Fewer tech M&A deals, more cloud in Q2: PwC

Summary: PwC’s latest US technology M&A insights report finds deal volume down 35% from a year ago, but value of the deals up by one-fifth. Lots of cloud positioning, and, yes, some big social media plays.

In the second quarter of 2012 ending in July, there was a reduction in the volume of merger and acqusition activity taking place within the technology sector, but more emphasis on a shift to cloud-based delivery seen in prominent deals. 

World Trade Center NYC Aug 2012 Photo by Joe McKendrick

That's the word from PwC’s latest US technology M&A insights report, which found that technology sector deals decreased 15% in volume to 55 deals, compared to 65 deals closed in the previous quarter. Despite the decline in volume, cumulative transaction deal value increased eight percent to $31.8 billion. 

Compared to a year ago, deal activity in the second quarter dropped 35% --  there were 85 transactions in 2Q of 2011. However, the total value of the deals increased by 19%, up from $26.8 billion in 2Q 2011.

There were more consortium deals by private equity buyers, minority stake transactions and patent acquisitions, PwC says.

E-commerce and cloud services and solutions, along with stand-alone and Internet-based software products, represented 58% of deal volume during the quarter.

The biggest deals in 2Q:

  • Oracle’s acquisition of cloud-based talent management company Taleo for $1.9 billion, further extending Oracle’s suite of cloud-based products.
  • Google’s acquisition of MMI for $12.9 billion, Google’s largest acquisition to date and the largest US technology transaction closed since 2008.
  • SAP AG’s US subsidiary acquisition of cloud-based business commerce network, Ariba, for approximately $4.3 billion.
  • Microsoft’s announced acquisition of Yammer, a social media platform developer for businesses, for approximately $1.2 billion. Microsoft intends to incorporate Yammer into its current suite of Office products.
  • Facebook’s announced acquisition of Instagram, a mobile-based photo-sharing software provider, for $1 billion. Instagram provides an additional photo solution to Facebook’s rapidly growing mobile user base.
  • LAM Research’s acquisition of Novellus Systems, a supplier of wafer fabrication equipment, for approximately $3.4 billion.
  • Agilent Technologies’ acquisition of cancer diagnostics business Dako Denmark for $2.2 billion.

(Photo by Joe McKendrick. World Trade Center, NY.)

Topics: Tech Industry, Cloud

About

Joe McKendrick is an author and independent analyst who tracks the impact of information technology on management and markets. Joe is co-author, along with 16 leading industry leaders and thinkers, of the SOA Manifesto, which outlines the values and guiding principles of service orientation. He speaks frequently on cloud, SOA, data, and... Full Bio

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