Blackrock acquires IT Group in “natural fit”

BY Fraser Tennant

In a deal expected to bring significant benefits to the fields of construction and technology, specialist professional consultancy Blackrock Expert Services Limited is to acquire IT Group, an independent provider of professional services for IT disputes, digital forensics and e-disclosure.  

Both companies have stated their “delight” over joining forces and believe the transaction will allow them to better integrate services in a rapidly growing technology-related expert services market. 

“The shared ethos of quality, integrity and independence meant the two businesses were a natural fit together,” said Giles Derry, chief executive of Blackrock. “The ever-increasing importance of technology in construction and the continued growth of technology, IP and data disputes means this will be an area where access to IT experts is essential.” 

With technology having a more prominent role in construction projects, Blackrock’s acquisition of IT Group is particularly timely, bringing technology expertise in-house and further enhancing Blackrock’s position as a global provider of integrated consultancy services. “There is a scarcity of experienced IT experts in the market place,” added Mr Derry.

Having advised on complex construction projects in 50 countries with a combined value of over £150bn, Blackrock has built a distinguished track record since its founding in 2009. The acquisition of IT Group adds to Blackrock’s portfolio of high-profile contracts.

 “IT Group has been involved in some of the world's largest IT disputes, as well as disputes involving technology in construction projects,” said Tony Sykes, founder and senior partner of IT Group. “We are really excited about the opportunity to advise on Blackrock’s projects as well as continuing to offer technology dispute and forensic services to clients across the group.”   

Experienced in software licensing, IT project management, cyber, data theft and system design and specification disputes, IT Group operates internationally and has worked for insurers and law firms in the UK, US, EMEA and the Far East.

Mr Derry concluded: “The combination of Blackrock and IT Group is entirely consistent with our long-term strategy to provide excellence across a range of expert services.” 

Deals decline

BY Richard Summerfield

Despite favourable macroeconomic conditions and abundant cash levels among keen acquirers, both the number of reported M&A transactions and deal value worldwide declined for the second consecutive year in 2017, according to Wilmer Hale’s ‘2018 M&A Report’.

The number of reported M&A transactions worldwide dropped by 10 percent, from 59,544 deals in 2016 to 53,854 in 2017. Global M&A deal value decreased 9 percent, from $3.59 trillion to $3.26 trillion. The size of the average deal in 2017 was $60.6m, up slightly from the $60.4m in 2016, but trailing the $69.4m average recorded in 2015.

Deal volume in the US fell 13 percent from 21,666 transactions in 2016 to 18,957 in 2017. Deal value also declined by 15 percent, falling from $2.24 trillion to $1.91 trillion. Average deal size fell 3 percent to $100.9m in 2017, from $103.6m in 2016.

There was also a 7 percent fall in deal volume in Europe last year, with 20,721 transactions recorded, down from 22,305 in 2016. Total deal value fell 15 percent from $1.41 trillion to $1.19 trillion. The average deal size recorded also fell by 9 percent to $57.4m in 2017, from $63m in 2016.

The Asia-Pacific region also saw a 9 percent decline in deal volume with 16,926 transactions recorded in 2016 falling to 15,330 in 2017. Total deal value dropped 16 percent, from $1.25 trillion to $1.05 trillion. Average deal size fell 7 percent, from $73.8m to $68.5m.

Deal volumes also declined across a number of key sectors, including technology, life sciences and telecommunications. In the tech space fell, 2017 saw 9016 deals, a fall from 9103 deals in 2016. Deal value also fell for the second year running, declining 35 percent from $522.1bn to $338.4bn.

The financial services industry was the best-performing sector in 2017. Deal activity was up 3 percent to 3042 transactions record last year. Global deal value in the sector did fall by 18 percent, however, from $329.1bn to $271.3bn. Average deal size fell 20 percent, from $111.4m to $89.2m.

Following two consecutive years of declining deal volume and value, Wilmer Hale believes that 2018 could reverse the trend, despite the presence of some prevailing headwinds. A number of key factors should positively influence dealmaking, including improved economic stability and growth in most major economies. In addition, high levels of cash are being held by both strategic and private equity acquirers . Fundraising among private equity firms has also grown for the fifth year running and they are facing increasing pressure to exit investments and return capital to investors.

Report: M&A Report 2018

UK C-suite cyber confidence concerns

BY Richard Summerfield

Despite recent growth in the number of recorded data breaches, senior management at a number of UK companies believe that their cyber security provisions are above average – a sign that some UK firms may be overconfident in their defences, according to the ‘United Kingdom – Views from the C-Suite Survey 2018’ report released by FICO.

Executives at three out of four UK firms believe that their company is better prepared than its competitors. Among UK industries, financial services firms were the most confident of all, with 55 percent of respondents saying their organisation is a top performer, and 41 believe that their defences are above average. Forty-two percent of telecommunications providers believe that their firm is a top performer. The least confident executives were in the retail and e-commerce sectors, with 38 percent of respondents saying that their firm is a top performer, and only 19 percent rating it as above average.

This overconfidence among UK executives is particularly jarring as only 36 percent of organisations are carrying out regular cyber security risk assessments.

“These numbers suggest that many firms just don’t understand how they compare to their competitors, and that could lead to a lack of investment,” said Steve Hadaway, FICO’s general manager for Europe, the Middle East and Africa.

