EQT gets SUSE

BY Richard Summerfield

Private equity firm EQT Partners is to acquire British software company Micro Focus International’s Linux operating system SUSE enterprise software business for around $2.5bn, subject to shareholder approval and customary closing conditions.

The acquisition will be financed by the EQT VIII fund. Micro Focus will reportedly use some of the proceeds of the sale to reduce debt and may return some money to shareholders.

SUSE has been part of Micro Focus since 2014 when the company acquired The Attachmate Group for $2.35bn. At that time, SUSE represented just over a fifth of The Attachmate Group’s revenue. In the year to end April 2017, SUSE generated revenue of $303m and adjusted operating profit of $98.7m, according to Micro Focus  The EQT fund is paying a multiple of 26.7 times adjusted operating profit of the unit for the 12 months to end October 2017.

“Today is an exciting day in SUSE’s history,” said Nils Brauckmann, chief executive of SUSE. “By partnering with EQT, we will become a fully independent business. The next chapter in SUSE’s development will continue, and even accelerate, the momentum generated over the last years. Together with EQT, we will benefit both from further investment opportunities and having the continuity of a leadership team focused on securing long-term profitable growth combined with a sharp focus on customer and partner success. The current leadership team has managed SUSE through a period of significant growth and now, with continued investment in technology innovation and go to market capability, will further develop SUSE’s momentum going forward.”

“We are excited to partner with SUSE’s management in this attractive growth investment opportunity,” said Johannes Reichel, partner at EQT Partners and investment advisor to EQT VIII. “We were impressed by the business’ strong performance over the last years as well as by its strong culture and heritage as a pioneer in the open source space. These characteristics correspond well to EQT’s DNA of supporting and building strong and resilient companies, and driving growth. We look forward to entering the next period of growth and innovation together with SUSE.”

“It was clear from the outset that the SUSE Business was an outstanding business with great people, great customers and fantastic products in a vibrant and dynamic market,” said Kevin Loosemore, executive chairman of Micro Focus.

SUSE believes that the sale to Swedish-based EQT will help finance the next stage in its expansion, allowing the company to hire additional software engineers.

News: UK's Micro Focus sells SUSE software business to EQT for $2.5 billion

Coin-mining malware multiplies

BY Richard Summerfield

The types of malware utilised by cyber criminals grew by 629 percent in the first quarter of 2018, according to the McAfee Labs Threat Report: June 2018.

‘Cryptojacking’ and other forms of cryptocurrency mining experienced remarkable growth, climbing from around 400,000 total known samples in Q4 2017 to more than 2.9 million in Q1 2018.

“Cybercriminals will gravitate to criminal activity that maximises their profit,” said Steve Grobman, chief technology officer at McAfee. “In recent quarters we have seen a shift to ransomware from data-theft, as ransomware is a more efficient crime. With the rise in value of cryptocurrencies, the market forces are driving criminals to crypto-jacking and the theft of cryptocurrency. Cybercrime is a business, and market forces will continue to shape where adversaries focus their efforts."

Furthermore, on average, McAfee detected five new malware samples per second, down from eight per second recorded in Q4 2017.

 “There were new revelations this quarter concerning complex nation-state cyber-attack campaigns targeting users and enterprise systems worldwide,” said Raj Samani, chief scientist at McAfee. “Bad actors demonstrated a remarkable level of technical agility and innovation in tools and tactics. Criminals continued to adopt cryptocurrency mining to easily monetise their criminal activity.”

McAfee recorded 313 publicly disclosed security incidents in Q1 2018, a 41 percent increase over Q4 2017. One of the most frequently targeted industries was healthcare, which saw a 47 percent increase in recorded incidents. Cyber criminals targeted the sector with the SAMSA ransomware.

Education and finance also recorded increases of 40 percent and 39 percent respectively. Ransomware was frequently deployed against schools. In total, there were 313 publically disclosed security incidents in Q1, a 41 percent increase on the previous quarter.

According to McAfee, cryptocurrency mining campaigns may overtake the use of ransomware in the future, as it is as simpler and less risky form of cyber crime. Sophisticated Bitcoin-stealing phishing campaigns, such as ‘HaoBao’, which was launched by the Lazarus cyber crime ring, may become more commonplace, targeting global financial organisations and Bitcoin users.

Mobile malware has seen significant growth of late. Total known malware samples grew 42 percent over the last four quarters. Malware has also grown; the total number of malware samples grew 37 percent over the past four quarters to more than 734 million samples.

In January, McAfee reported an attack targeting organisations involved in the Winter Olympics in South Korea. The attack was executed using a malicious Word attachment containing a hidden PowerShell implant script. The script was embedded within an image file and executed from a remote server. The attack, dubbed ‘Gold Dragon’, involved a fileless implant which encrypted stolen data and sent the data to the attackers’ command and control servers. The implant then performed reconnaissance functions, monitoring the use of anti-malware solutions in order to evade them.

Report: McAfee Labs Threat Report: June 2018

Greystar affiliate to acquire EDR in $4.6bn deal

BY Fraser Tennant

In an all-cash transaction valued at approximately $4.6bn, including debt, Education Realty Trust Inc (EDR), one of the largest owners, developers and managers of collegiate housing in the US, is to be acquired by Greystar Student Housing Growth and Income Fund, LP (GEdR), an affiliate of Greystar Real Estate Partners.

Under the terms of the definitive merger agreement, EDR's stockholders will receive $41.50 per share in cash. The agreement to be acquired by the newly-formed, perpetual-life fund GEdR has been unanimously approved by EDR’s board of directors.

"For more than 50 years, EDR has been a pioneer in the student housing industry, partnering with some of the most prestigious universities in the US to enhance and transform campus housing and achieve student success goals," said Randy Churchey, EDR’s chief executive chairman of the board of directors. "As a public company, one of our priorities is to maximise stockholder value and we believe this transaction with Greystar accomplishes that goal.”

