Pfizer abandons AstraZeneca effort

BY Matt Atkins

US pharmaceutical firm Pfizer has walked away from its efforts to woo British drugmaker AstraZeneca. The American giant threw in the towel shortly before 5pm on Monday 26 May, conceding that its attempts to create the world's largest pharmaceutical firm had failed. 

AstraZeneca has fiercely resisted Pfizer's campaign, which began in November last year. Backed by UK scientists and politicians, the firm's boardroom has knocked back a string of multi-billion pound offers. The UK firm rejected a final offer of £69bn, or £55 per share, saying the proposal undervalued the company and its prospects for growth.

Pfizer's campaign faced many hurdles, being mired in controversy from the off. The bid had stirred public anger on both sides of the Atlantic, after it was revealed tax savings were a key driver of Pfizer's approach. A successful takeover would have given Pfizer the chance to relocate its tax base to the UK, escaping the high rate of US corporation tax.

The US firm had come under intense pressure from the UK government, as well as unions, to spell out Pfizer's commitment to British research and jobs. The firm’ chief executive, Ian Read, spent two days of questioning from MPs on the Commons Business Select Committee and the Science Committee, giving a five-year pledge on UK jobs and facilities. In light of the tax storm surrounding the deal, these guarantees were dismissed as inadequate.

While AstraZeneca’s board can breathe a sigh of relief, the news will come as a disappointment to a number of shareholders who had wanted the firm to engage with Pfizer. Investors including BlackRock, Legal & General, Axa and Schroders made it clear they wanted the company to consider the bid, though other leading investment groups were against it. Many viewed the price per share offered as a few pounds too low. It has been widely reported that a figure above £58 may have swayed the board.

Under UK takeover rules, Pfizer cannot approach AstraZeneca for six months, although the UK firm can choose to initiate talks in three month's time. Mr Read has said the US firm does not rule out future discussions with AstraZeneca, but that it will now focus on "lots of great opportunities" including growth within the company and other potential deals.

News: Pfizer drops AstraZeneca takeover bid

LatAm PE down but optimism high

BY Matt Atkins

Latin America focused private equity (PE) invested and raised a lower amount in 2013 than in previous years, according to a new EY Report. However, amounts remained well above 2009 levels.

PE faces a much more challenging environment in Latin America than in previous years, says the ‘Great expectations: what’s next for Latin American private equity?’ report. GDP growth forecasts have been lowered for many of the region’s biggest economies, and high inflation remains an issue. However, the region’s continued development means PE activity is significantly higher than a decade ago.

The biggest story of 2013 was the strength of Latin American IPO markets. Exits via IPO in EY’s study sample doubled, and 38 percent of IPOs in the region were PE-backed – the highest level ever recorded. The trend looks set to continue through 2014. Exit by IPO is by far the most common route to realisation for Latin America’s larger PE portfolio companies, with trade sales predominant in sub-$100m deals. However, as the barriers to going public are coming down, particularly in Brazil, this longstanding divergence is narrowing.

While secondary buyouts were expected to increase, they have remained relatively rare. In EY’s study, only a tenth of deals exited from the sub-$100m category were sold to other PE houses. The report predicts this proportion will grow as smaller houses work more closely with portfolio companies.

EY reports that PE is exploiting opportunities in a diverse range of sectors. The consumer goods and services sector accounted for nearly a third of realisations in 2013, followed by financials and technology. These three sectors benefited from growing consumer demand and overall economic development in the region.

Regarding triggers for exit, in 2013, strong business performance accounted for nearly 50 percent of exits. Favourable market conditions were a timing trigger in just over a third of exits. Overall, says EY, this suggests that PE owners in Latin America have an eye on exit. Their preparation is paying off, with exits via sales to trade buyers and IPOs both showing strong multiple returns.

Report: Great expectations: what’s next for Latin American private equity?

