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CM Y K Composite
* * * * * * WEDNESDAY, APRIL 8, 2015 ~ VOL. CCLXV NO. 81 WSJ.com HHHH $3 .00
CONTENTSArts in Review.......... D5Business News.. B2,3,5Global Finance............ C3Heard on the Street C12Home & Digital...... D2,3Managing...................... B7
Opinion................... A11-13Property Report C8-10Sports.............................. D6Technology................... B4U.S. News................. A2-5Weather Watch........ B7World News........... A6-9
s Copyright 2015 Dow Jones & Company.All Rights Reserved
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What’sNews
Sen. Rand Paul kicked off hispresidential campaign, with theKentucky Republican present-ing himself as a libertarian andanti-Washington populist.A1 Iraq exhumed the remainsof dozens of men thought tobe among the estimated 1,700air force cadets massacred byIslamic State last year. A7The U.S. said it is expeditingarms deliveries for the Saudi-led military campaign againstHouthi rebels in Yemen. A7 Iran said militants fromPakistan killed eight borderguards, as Tehran presses Pak-istan to stay out of Yemen. A7A white police officerwhoshot a black man in SouthCarolina was charged withmurder after a review of avideo taken by a bystander. A2 Rahm Emanuel was re-elected Chicago mayor after arunoff that tested the policiesand personality of the formerWhite House chief of staff. A4 Obama and Rául Castromaymeet this week for the firsttime since the U.S. and Cubabegan to normalize ties. A9Skilled-worker visa demandalready has exceeded the entireyear’s supply, prompting theU.S. to resort to a lottery. A2 Two black candidateswereelected to the Ferguson, Mo.,City Council, increasing Afri-can-American representation.A5 A leaked Polish reportcited pressure on pilots toland in a 2010 crash thatkilled the nation’s president. A9 UConn beat Notre Dame63-53 to clinch the NCAAwomen’s basketball title. D6
Shell is in advanced talksto buyU.K. natural-gas firm
BG in a deal that could be val-ued at over $50 billion, the lat-est sign of how falling pricesare roiling the energy sector.A1 U.S. oil prices hit a 2015high of $53.98 a barrel on aforecast that output wouldbegin to decline in June. C4 FedEx agreed to buy Dutchpackage-delivery companyTNT for $4.8 billion in a dealaimed at beefing up its Euro-pean ground network. B1REITs and other borrowersare getting loans from non-bank brokers as banks retreatfrom the repo market. C1U.S. stocks gave back gainsamid concerns about corporateearnings. The Dow eased 5.43points to close at 17875.42. C4Kyle Bass is pursuing a strat-egy of challenging drug com-pany patents while also bettingagainst the firms’ shares. B1 China’s top two insurersare buying a majority stake ina $500 million Boston project,their first investment in U.S.commercial real estate. C1 Software firm Informaticaagreed to be acquired for $5.3billion in the biggest leveragedbuyout so far this year. B4 Steven Cohen’s investmentfirm named an external advi-sory board in bid a to demon-strate tighter oversight. C3McDonald’s is adding pre-mium sirloin burgers to its U.S.menu for a limited time, thelatest move to revive sales. B3NBC’s “Nightly News” fell tosecond place last week behindABC’s “WorldNewsTonight.”B3
Business&Finance
World-Wide
a big enough catalyst for change.The privately held Fidelity,
with about $2 trillion in assetsunder management—a measureof investments in Fidelity’s ownproducts—has long been knownfor mutual funds run by starstock pickers. But in recentyears, it has lost customers andmarket share to rivals emphasiz-ing so-called passive investmentsthat mimic indexes for a fractionof the cost of the typical mutualfund. Fidelity, the No. 2 mutual-fund firm ranked by assets undermanagement, said in Februarythat investors pulled $16 billionfrom its stock mutual funds in2014, double the amount of theprevious year, while No. 1 Van-guard Group, which specializesin passive funds, took in an in-dustry-record $216 billion.
