Investor group acquires Ultimate Software in $11bn deal

BY Fraser Tennant

In a move which takes a global provider of human capital management (HCM) into private ownership, Ultimate Software is to be acquired by an investor group led by private equity firm Hellman & Friedman in a transaction valued at approximately $11bn.

Under the terms of the agreement, all of Ultimate’s stockholders will receive $331.50 in cash for each share of the company’s common stock. Ultimate’s board of directors has unanimously approved the transaction and has recommended that stockholders vote in its favour.

Founded in 1990, Ultimate Software is a leading global provider of cloud-based human capital management and employee experience solutions, with more than 48 million people records in the cloud. The firm delivers HR, payroll, talent, and time and labour management, as well as HR service delivery solutions.

“This transaction will bring meaningful benefits to our employees and customers – both in the long and short terms,” said Scott Scherr, chief executive and founder of Ultimate. “It will also allow us to make additional, prudent investments in our products and services so that our customers will benefit from our ability to bring new features and services to market more quickly, while still enjoying the same high level of service.”

Upon completion of the transaction, Ultimate will continue to operate under the leadership of Mr Scherr and the existing senior management team. The privately held company will be owned by Hellman & Friedman in partnership with significant investors Blackstone, GIC, Canada Pension Plan Investment Board (CPPIB) and other investors, including JMI Equity.

“Ultimate’s impressive track record of growth is built on the outstanding quality of its software and its dynamic and motivated employees,” said David Tunnell, a partner at Hellman & Friedman. “The company deeply understands the essence of human capital management, having itself been recognised with numerous best workplace awards from leading publications for its exceptional mission-driven culture. We look forward to building on Ultimate’s successes, working along with our investment partners.”

The acquisition is expected to close in mid-2019, subject to stockholder approval and other customary closing conditions, including regulatory approvals.

News: Ultimate Software agrees to $11 billion buyout by investor group

The evolving cyber threat

BY Richard Summerfield

2018 was a challenging year for the cyber security industry as threat actors’ tactics, traits and techniques continued to evolve. As a result, the number of large corporations which fell victim to cyber attack continued to grow last year, according to AppRiver’s ‘2018 Global Security Report’.

AppRiver’s Email Security and Web Protection filters quarantined more than 10 billion global threats including: (i) 8.3 billion messages containing URL-based malware, phishing attacks and text-based attacks; (ii) 300 million emails that included malware in a message attachment; (iii) the majority of malicious attachments with Word files with embedded macros; and (iv) 4.5 billion quarantined messages that originated in the US.

Trojan attacks surpassed the number of ransomware attacks, becoming the most commonly distributed threat type – Trojans were dispersed more than 20 million times. The ‘Trickbot Trojan’ and ‘Emotet’, were particularly prominent threats. Emotet, which functions as a downloader of other banking Trojans, cost state, local, tribal and territorial (SLTT) governments up to $1m per incident to remediate. In order to defeat such attacks, companies must deploy a robust ‘defence-in-depth’ approach, the report notes. Distributed Spam Distraction (DSD) and Business Email Compromise (BEC) attacks also became more prominent in 2018.

“The lines between hacking, cybercrime, and cyberwarfare are increasingly blurred now,” said Troy Gill, AppRiver’s senior cybersecurity analyst. “As a result, protecting small- and mid-sized businesses must be considered an integral part of our larger national cybersecurity posture. To be most effective, our strategy must be comprehensive, addressing vulnerabilities at all levels.”

Looking ahead, the report notes that internal ecosystem attacks will increase and attackers will employ more ‘bleeding-edge’ attack methods. The report notes that more advanced attack techniques will likely trickle down from the nation-state level to threaten more for-profit attacks against the public.

The rapid growth of the number of Internet of Things (IoT) devices will also create challenges, particularly as the lack of security being built into such devices will leave parties exposed.

Report: 2018 Global Security Report

Entegris and Versum agree merger of equals

BY Richard Summerfield

Chemicals manufacturer Entegris Inc has announced that it is to acquire rival Versum Materials Inc in a $4bn all-stock merger, creating a $9bn company which specialises in advanced materials, specialty gases and microcontamination control.

The deal is expected to close in the second half of 2019, subject to the satisfaction of customary closing conditions, including receipt of US and international regulatory approvals, and stockholder approval at each company.

Under the terms of the agreement, Versum Materials shareholders will get 1.120 shares of Entegris for each share held. Entegris stockholders will own 52.5 percent of the combined company, while Versum Materials stockholders will own 47.5 percent.

The companies expect the merger to generate around $75m in annual cost savings within 12 months of closing.

