Tech Giants in Acquisition FrenzyBy Reuters | Posted 2010-05-14 Email Print
From HP buying 3Com and Palm, to Oracle buying Sun Microsystems to SAP buying Sybase, cash rich technology companies are on a shopping spree to expand into new markets as they prepare for economic recovery. Even Novell has put itself up for sale. And Brocade reportedly investigated the market for its own sale last year. Here's what's behind the trend.
NEW YORK (Reuters) - Technology firms are kicking off a new wave of mergers and acquisitions as cash-rich makers of hardware, software and everything in between position themselves for economic recovery and reach into new markets.
The movement toward mobile computing, the increasing importance of data storage, and the use of the Internet to access information are forcing tech players to reexamine where they want to compete, and to consider buying their way there.
Business software maker SAP AG (NYSE:SAP) made the latest move, offering to buy database system firm Sybase Inc (NYSE:SY) for $5.8 billion in a bid to move ahead of archrival Oracle Corp (NASDAQ:ORCL) in the mobile data market. Hewlett-Packard Co (NYSE:HPQ) is in the process of buying smartphone pioneer Palm Inc (NASDAQ:PALM) for $1.2 billion , while software maker Novell Inc (NASDAQ:NOVL) has put itself up for sale.
"Everybody is coming back," said Paul Parker, head of global M&A at Barclays Capital. "Tech deals have been on the rise thanks to cash buildup at many of the big companies. There is transformational activity being worked on or announced already in every sector."
Cash-rich potential buyers like Microsoft Corp (NASDAQ:MSFT), IBM (NYSE:IBM) and Cisco Systems Inc (NASDAQ:CSCO) are easy to spot. The targets -- and the premiums they will demand -- are not so obvious.
Analysts and bankers regularly cite as potential targets Akamai Technologies Inc (NASDAQ:AKAM), Brocade Communications Systems Inc (NASDAQ:BRCD), Citrix Systems Inc (NASDAQ:CTXS), NetApp Inc (NASDAQ:NTAP), McAfee Inc (NYSE:MFE), Quest Software Inc (NASDAQ:QSFT) and Red Hat Inc (NYSE:RHT).
A good deal of the cash built up by global tech firms is invested abroad, which could point to more cross-border deals along the lines of Cisco's purchase of Norwegian video conferencing system maker Tandberg, or SAP-Sybase.
Norwegian browser-maker Opera (OSL:OPERA) has been seen as a takeover target for a while, especially after BlackBerry maker Research in Motion Ltd (TSE:RIM) bought rival browser firm Torch and phone maker Nokia (BIT:NOK1V) bought Novarra.