Continuity and COVID-19

BY Richard Summerfield

The BCI, in association with FortressAS, has published a new report looking at how business continuity and resilience may develop following the disruption caused by the COVID-19 pandemic. ‘The Future of Business Continuity’ report outlines some of the most important lessons learned in the first half of 2020 and re-emphasises the importance of well-resourced business continuity professionals.

One of the report’s major themes is that many business continuity practitioners felt they were marginalised when key strategic decisions were being made in the early stages of the pandemic. Thirty-three percent of those surveyed for the report believe it is imperative that companies have a dedicated board member responsible for promoting resilience at all levels in the organisation. Respondents also believe that business continuity should not be subordinate to other departments, such as risk, for example.

As companies react to the developing COVID-19 crisis, business continuity has become central to the operations of many businesses. Many professionals expect this rising awareness to result in extra departmental resources going forward. Around 95 percent of those interviewed are confident of securing extra support for business continuity from a financial or resource perspective post-COVID, due to management’s increased awareness of the department during the crisis.

“COVID-19 may have shaken many organizations to their foundations, but it has highlighted the importance of business continuity as being at the core of an organisation’s resilience strategy,” said Rachael Elliott, head of thought leadership, at The BCI. “Professionals are hopeful of greater attention at Board level going forward, and the pandemic has helped to act as a silo-breaker between different departments’ resilience strategies. We don’t have long to act though – respondents believe we have just six months to make these theoretical concepts into actionable processes within organizations before they are forgotten.”

Report: The Future of Business Continuity

Kimberly-Clark to acquire Softex Indonesia in $1.2bn deal

BY Fraser Tennant

In a $1.2bn deal which highlights its commitment to emerging markets, US multinational personal care  company Kimberly-Clark Corporation is to acquire diaper maker Softex Indonesia, a leader in the fast-growing Indonesian personal care market.

A large, growing market with attractive future prospects, approximately 80 percent of Softex Indonesia’s sales come from diapers – an estimated at $1.6bn market and the sixth largest in the world. The remaining sales are mostly in the feminine care and adult care categories.

Kimberly-Clark’s all-cash acquisition of Softex immediately improves its currently limited position in the country to one with strong market share in key personal care categories across Southeast Asia's largest economy.

"This acquisition represents a compelling strategic fit and demonstrates our commitment to accelerate growth in developing and emerging markets," said Mike Hsu, chairman and chief executive of Kimberly-Clark. "Moreover, adding Softex Indonesia and its brands to Kimberly-Clark will enhance our company's underlying growth prospects and help us create even more long-term shareholder value."

The acquisition is another demonstration of Kimberly-Clark's commitment to generate improved, sustainable top-line growth and create long-term shareholder value. Moreover, the transaction will be financed primarily through incremental debt and secondarily, cash on hand.

"Softex Indonesia has a strong, growing and profitable business with a portfolio of brands loved by Indonesian consumers," said Aaron Powell, president of Kimberly-Clark's Asia-Pacific consumer business. "This acquisition provides an opportunity for Kimberly-Clark to accelerate our growth in Southeast Asia, and we look forward to combining our strengths in innovation and brand building to expand on Softex Indonesia's continued success."

Since 1976, Softex Indonesia has built a successful personal care business with strong market positions and has consistently delivered double-digit growth. The company has excellent manufacturing capabilities and a strong go-to-market distribution network. Softex Indonesia generated net sales of approximately $420m in 2019.

The transaction is subject to customary closing conditions and expected to close in the fourth quarter of 2020.

News: Kimberly-Clark to buy Indonesian diaper maker Softex for $1.2 billion

Whiting Petroleum emerges from Chapter 11

BY Fraser Tennant

Although owing billions and having filed for Chapter 11, US oil & gas company Whiting Petroleum Corporation has completed a financial restructuring and emerged from bankruptcy protection.

The company concluded its reorganisation after completing all required actions and satisfying the remaining conditions to its plan of reorganisation. Furthermore, Whiting says its new capital structure will reduce debt by $3bn and includes a new $750m reserve-based revolving credit facility, set to mature in April 2024.

In connection with emergence from Chapter 11, all of Whiting’s existing equity interests will be cancelled and cease to exist. Shares of the company’s new common stock commenced trading on the New York Stock Exchange from 2 September.

Whiting was one of the first large oil companies to fall victim to the onset of the coronavirus (COVID-19) pandemic, filing for Chapter 11 bankruptcy protection in April.

The restructuring will also see a new board of directors take the helm. The new board includes chairman Kevin McCarthy and chief executive Lynn Peterson. In addition, James Henderson has been appointed as chief financial officer.

