Contact: Brenon Daly
Once again, there was a gigantic ‘October surprise’ in the tech M&A market. In the just-finished month, Qualcomm put together a blockbuster $39.2bn play for NXP Semiconductors, accounting for nearly half of all spending on last month’s tech deals. A year ago, Dell’s mammoth $63.1bn purchase of EMC dominated October 2015 spending. Together, those October prints are the two largest non-telecom tech acquisitions of the past decade and a half, according to 451 Research’s M&A KnowledgeBase.
On its own, the Qualcomm-NXP pairing slightly exceeded an entire month’s worth of tech spending in 2016. When added to the other 304 transactions announced in October, the total for spending on tech deals across the globe hit $82bn. Also boosting last month’s total was CenturyLink’s $24bn reach for Level 3 Communications. (Including the assumption of debt, the enterprise value of that transaction swells to $34bn.) Altogether, October spending ranks as the second-highest monthly total of 2016, according to the M&A KnowledgeBase.
Outside of those two big prints, which accounted for slightly more than three-quarters of all announced deal value last month, dealmaking was a bit slower than usual at the top end of the market. In our M&A KnowledgeBase, we tallied just six transactions valued at more than $1bn last month, down from a monthly average of eight ‘three-comma deals’ through the first three quarters of the year. Overall deal flow was also a little slower than usual, with the number of announced transactions in October down almost 15% compared with the monthly average in the first half of 2016 and down almost 20% compared with the same month of the two previous years.
With two months of 2016 still remaining, this year has already topped full-year spending for every year except the post-internet bubble record level of 2015. While this year likely won’t challenge last year in terms of deal volume or the value of those transactions, it is outpacing 2015 in another key M&A consideration: valuations. Looking at the largest multiples paid in deals valued at $10bn or more over the past two years, four of the five transactions have printed in 2016, according to the M&A KnowledgeBase.
2016 tech M&A activity, monthly
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Source: 451 Research’s M&A KnowledgeBase
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