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Is tech M&A positioned for an upturn?

Roy Harris | Nov. 30, 2011
If many U.S. deal-watchers have been shaking their heads at the lower overall numbers for technology-based merger transactions closing in the third quarter, there are some who believe that underlying trends carry hope for a potential revival of M&A in the sector.

'Transformational' Deals

Ticking off the giant deals announced in the quarter, PwC sounded positive about the possibility that they may increase in the near future.

Leading the "transformational deals" announced was Google's $12.5 billion acquisition of Motorola Mobility, a dedicated Android partner spun off by Motorola less than 10 months ago. "The acquisition represents Google's first entrance into the hardware market with the pending addition of Motorola's suite of mobile products," the PwC report said.

As Hewlett-Packard announced that it plans to consider a spin-off of its PC division (later cancelled), it also announced the acquisition of UK software provider Autonomy Corporation for $11.7 billion in cash.

In addition, Broadcom announced the acquisition of NetLogic for $3.9 billion, expanding the chipmaker's market share in the growing segment of streaming video and data.

Private Equity Factors

"While corporates drew attention with some of the largest technology deals announced in several years, private equity firms remained active, with several deals topping $1 billion being announced during the quarter," PwC said. They include:

  • Blackstone's acquisition of healthcare revenue and payment cycle management company Emdeon in a public-to-private transaction valued at $3 billion.
  • Providence Equity Partners' $1.6 billion acquisition of Blackboard Inc.; Providence announced the deal before completing its $1.9 billion public-to-private acquisition of SRA International announced in Q211.
  • Hellman & Friedman's acquisition of Sungard's Higher Education business for $1.8 billion in a transaction that will combine the company with existing portfolio company Datatel.

Among the largest deals that closed in the quarter:

  • Texas Instruments' acquisition of analog chipmaker National Semiconductor for $6.4 billion.
  • CenturyLink's $3.2 billion deal, in cash and assumed debt, for Savvis, improving CenturyLink's managed hosting and colocation services.
  • Golden Gate Capital and portfolio company Infor's acquisition of Lawson Software for $1.9 billion.
  • Electronic Arts' $1.3 billion deal for PopCap Games, in that industry's largest acquisition since the merger of Activision and Vivendi.

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