66 Acquisition International - Issue 6 2018 M&A in the technology sector has already exceeded previous H1 periods in 2018, with still a month to go at the time of writing until the end of the second quarter. According to Zephyr, the M&A database published by Bureau van Dijk, there have been 2,227 deals worth a combined USD 102,582 million announced in Q2 2018 to date, which is almost equal to the value recorded in Q2 2017, despite volume being half the 4,059 deals worth USD 103,671 million announced in Q2 2017. he opening five months of 2018 have seen 5,989 deals worth USD 231,900 million signed off, which by value is a significant improvement on USD 177,735 million in H1 2017 and USD 210,518 million in H1 2016, with still four weeks left until the end of the second quarter. The vast improvement by value comes despite a decline by volume in Q1 2018, which reached its lowest level since Q1 2014 when 3,578 deals were announced. This suggests buyers are favouring single deals with higher valuations over prolific dealmaking in the technology sector. For Q1 2018, this represents the second consecutive improvement in quarterly value, with Q2 expected to continue on the same trajectory. 2018 has started off promisingly as a number of large transactions have already been signed off. Each of the top 20 deals by value exceeded USD 1,000 million, seven of which were worth USD 5,000 million, or more, and the top three were valued at in excess of USD 10,000 million. The largest of these transactions involves US- based supermarket store operator Walmart agreeing to acquire an unknown majority stake in Singapore-based online ecommerce platform Flipkart in a deal worth USD 14,000 million. This was closely followed by US asset manager Berkshire Hathaway increasing its minority stake in computer hardware and mobile device giant Apple from 3 per cent to just under 5 per cent for USD 12,641 million. The third- and fourth-largest deals in the technology sector each took the form of a minority stake investment, the first of which involved China-based online payment platform Ant Financial Services Group raising USD 10,000 million in a round of funding from Carlyle Group, Canada Pension Plan Investment Board, GIC and BlackRock. Fourth place involved JPMorgan offloading less than a 2 per cent stake in Cayman Islands-based Internet instant messaging service provider Tencent Holdings in a deal worth USD 9,365 million. Five of the top 20 deals by value targeted a US- based company; however, investment in the Far East and Central Asia proved to be most impressive in Q2 2018 to date as 829 deals worth USD 52,110 million have targeted the region in the quarter. In terms of value, Q2 was the largest three-month period for the Far East and Central Asia on record, improving on the USD 31,123 million recorded in Q1 2018 and the USD 27,443 million recorded in Q2 2017. North America placed second by value with USD 27,638 million, followed by Western Europe with USD 21,005 million. Similarly, by volume, North America placed second with 692 deals, while Western Europe was third with 500 deals. In addition, investment in Oceania improved quarter- on-quarter to USD 936 million, while the Middle East and South and Central America declined over the three months to USD 333 million and USD 272 million, respectively. 2018 is proving to be a significant year for M&A in technology companies, particularly those based in the Far East and Central Asia. While volume has recorded four consecutive quarterly declines, value has continued to improve since Q3 2017 and if large transactions, such as Walmart’s investment in Flipkart, continue to be announced in the coming months, 2018 could become a record year for deals in the sector. Company: Bureau van Dijk E-Mail:
[email protected] Web: www.bvdinfo.com Technology T