Rise of the robots

BY Richard Summerfield

Automation is coming. Recent reports have suggested that millions of people around the world will be impacted by the wave of automation and other new technologies which are currently emerging.

A new report from PwC – 'Will robots really steal our jobs?' – suggests that while the financial services industry in particular could be vulnerable to automation in the short term, a variety of industries, including those in the transport space, are much more vulnerable in the longer term in the UK. Less well educated workers, too, will be increasingly susceptible to replacement. Female workers are also more likely to be replaced than their male counterparts.

PwC has identified three distinct waves of automation which will impact the global economy up to 2030: the algorithm wave, the augmentation wave and the autonomy wave.

The algorithm wave is already underway and will last until the early 2020s. It involves automating structured data analysis and simple digital tasks, such as credit scoring. This wave could see just 2-3 percent of UK employees affected – 4 percent of women and 1 percent of men.

The augmentation wave, which centres on the automation of repeatable tasks and exchanging information, as well as further development of aerial drones, robots in warehouses and semi-autonomous vehicles, could impact 20 percent of UK jobs – 23 percent of women and 17 percent of men. This wave will last until the late 2020s.

The third wave, the autonomy wave, suggests that AI will have developed to the point that it will be able to analyse data from multiple sources, make decisions and take physical actions with little or no human input. This wave will last until the mid 2030s and could affect 30 percent of the workforce – 26 percent of women and 34 percent of men.

Euan Cameron, UK Artificial Intelligence leader at PwC, said: “Our research shows that the impact from automation and AI will be felt in waves, with more routine and data tasks hit first. But just because businesses and people aren’t feeling the impacts right now, there is no excuse not to start planning for the future. AI technology is getting more sophisticated every day and businesses need to understand how, where and when their people are likely to be affected in the future. Those that understand the risks and opportunities can start upskilling their people and adapting their businesses, rather than simply reacting when it’s too late.”

Automation is expected to be a boon for the economy, however. PwC believes it could contribute as much as 10 percent to UK GDP and 14 percent to global GDP by 2030.

Report: Will robots really steal our jobs?

Beleaguered Bon-Ton files for Chapter 11

BY Fraser Tennant

Debt ridden and struggling to grow sales, Bon-Ton Stores, Inc. (Bon-Ton), one of the largest regional department store chains in the US, has filed for Chapter 11 bankruptcy protection.

Having filed a number of customary motions with the US Bankruptcy Court for the District of Delaware, Bon-Ton, along with its subsidiaries, is currently engaged in constructive discussions with potential investors and its debt holders regarding the terms of a financial restructuring plan.

The beleaguered retailer intends to use this court-supervised process to explore potential strategic alternatives to maximise value for the benefit of its stakeholders, which may include a sale of the company or certain of its assets as part of the plan of reorganisation.

In addition, Bon-Ton has received a commitment from its existing ABL lenders for up to $725m in debtor-in-possession (DIP) financing which, subject to court approval, is expected to support its operations during the financial restructuring process. Bon-Ton has also requested court approval to pay wages and provide health and other employee benefits, as well as pay vendors in the ordinary course for all goods and services provided on or after the Chapter 11 filing date.

“The actions we are taking are intended to give us additional time and financial flexibility to evaluate options for our business,” said Bill Tracy, president and chief executive of Bon-Ton Stores. “Bon-Ton has seven well-loved brands and associates that have remained committed to delivering excellent service to our customers for decades. During this court-supervised process, we plan to continue operating in the normal course and executing on our key initiatives to drive improved performance.”

Headquartered in York, Pennsylvania and Milwaukee, Wisconsin, Bon-Ton operates 256 stores, which includes nine furniture galleries and four clearance centres. The stores offer a broad assortment of national and private brand fashion apparel and accessories for women, men and children, as well as cosmetics and home furnishings.

Acting as Bon-Ton’s legal counsel during the restructuring process is Paul, Weiss, Rifkind, Wharton & Garrison LLP. AlixPartners LLP is serving as restructuring adviser and PJT Partners, Inc. is acting as financial adviser.

Mr Tracy concluded: “We appreciate the ongoing dedication of our associates, whose hard work in serving our loyal customers is critical to our success and the future of our company. Importantly, we look forward to continuing to provide our customers with quality merchandise and an exceptional shopping experience in our stores and across e-commerce and mobile platforms as we move through this financial restructuring process.”

News: U.S. department store chain Bon-Ton files for bankruptcy

GDPR compliance a major concern for business leaders, claims new survey

BY Fraser Tennant

Increasing regulatory pressures such as the forthcoming EU General Data Protection Regulation (GDPR) are a major concern for business leaders, according to an EY survey published this week.

According to the third biennial EY Global Forensic Data Analytics Survey – ‘How can you disrupt risk in an era of digital transformation?’ – which examined the responses of 745 executives from 19 countries, 78 percent of respondents expressed increasing concern about data protection and data privacy compliance issues, specifically the GDPR.

Indeed, with less than four months to go until the GDPR comes into force on 25 May 2018, only 33 percent of survey respondents said they have a plan in place to comply with the EU legislation. Moreover, while the average response of respondents in Europe was more positive, with 60 percent indicating they have a GDPR compliance plan in place, the survey notes that much work remains to be done in other markets, including Africa and the Middle East (27 percent), the Americas (13 percent) and Asia-Pacific (12 percent).

