The Wall Street Journal - 14.11.2019

© 2019 Dow Jones & Company. All Rights Reserved. ** THE WALL STREET JOURNAL.** Thursday, November 14, 2019 |B

TECHNOLOGY: FACEBOOK REPORTS GAINS IN REMOVING OBJECTIONABLE CONTENT B

BUSINESS&FINANCE

BUSINESS

Unilever names

a new chairman, the

second change to the

topranksinayear. B

MANAGEMENT

It takes two to turn

job-sharing into a

promotion...

and then another. B

Kong, the company was eager

to go ahead with the offering

because the market conditions

did improve, one person famil-

iar with the plans said.

Alibaba’s leaders were

drawn to Hong Kong for its

secondary listing, believing it

would give them a foundation

of China-based shareholders

who actually see and use the

company’s products daily, this

person added.

The secondary listing would

be a consolation prize for

Hong Kong, which in 2014 lost

out to New York on Alibaba’s

record-setting $25 billion IPO.

Corp., the Chinese investment

bank known as CICC, and

Credit Suisse Group AG are the

most senior financial advisers

on the deal, a role known in

Hong Kong as joint sponsors.

They are working alongside

Citigroup Inc., JPMorgan

Chase & Co. and Morgan Stan-

ley as joint global coordinators

and joint bookrunners, the U.S.

filing showed.

Alibaba in August post-

poned plans for its Hong Kong

listing because of the city’s po-

litical instability and poor

market conditions. While pro-

tests continue to roil Hong

launched and Alibaba would

take orders for the shares, as

well as running a roadshow for

prospective investors, until

Nov. 19. Alibaba will use the

stock ticker 9988, the term

sheet showed.

Alibaba is China’s most

valuable company by market

capitalization, worth nearly

half a trillion dollars.

The company reported a

40% rise in quarterly sales ear-

lier this month and on Monday

set another record for its an-

nual Nov. 11 “Singles Day,” sell-

ing $38.3 billion in goods.

China International Capital

In this filing, and a second

document made public in Hong

Kong, Alibaba said it would

use the proceeds to expand

relatively new businesses. The

company said it would also use

the funds to invest in cloud

computing and offline retail.

While Alibaba dominates

China’s online-retail market,

holding about a two-thirds

share, its newer initiatives

such as cloud computing and

entertainment are bleeding

money amid competition.

In a note outlining the

terms of the deal, one of the

banks said the deal had

hub a vote of confidence after

monthslong demonstrations

and sometimes-violent clashes

between antigovernment pro-

testers and police.

Alibaba said in a U.S. filing

that based on Tuesday’s clos-

ing price for its U.S.-traded

stock, it could raise up to

$13.38 billion. That figure as-

sumes the banks underwriting

the deal exercise an option to

buy more shares.

The company said it would

determine the deal’s price on

or around Nov. 20, and trading

would start around four busi-

ness days later, or Nov. 26.

S&P 3094.04À0.07% S&PFIN g0.57% S&PIT À0.25% DJTRANS g1.06% WSJ$IDX g0.06% LIBOR3M 1.910 NIKKEI (Midday) 23263.96g0.24% See more at WSJ.com/Markets

BEIJING— Alibaba Group
Holding Ltd.’s leaders used the
code “Project Orange” to dis-
cuss the company’s block-
buster initial public offering in

2014. Now they are close to
      seeing the fruition of “Project
      Tangerine,” the internal name
      for their effort to raise roughly
      $13 billion in a secondary list-
      ing in Hong Kong.
      The Chinese online retailer
      said Wednesday that it had ap-
      plied for the offering on the
      Hong Kong stock exchange. The
      move gives the Asian financial

BYSTUWOO

Alibaba Seeks $13 Billion in Share Sale

$141, or less than $4 a month,

and free seven-day trials are

also offered.

A deal offering a free year

of the service to certain Veri-

zon Communications Inc. cus-

tomers is also likely contribut-

ing a significant number of

sign-ups. Speaking at a confer-

ence in Barcelona on Wednes-

day, Verizon’s finance chief

said about 17 million accounts

at the carrier are the kind of

unlimited plans that are eligi-

ble for the Disney+ promotion.

