DealBook Briefing: Is Saudi Arabia Twisting Arms to Help Aramco’s I.P.O.?

September 20, 2019

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Prince Alwaleed bin Talal, one of those reportedly pushed to invest. Amer Hilabi/Agence France-Presse — Getty Images

Saudi Arabia may be forcing its businessmen to boost Aramco

The kingdom is reportedly trying to pressure some of its richest families to invest in the national oil giant’s forthcoming I.P.O., according to the FT, citing unnamed sources. If true, that would indicate how much it wants Saudi Aramco’s stock sale to work.

“Four of the sources said the aim was to ‘strong-arm,’ ‘coerce’ or ‘bully’ some of the wealthiest families in the kingdom to become cornerstone investors in what has been billed as the world’s biggest ever I.P.O.,” the FT adds.

Among those reported to have been tapped is Prince Alwaleed bin Talal, the well-known billionaire who was one of hundreds of Saudi royals detained by the government two years ago and forced to hand over huge parts of their fortunes.

Another is an unidentified businessman who was asked to invest as much as $100 million, as his “patriotic duty,” the report added. An adviser to the mogul said, “There is a limit on how patriotic he wants to be.”

The reported campaign comes as Saudi officials feel pressure to make the I.P.O. a success:

• The recent drone attacks on key Aramco plants have raised questions about the company’s prospects. Energy analysts have said that a recent resumption of Saudi oil output was achieved by releasing reserves, and that Aramco is still weeks away from getting back to normal.

• And while Prince Mohammed bin Salman, Saudi Arabia’s de facto ruler, has called for Aramco to be valued at $2 trillion in the I.P.O., some advisers have told him the valuation would likely be much smaller.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin, Michael J. de la Merced, Lindsey Underwood and Stephen Grocer.

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Martin Bureau/Agence France-Presse — Getty Images

Airbnb plans to go public next year

The online room rental company said in a one-sentence statement yesterday that it plans to become a publicly traded company in 2020. How it gets there remains to be seen.

It has to hope that its debut will be better received than those of two other Silicon Valley darlings, Uber and Lyft. (And that it doesn’t encounter the pushback from prospective investors that led WeWork to postpone its I.P.O.)

Airbnb’s announcement came as it was exploring giving equity to the “hosts” who list their homes on its platform, Erin Griffith of the NYT reports, citing unnamed sources. Under securities laws, Airbnb has to disclose plans to go public before it gives out those shares.

But the company may not stage an I.P.O. It may instead arrange a direct listing where it simply lists its shares on a public market without raising additional money. Spotify and Slack both successfully followed that route.

Airbnb still has obstacles to overcome. Among them: Resolving its dispute with New York City over regulations blocking short-term rentals of entire apartments, according to Olivia Carville of Bloomberg.

More: A group of prominent venture capitalists plan to discuss whether more start-ups should go public through direct listings at an invite-only symposium next month.

Mark Zuckerberg Brendan Smialowski/Agence France-Presse — Getty Images

Mr. Zuckerberg goes to Washington

Mark Zuckerberg met with President Trump and several senators yesterday during his first trip to Washington since hearings last year on Facebook’s privacy and data practices, Reuters reports.

Details of his presidential meeting were not released, but a Facebook spokesman said it was “constructive,” and Mr. Trump described it on Twitter as a “nice meeting.”

“On Capitol Hill, Mr. Zuckerberg received an earful of complaints,” the WSJ reports. Senator Josh Hawley, Republican of Missouri, asked him to consider selling Instagram and WhatsApp, which are part of an antitrust investigation by the F.T.C. “I think it’s safe to say that he was not receptive to those suggestions,” Mr. Hawley said later.

The Facebook C.E.O. also met with Senator Mike Lee, the Republican chairman of the Senate antitrust subcommittee, and Senator Maria Cantwell, Democrat of Washington and the ranking member of the Senate Commerce Committee. He also had a private dinner with a group of senators, including Senator Richard Blumenthal, Democrat of Connecticut and a frequent critic of Facebook.

Amazon takes a stand on climate change

The e-commerce giant said yesterday that it would meet the goals of the Paris climate agreement 10 years ahead of schedule. It’s a huge and costly commitment.

• Amazon plans to buy 100,000 electric delivery trucks from Rivian, a company that it has invested $440 million in.

• It plans to rely solely on renewable energy by 2030, and be completely carbon neutral by 2040.

• And it has donated $100 million to the Nature Conservancy to fund the Right Now Climate Fund.

Its annual carbon footprint right now is about 44.4 million metric tons, equivalent to nearly 600,000 tanker trucks of gasoline. That puts Amazon in the top 150 or 200 emitters in the world, Bruno Sarda of CDP North America, an environmental nonprofit, told the NYT.

The announcement comes ahead of a planned employee walkout over climate change today, as staffers push the company to be more aggressive in its climate goals.

But Amazon punted on some employee demands. Jeff Bezos demurred on a call to stop providing cloud services to the oil and gas industry. And while he said the company would review its donations to politicians who deny the scientific consensus on climate change, he declined to endorse the Green New Deal.

Keep your eye on whether other businesses join Amazon in pledging to meet the Paris goals early.

Rich Pedroncelli/Associated Press

Colt ends its line of civilian AR-15s

The gun maker will no longer produce or sell AR-15 rifles for civilians, the NYT reports, after a renewed push for gun control in the wake of more mass shootings.

Colt blamed market conditions, not calls for more gun regulations. “Over the last few years, the market for modern sporting rifles has experienced significant excess manufacturing capacity,” Dennis Veilleux, its C.E.O., said in a statement. He added that the gun maker remained “committed to the Second Amendment.”

