Tax teams under pressure to invest in technology, says new survey

BY Fraser Tennant

The continued globalisation and digitalisation of tax is putting tax professionals under pressure to invest in new technologies, according to a new survey by Thomson Reuters.

In its ‘2019 European Tax Technology Survey’ – which polled 438 tax teams across a wide range of industries, including banking, manufacturing and services – Thomson Reuters reveals that 98 percent of tax professionals plan to invest in tax technology over the next 12 months, compared to only 54 percent in 2018. Moreover, the main driver behind the anticipated investment is the rise in digitally capable tax authorities.

Recognising the need for increased efficiency for internal processes and workflow, 45 percent of survey respondents said that they had started or have plans to implement digital tax filing and compliance for new standards such as MTD and Standard Audit File for Tax (SAF-T) – the international standard for the electronic exchange of reliable accounting data, as defined by the Organisation for Economic Co-operation and Development (OECD).

Key findings from the survey include: (i) 76 percent of senior tax executives have seen an increase in attention on tax compliance and planning at board level; (ii) 28 percent of tax teams plan to increase spend significantly in the next 12 months – mainly to address the needs of digital tax reporting; (iii) managing compliance across multiple jurisdictions continues to be the biggest challenge, although preparing for Brexit had also significantly increased in importance; and (iv) 89 percent consider tax technology as strategic to the success of their tax function, although only 39 percent have a tax technology strategy.

“The survey indicates that many tax departments are looking to centralise and manage compliance across multiple jurisdictions, in response to the continued globalisation and digitalisation of tax,” said Steve Smith, proposition lead, corporates at Thomson Reuters. “The interest in new technologies also suggests that tax departments are recognising that the deployment of tax technology can help increase efficiencies, reduce human error and deliver a consistent and manageable way of addressing these new tax regulations.”

In addition, the survey found that there is an appetite within tax departments to adopt in-house technology, rather than outsource, suggesting a desire to take control of the digital tax transformation process.

Mr Smith concluded: “It is inevitable we will see more jurisdictions following suit in the coming years, and multi-national corporations need to be prepared to address these requirements with future-proofed technology solutions.”

Report: 2019 European Tax Technology Survey

Security analytics deal sees Rapid7 acquire NetFort

BY Fraser Tennant

In a deal which adds traffic-visibility analytics and security monitoring software to its cyber security repertoire, US data analytics company Rapid7 has acquired Irish tech firm NetFort.

The deal is expected to improve Rapid7’s ability to detect attacks, investigate incidents and gain increased visibility into devices that pose a risk to organisations.

The company plans to bring NetFort’s network monitoring, visibility and analytics capabilities into its Insight cloud – which processes billions of events and monitors millions of assets daily, collecting and analysing data from the endpoint to the cloud – to assist its 7800 customers to securely advance their organisations.

“We were immediately impressed by NetFort’s technology and the deep network protocol expertise inherent across the team,” said Lee Weiner, chief product officer at Rapid7. “By bringing NetFort’s network data and analytics to our own platform, we enhance security analysts’ capability to unearth risk, detect attacks and investigate incidents more effectively.”

Founded in 2000, Rapid7 helps security teams reduce vulnerabilities, monitor for malicious behaviour, investigate and shut down attacks, and automate routine tasks.

NetFort is Rapid7’s second Irish acquisition after previously buying Logentics in 2015.

“We are delighted to join Rapid7 and believe this is a testament to the capabilities of our people and our technology,” said John Brosnan, chief executive at NetFort. “Rapid7 will help us apply our network data insights across their cloud-based platform to improve the security posture of our customers.”

Founded in 2002 and based in Galway, NetFort provides network traffic and security monitoring software for virtual and physical networks. Its products provide powerful, deep-packet inspection technology which helps businesses have comprehensive visibility across their networks.

The financial terms of the deal were not released.

News: Galway tech firm NetFort acquired by Boston’s Rapid7

Adtech giant Sizmek files for Chapter 11

BY Fraser Tennant

Against a backdrop of slowing revenue and an inability to obtain fresh investment, adtech giant Sizmek, along with a number of its subsidiaries, has filed for Chapter 11 bankruptcy protection.

The company has stated that it initiated voluntary proceedings to allow it to preserve value and seek access to capital while it continues to review strategic alternatives.

As the world's largest independent buy-side advertising platform, Sizmek operates in more than 70 countries, with local offices in many countries providing award-winning service throughout the Americas, Europe, the Middle East and Africa (EMEA) and Asia-Pacific (APAC).

Subsidiaries included in the Chapter 11 filing are Sizmek Inc., Sizmek DSP, Inc., Sizmek Technologies, Inc., Wireless Artist LLC, Wireless Developer, Inc., X Plus One Solutions, Inc., X Plus Two Solutions, LLC, and Point Roll, Inc.

In a statement on its website, Sizmek said: “We are confident this process is the best possible option. Importantly, Sizmek is open for business. The US Chapter 11 process – unlike bankruptcy schemes in other geographies – is specifically designed for companies like ours to operate as usual while working to resolve financial issues. Our board and management team continue to explore all available options, including a potential sale.”

