New research has found that the value of mergers and acquisitions among companies in the technology sector increased by over 70% in the first half of 2006, against the level of market activity in the year-ago period. In addition, for two years on the trot, the telecoms sector has seen the biggest deals.
The value of IT industry mergers and acquisitions has soared in the first half of 2006.
Datamonitor’s Technology Finance MarketWatch takes an in-depth view of the activity in the technology sector, tracking all mergers and acquisitions (M&A) of the IT sector and listing the fluxes in the financial performance of 500 of the biggest vendors of software, hardware and network equipment, consulting and professional services firms, and telecoms and carrier services companies.
Scrutiny of deals tracked showed the number of transactions recorded in the first six months of the year was up only slightly on the activity over the same period in 2005, going from 507 deals then to 539 this time.
However, of those deals tracked this year, the 539 transactions recorded in 2006 totaled $199.57 billion, against a value of $113.65 billion recorded for the 507 deals last year.
The breakdown of deals for the different technology sectors tracked on a daily basis reveals that the telecoms sector scored big again this year, with 26 deals done to the value of almost $116 billion. That’s broadly comparable with the situation last year, when the 25 deals recorded in that sector made for the then highest total value of $43 billion.
Two of the biggest deals in the market in the first six months involved telecoms companies. There was the $89.4 billion takeover by AT&T of BellSouth, the $15.5 billion Softbank acquisition of Vodafone KK. Then, there’s private equity group Sonae SGPS SA’s hostile $12.8 billion bid for Portugal Telecom. In its half yearly results, Sonae says that it is confident its offer for the acquisition will succeed.
Acquisitions in the broad market segment of systems software accounted for 151 deals, worth some $11.9 billion. And the fast-consolidating IT service sector also saw a heavy number of transactions – some 116 acquisitions were recorded there, worth a total of $14.1 billion.