The UK is not alone in its overconfidence, however. Firms from all eight jurisdictions surveyed, including the US, believe they are well placed to resist a cyber attack. Canadians were more likely to rate their firm a top performer for cyber security.

Ovum conducted the survey for FICO through telephone interviews with 500 senior executives, mostly from the IT function, in businesses from the UK, the US, Canada, Brazil, Mexico, Germany, India, Finland, Norway, Sweden and South Africa. Respondents represented firms in the financial services, telecommunications, retail and e-commerce and power and utilities sectors.

“IT leaders have greater funding than ever to protect organisations from the continuously evolving threat landscape and meet complex compliance demands,” said Maxine Holt, research director at Ovum. “These same IT leaders are undoubtedly keen to believe that the money being spent provides their organisation with a better security posture than any other – but the rapid pace of investment, often in point solutions, rarely takes an organisation-wide view of security.”

Report: United Kingdom – Views from the C-Suite Survey 2018

Battle for Sky intensifies

BY Richard Summerfield

The battle for UK pay-TV broadcaster Sky has intensified as both 21st Century Fox and Comcast have increased their offers for the company to £24.5bn and £26bn respectively.

Fox’s sweetened offer, which was submitted on Wednesday, would see it pay £14 per share. Fox’s original bid of £10.75 per share for the 61 percent of Sky it does not own was lodged in December 2016.

Comcast first offered £12.50 per share, valuing the company at £22bn. Comcast's latest offer of £14.75 per share prompted Sky’s independent committee recommending shareholders to reject Fox's. Comcast also announced that its increased offer has been recommended by the Sky Independent Committee of Directors.

“We are pleased to be announcing a recommended increased offer for Sky today,” said Brian Roberts, chief executive of Comcast. “We have long admired Sky, which we believe is an outstanding company and a great fit with Comcast. We will be posting our offer document to Sky shareholders shortly.”

Comcast’s offer represents an “attractive premium to the current alternative offer", said Martin Gilbert, deputy chairman of Sky. “We have long recognised the unique position that Sky occupies, and unanimously recommend this offer by Comcast,” he added.

The UK government had been expected to approve Fox’s latest bid for Sky after the company satisfied ongoing concerns over media plurality. Britain’s former Culture Secretary Matt Hancock, who was replaced this week following a cabinet shakeup, was willing to let the takeover go ahead, provided Fox sold Sky’s 24-hour news channel to Disney.

The battle for Sky is just part of the wider ongoing fight for control in the media and telecoms sector, where consolidation has become a key consideration. Fox itself is subject to an ongoing battle between Disney and Comcast. Fox’s assets, including its existing stake in Sky, as well as its movie studios, cable channels, National Geographic and a 30 percent stake in streaming service Hulu are all subject to ongoing fight for Fox.

Disney has offered $71.3bn in cash and shares for the company, minus Fox News, Fox Sports and Fox Television Stations, which would be spun off into a new company called ‘New Fox’. Sky has 23 million customers in five European countries and also boasts a market-leading platform. The company has a slew of original content and licence agreements, notably with the English Premier League.

The media and telecoms industry is in a state of flux as traditional players attempt to keep pace with streaming giants such as Netflix and Amazon and readjust to the new media landscape.

Sky’s shares were up 3 percent on Thursday in anticipation of additional bidding for the company.

News: Sky shares rally after Comcast and Fox go head-to-head in bid battle

Seadrill emerges from depths of bankruptcy

BY Fraser Tennant

Following a year-long Chapter 11 bankruptcy process, offshore drilling rig contractor Seadrill Limited has completed its reorganisation, restructured its debt, sourced substantial liquidity and emerged from the depths in a strong position to execute its business plan.

Seadrill’s plan of reorganisation has equitised approximately $2.4bn in unsecured bond obligations, more than $1bn in contingent newbuild obligations, substantial unliquidated guaranty obligations, and $250m in unsecured interest rate and currency swap claims.

The company will also have access to over $1bn in fresh capital due to extending near-term debt maturities. In addition, a newly constituted board of directors has been appointed, consisting of John Fredriksen as chairman and Harald Thorstein, Kjell-Erik Østdahl, Scott D. Vogel, Peter J. Sharpe, Eugene I. Davis, and Birgitte Ringstad Vartdal as directors.

Once recognised as the world’s largest offshore driller, the company was forced to seek protection from creditors when it was unable to repay the massive debts it amassed during the boom years of buying new rigs.

“I would like to thank our customers, vendors and financial stakeholders for their continued loyalty and support throughout the restructuring process,” said Anton Dibowitz, chief executive of Seadrill Management. “I would also like to thank all our employees for their continued hard work and dedication during this period and whose efforts were a key part of concluding this restructuring process."

Furthermore, in accordance with its new reporting obligations, Seadrill has stated that it will issue its next earnings report in November 2018, which will include half year and third quarter 2018 results and reflect fresh start reporting.

During the course of the restructuring process, Seadrill was principally advised by Kirkland & Ellis LLP, Slaughter and May, Advokatfirmaet Thommessen AS, Jackson Walker LLP, Houlihan Lokey Capital, Inc, Morgan Stanley and Alvarez & Marsal North America, LLP.

Mr Fredriksen concluded: "We are pleased to be emerging from Chapter 11 and moving forward with a solid financial foundation on which we will continue to grow and strengthen our business." 

News:  Seadrill Reorganises, Emerges From Bankruptcy