The CFO, Matt Ellis, de-

clined to say exactly how

many of the carrier’s custom-

ers have begun using the video

streaming service, but said

“we would expect a pretty sig-

nificant number” of eligible

Please turn to page B

LOS ANGELES— Walt Dis-

ney Co.’s flagship streaming

service has signed up 10 mil-

lion users, the company said

the day after Disney+

launched.

Disney had been offering

subscriptions for several

months before Tuesday’s

launch, including some at a

significant discount.

Investors were encouraged

by the numbers as Disney

shares closed at a record high

Wednesday. The stock rose

7.3% to finish at $148.72, and it

now has risen more than 35%

in 2019. Disney, a member of

the Dow Jones Industrial Aver-

age, was responsible for about

75% of the index’s gains

Wednesday.

Reaching 10 million sub-

scribers about 24 hours after

the formal launch appears to

be a robust start for the com-

pany, but it’s unclear how

much each of those customers

is worth to Disney. One of the

company’s most popular sub-

scription promotions sold a

three-year deal for roughly

BYERICHSCHWARTZEL

Disney+ Signs Up

10 Million Users,

Stirring Investors

Morebondissuersarelookingtomunicipaladvisers,threateningthemarket

dominanceofbigbanksandbrokerages.

Source: Refinitiv

Municipal advisory firms by debt amount advised on in 2018, in billions

Lead underwriters by amount of municipal debt issued in 2018, in billions

Ponder

PFMFinancialAdvisors

PublicResourcesAdvisoryGroup

HilltopSecurities

AcaciaFinancialGroup

Frasca&Associates

MunicipalCapitalMarketsGroup

PiperJaffray

BakerTillyMunicipalAdvisors

KNNPublicFinance

36

$47

22

10

9

9

7

4

4

4

BankofAmerica

Citigroup

JPMorganChase

MorganStanley

RoyalBankofCanada

GoldmanSachsGroup

WellsFargo

RaymondJamesFinancial

PiperJaffray

JefferiesFinancialGroup

$48

41

31

26

20

15

15

12

11

11

Percentage of bond issues
with municipal advisers

80

0

10

20

30

40

50

60

70

%

2004 ’08 ’12 ’16 ’

Through Nov. 1

up only a small portion of the

overall market, broker-deal-

ers—as these banks and bro-

kers are known because they

price and sell new bonds and

trade existing ones—aren’t ea-

ger to face further inroads.

The firms that sell munici-

pal debt include some of the

biggest U.S. banks. Last year

the top five underwriters were

Bank of America Corp., Citi-

group Inc., JPMorgan Chase

&Co., Morgan Stanley and

Royal Bank of Canada ,ac-

cording to Refinitiv.

“We’re pushing for this

whole thing to be killed,” said

Mike Nicholas, chief executive

of Bond Dealers of America, a

trade group.

Advisers that hire them-

selves out to local govern-

ments participate in three-

quarters of muni-bond issues,

up from 52% in 2004. They

pitch governments on the ben-

efits of having a fiduciary at

the table to evaluate prospec-

tive deals.

Today, there are around 500

municipal-advisory firms scat-

tered around the country,

more than 70% made up of

fewer than five advisers, ac-

cording to the Municipal Secu-

rities Rulemaking Board. They

often work out of small shops

or sometimes home offices,

logging hours on the road to

visit rural towns and schools

that make up their client base.

Some are affiliated with bond

dealers.

The SEC proposal, which

was released last month, came

in response to a letter from

the nation’s largest muni advi-

sory firm, Philadelphia-based

PFM, which advised on $47.

billion in bond deals last year,

according to Refinitiv.

