Cyber attacks double as resilience grows

BY Richard Summerfield

Targeted cyber attacks have doubled in the last year, according to Accenture Security’s latest ‘State of cyber resilience’ study.

The report, which surveyed 4600 executives from large organisations around the world, found that the volume of targeted attacks reached 232, up from 106 in Accenture’s 2017 report.

Ransomware and distributed denial of service (DDos) attacks in particular have been on the rise over the last 12 months. Though organisations are increasingly able to block attacks (87 percent of focused attacks were repelled last year, up from 70 percent in the 2017 report), 13 percent of focused attacks were able to penetrate defences.

Accordingly, organisations are still facing an average of 30 successful security breaches per year which cause damage or result in the loss of high-value assets, which is unsustainable in the long run.

“Only one in eight focused cyber attacks are getting through versus one in three last year, indicating that organisations are doing a better job of preventing data from being hacked, stolen or leaked,” said Kelly Bissell, managing director of Accenture Security.

“While the findings of this study demonstrate that organisations are performing better at mitigating the impact of cyber attacks, they still have more work to do. Building investment capacity for wise security investments must be a priority for those organisations who want to close the gap on successful attacks even further. For business leaders who continue to invest in and embrace new technologies, reaching a sustainable level of cyber resilience could become a reality for many organisations in the next two to three years. That’s an encouraging projection,” he added.

Companies are also getting better at detecting breaches when they do occur. On average, 89 percent of respondents said their internal security teams detected breaches within a month, compared to only 32 percent last year. This year, 55 percent of organisations took one week or less to detect a breach, up from 10 percent last year.

New technology, such as artificial intelligence, machine learning, user behaviour analytics and blockchain, have been helping companies to fight off cyber attacks. Eighty-three percent of respondents agreed that these new technologies are essential to protecting their organisations.

However, there is much more work to be done. Respondents said only two-thirds of their organisations are actively protected by their cyber security programme. This must improve; companies should be proactive in designing and deploying their threat defences.

Report: 2018 State of Cyber Resilience

Breitburn completes Chapter 11 to emerge as Maverick

BY Fraser Tennant

Following a near two-year bankruptcy, struggling energy company Breitburn Energy Partners LP has  emerged from Chapter 11 reorganisation and begun operations as Maverick Natural Resources, LLC – a newly-formed company owned and operated by private equity (PE) firm EIG Global Energy Partners.

Despite being a major acquirer, explorer and developer of oil and gas properties in the US, Breitburn was among the dozens of energy companies that filed for bankruptcy in 2016 after a lingering slump in commodity prices that began in late 2014. Now having successfully completed Chapter 11 reorganisation, Breitburn has returned as a new EIG-backed company, Maverick.

As a result of the Chapter 11 restructuring process, Maverick has an approximate debt of $105m, substantially lower than Breitburn’s $2.96bn debt balance prior to initiating the restructuring process. Furthermore, Maverick has approximately $295m of additional borrowing capacity under a new bank credit facility, and its balance sheet provides it with significant financial flexibility and positions the organisation for long-term success.

Specialising in private investments in energy and energy-related infrastructure on a global basis, EIG has been one of the leading providers of institutional capital to the global energy industry since 1982.

“We are pleased to close this chapter and focus on generating value for the Maverick platform,” said Clayton Taylor, managing director of EIG. “Maverick will emerge with low leverage, a simple balance sheet and sufficient liquidity to remain adaptive to the ever-changing market conditions. Following a judicious review of the asset portfolio and cost structure, we believe Maverick is well-positioned to capitalise on cost reduction initiatives, to deploy capital to high growth prospects and to potentially build the platform through strategic acquisitions.”

A portfolio company majority-owned and controlled by funds and accounts managed by EIG, Maverick is focused on the development and production of long-lived oil and gas reserves throughout the US.

“The Chapter 11 reorganisation marks a new beginning for our company and all of our stakeholders and the end of a difficult period managing through the steep and sustained decline in oil and natural gas prices,” said Halbert S. Washburn, Maverick’s chief executive. “Throughout the extended restructuring process, we remained focused on our key goals of managing production and reducing costs to preserve the value of our diverse and long-lived portfolio, substantially reducing debt and dramatically improving our liquidity position, and achieving a consensual plan of reorganisation among our key creditor groups.”

News: Breitburn Energy Partners Successfully Completes Chapter 11 Reorganization Emerges As Newly Formed Maverick Natural Resources LLC

Global M&A value hit record high in Q1 2018, reveals new report

BY Fraser Tennant

The dramatic surge in dealmaking activity at the tail end of 2017 has continued into 2018, with the value of global M&A reaching a record Q1 value, according to a new report by Mergermarket.

In its ‘Global & Regional M&A Report Q1 2018’, the M&A data and intelligence provider notes that: (i) global M&A reached record levels as corporates pursue innovation through M&A; (ii) private equity (PE) activity recorded its fourth consecutive $100bn figure quarter for buyouts; and (iii) Q1 2018 deal value is up 18 percent on Q1 2017’s value, recording $890.7bn (across 3774 deals).

In addition, while large tech companies have looked to diversify their offering through M&A, more traditional firms also had to react to newer, more innovative firms, with many looking towards defensive consolidation. Recent trade disputes between China and the US have served to boost these defensive strategies further.

Furthermore, global PE activity remained remarkably high, with many investors pursuing larger targets as the mid-market became saturated. In Q1 2018 there were 699 buyouts worth a total of $113.6bn, representing the strongest start to the year since 2007. Q1 2018 is also the fourth consecutive quarter in which buyout activity has reached the $100bn figure.

