock options as incentives to Arm employees.
Uncertainties linger around an Arm IPO, including whether the volatile semiconductor business will stay hot through this year.
Chinese tech stocks popular among U.S. investors have tumbled amid the country’s regulatory crackdown on technology firms. WSJ explains some of the new risks investors face when buying shares of companies like Didi or Tencent. Photo Composite: Michelle Inez Simon
Tech shares have fallen recently because of tightening by the Federal Reserve. Fumio Matsumoto, chief strategist at
Okasan Securities,
said that made the timing for a big IPO less than ideal, and he also observed that a strategic buyer in the chip industry might pay more for Arm because of the potential synergy effects.
Still, Mr. Matsumoto said the downturn in Silicon Valley also offered opportunities for Mr. Son, and it made sense to raise cash for his war chest from an Arm IPO. “Because technology share prices have gone through a sharp correction over the past year, we are seeing a good cycle to consider preparing” for new investments, Mr. Matsumoto said.
After a rough patch a few years ago, Arm is on track for $2.5 billion in revenue this fiscal year, which ends in March, up from $1.98 billion the previous year, SoftBank said. Arm’s operating profit, according to one type of calculation used by SoftBank, more than doubled over the past two years to a projected $900 million this fiscal year.
An array of consumer electronics companies as well as semiconductor companies, including
Apple Inc.,
Samsung Electronics Co.
and
Qualcomm Inc.,
use Arm’s designs in at least some of their chips. The designs are known for their low power consumption, making them nearly ubiquitous in mobile devices.
The collapse of the Arm deal is just one of the challenges Mr. Son is tackling in his globe-spanning investment portfolio. He said “we are in pain” over China’s crackdown on its big tech companies, which hit SoftBank investments including its most valuable one, e-commerce giant Alibaba Group Holding Ltd.
The past two years have seen some of the wildest swings in the four decades since Mr. Son started SoftBank. The pandemic, initially seen as a blow, soon emerged as a boon for many technology businesses including those in which SoftBank has invested. SoftBank shares surged, only to fall by half from their recent peak when the China troubles hit and the Arm deal ran aground.
SoftBank’s net asset value, Mr. Son’s preferred measure of the company’s finances, fell by ¥1.6 trillion, equivalent to about $14 billion, in the October-December quarter to ¥19.3 trillion. That is a fall of 30% from the peak in September 2020 and the lowest level since 2017.
Mr. Son blamed the sharp fall in Alibaba shares. The Chinese company, which once made up the majority of SoftBank’s net assets, now accounts for less than a quarter of the total.
SoftBank said it unloaded a small number of Alibaba shares to settle contracts with its lenders, but Mr. Son said SoftBank’s stake in the Chinese company remained close to a quarter.
Mr. Son, who turns 65 this year, has lost a number of top lieutenants in recent years, including Chief Operating Officer
Marcelo Claure,
who stepped down in January after a pay dispute. Mr. Son said that while he was grooming successors, he didn’t intend to step down soon.
“If I stop, I’d become an old grandpa very quickly,” he said. He boasted that when he went bowling recently, he topped 200 points in two different rounds—a fine score for an amateur. “I thought, ‘Hey, I’m still pretty young,’ ” he said.
—Sam Schechner in Paris contributed to this article.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com and Peter Landers at peter.landers@wsj.com
Reddit Inc. said it has confidentially filed paperwork with the U.S. Securities and Exchange Commission for an initial public offering, an announcement that comes at the tail end of a banner year for stock-market debuts.
The company said in a blog post that it had started the paperwork with the SEC but didn’t share any further details.
“The number of shares to be offered and the price range for the proposed offering have not yet been determined,” it said in the post. “The initial public offering is expected to occur after the SEC completes its review process, subject to market and other conditions.”
As of August, Reddit said it had a valuation of about $10 billion after raising more than $400 million from Fidelity Investments Inc. In February, the social-media company said it had raised about $500 million at a $6.5 billion valuation.
Reddit has been looking to build on the attention it gained when at the start of the year its WallStreetBets forum became a hot spot for the individual investors who rallied around
GameStop Corp.
and other stocks.
The episode brought in millions of new users, Reddit CEO
Steve Huffman
said in its wake, as well as new advertisers, the source of the bulk of the company’s revenue. He has also said that with an IPO, he would want to make Reddit’s share offering more accessible to individual investors.