Broker-dealers are alarmed

at the SEC proposal, reflecting

broader shifts occurring in the

municipal market alongside

Please turn to page B

Wall Street’s longstanding
hold on the $4 trillion munici-
pal-bond market faces a chal-
lenge from an onslaught of
small, independent firms
known as municipal advisers.
The Securities and Ex-
change Commission is consid-
ering allowing these advisers
to arrange private bond sales
to skilled investors without
the involvement of the large
banks and midsize brokers
that for decades have domi-
nated the market for high-
grade local government debt.
Though private sales make

BYHEATHERGILLERS

Wall Street Banks’ Muni Business

Faces Threat From Small Firms

PERSONAL TECHNOLOGY|By Wilson Rothman

Apple’s MacBook Pro

Tackles a Key Complaint

Apple in-
troduced a 16-
inch MacBook
Pro on
Wednesday,
marking a new
screen size as well as a de-
parture from the problematic
“butterfly” keyboard that
triggered customer com-
plaints and drove the com-
pany to offer an extended re-
pair program.
The computer—available
for purchase Wednesday, re-
placing the 15-inch MacBook
Pro—also has a larger battery,
improved speakers and higher
maximum memory and stor-
age options.
Regular Wall Street Jour-
nal readers might wonder
why they are hearing about
this from me, rather than Per-
sonal Tech columnist Joanna
Stern, who put a spotlight on
the keyboard issue back in
March. The piece included

Apple’s apology on the sub-

ject, to the “small number of

users” that were having is-

sues. Joanna is traveling on

assignment, and will be back

for a full review of the new

16-inch MacBook Pro. As her

editor, I took on the first look.

(Dow Jones & Co., pub-

lisher of The Wall Street

Journal, has a commercial

agreement to supply news

through Apple services.)

The issue at the center of

the keyboard debacle was the

mechanism under the keys.

In 2015, Apple began using

a butterfly mechanism to re-

place the previous “scissor”

mechanism, which is an in-

dustry standard. This enabled

a thinner laptop design,

though reliability problems—

including duplicate or missed

key presses—continued for

years, as Joanna explained.

Multiple suits were filed

Please turn to page B

INSIDE

A live-action ‘Lady and the Tramp’ is part of the service’s mix of

remakes, new shows, classics and curiosities. A viewing guide, B2.

DISNEY+

35 %

Thecompany’sshare-price

gainsofarthisyear.

industry but whose fortunes

have waned in the digital age.

HP confirmed the approach

the following day without com-

menting further on the bid. HP

said in a statement Wednesday

that it is committed to doing

what is in the best interests of

all HP shareholders.

In his first public comments

about the potential deal, the

83-year-old billionaire said he

believes it is in the best inter-

ests of both sets of sharehold-

ers given the potential for cost

savings—pegged by Xerox at

more than $2 billion—and for

the combined company to mar-

ket a more balanced portfolio

of printer offerings.

Mr. Icahn said he isn’t set on

any particular structure, an ap-

parent nod to comments from

some analysts that a purchase

of Xerox by HP may make more

sense. Xerox, famous for its

eponymous copiers, has a mar-

ket cap of about $8 billion.

“I think a combination is a

no-brainer,” Mr. Icahn said. “I

believe very strongly in the

synergies,” he said, adding that

“there will probably be a choice

between cash and stock and I

would much rather have the

stock, assuming there’s a good

management team.”

Both Xerox and HP have

been scrambling to retool their

businesses as the need for

printed documents declines.

Both are in cost-cutting mode,

with Xerox planning to cut

roughly $640 million in ex-

penses under Chief Executive

John Visentin while HP has

tasked its new CEO, Enrique

Lores, with implementing a

plan to save $1 billion annually.

Xerox primarily makes large

printers and copy machines and

most of its nearly $10 billion in

annual revenue comes from

renting and maintaining them

for businesses. HP, based in

Palo Alto, Calif., sells mainly

smaller printers and printing

Please turn to page B

Activist investor Carl Icahn

is pushing for the proposed

union of Xerox Holdings Corp.

and HP Inc., arguing that a

combination of the printer

makers could yield big profits

for investors.

Mr. Icahn, who owns a 10.6%

stake in Norwalk, Conn.-based

Xerox, told The Wall Street

Journal that he also owns a

4.24% stake in HP, valued at

roughly $1.2 billion. His stake

in HP, not previously reported,

could increase pressure on the

printer and personal-computer

company to strike a deal.

Xerox last week made an of-

fer to buy HP for $33 billion, or

$22 a share—$17 in cash and

0.137 Xerox share for each HP

share. It is a bold move given

that HP’s market value, at $

billion, is more than three

times that of Xerox. The deal

would unite companies that

were once giants of American

BYCARALOMBARDO

Icahn Backs Xerox’s Big Bid,

Reveals Stake in Target HP