“The extraordinary surge in dealmaking seen at the end of 2017 has carried through into 2018,” said Jonathan Klonowski, EMEA research editor at Mergermarket. “Global M&A hit its highest Q1 value on record as pressure from investors and the search for innovation continues to push corporates towards M&A. PE activity also rebounded to pre-financial crash highs.”

In addition, the report reveals that 14 deals which breached the $10bn mark have been recorded so far this year, including the $67.9bn deal between Cigna and Express Scripts and the $46.6bn transaction which will see German utility Eon acquire Innogy, a subsidiary of German energy company RWE. 

Mr Klonowski added: “Following on from the trend seen in 2017, intra-European dealmaking has once again been active across the continent in the first quarter with the top three deals all being conducted between European companies.”

Report: Global & Regional M&A Report Q1 2018

Novartis agrees AveXis acquisition

BY Richard Summerfield               

Swiss drug manufacturer Novartis AG has agreed to acquire boutique gene-therapy company AveXis Inc for $8.7bn.

The deal will see Novartis pay $218 in cash for each AveXis share held, a 72 percent premium to AveXis’s 30-day volume-weighted average stock price. The deal is expected to close in mid-2018.

“The commitment, drive and expertise of the entire AveXis team has created significant stockholder value, and we are pleased that Novartis recognizes that value in the potential of AVXS-101, our first in class manufacturing capabilities and our gene therapy pipeline, all of which serve to transform the lives of people devastated by rare and life threatening neurological diseases such as SMA, Rett syndrome and genetic ALS,” said Sean Nolan, president and chief executive of AveXis. “With worldwide reach and extensive resources, Novartis should expedite our shared vision of bringing gene therapy to these patient communities across the globe as quickly and safely as possible.”

Since Mr Narasimhan became CEO of Novartis International, the company has refocused its efforts on expanding into new areas. Focused medicines and gene therapy have become key areas for the company. Earlier this year Novartis made a $170m deal with Spark for rights to use its blindness treatment, Luxturna, outside the US.

According to a statement announcing the deal, AveXis has several ongoing clinical studies for the treatment of SMA, an inherited neurodegenerative disease caused by a defect in a single gene.

“The proposed acquisition of AveXis offers an extraordinary opportunity to transform the care of SMA. We believe AVXS-101 could create a lifetime of possibilities for the children and families impacted by this devastating condition,” said Mr Narasimhan. “The acquisition would also accelerate our strategy to pursue high-efficacy, first-in-class therapies and broaden our leadership in neuroscience. We would gain with the team at AveXis another gene therapy platform, in addition to our CAR-T platform for cancer, to advance a growing pipeline of gene therapies across therapeutic areas. We look forward on the closing of the deal to a smooth transition for AveXis employees and welcoming them to Novartis.”

Paul Hudson, chief executive of Novartis Pharmaceuticals, said: “Bringing AveXis on board would support both our ambition to be a leader in neurodegenerative diseases and our Neuroscience franchise priorities to strengthen our position in devastating pediatric neurological diseases such as SMA. We relish the opportunity to leverage our expertise, our 70-plus year heritage in neuroscience and our global footprint to help AVXS-101 benefit high-need SMA patients around the world.”

Novartis will likely fund the deal through the $13bn it recouped for selling its stake in a consumer healthcare joint venture with its partner GlaxoSmithKline. The deal, which was announced in late March, saw GSK take control of a number of products, including Sensodyne toothpaste, Panadol headache tablets, muscle gel Voltaren and Nicotinell patches.

News: Novartis bets big on gene therapy with $8.7 billion AveXis deal

2018 a strong year for PE – report

BY Richard Summerfield

Building on an impressive 2017, 2018 looks set to be another strong year for the private equity industry, according to the Akerman 'PErspectives on U.S. Middle Market Private Equity' report, based on data from PitchBook.

Not only did the industry accumulate record levels of dry powder in 2017, but the US tax reform and persistently low interest rates were also beneficial, helping to drive record or near-record buyout and exit activity. The report also notes near-historical highs in several other categories for sub-$500m US buyout funds, including the number of deals and add-on deals closed, number of closed exits and fundraising.

Furthermore, US funds with less than $500m under management set record-highs in 2017 for total deal value, add-on deal value and deal exit value.

Overall fundraising for funds between $500m and $1bn grew last year. The sector raised a record $39bn , up from $35bn in 2016, and a total of 117 funds closed. Fundraising is expected to continue to grow in 2018, provided that the economy remains healthy.

Deal activity was down slightly in 2017, with 1133 transactions completed worth a combined $44.8bn, from 1258 deals worth $51.2bn in 2016. However, dealmaking is  expected to grow in 2018, particularly in the mid-market, due to “heightened interest in Section 1202 of the Internal Revenue Code, which allows PE funds to avoid the 23.8 percent federal capital gains tax on dispositions of qualified portfolio companies”, according to Carl Roston, co-chair of Akerman’s Corporate Practice Group.

“In today’s market environment, PE fundraising and transaction volumes have maintained healthy levels thanks to a host of favorable market dynamics. Factors driving this PE activity include low interest rates, a growing economy, the reduction in marginal federal income tax rates, the relative outperformance of domestic middle market private equity compared to other asset classes, benign credit markets, and the rebalancing of portfolios by institutional investors,” said Mr Roston.

He added: “With growing competition and robust valuations for quality buyout targets, increasingly there is a premium on sophisticated deal sourcing through industry relationships, as well as on cost-effective and efficient processes that facilitate closed deals, collaborative relationships with management teams and prudent risk management.”

Report: PErspectives on U.S. Middle Market Private Equity