News (#12 December 2016)

Biznews

M&A

Symantec consolidates with LifeLock in deal worth USD 2.3 billion

Symantec, aproducer of anti-virus programs in the United States and LifeLock, a company that develops information security solutions, have come to a final mutual decision on the purchase of LifeLock by Symantec. The purchase will cost the company USD 2.3 billion. Through this deal the largest world platform for digital security for consumers and families will appear. It has already been approved by the Board of Directors, but not yet approved by LifeLock regulators and shareholders. The companies plan to complete the deal by the end of the first quater 2017. In the last year alone one third of US citizens and more than 650 million people globally have become victims of cybercrimes. The problem of data security worries more and more people every day. The information security market, which is estimated at USD 10 billion, is showing fast growth rates.

Nokia closed on purchase of Alcatel-Lucent

Nokia closed on the purchase of Alcatel-Lucent for EUR 15.6 billion. Nokia bought out 100% of shares of Franco-American telecommunication equipment manufacturer. Conclusion of a transaction with Alcatel marked completion of a three-year transformation that began with purchase by Siemens of a stake in Nokia Siemens in 2013 and continued with sale of part of the business, including the cartographic division. Finns announced purchase of Alcatel in April 2015. Nokia itself was purchased for USD 7 billion by Microsoft in 2013. In May 2016 American corporation sold brand Nokia and push-button phone business to companies FIH Mobile Limited (subsidiary of Taiwanese Foxconn) and Finnish HMD Global. Transaction amount totaled USD 350 million. Nokia, in cooperation with HMD Global, intends to resume production of phones and tablets under its own brand.

Broadcom takes over Brocade for USD 5.9 billion

Semiconductor manufacturer Broadcom has agreed to purchase the company Brocade, which develops hardware and software for storage networks management. The deal is valued at USD 5.5 billion. The buyer shall also repay Brocade debts, which amount to USD 0.4 billion. The deal will be completed in the second quarter of 2017. After this, the companies plan to jointly search for a buyer for Brocade business in the creation of IP-based networks. Broadcom was established in 1991 and is a major global semiconductor manufacturer.

Oracle buys cloud services developer

The second largest software developer in the world, Oracle, offered USD 9.3 billion for the cloud services developer NetSuite. Oracle made an offer to purchase NetSuite in July of this year. The corporation was willing to pay USD 109 per share, to feel more confident in dealing with such competitors as Workday and Salesforce, which already have popular cloud products. T. Rowe Price investment fund, the second largest shareholder in NetSuite, said that the proposed amount was too low and sent the buyer a formal letter with a proposal to raise price to USD 133 per share. The deal was also complicated by the fact that the founder and the head of the board of directors of Oracle, Larry Elisson, is the largest shareholder of NetSuite, who owns 40% of the company. To avoid accusations of conflict of interest, Elisson agreed not to take these shares into account when voting for the deal. Due to this takeover, revenues of Oracle from cloud software will grow by about USD 1 billion, which should make it the first technology company to earn USD 10 bil- lion in revenue from the cloud business.

Facebook buys back own shares for USD 6 billion

The board of directors of Facebook has approved the decision to repurchase its own Class A shares for a total amount of up to USD 6 billion. The program will come into force in the first quarter of 2017 and has no fixed expiry date. Its duration, as well as actual number of shares that may be acquired by the issuer, will depend on a number of factors, including price, market conditions and the availability of alternative investment opportunities. Total company revenues rose by 56% and totaled USD 7.011 billion versus USD 4.501 billion in 2015. Revenues from advertising increased by 59% and reached USD 6.816 billion. At the same time, 84% of all advertising revenues consisted of revenues earned from mobile advertising.

Tax

Ukraine to join BEPS Plan in January

Ukraine will become an official member of the BEPS (Base Erosion and Profit Shifting) from 1 January 2017, the association that implements guidelines for the fight against tax evasion developed by the Organization for Economic Cooperation and Development (OECD). The BEPS Plan was developed by the OECD and includes recommendations on how to avoid tax evasion. Within the framework of the Plan 15 steps were developed, which cover different areas of countering aggressive tax planning. Ukraine undertakes to implement the minimum standards set out in the Plan, which includes 4 steps: fighting tax abuse, related to the use of special tax regimes; preventing abuse during application of tax conventions; disclosure of information about use of aggressive tax planning schemes; increasing efficiency of dispute resolution mechanisms regarding application of double taxation treaties signed between countries.

IP Protection

Cyberpolice have halted the operation of Fs.to

resource controlled by Ferazko Ltd, a Seychelles offshore, while Ex.ua (owned by Delivka Ltd) has announced that it will halt its operations on 30 November. These websites had a huge audience. Users visited the Fs.to site 23 million times, and Ex.ua 36.6 million times in October. The main reason for the closure of Fs.to was applications submitted by American (Motion Picture Association of America) and Ukrainian copyright holders. The deputy head of the Presidential Administration of Ukraine Dmitry Shimkiv stated that the decision by the Ex.ua sharing service to stop its operations is part of the anti-piracy campaign in the Ukrainian segment of the Internet. Every year the US Trade Representative (USTR) and the International Intellectual Property Alliance (IIPA) enters our country on the list of the most deliberate pirates. In 2016 Ukraine topped that list. One of the USs government complaints was the high level of online piracy and government inactivity in relation to sites like ex.ua and fs.ua.

Finance

Improved mechanism for funding national film production

The Government of Ukraine has, by its Resolution No. 809 of 16 November 2016, improved mechanism of state support for the making and distribution of national films. Adoption of this Resolution gives the possibility to make pre-payment for national films production taking into account the need to use these funds in the course of 6 months without particular reference to the end of a budget year. Thus, producers of national films will be able to get stable funding for following production needs.

International Aid

Germany provides Ukraine with EUR 72 million aid

Germany will provide Ukraine with EUR 72 million aid for sustainable economic development, regional development, energy efficiency and assistance to internally displaced persons. On the German side the talks were attended by representatives of the Federal Ministry for Economic Cooperation and Development, the German government-owned bank KfW Bankengruppe and the German Society for International Cooperation GIZ. Allocation of funds will take place under supervision of responsible ministries within the framework defined by the protocol of priority projects. German aid to Ukraine reaches EUR 500 million since 2002. This makes it one of the largest donors to Ukraine within the framework of technical and financial cooperation.

EU allocates additional EUR 54 million for reforms in Ukraine

The European Union has released the first tranche worth EUR 23 million of the Budget Support to Ukraines Regional Policy Program. The programs total value is EUR 55 million. The programme provides additional finances to reforms on regional policy and decentralization in line with Ukraines regional development strategy. The overall goal is to enhance citizens wellbeing throughout the country. To further enhance the implementation of reforms, the EU has also released the last tranche of EUR 25.9 million under its support programme for implementing Ukraines transport strategy. The third recent disbursement was made in the trade sector: as a part of its commitment to help Ukraine to build a stronger economy, the EU transferred EUR 5.14 million to the countrys state budget to facilitate trade in goods between the two partners. This is already the fourth disbursement within the EUs Promoting Mutual Trade through the Removal of Technical Barriers to Trade between Ukraine and the European Union Programme, implemented between 2010 and 2016.

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