Mike Rosendahl

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Industry Trends

Nvidia-Arm Acquisition Deal Faces Lawsuit on Antitrust Grounds

Nvidia Corp. planned to acquire Arm Ltd., a semiconductor intellectual property company that designs and licenses multiple types of technologies. The Federal Trade Commission has issued a lawsuit to block the merger on the grounds Nvidia would control and could cut off access to critical semiconductors that are relied on by not just Nvidia but tech companies across the United States. Arm Ltd. architecture technology is a core supplier of instructions used in most mobile processors powering smartphones, including those powered by Qualcomm Chips. The acquisition of Arm would move the semiconductor technology business to a less neutral playing field , threatening the ability of fair competition.1

Truce Expected on 5G Rollout

AT&T and Verizon have agreed to delay their planned 5G rollouts until January 19, allowing the FAA more time to address its safety concerns. The FAA and government officials view travel disruptions over 5G as unavoidable, but the goal is to carve out buffer zones around airports to alleviate FAA safety concerns. The FAA officials remain concerned the 5G signal will interfere with key cockpit safety systems while the telecommunication officials insist there is no interference.2

Kronos Ransomware Attack Disrupts Employers

Ultimate Kronos Group, a widely used HR management firm, suffered a devastating ransomware attack on December 11, 2021, that left many employers unable to access payroll and other vital solutions they need to manage their workforces. Kronos has estimated that the issue will require several weeks to resolve but has not commented on potential restoration times. Employers cannot access much of their scheduling services, and other services impacted include their Healthcare Extensions, UKG TeleStaff, and Banking Scheduling Solutions. As of January 5, 2022, Kronos has not fully recovered from the hack.3

Amazon Web Service Experiences Several Outages

Recent outages in Amazon Web Services, a public cloud services provider, have disrupted several prominent websites, including Facebook, Hulu, and Slack. Connection issues have been reported from around the country, and major outages were reported on December 7 and 15 . The software supports the online infrastructure of many large companies, so many websites remained entirely inaccessible while the outage occurred. Amazon concluded that some of its network devices were the cause of the outages.4

More Pipeline Cybersecurity Needed to Prevent Repeat Attacks

Pipeline cybersecurity's issues are still unresolved, even after a massive cyber attack shut down a large gasoline supply pipeline in the U.S. in May 2021. The nation must address new vulnerabilities and growing cyber threats to secure its gasoline supply. The country can mitigate some losses by gaining greater visibility across its operational technology network and establishing next-generation information-sharing platforms so operators can respond to attacks. Following the attack, the pressure for new cybersecurity regulation could help improve cybersecurity protections. Still, some experts worry that policymakers might rush to impose regulations resulting in ineffective, oppressive rules.5

Biden’s Pick for FCC Approved by Senate

The Senate Commerce Committee permitted President Joe Biden’s picks for the FCC to advance to a full Senate vote. Acting FCC Chairwoman Jessica Rosenworcel was pushed forward to a full Senate vote by a vote of [x-y], a significant majority. She will be the first female chairwoman of the FCC in its 86 year history of the FCC.6

Cybersecurity Stocks Continue to Climb Amid Massive Selloffs

Cybersecurity stocks have recently been abandoned in massive selloffs, but the valuations of many cybersecurity companies imply that the sector is likely to grow substantially over the next few years and could benefit from lasting tailwinds. Analysts at UBS estimate that the global cybersecurity market is likely to grow to $235 billion by 2025, up from $145 billion in 2020, due to companies increasing their digitization efforts and investors emphasizing cybersecurity. Despite multiple large cybersecurity stocks, such as SentinelOne, CrowdStrike, and Cloudflare valuing at more than 25% below their 52-week high, their enterprise value-to-forecast sales ratios of 59.2, 31.6, and 78.4 times signify that investors see high growth potential for the industry.7

Intel plans an IPO for their Robot-Car unit, Mobileye Inc.