EDR owns or manages 79 communities with more than 42,300 beds serving 50 universities in 25 US states. EDR’s acquirer, Greystar, is a leading, fully integrated real estate company which offers expertise in investment management, development and property management of rental housing properties globally.

"We are pleased to partner with a group of world-class investors to acquire one of the nation's best student housing operators and developers,” said Bob Faith, founder, chairman and chief executive of Greystar Real Estate Partners. “EDR has one of the highest quality and best located student housing portfolios in the US and it will seed Greystar's newly formed flagship student housing-focused perpetual-life fund. Combined, we will leverage our expertise, vision and financial strength to serve our current university partners as well as further expand our global student housing footprint.”

The EDR/GEdR transaction is currently expected to close in the second half of 2018 and is subject to customary closing conditions, including the approval of EDR's stockholders.

The deal adviser for EDR was BofA Merrill Lynch, while Morrison & Foerster LLP and Venable LLP were its legal advisers. J.P. Morgan Securities LLC was financial adviser to Greystar, while Hogan Lovells US LLP and King & Spalding were its legal advisers.

Mr Churchey concluded: “We are certain today's announcement is in the best interest of all of EDR's stakeholders, including university partners, employees and stockholders."

News: Greystar to buy Education Realty for about $4.6 billion including debt

Megatrends set to transform human experience and global order, claims new report

BY Fraser Tennant

A new era in which human augmentation such as artificial intelligence (AI), robotics and augmented and virtual reality (AR and VR) reinvent work, consumer behaviour and regulation is on the way, according to a report published this week by EY. 

In its new report – ‘What’s after what’s next? – the upside of disruption: megatrends shaping 2018 and beyond’ – EY reveals the megatrends it says are set to transform many aspects of everyday and business life. Highlighting three primary forces behind disruption – technology, globalisation and demographics – the report examines the latest developments within these forces: human augmentation (technology), populism (globalisation) and ageing (demographics) – which generate new megatrends.

The EY report also analyses the reinvention of food production, manufacturing, urbanisation and healthcare, as well as providing a framework for understanding where disruption comes from and where it is headed, giving leaders a way to anticipate, prepare and strategically respond.

“Today's corporate leaders almost universally see disruption as both an opportunity and an existential threat,” said Uschi Schreiber, EY global vice chair – markets and chair of the global accounts committee. “But to seize the opportunity and find the upside of disruption, leaders need to understand where disruption is coming from, where it is headed and what it means for them.”

In the long-term, EY envisions a broad reshaping of the political and economic landscape via: (i) a rebalanced global system – the rules for the international order will be rewritten as rising economic powers create a multipolar global system, with new norms, institutions, networks and centres of influence; (ii) renewed social contracts – in an era of digital disruption and growing income inequality, the rules organising societies will be revised to strike a more sustainable balance between the interests of individuals, institutions and governments; and (iii) superfluid markets – the rules governing firms and markets will be refashioned as disruption eliminates market frictions and creates markets for everything, and produces lean, hyper-efficient companies.

In terms of regulation, the report suggests that technologies such as AI and autonomous vehicles will challenge existing regulations, with disruptive technologies enabling new regulatory approaches that are built on open data, conducted in real-time and dynamically adapt to changing market conditions.

However, amid a constantly evolving political and economic landscape, while EY advises organisations to turn downsides into upsides and threats into opportunities, they also need to be aware that future working worlds are broad in scope and will occur on a much longer timeline than any megatrend.

Report: What’s after what’s next? – the upside of disruption: megatrends shaping 2018 and beyond

CYBG to buy Virgin Money for $2.3bn

BY Richard Summerfield

Virgin Money Holdings is to be sold to CYBG in a $2.3bn all-stock transaction, creating a bank with around six million customers, making it the UK’s sixth largest bank.

Under the terms of the deal, Virgin Money shareholders will get 1.2125 new CYBG shares for every Virgin Money share they hold, and will end up owning about 38 percent of the combined business, which will be known as Virgin Money. CYBG has agreed a £12m a year licensing deal with Virgin Group owner Sir Richard Branson, rising to £15m after five years

Virgin Money and CYBG – the owner of Clydesdale and Yorkshire banks – have been in negotiations since May. Virgin was willing to negotiate with CYBG because of the improvement the company made to its original proposal. CYBG initially offered Virgin Money shareholder’s a 36.5 percent stake in the new company, though this offer was rejected. Virgin was also willing to accept the new proposal due to the “substantial synergy potential” and growth opportunities the deal represented.

The deal, which is still awaiting shareholder approval, will allow CYBG to benefit from greater scale. It will lead to potential cost savings and allow CYBG to benefit from Virgin Money’s significant high street presence.

Job losses are expected, however. The combined company will have around 9000 employees, however around 1500 jobs are expected to go – a reduction of around 15 percent. According to Ian Smith, CYBG chief financial officer, the £35m the company expects to save from “organisational redesign” would be derived from removing duplication among senior management. There would be “little overlap in our customer-facing roles”, he confirmed. In total, the deal is expected to generate £120m in annual pre-tax cost savings.

David Duffy, chief executive of CYBG  said: “The combination of CYBG and Virgin Money will create the first true national competitor to the status quo in UK banking, offering a genuine alternative for consumers and small businesses.” The combination provided “the opportunity to build a best-of-both model that draws on the talent of both CYBG and Virgin Money”, he added.

Mr Duffy will lead the new company. Jayne-Anne Ghadia, CEO of Virgin Money, will act as a temporary senior adviser to the new Virgin Money.

News: CYBG and Virgin Money join forces to take on Britain's biggest banks