Rise of ransomware threats – Verizon

BY Richard Summerfield

The risk posed by ransomware attacks has increased significantly over the last year, according to the 15th annual Verizon 2022 Data Breach Investigations Report.

The report, which aims to increase awareness among organisations of what tactics threat actors are likely to use in data incidents and breaches, analysed 23,986 security incidents from 1 November 2020 to 31 October 2021, and found that ransomware attacks had increased by 13 percent in a single year in 2021, a jump greater than the past five years combined.

According to the report, organised crime continues to be a pervasive force in the world of cyber security, with four out of every five breaches attributed to it over the last 12 months. External actors were approximately four times more likely to cause breaches in an organisation than internal actors, the report notes. Furthermore, the coronavirus (COVID-19) pandemic, as well as ongoing and increasingly fraught geopolitical tensions, have also impacted cyber security, driving increased sophistication, visibility and awareness around nation-state affiliated cyber attacks.

“Over the past few years, the pandemic has exposed a number of critical issues that businesses have been forced to navigate in real-time,” said Hans Vestberg, chief executive and chairman of Verizon. “But nowhere is the need to adapt more compelling than in the world of cybersecurity. As we continue to accelerate toward an increasingly digitized world, effective technological solutions, strong security frameworks, and an increased focus on education will all play their part in ensuring that businesses remain secure, and customers protected.”

Verizon also pinpointed the risk faced by supply chains. Supply chain issues have come to dominate the international economic landscape over the past year, and the cyber security space is no different. According to the report, 62 percent of system intrusion incidents came through a supply chain partner of the target organisation.

Twenty-five percent of total breaches were the result of social engineering attacks. The human element accounts for 82 percent of analysed breaches over the past year, including human errors and misuse of privilege. Specifically, human error is responsible for 13 percent of breaches according to the report. ‘Misconfigured cloud storage’ was reported to have been a key driver behind this increase. Stolen credentials and phishing were also dominant among the attacks involving human elements.

“Assess your exposure, mitigate your risk, and take appropriate action,” suggested Dave Hylender, lead author of the report. “As is often the case, getting the basics right is the single most important factor in determining success.”

News: Ransomware threat rises: Verizon 2022 Data Breach Investigations Report

Centennial and Colgate Energy to combine in $7bn deal

BY Fraser Tennant

In a major merger of equals transaction, US oil and gas company Centennial Resource Development, Inc. and oil exploration and production company Colgate Energy Partners III, LLC are to combine in a deal valued at $7bn.

The merger values Colgate at approximately $3.9bn and is comprised of 269.3 million shares of Centennial stock, $525m of cash and the assumption of approximately $1.4bn of Colgate’s outstanding net debt.

The cash consideration and the repayment of Colgate’s outstanding credit facility borrowings at closing are expected to be funded with cash on hand and borrowings under an upsized revolving credit facility.

“This transformative combination significantly increases scale and drives accretion across all our key financial and operating metrics,” said Sean Smith, chief executive of Centennial. “Importantly, the combined company is expected to provide shareholders with an accelerated capital return programme through a fixed dividend coupled with a share repurchase plan.”

Moreover, the combined company will be the largest pure-play exploration and production (E&P) company in the Delaware Basin with approximately 180,000 net leasehold acres, 40,000 net royalty acres and total current production of approximately 135,000 barrels of oil per day.

“The merger of Colgate and Centennial is compelling from a financial, operational and strategic standpoint, establishing a leading Permian Basin independent,” said James Walter, co-chief executive of Colgate. “We believe the pro forma company is positioned to maximise returns for our new investor base, with our combined management team bringing a track record of operational excellence and strategic value creation.”

The transaction has been unanimously approved by the boards of directors of both companies and is expected to close in the second half of 2022.

Upon closing, Sean Smith will serve as executive chair of the board of directors of the newly combined business, and James Walter and Will Hickey, co-chief executives of Colgate, will lead the company as co-chief executives and serve on the board of directors.

The combined company will operate under a new name which is expected to be announced prior to closing.

Mr Hickey concluded: “We expect the combined company will be a top-tier, low-cost operator that is able to deliver better margins and shareholder returns.”

News: Centennial, Colgate Energy combine to create $7-bln Permian basin producer

Tech company Pareteum files for Chapter 11

BY Fraser Tennant

In order to facilitate an efficient sale process and position itself for long-term success, communications technology company Pareteum Corporation and certain affiliates has filed for Chapter 11 bankruptcy protection.

Prior to the Chapter 11 filing, the board and management of New York-based Pareteum evaluated a wide range of strategic alternatives and implemented a strategic asset sale strategy.

After a thorough marketing process to obtain a ‘stalking horse bidder’ for a court-supervised sale process, and as a result of arm's length negotiations, Circles MVNE Pte. Ltd has combined with Channel Ventures Group, LLC to execute a stalking horse asset purchase agreement for substantially all of Pareteum’s assets.

Pareteum expects to continue operations as usual during the Chapter 11 process and complete the process swiftly. To help fund and protect its operations, the company has received a commitment from Circles for up to $6m in debtor-in-possession (DIP) financing.

Upon approval from the bankruptcy court, the DIP financing, along with normal operating cash flows and the consensual use of cash collateral, will fund post-petition operations and costs under normal terms.

