Johnson & Johnson to acquire Vogue International for $3.3bn

BY Richard Summerfield

American multinational Johnson & Johnson has announced that it is to acquire haircare company Vogue International in a $3.3bn all cash deal.

The deal, which is subject to customary closing conditions, is expected to close in the third quarter of 2016 and is Johnson & Johnson’s biggest deal for four years. In 2012 the company paid $18bn for Synthes Inc - a deal which represented the company’s largest ever transaction.

Private equity firm Carlyle Group, which owns a 49 percent stake in Vogue (a holding which it acquired for $400m in 2014) is set to quadruple its initial stake through the deal. Vogue’s founder, Todd Christopher, who owns the remaining 51 percent stake in the company, will become a billionaire as a result of the sale.

Sandra Horbach, Carlyle managing director and head of the company’s consumer & retail team, said in a statement: “It has been a privilege to partner with Todd and to support his efforts to develop and launch innovative products, strengthen and grow the organisation, advance sustainability practices, and reach new customers all around the world with the OGX brand. Johnson & Johnson Consumer Inc. will be a great new home for Vogue.”

The deal, once completed, will add a number leading haircare brands, such as OGX shampoos and FX hair styling products, to Johnson & Johnson’s consumer portfolio that already includes globally recognisable brands, including Neutrogena and Clean & Clear. Though the company is perhaps best known for its sales of drugs and medical devices, Johnson & Johnson’s consumer brands are also a key part of its offering. Indeed, Johnson & Johnson has been revamping its consumer division of late. Consumer products accounted for around 19 percent of the company’s sales last year.

Given that Vogue’s estimated annual sales are in the $300m range, the acquisition could be a notable one for Johnson & Johnson. “Our acquisition of Vogue International's full line of leading advanced hair care products sold in the US and in 38 countries will strengthen our global presence in this important category. Vogue International's commitment to quality, innovation, and consumer preference complement our Consumer portfolio, while also presenting attractive hair care category growth opportunities for Johnson & Johnson," said Jorge Mesquita, worldwide chairman of consumer goods at Johnson & Johnson.

News: J&J to buy hair care products maker Vogue for $3.3 billion

FTSE 100 companies rife with cyber security vulnerabilities warns new report

By Fraser Tennant

FTSE 100 companies are increasingly vulnerable to cyber attacks according to a new report by the leading threat intelligence provider, Anomali.

In ‘The FTSE 100: Targeted Brand Attacks and Mass Credential Exposures’, it is revealed that 81 companies in the FTSE 100 had potentially malicious domain registrations against them during the last three months, a ploy that enables cyber criminals to create dummy websites that can be used to trick users into supplying private data.

Should such data be gleaned, a hacker can then sell or use it to access and attack a company’s network – malicious action which leaves the UK’s largest businesses open to cyber attacks and puts critical business content and personal information at risk.

The report also discovered that 5,275 employee email and clear text password combinations from FTSE 100 companies were found on a number of sites from which they can be stolen, publicly published or sold.

“Cyber crime is rising at an astonishing rate, and it’s now a board-level issue for businesses”, said Jamie Stone, Anomali’s vice president of EMEA. “Nevertheless, the evidence gathered across our threat intelligence platforms demonstrates that some basic security measures are not being adopted or followed at some of the largest and most prominent companies in the UK. The results of the report should be a wake-up call for these organisations, highlighting just how vulnerable they are in ways they might not even have considered.”

Additionally, the Anomali research discovered that: (i) most of the suspicious domains were registered using a Chinese address, with the second most from the US and the third most from Panama; and (ii) the vertical hardest hit with suspicious domain registrations is financial services with 376, followed by retail at 175 and critical infrastructure at 75.

“Understanding the importance of monitoring copies of brand domains and compromised employee credentials can’t be overstated”, continues Mr Stone. “Companies must be able to make sense of the threat intelligence that is available to them so that it provides relevant, actionable data to their business. The ability to learn and understand the impact of these additional fake domains and gather metrics about how employees use their work-related credentials outside of the workplace is absolutely crucial to maintaining security across the business.”

The Anomali report is the first in series which will examine trends and heighten awareness of domain registrations and credential exposures as a valuable source of information and an early warning of a possible attack.

Report: The FTSE 100: Targeted Brand Attacks and Mass Credential Exposures

Fighting back after Bangladeshi hack

BY Richard Summerfield

The Bangladeshi banking hack, which saw $81m stolen by cyber criminals in February, has caused the Society for Worldwide Interbank Financial Telecommunication (SWIFT) to issue a statement announcing the creation of a new five point security plan which will be released this week.

SWIFT’s secure messaging service is, in many ways, the glue that binds much of the global international banking system together. It allows banks to communicate with one another, sending payment instructions back and forth. However, the service acted as the backdoor for criminals to carry out the Bangladeshi theft. Via a number of coordinated cyber attacks, criminals broke into the messaging service, hijacked the system and redirected payments for their own ends.