Other business lines at Fidel-ity are performing well, and the company reportedrecord annual revenue in 2014. Assets under ad-ministration—a measure that includes other funds
Please see FIDELITY page A10
BOSTON—Abigail Johnsonwas so eager for change at mu-tual-fund giant Fidelity Invest-ments that she once tried to ousther own father as CEO, accordingto executives at the time.
A decade later, Ms. Johnson isfinally in charge, and she ap-pears no less willing to shakethings up.
Ms. Johnson, 53 years old, isquietly reshaping the companythat Edward “Ned” Johnson III,84, built into a money-manage-ment behemoth that overseesthe retirement plans of millionsof Americans. Since she tookover as CEO in October, she hascut costs and overhauled unitsthat are losing money, replacedheads of underperforming divi-sions and pushed the companyinto businesses her father long resisted.
But some current and former Fidelity executivesand analysts question whether Ms. Johnson hasthe vision to drive the company forward, or will be
BY KIRSTEN GRIND
$5.058 trillion
Big MoneyFidelity’s assets hit a record lastyear. The narrower category ofassets under management—limitedto Fidelity products—has grownmore slowly.
THEWALL STREET JOURNAL.Source: the company
$5
0
1
2
3
4
trillion
2008 ’09 ’10 ’11 ’12 ’13 ’14
All other assetsAssets undermanagement
Watch Out Sheepdogs, You May Be Replaced by a Dronei i i
Tech-savvy farmers opt for copters over canines; ‘don’t have to feed it’
helicopter with four rotors, cando in a fraction of the time, saysMr. Thomson, 22 years old.
“There are limitations, butyou don’t have to get on a horse,you don’t have to feed it,” Mr.Thomson says. “Just give it morebatteries.”
What do the sheep think?Most seem to respect the drone,
though some just look quizzi-cally until it is “a foot away fromthem and then they realize, Ohcrap. I got to run,” he says.“Sheep are naturally scared ofthings that might attack them.”
Tech-savvy livestock farmersfrom the Australian Outback tothe Irish countryside are startingto use drones as a relativelycheap alternative to the cowboyand the sheepdog. Camera-wield-ing copters that can be boughtoff-the-shelf for as little as $500can cover hilly terrain quickly,finding and guiding sheep andcattle while the rancher operatesremotely—sometimes wearing
Please see DRONES page A5
First they supplanted secre-taries, factory workers and storeclerks. Now robots are settingtheir sensors on one of theworld’s oldest jobs: herdingsheep.
Michael Thomson says hishomemade drone is the fastestway to move the roughly 1,000sheep on his sister’s spread inDannevirke, New Zealand, togreener pastures. Workers onthe 200-acre ranch typicallyhave used horses or all-terrainvehicles to herd the animals andcheck on their condition. Thoseall are tasks his quadcopter, a
BY JACK NICAS
Michael Thomson’s drone
DJIA 17875.42 g 5.43 0.03% NASDAQ 4910.23 g 0.1% NIKKEI 19640.54 À 1.3% STOXX600 404.34 À 1.6% 10-YR. TREAS. À 3/32 , yield 1.893% OIL $53.98 À $1.84 GOLD $1,210.60 g $8.00 EURO $1.0816 YEN 120.27
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Families’Winning HandsPERSONAL JOURNAL | D1
Kissinger and ShultzThe Iran Deal andIts Consequences
OPINION | A13
Petroleum giant Royal DutchShell PLC is in advanced talks toacquire Britain’s BG Group PLCin a deal that would likely be
BY DANA MATTIOLI, SHAYNDI RAICEAND JUSTIN SCHECK
valued at upward of $50 billionand would serve as the latestsign of how tumbling energyprices are shaking up the globaloil-and-gas industry.
