Category: M&A

Dassault comfortably announces two acquisitions

Ben Kolada

Contact: Ben Kolada

Even though the European economy is still struggling and M&A is an inherently risky business, Dassault Systèmes was able to comfortably announce a pair of acquisitions today, at least partly because the company is still growing. The purchases of Archividéo and FE-DESIGN are its first purchases in nearly a year.

Archividéo is a 3-D modeling vendor based in Rennes, France. Its software is used for urban planning, and could be particularly valuable to Dassault’s operations in emerging economies such as China. It has more than 250 customers, including cities, utilities and technology companies. Karlsruhe, Germany-based FE-DESIGN, on the other hand, provides product design optimization software to more than 200 customers. The acquisition fits into Dassault’s product lifecycle management segment, which is its fastest-growing business.

Terms weren’t disclosed on either transaction, but the deals aren’t likely to significantly impact Dassault’s financials. The pair of acquired companies adds just 70 employees to Dassault’s payroll. FE-DESIGN, the larger of the two based on headcount, generated only €5m ($6.6m) in revenue in its fiscal 2012.

The acquisitions come at a time when Eastern and Western European acquirers are staying out of the M&A game. As their home markets continue to sputter economically, the number of deals announced by European buyers so far this year has dropped 16.7% compared with the year-ago period. (That is slightly more than the 15.6% decline in tech transactions so far this year across the globe.)

Dassault, however, could comfortably announce a pair of acquisitions (however small they may be) because the company is still posting revenue growth. That’s noteworthy when we consider that the stagnant European economy accounted for 44% of the company’s total sales in its first quarter. Total revenue in Q1 grew 5.7% over the year-ago period.

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Action in API management

Contact: Carl Lehmann, Tejas Venkatesh

The API management market has been bustling, with three acquisitions and one notable funding round announced just in the past week. APIs and their development, management and integration have become important amid the Internet of Things environment, in which a multitude of connected points communicate via the Web.

The recent acquisitions of Mashery by Intel and Layer 7 Technologies by CA Technologies signal the opening round for an API land grab by all IT vendors that rely on integration to add value to their respective offerings. Players likely to seek similar deals include Software AG, TIBCO, Information Builders, Informatica, Fujitsu, Talend and OpenText. Oracle and SAP could also benefit from having API management capabilities as part of their integration technology portfolios.

In the future, successful API management providers will possess tools and techniques that simplify and automate how APIs are designed, coded and documented, and will also control distribution and use by a community of developers. In addition, these companies will allow existing APIs to be customized, thereby extending their value without having to design new APIs.

The week in API management

Date Company Event
April 24 3scale Networks Raises $4.2m in funding from Javelin Venture Partners and Costanoa Venture Capital
April 23 ProgrammableWeb Acquired by MuleSoft
April 22 Layer 7 Technologies Acquired by CA Technologies
April 17 Mashery Acquired by Intel

Source: Source: The 451 M&A KnowledgeBase, 451 Research

To get social, salesforce.com buys and builds

Brenon Daly

Contact: Brenon Daly

Built on the back of its two largest acquisitions, salesforce.com on Tuesday unveiled Social.com. The offering, which is part of the salesforce.com Marketing Cloud, connects the company’s core CRM product with advertising on social networks. Doubling down on social ad campaign development and optimization is the latest move by the SaaS giant to step into faster-growing markets.

At the heart of the company’s Marketing Cloud business are the ad placement and publishing technology that salesforce.com picked up with Buddy Media last June and the social listening products from Radian6 that it acquired two years ago. Collectively, those purchases cost salesforce.com a cool $1bn.

While salesforce.com has announced a handful of acquisitions since Buddy Media, those deals have been small technology purchases, notably around collaboration. However, recently a number of signs have pointed to (perhaps) larger M&A aspirations. Last month, salesforce.com sold $1bn in debt, which could be used to go shopping. Additionally, the company is currently hiring for at least two positions in its corporate development office.

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Big Blue gets deeper into devops with UrbanCode buy

Contact: Jay Lyman, Tejas Venkatesh

IBM has announced the acquisition of release automation vendor UrbanCode. The deal helps Big Blue gain new ‘devops’ capability and audience as mainstream enterprise verticals embrace the trend of faster, more automated software releases.

Terms of the transaction were not disclosed, but we understand that UrbanCode had about 55 employees. The startup did not raise any institutional funding in its 17-year history. While IBM certainly has similar capabilities in its Tivoli systems management software, many organizations are using automation and orchestration suites on top of or integrated with their systems management. UrbanCode gives Big Blue a better story for the last mile of software releases.