“The pace of regulatory change continues to accelerate and the introduction of data protection and data privacy laws, such as GDPR, are major compliance challenges for global organisations,” said Andrew Gordon, EY global fraud investigation & dispute services leader. “But businesses that adopt forensic data analytics (FDA) technologies can achieve significant advantages, benefiting from more effective risk management and increased business transparency across all of their operations.”

The survey also found that 42 percent of businesses believe that data protection and data privacy regulations have a significant impact on the design or use of FDA. EY’s examination further revealed that 13 percent of respondents indicated that they currently use FDA to achieve GDPR compliance, with more than half (52 percent) of the respondents indicating that they are currently in the process of analysing exactly which FDA tools they would use to assist them with achieving compliance.

Overall, survey respondents stated that increased adoption of, and spending on, advanced FDA technologies, needs to be matched with greater investment in skilled resources.

Mr Gordon concluded: “While it is encouraging to see that investment in advanced FDA is increasing, companies need to hire the right talent and invest in core skills such as domain knowledge and data analytics in order to be successful in managing their risk profile.”

Report: How can you disrupt risk in an era of digital transformation? – Global Forensic Data Analytics Survey 2018

Sanofi to acquire Ablynx for $4.8bn

BY Richard Summerfield

French pharmaceutical multinational Sanofi is to acquire Belgian rival Ablynx for $4.8bn, its second multi-billion dollar deal this month.

Sanofi will pay €45 per share in cash for Ablynx, a premium of 21 percent over its closing price on Friday 26 January, and more than double the price before Novo Nordisk – a rival Danish firm which made an unsolicited takeover offer for Ablynx – went public with its initial bid for the company earlier this month. The Sanofi deal, which has been approved by the boards of both companies, is expected to close by the end of the second quarter 2018. Sanofi’s bid is 48 percent above Novo’s unsuccessful offer.

Novo made a €2.6bn unsolicited offer for Ablynx in January, however that offer was rebuffed and the company reconsidered its options due to “unrealistic premiums”. The pharma space has become an increasingly competitive market of late. With companies looking to bolster their product pipelines and generate growth, acquisitions of smaller competitors has become common practice. Last week Sanofi announced it had agreed to acquire Bioverativ for $11.6bn, its biggest deal for seven years.

In a statement announcing the deal, Sanofi’s chief executive Olivier Brandicourt said: “With Ablynx, we continue to advance the strategic transformation of our Research and Development, expanding our late-stage pipeline and strengthening our platform for growth in rare blood disorders. This acquisition builds on a successful existing partnership. We are also pleased to reaffirm our commitment to Belgium, where we have invested significantly over the years in our state-of-the-art biologics manufacturing facility in Geel. We intend to maintain and support the Ablynx science center in Ghent.”

Ablynx’s chief executive Edwin Moses said: “Since our founding in 2001, our team has been focused on unlocking the power of our Nanobody technology for patients. The results of our work are validated by clinical data. As we look ahead, we believe Sanofi’s global infrastructure, commitment to innovation and commercial capabilities will accelerate our ability to deliver our pipeline. Our board of directors feels strongly that this transaction represents compelling value for shareholders and maximises the potential of our pipeline to the benefit of all stakeholders.”

One of the key drivers of the Sanofi/Ablynx deal was the Belgian company’s experimental drug caplacizumab, which is used to treat the rare bleeding disorder acquired thrombotic thrombocytopenic purpura.

News: Sanofi beats Novo to buy Ablynx for $4.8 billion in biotech M&A boom

The future’s bright – IMF

BY Richard Summerfield

The International Monetary Fund has predicted an upturn in the global economy in its latest World Economic Outlook Update.

The global economy is expected to have grown by 3.7 percent in 2017, 0.1 percent faster than the IMF projected last autumn and half a percent higher than in 2016. The pickup in growth has been broad based, with notable upside surprises in Europe and Asia. The report says 120 economies – both developed and emerging – accounting for three-quarters of global economic activity, saw an improvement in 2017.

Looking ahead, recent reforms to the US tax regime will also have a positive impact on global growth over the next two years, the IMF has suggested.

“The effect on US growth is estimated to be positive through 2020, cumulating to 1.2 percent through that year, with a range of uncertainty around this central scenario,” the report noted. Yet, the IMF argued that the impact of the reforms will not be long lasting “due to the temporary nature of some of its provisions, the tax policy package is projected to lower growth for a few years from 2022 onwards".

Global growth forecasts for 2018 and 2019 have been revised upward by 0.2 percent to 3.9 percent. Advanced economies, where growth is now expected to exceed 2 percent in 2018 and 2019, will be responsible for the majority of the growth.

The eurozone is also expected to see improved growth. The IMF has revised its predicted growth rates for Germany, Italy and the Netherlands, based on improved momentum in domestic demand and higher external demand. However, Spain, which has been performing admirably in recent years, has seen its growth forecast for 2018 revised down, in light of the perceived effect that increased political uncertainty will have on confidence and demand.

UK growth will be 1.5 percent in 2018 and 2019. In October, the IMF reported that the UK’s estimated growth in 2019 would be 1.6 percent, however Brexit and its potential implications for trade barriers and regulatory realignment may dampen UK growth moving forward.  Of the G7 nations, the UK s projected to outgrow Italy and Japan over the next two years, but lag behind the rest of the group.

Emerging and developing Asia will see growth of around 6.5 percent in 2018 and 6.6 in 2019, the IMF estimates. Emerging and developing Europe will see growth of 5.3 percent in 2018 and 2019.

Report: World Economic Outlook Update, January 2018