Intel Corp. has announced that they plan to list publicly available shares of its self-driving car unit, Mobileye Inc., in an IPO mid-2022. The Wall Street Journal estimates that Mobileye can have a valuation of more than $50 billion. Mobileye, an Israeli company specializing in chip-based camera systems that power automated driving features in cars, initially went public in 2014 but was acquired by Intel in 2017 for $15 billion. The company’s revenues have roughly tripled since Intel acquired it. High investor interest in autonomous vehicles is likely to help Intel obtain the total value of their asset when Intel relists Mobileye's shares.8

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • The Rocket Science Group, LLC
  • Intuit Inc.
  • $11,755.65
  • Medallia, Inc.
  • Thoma Bravo, L.P.
  • $7,070.80
  • TracFone Wireless, Inc.
  • Verizon Communications Inc.
  • $6,900.00
  • ProQuest LLC
  • Clarivate Plc
  • $5,323.77
  • Cornerstone OnDemand, Inc.
  • Clearlake Capital Group, L.P.
  • $5,012.96
  • Cloudera, Inc.
  • Clayton, Dubilier & Rice, LLC; KKR & Co. Inc.
  • $5,002.13
  • Boomi, Inc.
  • TPG Capital, L.P.; Francisco Partners Management, L.P.
  • $4,000.00
  • Neustar
  • TransUnion LLC
  • $3,100.00
  • Meredith Corporation
  • Gray Television, Inc.
  • $2,825.00
  • Global Enterprise Asset Management (EAM) Business of Infor, Inc.
  • Hexagon AB (publ)
  • $2,751.26

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • QAD, Inc.
  • Thoma Bravo, L.P.
  • $1,642.61
  • Encora Digital, Inc.
  • Advent International Corporation
  • $1,500.00
  • Acuant, Inc.
  • Audax Management Company, LLC
  • $736.00

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Sirius Computer Solutions, Inc.
  • CDW, LLC
  • $2,500.00
  • Mailgun Technologies, Inc.
  • Pegasus Corp One
  • $1,892.17
  • Appriss Insights, LLC
  • Equifax Workforce Solutions, Inc.
  • $1,825.00
  • PK Global
  • Concentrix Corporation
  • $1,575.00
  • Frame.io, Inc.
  • Adobe Ince
  • $1,275.00
  • Products Business of FireEye, Inc.
  • McAfee Enterprises, Inc.
  • $1,200.00
  • Inteliquent, Inc.
  • Sinch AB
  • $1,140.00
  • Clarabridge, Inc.
  • Qualtrics International Inc.
  • $1,125.00

 

Source S&P Capital IQ as of 1/11/2022 and PCE Proprietary Data

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. Feiner, Lauren "FTC Sues to Block Nvidia's $40 billion acquisition of Arm," 2 Dec. 2021.
  2. Tangel, Andrew and FitzGerald, Drew “5G Truce Expected to Avert Many – But Not All – Flight Disruptions,” The Wall Street Journal, January 5, 2022.
  3. Shen, Michelle. “Ransomware attack on Kronos could disrupt how companies pay, manage employees for weeks.” USA Today, Gannett Satellite Information Network, LLC., 14 Dec. 2021.
  4. Fieldstadt, Elisha. “Another Amazon Web Services outage disrupts Facebook, DoorDash, Hulu.” NBC News, NBC Universal, 15 Dec. 2021.
  5. DiChristopher, Tom. “Pipeline operators face huge challenge preventing repeat of Colonial hack.” S&P Capital IQ, S&P Global Market Intelligence, 7 Dec. 2021.
  6. Brandom, Russell, “Jessica Rosenworcel Confirmed by Senate to Lead the FCC,” The Verge, December 7, 2021.
  7. Calatayud, Adrià. “Cybersecurity Stocks' Valuations Remain High Despite Selloffs -- Market Insight.” S&P Capital IQ, S&P Global Market Intelligence, 2 Dec. 2021.
  8. Driebusch, Corrie and Lombardo, Cara. “Intel Plans an IPO For Robot-Car Unit.” The Wall Street Journal, Dow Jones & Company, Inc., 7 Dec. 2021.
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