“We are excited to begin our new chapter at Whiting, with a focus on capital discipline and free cash flow generation to create long-term value for our shareholders,” said Ms Peterson. “On behalf of the Company and newly appointed board of directors, I would like to thank our employees for their patience and dedication during this process.”

Founded in 1980, Whiting Petroleum is an independent oil and gas company that develops, produces, acquires and explores for crude oil, natural gas and natural gas liquids primarily in the Rocky Mountain region of the US. The company’s largest projects are in the Bakken and Three Forks plays in North Dakota and Niobrara play in northeast Colorado.

News: Whiting Petroleum Emerges From Chapter 11 Protection

CD&R agrees $4.7bn Epicor deal

BY Richard Summerfield

Four years after it acquired the company, private equity giant KKR & Co has agreed to sell Epicor Software Corp to Clayton, Dubilier & Rice, in a deal valued at $4.7bn.

KKR, which bought Epicor from Apax Partners in 2016 for $3.3bn, including debt, had been exploring a sale of the business since 2019. The deal is expected to close later this year.

“This is an exciting day for the entire Epicor family – employees, customers, and partners alike – and validates the company’s leadership position across markets we serve,” said Steve Murphy, chief executive of Epicor. “We welcome this new partnership with CD&R, which shares our vision for growing the company, and I thank KKR for a highly successful partnership these past few years. We are excited to work with CD&R to increase investment in our market-leading product portfolio and to enhance our ability to support an ever-increasing range of customer needs.”

“Epicor’s reputation for quality and performance, and its impressive portfolio of next-generation cloud products, position the company well to accelerate growth in the coming years,” said Jeff Hawn, operating partner at CD&R. “We look forward to partnering with the Epicor management team to further expand Epicor’s product portfolio as well as make strategic acquisitions to meet customers’ evolving digital transformation needs.”

“Four years ago, we embarked on an ambitious product modernization journey together with Epicor and are incredibly proud of the successes that the company has achieved to date, particularly with its recent cloud releases,” said John Park, chairman of the Epicor board and head of Americas technology private equity at KKR. “We are confident that CD&R will provide valuable support as the company continues these product- and customer-centric investments to accelerate growth in the cloud.”

News: CD&R to buy KKR’s Epicor Software for $4.7 billion

Aveva agrees to acquire OSIsoft for $5bn

BY Richard Summerfield

Aveva has agreed to acquire OSIsoft, its SoftBank-backed US rival, for $5bn. The deal is expected to close by the end of 2020.

Aveva intends to fund the acquisition through a combination of a $3.5bn rights issue (to be launched in the autumn), cash and new debt facilities.

The OSIsoft acquisition is one of the largest deals ever attempted by a listed UK technology company. The combined company is expected to have annual revenue of £1.2bn, with adjusted earnings before interest and taxes predicted to be about £330m.

“Combining Aveva and OSIsoft is yet another significant milestone in our journey to achieving the ambitious growth goals that we have set,” said Craig Hayman, chief executive of Aveva. “This will not only help us serve existing customers better but also open the flood gates to new opportunities which will accelerate the delivery of our digitisation vision.

“Data has been enabling organisations to more effectively determine the cause of problems by allowing them to visualise what is happening in different locations, departments and systems,” he continued. “This agreement will enable our customers to improve business processes as well as eliminate inefficiencies. We are extremely proud to be moving into the next chapter with an even stronger solutions portfolio as well as an ever-increasing and robust customer base which continues to make us leaders in our sector.”

“Joining forces with Aveva enhances and extends our ability to deliver on our key commitments to our customers, partners and employees,” said Dr. J. Patrick Kennedy, chief executive and founder of OSIsoft. “Together we will be better able to service the largest digital transformation projects in history, including across industry 4.0+ and IIoT. Aveva’s interest in OSIsoft is a testament to our talented team, and the extraordinary value of the PI System as the real-time streaming data infrastructure that powers the industrial world.”

He added: “Today’s announcement is the culmination of a thoughtful search for a respected organisation that would mesh with our own strong mission- and customer-driven culture.  The next chapter in PI’s fifth decade will be exciting for our employees and customers, and I look forward to my continued involvement in my new role as the largest individual shareholder in the combined company and as Chairman Emeritus to ensure we realise the full benefits of this transaction.”

Osisoft is jointly owned by SoftBank’s Vision Fund and founder and Mr Kennedy’s family. SoftBank acquired a holding in Osisoft in 2017 and owns a 44.7 percent stake in the company.

News: UK software provider Aveva buys OSIsoft for $5 billion as Softbank cashes out