Takeovers hit 'dot-com boom' high

IT companies spent over €100bn on mergers and acquisitions in 2006, leaving many with a choice of 'buy or be bought'

Enthusiasm for takeovers is rampant in the technology sector again, according to figures released by PriceWaterhouseCoopers on Monday.

PWC reported that technology merger and acquisition levels reached a total worldwide value of just over €100bn (£65bn) in 2006. This is the first time this milestone had been passed since 2000, at the peak of the dot-com boom.

Activity trailed off in the fourth quarter of 2006, but PWC believes that technology companies face a choice of 'buy or be bought' this year.

"PricewaterhouseCoopers expects strong M&A performance to continue at least through the first half of 2007, driven by the weight of available private equity funds, and a continued strong corporate appetite for both infill and transformational deals," said the financial giant in its report, Technology Insights 2007. The full report can be seen on PWC's website.

The merger and acquisition figures for 2006 were bolstered by a total of 18 'mega deals' — mergers or acquisitions worth more than €1bn each. Leading the way was the €11.1bn merger of networking giants Alcatel and Lucent.

Most of the deals, though, were between €10m and €500m, which PWC said illustrated that most technology takeover activity is largely a mid-market affair.

Technology Insights 2007 also found that established IT firms are spending more money than newer internet firms on acquisitions.

"While the headlines are dominated by the forays of the 'New World' technology stocks, it is the 'Old World' players that appear to be the real driving force. Oracle and IBM invested a combined €8.7bn on eight disclosed acquisitions in 2006. In comparison, the spending of the 'new world', including Google and eBay, was relatively muted at some €1.4bn," wrote PWC.

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