Security concerns restrain mobile banking

BY Matt Atkins

Consumer fears surrounding security have dampened interest in the mobile technology services of financial institutions worldwide. These are the findings of Deloitte's new report, Mobile Financial Services: Raising the Bar on Customer Engagement, based on survey data from Andrews Research Associates.

Though financial services companies are largely eager to enter the mobile transaction market, the industry still has work to do before it captures the full potential of today's technology, finds the report.

Of those respondents who do not regularly use mobile devices for financial services, sixty-one percent cited security issues as the prime reason. Over one-third of those surveyed were most insecure about using financial services on mobile devices due to lack of trust in the security of the Wi-Fi and mobile networks transmitting their data. Twenty-eight percent were worried about their mobile device being lost or stolen. One in five respondents believed that the risk of identity theft was greater with mobile transactions.

To address security concerns, respondents supported measures to create more secure Wi-Fi or mobile networks, systems that automatically disable stolen mobile devices, and the adoption of more secure mobile identification methods such as biometric technology.

The survey did indicate that mobile products have been more widely adopted in the banking sector than in other financial service sectors, such as insurance. However, it still finds that banks "are at a decided disadvantage compared to other sectors" when it comes to security.

“The financial services industry is entering a new phase in its digital evolution, with mobile technology reshaping customer engagement in a dramatic manner, and increasingly becoming the primary method of a consumer's interaction with their financial services providers," said Jim Eckenrode, executive director of the Deloitte Center for Financial Services. "To boost adoption and set the stage for more ambitious applications, companies will likely have to take tangible steps to reassure consumers about the security of their mobile financial transactions."

Report: Mobile Financial Services: Raising the Bar on Customer Engagement

SFO outlines changes to UK Bribery Act

The director of the Serious Fraud Office (SFO), David Green QC, has proposed a number of changes to the UK Bribery Act, which, if enacted, could make it easier for the SFO to prosecute corporations under the Act. Furthermore, the Home Office has is considering financially incentivising whistleblowers in cases of fraud, bribery and corruption. If this is implemented it will represent a significant development in the discovery and enforcement of fraud, bribery and corruption offences in the UK.

FW spoke to Satnam Tumani, a partner at Kirkland & Ellis International, Siobhain Egan, a director at Lewis Nedas Law, and Sam Eastwood, a partner at Norton Rose Fulbright, about the proposed changes.

TalkingPoint: Proposed changes to the UK Bribery Act

Cyber-alert stats paint stark picture

BY Matt Atkins

The average US firm faces 10,000 potential cyber-security alerts daily, more than any IT team can possibly process, according to an analysis of web traffic by threat protection and containment firm, Damballa. The Damballa State of Infections Report Q1 2014 culled information from ISP and mobile traffic, as well as its own customers, finding that the busiest networks generated up to 150,000 alerts.

While the report makes clear that a large number of these alerts are innocent, the problem lies in the sheer volume of alerts that firms face. The scale of the problem leaves most IT teams with little hope of keeping on top of the daily alerts, allowing infected systems to hide more easily. “Bystanders may think it’s outrageous that a breach could go undetected for months,” says Damballa. “Main-stream media has certainly stirred the pot with stories about security teams ignoring alerts. But the people engaged in daily hand-to-hand combat know that an alert doesn’t equal an infection – and that’s part of the problem.”

Large multinational firms with a global reach face up to 97 active infected devices per day, according to the report, a relatively small amount. However, the manual work required to actually find infections is the number one security challenge. An overload of security alerts aids cybercriminals such as those who attacked firms in the US retail sector during 2013. During the time of its three-month security breach, Neiman Marcus experienced 30,000 security alerts. Sifting the alerts that indicated criminal activity from false positives and innocent but anomalous behaviour, extending the period in which the firm was under attack.

Traditional IT security controls can't stop today's threats, says the report. Organisations need to automate labour-intensive processes like alert chasing and focus on discovering successful infections and triage the devices at most risk. “There aren't enough trained security professionals in the world to solve the problem,” says Damballa.

Report: State of Infections Report Q1 2014