San Francisco-based Reddit, founded in 2005, is known for its message boards on an array of topics, plus its “ask me anything” digital town halls with celebrities, politicians and subject-matter experts. The company was sold to Condé Nast in 2006, and the magazine publisher’s parent, Advance Publications Inc., spun Reddit off in 2011 and remains a shareholder.
Over time Reddit has grown to outpace rivals such as Digg to become a haven for niche communities to gather and a go-to source of news. Reddit had more than 50 million daily users as of January, according to its website. In August the company said it reached $100 million in advertising revenue in a quarter for the first time, almost triple the prior-year figure, but that it remained unprofitable.
Reddit’s market debut will come after a year for IPOs like no other. More than 900 companies have gone public in 2021, raising nearly $300 billion in 2021, including electric vehicle maker Rivian Automotive Inc., dating app
Bumble Inc.
and mobile-videogame maker
Playtika Holding Corp.
Along with Fidelity, Reddit’s investors include venture-capital firms Andreessen Horowitz and Sequoia Capital, and Chinese technology conglomerate
Tencent Holdings Ltd.
In recent years, Reddit has been taking steps to grow by investing in areas such as video and consumer products, as well as by moving into international markets. But like many other social-media companies, it’s also been plagued with content-moderation challenges, including how to stop the spread of misinformation and calls for violence.
In 2020, Reddit banned “The_Donald,” a community devoted to former President
Donald Trump,
saying moderators frequently ignored content that violated its platform’s rules.
Thanks to the GameStop trading frenzy, Reddit has become a hot spot this year for everyday Wall Street investors seeking advice. At The Wall Street Journal’s Tech Live conference in October, Mr. Huffman said he was hoping a lot of individual investors would participate in Reddit’s initial offering.
“Retail investors are usually the last and probably at the worst price” for initial offerings, Mr. Huffman said at the event. “But the way the market is evolving to be more fair I think is really exciting.”
Write to Sarah E. Needleman at sarah.needleman@wsj.com
Volvo Cars, the Swedish auto maker owned by Zhejiang Geely Holding Group Co. of China, is completing plans for an initial public offering and is set to announce details of the listing as early as Monday, in a deal that could value the car maker at as much as $25 billion, according to people familiar with the matter.
A listing, if it goes ahead, would represent one of the car industry’s most dramatic turnarounds.
Ford Motor Co.
, weakened by the global financial crisis, sold the Swedish company to Geely for $1.8 billion in 2010.
Volvo has long capitalized on a brand recognized for safety, but at the time of its sale, its product lineup had failed to excite car buyers. Geely bankrolled Volvo’s recovery over the next decade, opening China as a market for the brand and providing financing to help the company revamp its model offerings.
Today, Volvo is profitable, with a road map for electric-model rollouts that is ahead of some competitors. Its brand is back in fashion in the U.S. and elsewhere. It now competes with German premium brands, including BMW maker
Bayerische Motoren Werke AG
,
Volkswagen AG’s
Audi brand and
Daimler AG’s
Mercedes-Benz.
For the first half of this year, Volvo reported a 41% increase in sales over the same period last year, to 380,757 vehicles. The company’s sales in the U.S. rose 47% to 63,754 vehicles. Europe remains Volvo’s biggest market.
At a valuation of $25 billion, Volvo would be bigger than European car maker
Renault SA,
which has a market value of a little more than $10 billion. That is despite Volvo selling a fraction of the cars Renault sells each year. Volvo’s size, though, would pale against the world’s biggest car makers, including
General Motors Co.
and Volkswagen, underscoring the competitive challenge the Swedish company faces. Its value would also sharply trail the $767.5 billion market capitalization of electric-vehicle leader
Tesla Inc.
Still, a listing would provide investors another competitor to bet on in an auto-industry race to roll out electric vehicles. Volvo was the first conventional auto maker to begin phasing out internal-combustion engines, ending its production of cars only powered by fossil fuels in 2019. Since then, every new Volvo is either a fully electric or hybrid model.
Most big auto makers have since said that they also will be phasing out conventional engines in new vehicles, by around 2035.
Volvo has floated the idea of a possible listing as far back as 2018, and in May said it was considering an IPO on the Stockholm stock exchange. Such a listing could provide the company a broader shareholder base and greater independence from its Chinese investors. In September, Reuters reported that Volvo was in talks to list its shares in the coming weeks.
It isn’t clear how big a stake Geely plans to sell, but it has previously indicated it would likely remain a major shareholder after any offering. A decision on the details of the listing and its public disclosure could be delayed, but people familiar with the plans said a final call was imminent.