The deal follows similar moves by IBM’s competitors. Just last night, during the opening session of CA World, CA Technologies announced that it had picked up UrbanCode rival Nolio. Similarly, BMC grew its devops capabilities through the acquisitions of StreamStep in October 2011 and VaraLogix in August 2012.

The rapid-fire pace of M&A indicates the growing importance of the devops trend, which represents a departure from traditional, organizational silos for development and IT operations. Devops continues to grow beyond technology and Web 2.0-type customers to more mainstream enterprise verticals such as financial services, insurance, retail, healthcare, media and entertainment, all of which are represented among UrbanCode’s clients.

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From partner to parent

Contact: Tejas Venkatesh

Intel has quickly moved from Mashery’s partner to its parent, buying Mashery just six months after entering into a reseller relationship with the API management startup. The deal could help further propel growth of Intel’s datacenter group, one of the company’s growth centers.

Contrasting total revenue in the first quarter, which declined 4%, Intel’s datacenter group saw its revenue grow 7% compared with the year-ago period. Its datacenter business makes semiconductors and software to be used for servers and storage inside datacenters.

APIs expose information and data to customers and partners where and when it is needed via applications, websites and any number of on-premises or mobile devices. The proliferation of SaaS offerings and the need to link them with on-premises software has caused an explosion in the number and type of APIs. Thus, managing them while ensuring security and scalability is becoming extremely important. The API management market is relatively new, and Mashery was one of the first out of the blocks. With Mashery’s assets, Intel now has API management technology, which is required for both cloud and mobile device integration.

Intel already sells a combined product, Intel Expressway API Manager (EAM), which combines Mashery’s API management technology with its own security capabilities for API execution. Intel’s EAM can securely expose and scale APIs by enabling the controls needed for compliance and data protection.

This isn’t Intel’s first acquisition in this sector, but is likely its largest. Though financial details were not disclosed, we understand that Mashery generated about $10m in revenue last year, and was set to double this year. We haven’t yet pinned down the price paid, but rumors so far peg the deal value at north of $100m. Intel had previously picked up API security capabilities with the small acquisitions of Sarvega in August 2005 and Conformative Systems in February 2006, yielding software designed to take better advantage of its multicore processor architecture.

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Taking it easy

Ben Kolada

Contact: Ben Kolada

J2 Global has announced the acquisition of Backup-Connect International, another characteristic play of its usual M&A strategy. Although its recent purchases of Ziff Davis and IGN Entertainment seemed to signal that j2 would focus on larger and inherently more difficult acquisitions, we read the company as still being more of an opportunistic acquirer – taking what it can if the taking is easy.

At a high level, the acquisition of Netherlands-based Backup-Connect is yet another geographic play meant to add global depth to j2’s business continuity services. With Backup-Connect, the company has now announced four acquisitions in this sector: two in Ireland, one in the US and now one in the Netherlands.

The fact that this is j2’s first foray into the Netherlands suggests that the country hasn’t historically been a strategic focus, although it does provide a handy base for continental European operations. Also, the company’s main dealmaker didn’t have to travel far to do the deal: j2’s global head of M&A, Jeroen van der Weijden, operates out of Amsterdam.

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Will Sprint side with strategy?

Ben Kolada

Contact: Ben Kolada

DISH Network’s $25.5bn offer for Sprint Nextel represents a 13% premium to SoftBank’s October bid, but its lack of mobile experience may ultimately cause the company to lose the deal. Stock plays a major component of both transactions (32% for DISH versus 30% for SoftBank), meaning the future value of either deal will be dependent on which company – SoftBank or DISH – will be able to better execute in the mobile market. Arguably, the answer is SoftBank.

Without a doubt, SoftBank understands the mobile market, and therefore would understand Sprint’s business more than DISH. Mobile is an entirely new arena for DISH. SoftBank, on the other hand, generated some $22bn in mobile revenue alone last year. To put that in perspective, that’s nearly double the total revenue DISH generated over the same period.

Meanwhile, we’d also point out that DISH’s investors already have doubts about the deal. Following the announcement, the company’s shares fell more than 5% throughout the day, though they did recoup some of the losses by midday.

Although Sprint hasn’t yet provided an official response to the DISH bid, we expect that it will staunchly defend itself against DISH, much like it is defending Clearwire against a DISH takeover.

