Is this cyberattack a black swan event? Or should this have been anticipated?

From a post-merger integration standpoint, what are the lessons from this case?

20 Cyberattack on TNT Express and Impact on Parent Company FedEx? In May 2016, FedEx acquired TNT Express, expecting to derive value from the combined assets. In June 2017, TNT Express suffered a devastating cyberattack, and FedEx's stock fell 4.5%. William E. Hefley, University of Texas at Dallas On June 27, 2017, a malware infection-NotPetya-began spreading from Ukraine. It affected firms in many coun- tries, although the greatest impact was in Ukraine. As a result of this malware infection, FedEx acknowledged that this software infection might have a material impact on its operations and financial results. On June 28, FedEx halted trading of its stock while it assessed the impact of an outbreak of the malware on the network of TNT Express, the recently acquired FedEx subsidiary based in Amsterdam, the Netherlands. The disruption caused by the malware significantly affected communications and operations at TNT Express due to the infiltration of an information system virus. Investors commented that such trading halts were not common among large companies such as FedEx, "unless the news is pretty material to investors/the company."? While trading of FedEx stock resumed soon after the temporary halt, the decision to halt trading was significant, with some com- menters noting that FedEx might be concerned that the infection could spread and cause more significant disrup- tions to its global package-delivery operation.' On July 17, FedEx warned that the impact of NotPetya on its TNT subsidiary would "materially impact" its profits. FedEx indicated in its form 10-K annual report filing with the US Securities and Exchange Commission (SEC), "Our 2018 results will be negatively affected by our TNT Express integration and restructuring activities, as well as the impact of the TNT Express cyberattack. It continued with other telling statements, indicating that it had: experienced [a] loss of revenue due to decreased volumes at TNT and incremental costs associated with the imple- mentation of contingency plans and the remediation of affected systems. ... We cannot yet estimate how long it will take to restore the systems that were impacted, and it is reasonably possible that TNT will be unable to fully restore all of the affected systems and recover all of the critical business data that was encrypted by the virus. How would these material financial impacts affect FedEx? How could the operational impacts, including the loss of data, impair FedEx's ability to operate? FedEx has long believed that the information about a package is as important as the package itself." What more could FedEx have done to prevent this occurrence? Did it do the right things in preparing to ensure that this information was available, uncorrupted, and usable in directing its worldwide operations? What will be the ongoing impact on FedEx's share price as a result of this cybersecurity incident? Fedex's 2016 Acquisition of TNT Express Founded in 1973, FedEx had grown to more than 400,000 employees providing services in more than 220 countries and 1. Professor Bill Hefley and Research Associate Deepima Pathania prepared this case. William E. Hefley. This case was prepared for the purpose of class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Reprinted with permission. 2. M. Nichols, 2017, FedEx "significantly affected" by virus, trading briefly halted, Memphis Business Journal June 28: www.bizjournals.com/memphis ews/2017/06/28/fedex-trading-halted.html, accessed August 31, 2017. 3.D. Paul, 2017, More companies warn on financial impact from Petya infection, Security Ledger July 7: securityledger.com/2017/07/dear-sec-more -companies-warn-on-financial-impact-from-petya-infection/, accessed August 31, 2017. 4. FedEx Corporation, 2017, FORM 10-K (Annual report) filed 07/17/17 for the period ending 05/31/17, available from EDGAR, accessed July 31, 2017. 5.W. Risher 2017, FedEx targeted in cyber attack as hackers hit companies across globe, Commercial Appeal May 12: http://www.commercialappeal.com/story /money/industries/logistics/2017/05/12/fedex-targeted-cyber-attack-possibly-part-global-ransomware-hack/3201560017, accessed August 31, 2017. 409