An offering would come amid a frenzy of investor interest in electric vehicles and after an EV-focused Volvo affiliate made its own move to take advantage of that enthusiasm.
Last week, Polestar, a Swedish electric-vehicle maker jointly owned by Volvo, Geely and others, announced plans to merge with a special-purpose acquisition company and list in New York in a deal that would value the Swedish EV company at roughly $20 billion.
Volvo Cars said last month that it expected to own close to 50% of the combined company after completion of Polestar’s merger with Gores Guggenheim Inc.
The Polestar deal generated a pathway for Volvo to pursue its own offering by assigning a value of about $10 billion to Volvo’s stake, according to some of the people familiar with Volvo’s listing plans.
Earlier this year, Volvo and Geely backed away from considerations of merging Volvo with Geely Auto Group, raising expectations that the company would pursue a separate listing and greater independence from Geely Holding.
“Volvo Cars is especially well-positioned to deliver continued growth and harness the full potential of electrification and the delivery of safe autonomous-drive functions,”
Eric Li,
chairman of Geely Holding, said in May.
Ford bought Volvo in 1999 for 50 billion Swedish kronor, or about $6.47 billion at the time of the transaction. At the time, Volvo had 28,000 employees and produced about 400,000 vehicles a year.
By 2009, when Ford put the company up for sale, Volvo was struggling. After Geely stepped in, it poured in money. Over the course of a decade, Geely invested more than $11 billion, financing a modernization of the company’s model lineup, an early shift into electric vehicles, and factories in China that helped Volvo cash in on China’s surging appetite for Western cars.
In 2018, Volvo opened its first U.S. factory. The brand had once been a household name in suburban America in the 1970s. But it had to rebuild its business in the world’s most lucrative car market.
Volvo produces the S60 sedan in Charleston, S.C. Next year, the South Carolina plant intends to produce an electric version of the company’s XC90, a large, premium sport-utility vehicle. Volvo has invested more than $1 billion in the plant and employs 1,500 people there. The company has said that its U.S. plant will be the first to shift entirely to electric-car production.
Write to Ben Dummett at ben.dummett@wsj.com and William Boston at william.boston@wsj.com
SINGAPORE—China plans to propose new rules that would ban companies with large amounts of sensitive consumer data from going public in the U.S., people familiar with the matter said, a move that is likely to thwart the ambitions of the country’s tech firms to list abroad.
In recent weeks, officials from China’s stock regulator have told some companies and international investors that the new rules would prohibit internet firms holding a swath of user-related data from listing abroad, the people said. The regulators said that the rules target companies seeking foreign initial public offerings via units incorporated outside the country, according to the people.
China Securities Regulatory Commission officials said that companies with less sensitive data, such as those in the pharmaceutical industry, are still likely to receive Chinese regulatory approval for foreign listings, according to the people.
The new rules are likely to help Beijing exert more control over the complex corporate structure that China’s biggest tech companies use to sidestep restrictions on foreign investment. Chinese leaders consider sectors such as the internet, telecommunications and education sensitive because of political or national-security concerns.
Chinese technology giants including Alibaba Group Holding Ltd. , Didi Global Inc. and Tencent Holdings Ltd. have used such a corporate structure known as a Variable Interest Entity to attract foreign capital and list offshore.
Western Digital Corp. is in advanced talks to merge with Japan’s Kioxia Holdings Corp., according to people familiar with the matter, in a deal that could be valued at more than $20 billion and further reorder the global chip industry.
Long-running discussions between the companies have heated up in the past few weeks and they could reach agreement on a deal as early as mid-September, the people said. Western Digital would pay for the deal with stock and the combined company would likely be run by its Chief Executive, David Goeckeler, the people said.
There’s no guarantee Western Digital, which had a market value of around $19 billion Wednesday afternoon, will seal an agreement, and Kioxia could still opt for an initial public offering it had been planning or another combination.
The Wall Street Journal reported in March that Western Digital and Micron Technology Inc. were examining potential deals with Kioxia, which makes NAND flash-memory chips used in smartphones, computer servers and other devices. Micron’s interest has since cooled and Kioxia has been focused on discussions with Western Digital, which already has deep existing ties with the Japanese company.
Any transaction would require the blessing of the Japanese government, given Kioxia’s significance there and the political sensitivities of transferring ownership of such key technology. Washington would also likely play a role, but a deal could fit with a push by the U.S. to boost its chipmaking capabilities and increase competitiveness with China.
