Tuesday, May 08, 2018

Technology, Media and Telecom 2018 M&A Deal Update

As more companies use technology innovation to improve their scale, automation and robotics continue to generate interest among investors. Mapping and software development have significant potential, particularly as most business leaders seek to digitize their commercial operations.

This trend will continue for some time. Consulting on the various types of new technology tools will also likely be an area to follow in the near future, according to the latest worldwide market study by Mergermarket.

Technology, Media & Telecom Market Development

Moreover, emerging applications for artificial intelligence (AI) are in vogue, and China has emerged as a potential leader in this space, with dealmakers looking to invest in startups specializing in this area.

Until the Facebook data protection issue became public knowledge in mid-March, first-quarter (Q1) 2018 activity within the global Technology, Media & Telecommunications (TMT) sector as a whole was experiencing a boost from several large transactions.

Overall, global TMT activity was up 87.1 percent in value in Q1 2018 to $134 billion worth of deals compared to $71.6 billion announced in Q1 2017. However, deal count fell by 20 transactions -- from 815 deals in Q1 2017 to 795 in Q1 2018 -- continuing a downward trend over the last three quarters.

The largest transaction, and the only mega-deal (>$ 10 billion) of Q1 2018 was the $10.5 billion takeover of Denmark-based TDC -- a telecom company providing both traditional and digital services -- by a consortium including PKA Pension Funds, Arbejdsmarkedets Till√¶gspension, and Macquarie’s European Infrastructure and Real Assets Group.

Other notable transactions for the sector in Q1 2018 approaching mega-deal status were Microchip Technology’s $ 9.8 billion bid for Microsemi Corporation, a maker of analogue and mixed-signal integrated circuits and semiconductors, and FUJIFILM Holdings’ $8.6 billion bid for a 50.1 percent stake in Xerox Corporation.

Regionally, the U.S. market was responsible for the largest share of global TMT deal value in Q1 2018 with 40.4 percent ($54.1 billion) of market share. This figure was up from the 38.5 percent share by value that the U.S. had claimed in Q1 2017 with $27.6 billion.

Europe, meanwhile, accounted for 33.5 percent of Q1 2018’s total TMT deal value with $44.9 billion, up from a 13.7 percent market share in Q1 2017 with $9.8 billion.

Asia-Pacific was down from its 38.1 percent market share in Q1 2017 with $27.3 billion, and was responsible for 21.9 percent of total TMT deal value with $29.4 billion in Q1 2018.

Overall, Technology accounted for 62.2 percent of TMT’s total deal value with $83.4 billion, down slightly compared to 63.8 percent in Q1 2017. However, Tech’s total deal value was at the same time 82.5 percent higher than Q1 2017’s total of $45.7 billion.

Meanwhile, there were only 621 Technology transactions announced in Q1 2018, seven fewer than during the same period last year.  The Media and Telecommunications segments were on par with each other in the first quarter of the year, reaching just over $25 billion each, though the former recorded 141 transactions while Telecom recorded 33.

Outlook for TMT Global Market Growth

According to the Mergermarket assessment, with anxiety surrounding the culpability and responsibility of the hyperscale web technology firms -- such as Facebook and Google -- now under scrutiny, the rest of the year remains somewhat uncertain. Therefore, we'll have to wait and see how the TMT market evolves.