In the months prior to the filing, Sizmek had been discussing with stakeholders how to address its over-leveraged balance sheet. However, despite these discussions, Sizmek’s primary lender assumed control of Sizmek’s bank accounts and sought to divert customer receivables – thereby cutting off access to capital.

“Chapter 11 protection is the only responsible mechanism by which we can seek access to capital and preserve value while continuing to explore value-maximising alternatives,” continued the statement. “We are aggressively seeking to access our existing cash, and intend to fully resume normal-course operations as soon as possible.”

The Sizmek statement concluded: “We are committed to serving clients to the same high standard they have come to expect and are working diligently to ensure platforms experience as little interruption as possible.”

News: Independent ad server, Sizmek, files for Chapter 11 Bankruptcy

DSV and Panalpina agree $4.6bn merger

BY Richard Summerfield

Following months of speculation – and activist activity – the future of Swiss logistics company Panalpina has finally been sealed, with Danish rival DSV agreeing to acquire the company in a deal worth $4.6bn.

The merger, once completed, will create one of the world’s largest companies in logistics and freight forwarding – only DHL Logistics, Kuehne & Nagel and DB Schenker will be bigger.

The deal will see DSV acquire Panalpina with an all-share offer of 2.375 DSV shares for each Panalpina share held. The offer gives an implied price of 195.8 Swiss francs for each Panalpina share, compared with DSV’s cash offer of 180 francs per share made on 15 February – a 43 percent premium, and an initial cash and shares offer then worth 170 francs which was made in January. The agreement has the backing of investors holding 69.9 percent of registered shares, including the Ernst Goehner Foundation which owns 46 percent of Panalpina and had rebuffed a previous offer.

“In the course of the past weeks, Panalpina’s board of directors and management has been exploring different strategic initiatives and held discussions with DSV about a potential combination,” said Peter Ulber, chairman of Panalpina. “The board of director’s assessment is that the updated proposal of DSV is very attractive. It is recognising the quality of Panalpina’s employees, the company’s strong position as one of the world’s leading providers of supply chain solutions, and its special competencies and know-how in air and ocean freight. The board of directors recommends Panalpina’s shareholders to accept the offer. Talks with Agility have been discontinued. We are now looking forward to join forces with DSV and contribute to creating one of the world’s largest transport and logistics companies. Our customers will be able to benefit from a stronger network and service offering as well as new competencies and skills.”

“A combination of DSV and Panalpina further strengthens our position as a leading global freight forwarding company,” said Kurt Larsen, chairman of DSV. “Together, we can present a strong global network and enhanced service offering to our clients, further solidifying our competitive edge in the industry. It’s a great match on all parameters. Panalpina is a great company and we’re very excited by this possibility to join forces and to welcome Panalpina’s talented staff.”

The DSV/Panalpina merger comes a few months after DSV abandoned its pursuit of Ceva Logistics AG, after its offer worth $1.7bn was rejected. DSV said at the time it would pursue other targets.

News: Denmark’s DSV to buy logistics company Panalpina in $4.6 billion deal

Uber takes Careem

BY Richard Summerfield

Ride-hailing giant Uber has agreed to acquire its biggest Middle Eastern rival Careem for $3.1bn.

Uber will finance the transaction using $1.4bn in cash and $1.7bn in convertible notes, bringing to an end a nine-month period of negotiation. The notes, according to Uber’s statement announcing the deal,  will be convertible into Uber shares at a price equal to $55 apiece, roughly a 13 percent increase over Uber’s share price in its last financing round, which was undertaken more than a year ago. The transaction is expected to close in the first quarter of 2020 once it has received regulatory approval across several jurisdictions.

“This is an important moment for Uber as we continue to expand the strength of our platform around the world,” said Uber chief executive Dara Khosrowshahi. “With a proven ability to develop innovative local solutions, Careem has played a key role in shaping the future of urban mobility across the Middle East, becoming one of the most successful startups in the region. Working closely with Careem’s founders, I’m confident we will deliver exceptional outcomes for riders, drivers, and cities, in this fast-moving part of the world.”

“Joining forces with Uber will help us accelerate Careem’s purpose of simplifying and improving the lives of people, and building an awesome organisation that inspires,” explained Mudassir Sheikha, Careem’s chief executive and co-founder. “The mobility and broader internet opportunity in the region is massive and untapped, and has the potential to leapfrog our region into the digital future. We could not have found a better partner than Uber under Dara’s leadership to realise this opportunity. This is a milestone moment for us and the region, and will serve as a catalyst for the region’s technology ecosystem by increasing the availability of resources for budding entrepreneurs from local and global investors.”

Careem will continue to operate independently under the leadership of Mr Sheikha. The Dubai-based company operates in over 120 cities stretching from Morocco to Pakistan. After raising an additional $200m in funding last year, Careem launched a delivery service in Dubai and Jeddah,Saudi Arabia in December. Uber, meanwhile, has struggled to keep up with its regional rival despite eclipsing it in terms of revenue.

News: Uber buys rival Careem in $3.1 billion deal to dominate ride-hailing in Middle East