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

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.)

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