World’s top 40 mining companies hit by $27bn collective net loss

BY Fraser Tennant

The mining sector experienced a challenging 2015 with its 40 largest companies hit by a collective net loss of US $27bn, according to a PwC report published this week.

In ‘Mine 2016: Slower, lower, weaker... but not defeated’ – the 13th in a series of PwC reports which analyse financial performance and global trends – it is also revealed that market capitalisation fell by 37 percent (in a number of cases below net book value), a development which PwC says "effectively wipes out all the gains made during the commodity super cycle".

The aggregated results found in the PwC report were sourced from the latest publicly available information, primarily annual reports, with all figures reported in US dollars.

“Last year was undoubtedly challenging for the mining sector,” said Jason Burkitt, PwC’s UK mining leader. “A 25 percent year-on-year decline in commodity prices meant mining companies had to ratchet up their productivity efforts, while some found themselves in a fight for survival, with asset disposals and closures to follow.

“We’re also seeing shareholders persist with a short term focus, impacting the capital available for investment and, as a result, constraining options for growth. But this is a hardy industry, and while miners may be down now they are certainly not out.”

The PwC report also found that: (i) investors punished the top 40 mining companies for poor investment and capital management decisions and, in some cases, for squandering the benefits of the boom; (ii) concerns over the 'spot mentality' from shareholders focused on fluctuating commodities prices and short term returns rather than the long term investment horizon required in mining; and (iii) there was a focus in 2015 on maximising value from shedding assets as well as mothballing marginal projects or curtailing capacity.  

Although Mr Burkitt concedes that the mining sector will continue to face significant market challenges and constraints, he is also confident that there is a still a long-term positive outlook. “In the first five months of the year, we’ve been encouraged by some recoveries in market capitalisations and commodity prices – but with high volatility still in play, hopes of a sustained rebound are tempered.

“Many of the top 40 mining companies appreciate what is required for the marathon of mining and have their eyes firmly fixed on the long term rewards," he concluded.

The PwC analysis of the mining sector was published to coincide with this week’s London School of Mines conference on 8 June.

Report: Mine 2016 Slower, lower, weaker... but not defeated - review of global trends in the mining industry

Thoma Bravo acquires Qlik for $3bn

BY Richard Summerfield

Visual analytics company Qlik has been acquired by private equity firm Thoma Bravo in a $3bn deal, the two firms have announced.

The deal, which will be an all cash affair, is expected to close in the third quarter of 2016, provided the transaction wins the approval of Qlik’s shareholders and satisfies the usual closing conditions, according to a joint statement announcing the merger. The offer will see Qlik’s shareholders receive $30.50 per Qlik share held, a premium of 40 percent over the company's 10 day average stock price prior to 3 March 2016.

According to the statement, Qlik, which went public in 2010, will remain headquartered in Radnor, Pennsylvania. The company will also retain its existing management team.

“We believe the proposed transaction is in the best interest of Qlik’s shareholders and provides the Company with additional flexibility to execute our strategic plan as we continue to diligently provide customers with the premier products and services they have come to expect,” said Lars Björk, chief executive of Qlik. “Thoma Bravo recognises the value that Qlik delivers – a platform that lets our customers see the whole story that lives within their data. Thoma Bravo has an excellent track record of investing in outstanding technology businesses for the long-term, and I am confident our employees, customers and partners will greatly benefit from our partnership with them.”

The future of Qlik had been up for debate for some time. Indeed, the company had been on the hunt for potential buyers and is believed to have received preliminary offers from a number of interested parties, including private equity groups. However, it was Thoma Bravo’s interest in the company that proved decisive.

“We look forward to partnering with the Qlik team as they continue to grow their platform-based approach to business intelligence (BI) and analytics,” said Orlando Bravo, a managing partner at Thoma Bravo. “As the need for analytic solutions grows, Qlik is well-positioned to continue to drive innovation and lead the market.”

Qlik has become the latest in a string of companies to be acquired by private equity groups at the urging of activist hedge fund Elliott Management Corp. Elliott disclosed an 8.8 percent stake in the company in March and began agitating for a sale. Qlik follows Compuware Corp, Riverbed Technology Inc, Blue Coat Systems and Informatica into private equity ownership in the wake of Elliott activism.

News: Thoma Bravo to buy analytics firm Qlik in $3 billion deal

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