The report that follows HERE is our latest update on m&a values and trends in the dozen+ sectors of the information technology industry that we follow and sometimes lead. It’s too soon to tell how the consternation in the political world will affect this industry. High levels of liquidity and low interest rates help a lot, but uncertainty doesn’t. And while our sector remains fairly hot – see the report – overall m&a volume and value was clearly down in the first half of 2016 compared to the second half of 2015. Last year, m&a was torrid – with 39 mega deals valued at $10bn or more in the second half alone. So it’s not shocking to see overall m&a values and volume fall off a bit. Political consternation is a concern, however. Uncertainty is not our friend.
Following the non-binding but politically powerful British vote to leave the EU, the British Pound hit a 31 year low; the Prime Minister resigned; and something close to political chaos ensued. One survey said that 56 percent of British businesses surveyed are now negative about the near term future. And that’s not good for deal making. Leaders in France, Italy, the Netherlands and three other countries began calling for their own referendums to leave the EU – and maybe dumping the Euro – which fell to its own recent low versus the Dollar. More uncertainty. Meanwhile, in the US, the leading Republican running for President slammed Ford, Kraft Foods, Apple and others for producing goods outside the US; praised Vladimir Putin and Saddam Hussein; and came out against the types of international trade agreements that once were a bedrock of his party. He favors closing borders to Muslims, Mexicans and others he deems risky; wants to allow torture of those who oppose the US (and killing their families!); is against reforming Medicare and Social security; and called into question the integrity of a Federal judge overseeing a lawsuit against a company he controls. The leader of his own party called him a racist. All that might be have helped the leading Democrat running for President were she not perceived as protecting the ruling elites and had she not had her judgment (and perhaps her honesty) slammed publicly by the Director of the FBI. The pundits and pollsters say the race has four months to run and is too close to call. Uncertainty does not help deal making.
As you will see from the report that follows, in spite of the broader market, m&a in the information technology sector has continued unabated. Details on sector performance as well as on some of the more notable recent transactions are in the report that follows. A few of those transactions include:
- Microsoft (Nasdaq:MSFT) agreed to acquire LinkedIn (NYSE:LNKD) for $26.2bn;
- Symantec (NasdaqGS:SYMC) agreed to acquire Blue Coat from Bain Capital for $4.65bn;
- Change Healthcare (Nashville, TN) agreed to merge with the majority of McKesson’s Technology Solutions and create a new entity with pro-forma combined annual revenue of $3.4bn;
- Salesforce (NYSE:CRM) agreed to acquire Demandware (NYSE:DWRE) for $2.9bn;
- Dover Corp. (NYSE:DOV) agreed to acquire Wayne Fueling Systems for $780mm;
- MedData, a portfolio company of MEDNAX (NYSE:MD) acquired Cardon Outreach for $400mm;
- Cisco Systems (NasdaqGS:CSCO) agreed to acquire CloudLock for $293mm;
- Blackboard Inc. (Washington, D.C.) agreed to acquire Higher One Holdings for $260mm.
P.S. The publication date on my book, The Marine Corps Way to Win on Wall Street is fast approaching. More info on it is HERE and my latest blog post is HERE.
Sincerely,
Ken
