The year 2008 started with a surge in global M&A activities with 33 transactions in the IT/BPO sector. The M&A market has taken the speculation against weakening of dollar and crash of stock markets in its stride, focusing more on fundamentals and the growing role of services in global economies. The trend differs in terms of deal volume when compared to the last month, number of deals have increased by more than 100 percent, while the deal value has shown almost a seven fold increase. The total transaction value for January is about $10.5 billion including the two big tickets deals of Oracle acquiring BEA Systems for $8.5 billion and Sun Microsystems acquiring MySQL AB for $1 billion.
Coming to the large transactions both deals happened in the software space where Sun Microsystems acquired MySQL, a provider of open source database software. The acquisition will strengthen their market position in software supplier’s landscape and will accelerate their marketing abilities. Oracle a large software provider acquired BEA Systems, a provider of enterprise infrastructure software. This acquisition will further strengthen the position of Oracle as an enterprise software provider and BEA Systems can leverage on Oracles size to expand its market reach.
Satyam acquired Bridge Strategy Group, a management consulting firm, for $35 million in all cash deal at around twice the revenue multiple of the target. This acquisition will enable Satyam to scale up its consulting operations and offer full transformational solutions, providing highly strategic counsel to its customers. IBM continued its shopping spree with the acquisition of privately held Burlington-based AptSoft for an undisclosed amount. It develops business event processing software in service-oriented architecture (SOA) for customers mainly in financial, manufacturing and business-services sector. This will expand the offerings of IBM in business event software space and will enable AptSoft to scale up its operations.
Other acquisitions were in areas of information lifecycle-management solutions, storage solutions, data-protection software, financial-planning software, engineering services, games development and infrastructure management services space. These deals were of small value averaging around $32 million per deal.
While the U.S.A. was the overwhelmingly dominant geography in terms of deal making, India showed plenty of action, with six outbound and two inbound deals totaling about $175 in deal value. The deal landscape, however, was dominated by domestic U.S. deals in both volume and value terms. The month saw 16 domestic U.S. deals with cumulative value of almost $10 billion. Indian firms constituted six out of 33 deals, where all were cross-border deals (U.S.A. contributed three deals; Canada, Germany and Turkey contributing one deal each). Some of the acquiring firms were Satyam, Silverline Technologies, 7 Seas Technologies and Rolta India. The areas of transactions were customer lifecycle management, gaming, management consulting and ERP application. Other acquiring countries were U.K. and Finland.
The target geographies also had a similar trend in terms of deal count and value.19 firms were acquired in the U.S.A., where three were inbound deals. Two Indian firms were acquired by the U.S.A. firms in the areas of managed services and Oracle ERP application. Other targeted geographies were Canada, France, Turkey and Germany. The target service sectors were data-protection services, contact centers, online gaming firm, high-tech services and procurement outsourcing services.
| Mega M&As of JAN. '08 |
| Acquirer |
Target |
Area |
Deal size ($Mn) |
| Oracle Corporation |
BEA Systems |
Enterprise infrastructure software |
8,500 |
| Sun Microsystems |
MySQL AB |
Open source databases |
1,000 |
| Nokia Siemens Networks |
Apertio |
Provider of open real-time subscriber data platforms and applications built specifically for mobile, fixed, and converged telecommunications operators |
205 |
| Allscripts Healthcare Solutions |
Extended Care Info Network (ECIN) |
Software solutions and consulting resources |
90 |
| EMC Corporation |
Document Sciences Corporation |
Provider of document output management (DOM) software |
85.00 |
| Affiliated Computer Services |
Syan Holdings |
It offers managed services and technology solutions involving IBM mid-range and Intel servers |
60 |
| Metavante Tech. |
Nomad Payments |
Payment processing business, card payments software provider |
58 |
| Rolta India |
Broech Corp |
It specializes in ERP applications as well as Oracle technology based database and business Intelligence solutions |
45 |
| Autodesk |
Robobat |
Provides software for structural engineering analysis, design, and steel and concrete detailing |
42.5 |
| Glu Mobile |
Superscape Group |
Developer and publisher of mobile games using 3D technology |
35.7 |
| Satyam Computer Services |
Bridge Strategy Group |
Management Consulting firm |
35 |
| Double-Take Software |
TimeSpring |
A data protection software company |
8.30 |
| Dhanus Technologies |
Borusan Telekom |
Alternate network provider |
NA |
| System C Healthcare |
IQ Systems |
Supplier of patient management and Services clinical software solutions for private treatment centers and hospitals |
4.32 |
| Cambridge Tech. Enterprises |
Q-Soft Systems & Solutions |
It is a managed services company which provides support services to its clients using Oracle technology products and Unix / Linux systems |
NA |
| 7Seas Technologies |
Neodelight |
Online gaming firm |
NA |
| Infogain Corp |
Spider Systems |
Oracle ERP |
NA |
| Xchanging |
Mercuris SA |
Provides procurement outsourcing and advisory services to the Banking and Insurance sectors |
NA |
| IBM |
AptSoft Corporation |
Developer of business event processing software in service oriented architecture |
NA |
| Bentley Systems |
Hevacomp |
Software for energy analysis, heating and cooling load calculations, pipe and duct sizing, and electrical system design including lighting systems design applications and electrical CAD and product catalogues |
NA |
| EDM Group |
Business Designs |
Business process technology consultancy |
NA |
| Source: Tholons; acquisition deals signed between Jan. 1st to Jan. 31st 2008 |
