IT & Telecom Q3 2019

Q3 IT Telecom

M&A Transaction Trends

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)

Source S&P Capital IQ as of 10/10/2019 and PCE Proprietary Data

M&A Industry Trends

"Right to be Forgotten" Denied to Non-European Union Citizens

The “right to be forgotten” allows a user to request search engines to remove links to personal data as enacted by the European Union. A recent ruling has determined this law only applies to countries in the EU and not extending past its borders. This is a big win for information technology companies.1

AI Gives a Helping Hand to Telecommunications Companies

Predictive maintenance enabled by AI is changing the way telecommunications companies are operating. The most notable being, Self-Organizing Network (SON), which allows telecom companies to self-analyze and self-optimize, aiding in the deployment of consistent service. The SON Market is expected to grow from US$ 3.64 Billion in 2018 to US$ 6.39 Billion by 2023, at a CAGR of 11.9% between 2018 and 2023.2

U.S. Government Considers Funding Huawei Competitors

As concern over security risks related to Huawei’s technology grows, the U.S. is pivoting towards helping Huawei’s competitors. The U.S. Government has suggested issuing credit to Nokia, Ericsson, and others to develop into dominant competitors of Huawei. The industry is concerned if no rival can compete, Huawei will be the only option for 5G networks.3

Anti-Trust Investigation Puts Consumer Privacy at the Forefront

The DOJ began a wide-ranging anti-trust investigation that includes some of the most prominent leaders in tech, like Amazon, Apple, Facebook, and Google. The investigation places a heavy emphasis on each of the companies’ respective advertising practices. The FTC recently fined Facebook a record $5 billion for privacy abuses linked to the Cambridge Analytica scandal. The fines may be indicative of how seriously the DOJ views consumer privacy and may be an important factor when forecasting profits for large tech firms.4

Foreign Investors in U.S. Tech Companies Raises Concerns

U.S. Senator Marco Rubio (Florida) has called for the Committee on Foreign Investment in the United States to review TikTok’s (Beijing based) 2017 acquisition of Musical.ly (US based). TikTok, owned by ByteDance Technology Co., has financial backers such as KKR, General Atlantic, Hillhouse Capital Group, and Sequoia Capital. While Congressional members and Congress cannot call on CFIUS to investigate, the congressional committees have jurisdiction to review these deals. There is increasing concern over foreign investment in U.S. companies, specifically in the information technology sector.5

Largest M&A Transactions Closed

Target Buyer Value($mm)
Worldpay, Inc. Fidelity National Information Services, Inc. $43.590.64
First Data Corporation Fiserv, Inc. $41,770.58
Red Hat, Inc. International Buisness Machines Corporation $35,690.94
Total System Services, Inc. Global Payments, Inc. $26,710.98
Tableau Software, Inc. salesforce.com, inc. $17,377.59
Fox Sports Net LLC Sinclair Broadcast Group, Inc. $10,600.00
Tribune Media Company Nexstar Media Group, Inc. $7,126.83
Finisar Corporation II-VI Incorporated $3,827.31
Electronics for Imaging, Inc. Siris Capital Group, LLC $2,194.14
iPipeline Roper Technologies, Inc. $1,625.00

Source S&P Capital IQ as of 10/10/2019 and PCE Proprietary Data

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Michael Poole

 

Michael Poole

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407-621-2112

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Michael Rosendahl

 

Michael Rosendahl

Investment Banking

 

201-444-6280 Ext 1

mrosendahl@pcecompanies.com


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. “Google, Starbucks Fend Off EU Regulators in Court,” Valentina Pop & Sam Schechner, The Wall Street Journal, September 24, 2019.
  2. “The Amazing Ways Telecom Companies Use Artificial Intelligence and Machine Learning.” Bernard Marr, Forbes, September 2, 2019.
  3. “US Pushes to Fund Western Rivals to Huawei,” Kiran Stacey, Financial Times, October 7, 2019.
  4. “U.S. Antitrust Enforcers Signal Discord Over Probes of Big Tech,” John D. McKinnon and Brent Kendall, The Wall Street Journal, September 16, 2019.
  5. “U.S. Senator Rubio Calls for Review of TikTok’s Merger with Musical.ly,”, Shubham Kalia, Katie Paul, David Shepardson, and Alexandra Alper, Reuters, October 9, 2019.
David Jasmund

 

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