“Pareteum has faced numerous challenges in the last few years, especially in light of an increased cost of capital and the coronavirus (COVID-19) pandemic and has been working towards resolving legacy corporate issues while making progress to lay a foundation for future growth,” said Bart Weijermars, interim chief executive of Pareteum. “Despite our business challenges, our products and services that we provide to customers remain strong and relevant in this competitive industry.”

These challenges include accusations of fraud, as well as a number of shareholder lawsuits filed in the wake of a Securities and Exchange Commission (SEC) investigation into inflated revenue reports.

“We look forward to using the Chapter 11 process to position our business for sustained future success across our business lines,” continued Mr Weijermars. “By taking today's decisive and positive step, we are confident that under new ownership, the business can be best positioned for growth and to reach necessary scale and its full potential.”

News: Communications tech company Pareteum approved to tap bankruptcy loan

Philip Morris agrees $16bn Swedish Match takeover

BY Richard Summerfield

Philip Morris International has agreed to acquire Swedish Match AB, a maker of nicotine pouches, for $16bn.

The deal, which has been recommended by Swedish Match’s board of directors, is expected to close in Q4 2022, subject to acceptance by Swedish Match shareholders, regulatory approvals and other customary conditions.

Philip Morris has made a cash offer for the Stockholm-based group at 106 crowns per share, valuing it at 161.2 billion crowns - $16bn. However, according to hedge fund Bronte Capital, which owns about 1 percent of Swedish Match, the offer price is “unacceptable”. Bronte has reiterated its opposition to the takeover. Under Swedish law, 90 percent of shareholders need to agree to the deal for it to proceed.         

The deal, should it be completed, is a significant bet on cigarette alternatives, an area in which Philip Morris is already a major player. The company has been at the forefront of the tobacco industry’s push to diversify beyond cigarettes as regulations become ever more restrictive globally. The company developed the IQOS heated-tobacco system and last year agreed to take over Vectura Group Plc, a developer of asthma drugs. It also acquired Fertin Pharma, which produces a smoking-cessation aid.

Swedish Match’s products include Zyn nicotine pouches, which are tobacco-free and rapidly growing in popularity in both the US and Scandinavia. Swedish Match makes most of its profit from Swedish-style snuff called ‘snus’, which is banned in the European Union, outside of Sweden. In the US, the Food and Drug Administration (FDA) approved the marketing of snus as less harmful than cigarettes in 2019. In the US, Swedish Match is the market leader in the nicotine pouch and chewing tobacco markets, according to its website, and number three in moist snuff. In Scandinavia, it is market leader for snus products and number two for nicotine pouches.

“This is not a cost synergy case,” said Lars Dahlgren, chief executive of Swedish Match. “This is rather a textbook example of perfect industrial logic – two companies that share the same vision and that also are very complementary in their commercial setups.”

The deal for Swedish Match raises some questions regarding Philip Morris’s future relationship with former parent company Altria, which has a range of oral nicotine products. Philip Morris was split off from Altria in 2008 because of shareholder demands for better returns. The spinning off of Philip Morris saw the companies agree to a complex non-compete arrangement.

News: Philip Morris bets on cigarette alternatives with $16 bln Swedish Match bid

Switch Inc taken private in $8.38bn deal

BY Richard Summerfield

Data centre operator Switch Inc has agreed to be taken private by DigitalBridge Group in a deal worth $8.38bn.

Under the terms of the deal, DigitalBridge will acquire all outstanding common shares of Switch for $34.25 per share in an all-cash transaction valued at approximately $11bn, including the assumption of debt. The deal will be carried out by DigitalBridge Partners II, the value-added digital infrastructure equity strategy of the investment management platform of DigitalBridge, and an affiliate of global infrastructure investor IFM Investors.

The transaction, which was unanimously approved by a special committee of the Switch board of directors, is expected to close in the second half of 2022, subject to approval by Switch stockholders and the satisfaction of other customary closing conditions.

“Today’s announcement is an important step towards our long-term vision for the growth and evolution of our company,” said Rob Roy, founder and chief executive of Switch. “Through this partnership we will be ideally positioned to continue to meet strong customer demand for Switch's environmentally sustainable Tier 5 data center infrastructure. Following our expansion into a Fifth Prime campus last year, and with our plan to construct more than 11 million additional square feet of capacity through 2030, Switch's strategic position has never been stronger. The combination of our advanced data center infrastructure, significant expansion capacity in our land bank, and a new partnership with experienced digital infrastructure investors lays a strong foundation for Switch's continued industry leading growth.”

“At DigitalBridge, we are building the world's leading global digital infrastructure investment platform, and this transaction allows us to partner with one of the industry's fastest growing and highest quality data center portfolios,” said Marc Ganzi, chief executive of DigitalBridge. “Rob and his team share our vision for the future of communications infrastructure, making us the ideal partner to scale their business both domestically and internationally to meet the exponentially rising demand from large enterprise customers looking for mission critical digital infrastructure. We are also pleased to partner with IFM Investors, one of the world's leading institutional infrastructure investors, to execute this compelling transaction.”

 “IFM is excited to partner with DigitalBridge and Switch on this transaction,” said Kyle Mangini, global head of infrastructure at IFM. We consider Switch to be an excellent digital infrastructure business with strong potential. The company is a recognized industry leader with an impressive approach to ESG. Today's announcement reflects IFM’s strategy of investing in high quality infrastructure to protect and grow the long-term retirement savings of working people.”

 News: DigitalBridge to buy data center owner Switch for $8.38 billion