Amidst the turmoil in the global economic conditions, the global IT and Business Process Outsourcing (BPO) industry witnessed over 40 Mergers and Acquisitions (M&A) transactions in the month of June ’08 indicating no slow down in consolidation. The month witnessed $1.3 billion of deals from 40 transactions as against $1.8 billion of deals from 33 deals in May ’08 (excluding the HP-EDS deal). Though the total deal volume for the month is 18 percent higher than the previous month, the total deal value is 28 percent lower. The average deal size in June ’08 is around $32.5 million against the $53 million, which supports the argument that the acquirers are targeting the smaller firms mostly catering to a niche market segment.
In June ’08, there was only one transaction exceeding $200 million, i.e. General Dynamics Information Technology acquiring VIPs, Inc., the U.S.-based provider of health-care IT services for $225 million. This is a domestic deal initiated by the acquirer to diversify, penetrate and reach customers in the U.S. health-care market space. There are five other deals in the health-care sector, where target firms offer revenue-cycle management solutions, business-process management solutions, health-care research and clinical services based out of geographies such as the U.S., the U.K. and Germany.
The U.S.-based firms have continued acquiring firms for their inorganic growth strategy. The acquirers based in the U.K. made two domestic and three U.S. acquisitions, unlike India where all the four deals were cross border. Cognizant, the U.S.-based IT-services provider, acquired Strategic Vision Consulting, the U.S.-based provider of consulting and systems implementation services, for an undisclosed deal value. This acquisition is expected to complement CTS’s media and entertainment vertical by adding 60 employees with expertise in loyalty management, online data analytics and online advertisement operations.
The U.S. was the main target destination for the acquisitions in June ’08. The firms targeted in the U.S. were mainly into IT software and Knowledge Process Outsourcing (KPO) services. The second most targeted acquisition destination was the U.K. with four transactions, followed by Sweden and Germany.
| Mega M&As of MAY '08 |
| Acquirer |
Target |
Area |
Deal size ($Mn) |
| General Dynamics Information Technology |
VIPs |
IT software |
225 |
| Progress Software |
IO15 Technologies |
IT software |
162 |
| FTI Consulting |
Attenex |
IT software |
88 |
| Alcatel-Lucent |
Motive |
IT software |
67.8 |
| AEA Technology |
Project Performance |
IT consulting |
65 |
| Ultra Electronics Holdings |
ProLogic |
IT services |
50 |
| Sonic Healthcare |
GLP Medical |
IT software |
47 |
| Blackbaud |
Kintera |
IT services |
45 |
| Dassault Systèmes (DS) |
Engineous Software |
IT software |
40 |
| Torex Hospitality Sol. |
Alphameric Hospitality |
IT software |
33.8 |
| NetSuite |
OpenAir |
IT software |
26 |
| TIBCO Software |
Insightful |
KPO* |
25 |
| Tanla Mobile Asia Pacific |
Openbit |
IT software |
15.81 |
| Deloitte Consulting |
Solbourne Computer |
IT solutions |
— |
|
Electronic Arts
|
ThreeSF |
Internet |
— |
| N. Harris Computer |
Municipal Solutions |
IT solutions |
— |
| Tiger Tech Holdings |
Coral –Tell |
Internet |
— |
| Tooltech Group |
Ideteknik |
Engg. services |
— |
| Tooltech Group |
Aspinova |
Engg. services |
— |
| TechTeam Global |
Onvaio |
BPO |
— |
| Cognizant Technology Sol. |
Strategic Vision Consulting |
IT consulting |
— |
| LexisNexis |
LAWbase |
IT software |
— |
| WNS |
Business Applications Associates |
IT solutions |
— |
| SAP |
Visiprise |
IT software |
— |
| Microsoft |
Navic Networks |
Internet |
— |
| Decision Resources |
ManhattanResearch |
KPO* |
— |
| CDC Software |
Dynamic Business Consultants (DBC) |
IT software |
— |
| Bond International Software |
Team Spirit Software and Headcount Services |
IT software |
— |
| PharmaLinkFHI |
Matrix |
KPO* |
— |
| Protus |
GOT |
IT services |
— |
| Proofpoint |
Fortiva |
IT software |
— |
| MSC. Software |
MacNeal Group (tMG) |
Engg. services |
— |
| Globant |
ACCENDRA NETWORKS |
IT software |
— |
| MBB Industries |
DTS Systeme |
IT services |
— |
| Analysys Mason |
OSS Observer |
KPO* |
— |
| Ecologic Leasing Sol. |
Captara |
IT software |
— |
| Hexagon |
Viewserve |
IT software |
— |
| CheckPoint Systems |
OATSystems |
IT software |
— |
| Oracle |
Skywire Software |
IT software |
— |
| Integreon Managed Sol. |
Datum Legal |
KPO* |
— |
|
*Knowledge Process Outsourcing; Source: Tholons
|