BG confirmed the talks in astatement, after an earlier re-port by The Wall Street Journal.It made no further comment.The deal could be announced asearly as Wednesday, accordingto people familiar with the mat-ter.
BG, which emerged from the
breakup of British Gas, had amarket value of nearly £31 bil-lion ($46 billion) based on theclosing price of its shares Tues-day in London, before the Jour-nal report. With a typical take-over premium, a deal for BGwould likely be valued at wellover $50 billion.
Should the tie-up come to fru-ition, it would represent a mar-riage of two companies that, likeothers in the industry, have beenbuffeted by a sharp drop in oil-
and-gas prices since last summeras technological advances andother factors have contributed toa surge in world energy supplies.
It would enable the two Euro-pean energy giants to eliminateoverlapping costs to help com-pensate for the toll lower priceshave taken on their top lines.
The two companies aren’t theonly energy companies lookingto mergers and acquisitions toshore themselves up. In Novem-ber, Halliburton Co. agreed to
buy smaller oil-field-services ri-val Baker Hughes Inc. for about$35 billion. But in a sign of howdifficult such tie-ups can be tostrike in such a volatile pricingenvironment, Whiting PetroleumCorp., a medium-size U.S. oil-and-gas company, recentlyaborted an effort to find a buyer.
Shell is one of the world’slargest energy producers, witha market value of about $192billion. In addition to being a
Please see SHELL page A2
Shell Nears Deal to Buy Gas GiantBid for gas producercould be valued above$50 billion as tumblingprices shake up industry
As Kenyans Mourn Murdered Students, a Call for More Security
BENCU
RTIS/A
SSOCIAT
EDPR
ESS
IN MEMORIAM: Hundreds gathered Tuesday for a vigil for victims of last week’s terror attack, and students marched to demand better security. A6
LOUISVILLE, Ky.—Sen. RandPaul kicked off his presidentialcampaign on Tuesday by pre-senting himself as a libertarianconservative and anti-Washing-ton populist, a combination thatcarves out a niche for him in analready crowded primary field.
“Too often when Republicanshave won, we have squanderedour victory by becoming part ofthe Washington machine; that isnot who I am,” Mr. Paul said,speaking to supporters here in ahotel ballroom.
Mr. Paul took more shots atthe GOP than at President BarackObama, and he made no mentionof the likely Democratic nomi-nee, former Secretary of StateHillary Clinton.
His message played well withthe tea-party activists whohelped elect him to the Senatejust five years ago. He spoketheir language when he arguedthat the party’s 2016 nominee
Please see PAUL page A4
BY JANET HOOK
Paul JabsAt GOPTo Make2016 Case
thousands of vacationers willflock to the complex on the Bal-tic Sea island of Rügen, one ofGermany’s most picturesque des-tinations.
Christa Moog, a Berlin writer,last year paid €310,000($337,000) for an 820-square-foot apartment. She plans tomove in this fall.
“I am happy to see that thisbuilding is being made into nicevacation apartments. It was al-ways ruins,” said Ms. Moog, whoalso runs a literature-themed ho-tel in the leafy Berlin neighbor-hood of Friedenau. “The build-ings were built in a dark, badtime. Now they are being trans-
Please see NAZI page A8
PRORA, Germany—On a 2.8-mile stretch of sun-drenchedcoastland in this small seasidetown stands the remains of whatwas once among the Nazis’ mostambitious construction projects:Prora. The sprawling complex ofnearly identical buildings wasenvisioned as a working-classvacation spot for up to 20,000people before the regime put theproject on hold in 1939.
Now, after decades of decay,the site operated by the ThirdReich, the Soviets and the EastGermans over the years is beingconverted into hotels and apart-ments. The developers’ bet: that
BY TODD BUELL
Nazi-Built Resort TriesTo Lure Condo Buyers
FIDELITY’S NEW CHIEFCONFRONTSMARKETSHIFTAbigail Johnsonmust stemmove away frommutual funds run by stock pickers
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