Worryingly for both SWIFT and the global financial system, the Bangladeshi hack is not an isolated incident. In Ecudaor in 2015, a similar attack saw cyber thieves take more than $12m. An attack on Vietnam’s Tien Phong Bank, which was unsuccessful, has also recently come to light. It appears that these three publicised attacks may just be the tip of the iceberg.

Gottfried Leibbrandt, SWIFT’s chief executive, told an audience at the European Financial Services Conference in Brussels that “The Bangladesh fraud is not an isolated incident: we are aware of at least two, but possibly more, other cases where fraudsters used the same modus operandi, albeit without the spectacular amounts. The banks were compromised, credentials to payment generation systems were obtained to send fraudulent payments and the statements/confirmations from their counterparties were obfuscated."

In response to the hack, SWIFT will introduce certification requirements for vendors that help some banks connect to the network and use pattern recognition to identify suspicious behaviour.

In light of the reported – and unreported - cases SWIFT has called on the wider banking sector to do more to counteract cyber theft. It reiterated that while the company has a key role to play, it is not a regulator. "SWIFT is not all-powerful, we are not a regulator and we are not a policeman," said Mr Leibbrandt.

SWIFT’s response to these hacks may help shape the future of global banking.

News: SWIFT to unveil new security plan after hackers' heists

Bayer launches $62bn Monsanto bid

BY Richard Summerfield

German pharmaceutical and chemical powerhouse Bayer AG has launched a $62bn all cash takeover bid for US seeds firm Monsanto Co. A merger between the two would create a “global agriculture leader”, Bayer announced in a statement.

According to Bayer, the $122 per share cash offer for Monsanto represents a 37 percent premium over the company’s closing price on 9 May, the day before rumours of Bayer’s interest in the firm emerged. Under the terms of the proposal, the deal would be funded by a combination of debt and equity, with about 25 percent of the enterprise value coming from selling shares to existing investors.

However, the likelihood of the offer being accepted by Monsanto’s shareholders remains unknown. Last week, a Monsanto shareholder was keen to dismiss Bayer’s interest in a deal as nothing more than "arrogant empire-building".

In the statement announcing its interest in the firm, Bayer’s chief executive Werner Baumman said, “We have long respected Monsanto’s business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies’ shareholders. Together we would draw on the collective expertise of both companies to build a leading agriculture player with exceptional innovation capabilities to the benefit of farmers, consumers, our employees and the communities in which we operate.”

According to Bayer, a deal for Monsanto would add to core earnings per share by a mid-single-digit percentage in the first full year after completion of the transaction. It would also provide a double-digit percentage moving forward. The company’s earnings would also be bolstered by savings of about $1.5bn from the fourth year following the deal.

Should the deal win the approval of Monsanto’s shareholders it would be the biggest corporate takeover ever completed by a German firm and a clear signal of intent from Mr Baumann, who has been Bayer’s CEO for less than a month. Furthermore, the transaction would be a departure for Monsanto, which has been a keen acquirer itself of late. In August 2015, the company was forced to abandon a $43.7bn bid for Swiss pesticide manufacturer Syngenta AG when the firm refused to agree to a deal.

Syngenta was subsequently acquired by China National Chemical Corp for around $43bn. DuPont Co and Dow Chemical Co have also recently announced plans to merge and then carve out a new crop-science unit in another transaction in the fast moving crop and seed industry.

News: Bayer announces $62 billion cash offer for Monsanto

Chinese investors at home in US

BY Richard Summerfield

The Chinese economy has been experiencing a well documented slowdown and re-tooling. As a result, many Chinese businesses have begun to look overseas for their next growth opportunity.

Chinese foreign direct investment has climbed considerably, with investment into the US skyrocketing,  according to a new report from the Rosen Consulting Group and the Asia Society, titled 'Breaking Ground: Chinese Investment in US Real Estate'.

In 2014, Chinese outward FDI flows totalled $116bn, around $18.1bn of which entered the US market. A year later, Chinese outward FDI flows totalled $118bn, with $22.3bn flowing in to the US

The real estate market has been an increasingly attractive investment destination for Chinese businesses in recent years. In the US residential segment, Chinese acquirers spent around $93bn between 2010 and 2015. Accordingly, China has overtaken Canada as the lead foreign investor in the US residential space.

Much of the foreign capital has been concentrated in New York, Los Angeles and San Francisco, with the remaining volume spread widely across the rest of the country. The housing market in California and New York accounted for 35 percent and 7 percent of all transactions, respectively.

Furthermore, Chinese funded projects under construction or planned in the US totalled at least $15bn by the end of 2015. “What surprised me most is the speed of Chinese investment growth, but also the breadth of asset types and geographical locations,” says Arthur Margon, a partner at Rosen Consulting Group and lead author of the report.

Although the tightening of capital controls may impact upon Chinese acquisitions in the residential space in the short term, it is likely that Chinese investment in the US real estate space will continue to climb - particularly as there is an ever widening field of Chinese real estate investors, many of whom have yet to dip their toe in the American market.

Report: Breaking Ground: Chinese Investment in US Real Estate