Tag: Q1

A post-recession spending record — and then some

Brenon Daly

Contact: Brenon Daly

The first-quarter M&A totals for the tech industry suddenly look a lot different. AT&T’s announced acquisition of T-Mobile USA from parent Deutsche Telekom dramatically inflates the spending, more than doubling the collective value of the 750 transactions announced so far in 2011. The $39bn deal (the largest purchase in the telecom industry in a half-decade) compares to $29bn worth of transactions in the first 11 weeks of the year.

Further, it wasn’t just Ma Bell’s massive consolidation play in the wireless space that pushed up the total on Monday. Liberty Global announced plans to spend a total of $4.5bn on German cable operator Kabel Baden-Württemberg. Additionally, Charles Schwab said it will shell out $1bn in stock for optionsXpress Holdings, its largest deal in a decade. And Broadcom continued its recent steady run of dealmaking, handing over $313m for Provigent. Altogether, that pushed M&A spending so far this quarter to $74bn – the highest quarterly total since Q2 2008. And the post-recession record is only headed higher: the first quarter doesn’t wrap up until a week from Thursday.

Consistently inconsistent M&A in Q1

Brenon Daly

Contact: Brenon Daly

The first quarter is in the books and it’s hard to read much from it, at least in terms of M&A. While the quarter saw more deals announced than any other quarter since the credit crisis erupted, the aggregate spending on those transactions is lingering about one-third below the recent average. In the just-completed quarter, we recorded 841 acquisitions, with a total bill of $31bn. (We should note that nearly one-third of the M&A spending in the quarter came on a single telecom deal, where an Asian operator spent $9bn on mobile businesses in Africa just two days before the end of the quarter.)

Overall, the numbers point to an inconsistent recovery in the M&A market. On the one hand, many of the big buyers were busier than ever. CA Inc, Google, IBM and Oracle (among others) all announced at least three transactions in the just-completed quarter. But on the other side, we also saw a number of deals that continued the worrisome trends that we thought we might have left behind in 2009, with additional scrap sales and low-multiple divestitures in the first few months of 2010. Look for our full report on first-quarter M&A in tonight’s MIS and TDM sendouts.

Recent quarterly M&A activity

Period Deal volume Deal value
Q1 2010 841 $31bn
Q4 2009 822 $55bn
Q3 2009 758 $38bn
Q2 2009 778 $49bn
Q1 2009 663 $10bn

Source: The 451 M&A KnowledgeBase