Qihoo 360 to go private in $9.3bn deal

BY Richard Summerfield

Chinese internet company Qihoo 360 Technology Co. Ltd has announced that it has agreed a $9.3bn all cash deal to be taken private by a group of investors led by the firm’s chairman Hongyi Zhou. The deal for the company, which is expected to close in H1 2016, includes around $1.6bn worth of debt. The investor’s offer for the company has already won the approval of Qihoo’s board of directors; however the transaction is still subject to the customary closing conditions.

The company will become the latest in a number of US listed Chinese tech firms to have been taken private, which has become a feature of 2015. Indeed, as of mid November 2015 around 33 mainland Chinese companies listed on US exchanges had announced more than $40bn worth of privatisation and de-listing deals. Chinese firms including Shanda Games Ltd and medical R&D services provider WuXi PharmaTech have been among those de-listing in the US. For Chinese executives and investors it is considerably easier to target US listed companies as they tend to be cheaper than Chinese traded businesses.

The deal was first mooted in June 2015 by Mr Zhou and will see an investor group including Citic Guoan Group, Golden Brick Silk Road Capital, Sequoia Capital China, Taikang Life Insurance, the Ping An Insurance Group, Sunshine Insurance, New China Capital, Huatai Ruilian, and Huasheng Capital take control of the company.

Under the terms of the offer each class A and class B share in China will be exchanged for $1.33 in cash, and each American depositary share will be exchanged for $77. The price offered for the company represents a 16.6 percent premium on the closing price of Qihoo’s American depositary shares and a 32.7 percent premium to the average closing price of the company’s depository shares in the 30 days before the proposal.

The consortium has announced that it intends to finance the deal using contributions from the investors, as well as a committed term loan of up to $3bn, as well as a bridge loan of $400m. For the investor group to have raised the cash that it has, the Chinese economy is a particularly impressive feat. Stock market volatility has been considerable in 2015.

However Qihoo’s brand in China is strong, and for the investor group the company’s is an extremely attractive proposition. Over the course of the last eight quarters the company has met or exceeded each of its revenue and earnings estimates. Equally Qihoo’s stock has climbed 27.5 percent throughout 2015.

NEWS: Qihoo 360 to be taken private in $9.3bn deal

SOURCE: http://in.reuters.com/article/qihoo-360-ma-idINL3N1473SM20151218

NYC banking regulator reveals cyber security guidelines

BY Richard Summerfield

Unless you have been living under a rock for the last few years, it will not have escaped your attention that instances of cyber crime have become increasingly prevalent in the business community. It seems not a week goes by without a cyber breach grabbing the headlines – along with a swathe of sensitive data.

Various regulatory bodies have taken steps to guide firms through the minefield of cyber security. This week, New York’s leading banking regulator – the New York Financial Department of Services (NYDFS) – became the latest to follow suit. The NYDFS felt motivated to act as, in its own words, it "considers cyber security to be among the most critical issues facing the financial world today".

In a letter to other state and federal regulators, including the US Office of the Comptroller of the Currency and Federal Reserve Board of Governors, the NYDFS revealed details about its potential new cyber security regulations for the banks and insurance companies which fall under its jurisdiction. These regulations could include a requirement for institutions to notify companies of data breaches. "It is our hope that this letter will help spark additional dialogue, collaboration and, ultimately, regulatory convergence among our agencies on new, strong cyber security standards for financial institutions," wrote Anthony Albanese, NYDFS’ acting superintendent.

Organisations would also be obliged to ensure that contracts with third parties included a set of rules designed to keep sensitive data safe, including the use of multi-factor authentication, both internally and on customer log-on pages, and data encryption. Two step authentication is becoming increasingly popular online. Social media giants like Facebook and Twitter, services such as Gmail, and even online video games now offer multistep authentication. As such, it seems only logical that financial institutions embrace the technology.

Firms would also be required to appoint a chief information security officer if they do not already have one. The CISO would be responsible for overseeing policy, while cyber security staff would be required to undergo mandatory training.

Under potential new regulations, third party vendors – such as law firms, data processors and auditors – would also be required to achieve compliance moving forward.

News: NY banking regulator unveils details on planned cyber security rule

FTSE 350 board members should be 33 percent female, suggests Davies report

BY Fraser Tennant

A target that all FTSE 350 Index board members should be 33 percent female by 2020 is one of the key recommendations made in a new report by Lord Davies published this week.

As well as the call for more female representation on the boards of the UK’s largest companies, the Davies report, which is the culmination of five years work on gender equality, also includes a review of the female executive pipeline.

Additionally, the report reveals that the UK’s FTSE 100 has reached a significant milestone, with 25 percent of board positions now filled by women – a target set by Lord Davies in 2011.