“We are excited to combine with Versum Materials to create a premier specialty materials company for the semiconductor and other high-tech industries,” said Bertrand Loy, president and chief executive of Entegris. “The combined company will be ideally positioned to more effectively help our customers achieve higher yields and new levels of performance and reliability, and together, we will be well positioned to take advantage of long-term secular semiconductor growth, and to tackle new industry process challenges. I have great respect for the Versum Materials team and look forward to joining forces as we embark on this next chapter and create new value for our stockholders, employees and customers.”

“We could not ask for a better partner in Entegris,” said Guillermo Novo, president and chief executive of Versum Material. “This merger will create greater benefits and growth opportunities than either company could have achieved on its own. It dramatically accelerates our goal of portfolio diversification – creating an end-to-end materials solutions provider across the entire semiconductor manufacturing process. With enhanced global scale and world class technical expertise, we’ll be poised to drive further innovation and support investments across our technology, infrastructure, and additional capabilities – enabling us both to better serve our customers and provide expanded opportunities for our employees.”

News: Chemicals maker Entegris to buy Versum in $4 billion microchip bet

UK tech sector growth slows as Brexit uncertainty bites, says new study

BY Fraser Tennant

Growth across the UK tech sector in Q4 2018 expanded at its weakest pace for three years, as the impact of Brexit and accompanying uncertainty began to bite, according to a new report by KPMG.

According to KPMG’s UK Tech Monitor Index, the sector experienced a difficult end to 2018, as business activity growth eased and new work remained subdued, with global trade, in addition to Brexit-related uncertainty, contributing to a loss of momentum in the final quarter of 2018.

Furthermore, although the Index, which measures the strength of business activity across the sector, remained above the crucial 50.0 no-change value at 52.4 in Q4 2018, this was down from 54.0 in Q3 2018 to the slowest rate of tech sector business expansion since Q4 2015.

“Our report reveals that political uncertainty has dented client confidence contributing to a slowdown in growth at the end of last year,” said Bernard Brown, vice chair at KPMG UK. “But, buoyant staff hiring and capital expenditure plans are still in place for 2019.”

Indeed, despite the subdued end to 2018, the KPMG Index reports positive signs, with tech firms indicating that they remain “highly upbeat” about their capital expenditure plans, although projections for demand growth have “softened”.

The tech sector’s more upbeat attitude to business growth is in marked contrast to the rest of the UK economy, with many companies stockpiling and holding off on investment decisions.

In terms of the tech sector, KPMG notes that strong R&D spending continues to drive confidence regarding new product launches, with a weak pound providing a competitive boost that will help achieve new export sales.

“This confidence is reflected in the statistic that almost 50 percent of UK tech firms intend to add jobs over the next year, whilst many traditional manufacturers are considering moving jobs offshore,” added Mr Brown. “This demonstrates the strength and resilience of the UK tech sector in the new digital economy.”

News: Tech Sector Growth Weakest for Three Years as Uncertainty Begins to Bite

Global energy sector “undergoing rapid change”, says new report

BY Fraser Tennant

The global energy sector is undergoing rapid change following years of cost cutting, with many oil and gas companies expanding into new projects and territories, according to a new report by the Institute of Risk Management (IRM).

In 'Fuelling the Debate: Trends, Survey Report and Findings for the Energy Industry 2019', the IRM provides insight and thought leadership for risk managers operating in the sector, including oil and gas, energy and renewables, and offers advice on how they can improve their performance and relevance across a range of topics – from safety and sustainability to improving risk maturity and building effective risk cultures. 

According to the report, which is based on a survey of around 50 energy sector specialists, cost control and safety are key areas of focus, with businesses planning to invest in new projects because they are confident of achieving profits despite a long period of low oil prices.

Furthermore, strategic risks, the global economy and a skills gap are considered top risks by survey respondents, although only 27 percent said that green energy was likely to be an area of concern over the next five years.

“Excellence in risk management requires a strong understanding of general concepts and techniques but also an appreciation of the detailed risk landscape in particular sectors,” said Socrates Coudounaris, chairman of the IRM. “Among the report’s conclusions is that there is great scope for raising levels of risk maturity in the energy sector. This will require attention to various aspects of risk management and particularly to competence, training and education, raising them to world class standards.”

Risk managers also expressed concern over a lack of resources and a failure of the board to provide the right tone at the top. For example, just 40 percent of respondents said they had access to specialist ERM software.

In a bid to improve the global energy sector’s risk management outlook, the IRM has announced a series of initiatives, such as publishing individual expert insights and articles, as well as continuing to work towards establishing a regular maturity benchmarking assessment of the sector with fixed criteria.

Mr Coudounaris concluded: “We intend to build further on these initiatives and conduct more specialist academic research. We also intend to develop an ongoing special interest group for the energy sector that will support risk professionals in the field.”

Report: Fuelling the Debate Report: Trends, Survey Report and Findings for the Energy Industry 2019