But public pressure may have had a role, according to Timothy Lytton, an expert on the gun industry. “The mass shootings are probably making the company a little bit brand-sensitive,” Mr. Lytton told the NYT, noting that Colt’s headquarters aren’t far from Sandy Hook Elementary School.

The company will still make handguns for civilians and rifles for government contracts.

It’s unclear how the move will affect the rifle market, since plenty of other manufacturers make similar products. Colt itself said it believes there’s already an “adequate supply” of such weapons.

Purdue Pharma's headquarters in Stamford, Conn. Frank Franklin Ii/Associated Press

Purdue Pharma’s founding family threatens to abandon legal settlement

Members of the Sackler family could withdraw a promise to pay $3 billion as part of a nationwide settlement tied to the opioid crisis if a bankruptcy judge doesn’t block states’ lawsuits against them and their drug company, Jan Hoffman of the NYT writes.

The move could jeopardize a tentative settlement that Purdue, the maker of OxyContin, reached last week with representatives of two dozen state attorneys general and thousands of local governments that have brought lawsuits against it.

Purdue’s new complaint is aimed at about two dozen states that have not signed on to the settlement and are continuing to pursue cases against both the company and various Sacklers, Ms. Hoffman reports.

“It’s yet another effort by Purdue to avoid accountability and shield the Sackler family fortune, and we will be opposing it,” said Maura Healey, the attorney general of Massachusetts, the first state to sue the Sacklers.

Purdue’s lawyers said that the legal costs from continued litigation with the states, which Purdue estimates is costing the company about $5 million a week, would “destroy hundreds of millions of dollars or more of value available for all claimants and for the public.”

More: A WSJ analysis of opioid sales showed that OxyContin dominated the market for oxycodone drugs between 2006 and 2012, with 27 percent of sales.

Revolving door

Walmart’s C.E.O., Doug McMillon, will succeed Jamie Dimon of JPMorgan Chase as the chairman of the Business Roundtable, the influential trade group.

The Royal Bank of Scotland named Alison Rose as its C.E.O. She’s the first woman to lead a major British bank.

Microsoft will nominate Emma Walmsley, the C.E.O. of GlaxoSmithKline, to its board. Two current directors, Charles Noski and Helmut Panke, will step down.

Beyond Meat has hired Sanjay Shah, a former executive at Tesla, as its C.O.O.

BuzzFeed News has hired Samantha Henig, the former executive producer of audio for the NYT, as its executive editor of strategy.

The speed read

Deals

• Stripe, the payments company, has raised $250 million in a funding round that values it at $35 billion. Investors included Andreessen Horowitz, Sequoia and General Catalyst. (NYT)

• The food delivery service Postmates has raised $225 million in new funding from GPI Capital, ahead of its planned I.P.O. (Business Insider)

• Shares in Ping Identity, a maker of identity-verification software, jumped 25 percent in their debut yesterday. (Reuters)

• Japan is weighing tough new limits on foreign investment tied to national security; deal makers there are worried. (FT)

Politics and policy

• The House approved a short-term funding bill that would delay any potential government shutdown until just before Thanksgiving. (NYT)

• Lawyers for President Trump sought to block Manhattan’s district attorney from obtaining his state tax returns using a novel legal argument: that he cannot be criminally investigated until he leaves the White House. (NYT)

• Senate Republicans moved to advance the nomination of Eugene Scalia for Labor secretary, despite protests from Democrats about the vetting process. (WSJ)

• The White House reportedly organized — then quickly canceled — a meeting with vaping industry advocates, amid conservative opposition to its ban on flavored e-cigarettes. (Politico)

Brexit

• Jean-Claude Juncker, the outgoing president of the European Commission, said that the E.U. was willing to compromise on the issue of Ireland’s border with Northern Ireland. (FT)

• More than half of companies interviewed for a new survey said they weren’t prepared for a change in immigration rules for Britain after Brexit. (FT)

• The Conservative Party has been focusing on Brexit in its Facebook advertising for voters over the age of 45. (BBC)

Trade

• Fifty-eight percent of Americans think President Trump’s trade war with China is bad for the U.S., according to a new survey. (NYT)

• The Chinese authorities detained an American pilot working for FedEx. (NYT)

Tech

• YouTube announced changes to its user verification system and removed checkmarks from many high-profile creators. (NYT)

• Instagram announced rules for posts and ads about plastic surgery and weight-loss products. (Business Insider)

• Tinder has created a “Choose Your Own Adventure”-style series to give users something to talk about. (NYT)

• Bill Gates’s recommendation to Washington: Regulate, don’t break up, Big Tech. (Business Insider)

• Walgreens will begin testing a drone delivery service for food, over-the-counter drugs and other products next month using Alphabet’s Wing. (CNBC)

Best of the rest

• The Fed faces pressure to increase its reserves, with signs of stress in U.S. funding markets. Related: The Fed chairman, Jay Powell, is forcing the market to think more for itself. (Bloomberg, WSJ)

• A pesticide made by Dow Chemical sterilized thousands of banana workers in Nicaragua decades ago. Now they’re suing the company in France. (NYT)

• The former C.E.O. of Overstock, Patrick Byrne, sold his entire stake in the company, and blamed both the “deep state” and the government for his departure. (CNBC)

• India is the latest Asian country to ban e-cigarettes. (FT)

• A defense of liberal arts majors. (NYT)

Correction: Yesterday’s newsletter misstated who would benefit from an increase in the value of their holdings in Endeavor once the company goes public. Some senior executives, along with its leaders, Ari Emmanuel and Patrick Whitesell, would benefit, not just Mr. Emmanuel and Mr. Whitesell.

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