“Looking back to 2011, I could not have predicted British business would have embraced the Women on Boards agenda as they have, or indeed that the 25 percent target would have been achieved six months ahead of schedule," said Lord Davies. “This is truly amazing progress. I cannot thank the many, many businessmen and businesswomen enough for their significant and collective contribution. It has been a privilege to lead this campaign.”

Overall, the Davies report makes recommendations in an additional four key areas. First, the national call for action and voluntary, business-led approach should continue for a further five-year period. Second, all FTSE listed companies are to assess the gender balance on their boards and take prompt action to address any shortfall. Third, FTSE 350 companies should extend the best practice seen at board level to improve gender balance and improve the representation of women on executive committees. Finally, an independent steering body (made up of business and subject matter experts with a newly appointed chair and members) should be convened to support business in their efforts and to act as a catalyst for sustained progress.

“Lord Davies has been an inspirational champion; he has thrown the gauntlet down to business and pushed them to do more than ever before," commented the minister for women and equalities, Nicky Morgan. “The government fully supports his recommendations because we are clear, that in order to deliver our commitment to extending opportunity we must do more to secure equality for women in the workplace and beyond.”

Following a review of the recommendations in consultation with key stakeholders, the steering body will detail its response in early 2016.

Report: Improving the Gender Balance on British Boards

Lessons not learned as cyber crime still rife

BY Richard Summerfield

Companies operating in the current business climate face myriad difficulties and obstacles. One of the most potent and potentially damaging of these challenges is the scourge of cyber crime and cyber terrorism.

One need only look at the attacks on Ashley Madison, Sony and Target to see the extent of the financial, personal and reputational damage that cyber crime can inflict on companies and individuals.

Given the size and scale of some the most recent cyber attacks, it is difficult to imagine companies neglecting their cyber security obligations. However, according to a new report from PwC, nearly 10 percent of UK companies do not know how many cyber attacks they have suffered in recent years.

Furthermore, 14 percent of companies do not know how the attacks occurred. This is particularly disturbing as detected breaches in workplace security systems increased by 38 percent in the past year, according to PwC.

Cyber attacks via mobile phones in particular are becoming much more common. Thirty-six percent of respondents reported an increase in mobile attacks, up considerably from the 24 percent recoded last year. The average cost of those attacks is around £1.7m, the report notes.

PwC’s annual survey took in the opinions of more than 10,000 executives in more than 127 different countries. Much of the damage caused by cyber crime, according to the report, results from the actions of current staff members. Former employees were also a major source of cyber criminality.

But attitudes toward cyber security are changing. According to Dave Burg, global and US cyber security leader at PwC, the survey demonstrated a burgeoning awareness among corporates, many of whom are starting to act and think seriously about cyber security.

“We are seeing an increase in awareness of the risk and opportunities, and more boards are becoming more actively engaged in cyber security preparedness," said Mr Burg.

Despite the increase in boardroom awareness, more can and should be done at board level. The survey noted that 55 percent of boards do not participate in the overall security strategy. Furthermore, 42 percent of companies do not have an overall information strategy.

Report: The Global State of Information Security Survey 2016

Gender equality key to GDP growth?

BY Richard Summerfield               

Women today continue to face myriad social and economic barriers to attaining true gender parity. However, according to a new report from the McKinsey Global Institute, a lack of gender equality not only hinders women, it is also holding back the global economy to the tune of $28 trillion.

The world’s gross domestic product (GDP) could be uplifted by the equivalent of the combined economies of the US and China - $28 trillion - by 2025, according to the report, entitled 'The power of parity: How advancing women’s equality can add $12 trillion to global growth'. This economic uptick is contingent on women performing identical labour roles to their male equivalents. “We would call it an opportunity cost - this is the value at stake,” says Anu Madgavkar, a senior fellow at the McKinsey Global Institute and one of the authors of the report.

According to the research, women currently generate just 37 percent of global GDP. However, if they gained gender parity, they could boost the global economy by the equivalent of the US and Chinese economies combined. Even incremental progress on gender equality could be hugely beneficial to the global economy. If every country matched the participation rates of the highest-performing countries in their region, global activity would increase by $12 trillion – a figure equal to the combined GDPs of Japan, Germany and the UK.

Three of the major roadblocks which hold women back, according to the report, are lower workforce participation, fewer hours worked, and the fact that women are disproportionately represented in low-productivity sectors like agriculture. The notion that women are expected to take on the role of unpaid care in their personal lives also has a detrimental effect on their ability to contribute more significantly to global GDP. “When we looked at all the elements of gender inequality in work, unpaid care work was one of the top factors,” notes Ms Madgavkar.

Clearly, the role that women can play in advancing the global economy is considerable; however, it is important to note that gender equality in the workplace must go hand in hand with equality in wider society: "Realising the economic prize of gender parity requires the world to address fundamental drivers of the gap in work equality, such as education, health, connectivity, security, and the role of women in unpaid work".

Report: The power of parity: How advancing women’s equality can add $12 trillion to global growth