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Going mobile

Ben Kolada

Contact: Ben Kolada

In the past few years, mobile marketing M&A and IPO activity has been dominated by firms that pushed out ad impressions to consumers. The purchases of Quattro Wireless and AdMob more than three years ago were the most notable examples, with the two deals combining to create more than $1bn of M&A value. Turning to the other exit, the IPO last year of Millennial Media briefly created nearly $2bn of market value for that company. With these transactions, mobile ad publishing became an accepted form of mobile marketing.

But mobile advertising isn’t only about pushing ads out to consumers. In fact, this model may not even be the most effective. (That may be underscored by the performance of Millennial Media on the NYSE. Shares have lost about three-quarters of their value since the debut, and are now valued at just $500m.)

At the ad:tech conference, which wrapped up Wednesday in San Francisco, we noticed the emergence of a handful of startups attempting new ways to enable businesses to advertise themselves on smaller, mobile screens.

Rather than pushing out ad impressions, DudaMobile, for example, helps businesses ‘mobilize’ their own websites. Its software requires no coding knowledge. The company apparently has proven itself enough to recently expand its series B financing from $6m to $10.3m. In a similar vein, we’ve heard that bootstrapped Bizness Apps, which provides a template for small businesses to easily build custom-made apps, is experiencing considerable growth.

To our subscribers: What do you think is the next big trend in mobile advertising? Which companies or mobile advertising markets do you think are most valuable? Let us know @451TechMnA or anonymously at kb@the451group.com.

For more real-time information on tech M&A, follow us on Twitter @451TechMnA.

An ‘affinity acquisition,’ as LANDesk picks up divested Shavlik division

Brenon Daly

Contact: Brenon Daly

As a company that has been cast off twice from its larger corporate owners, LANDesk Software might have a special affinity for its latest transaction: the acquisition of Shavlik Technologies, which is being cast off by VMware. The deal adds Shavlik’s technology for managing and securing physical and virtual environments to the systems management vendor’s portfolio. Inside VMware, Shavlik was known as VMware Protect; under LANDesk, the business is called Shavlik Protect.

LANDesk’s purchase effectively unwinds VMware’s acquisition of the security company in mid-2011. At the time, we estimated that the virtualization giant paid about 3x sales for Shavlik. We understand that today’s deal went off at a more representative multiple for divestitures. That said, Shavlik, which never took any outside funding, is known to generate healthy cash flow. (Subscribers to The 451 M&A KnowledgeBase can click on the following links to see our estimated revenue and price for both the original VMware-Shavlik transaction as well as today’s LANDesk-Shavlik pairing.)

The purchase of the carved-out business represents the third deal LANDesk has done since private equity (PE) firm Thoma Bravo carved the company itself out of Emerson Electric in August 2010. (That transaction came almost exactly eight years after another PE shop, Vector Capital, carved LANDesk out of Intel.) On the other side, VMware’s sale of Shavlik is its second divestiture announced in 2013, as the virtualization giant works through a previously announced restructuring.

For more real-time information on tech M&A, follow us on Twitter @451TechMnA.

Ripe time for spoiled fruit

Ben Kolada

Contact: Ben Kolada

While we’re in a season of slim pickings for tech M&A, one market that’s ripening is the sale of spoiled fruit. Major tech companies such as Microsoft and VMware are now selling flagging businesses at an unusually quick clip.

There are a variety of reasons why companies would sell assets during every part of the economic cycle. But right now, as growth slows across much of the established tech markets, companies are increasingly focusing on the relatively few areas that are recording sales increases. (To continue our gardening metaphor, it’s similar to a person cutting off a dying bulb so that the rest of a plant can flourish.)

Microsoft, for example, announced its second asset sale in as many months, selling its Mediaroom IPTV distribution platform to Ericsson. (Last month, Microsoft sold its Atlas Advertiser Suite assets to Facebook.) Mediaroom was part of Microsoft’s Entertainment and Devices Division (EDD), which includes Xbox, Skype and Windows Phone assets. EDD revenue rose in FY 2012 primarily due to Skype and Windows Phone revenue, but has declined 8% in the two quarters since as Xbox sales sank.

And in the case of VMware, the sizzling growth of its core virtualization software in previous years allowed it to expand into new markets. But as the company’s top-line expansion dipped to 22% in 2012 from 32% in 2011, it announced a refocus of its business. VMware sold its SlideRocket assets in March, and may consider selling other noncore businesses.

Select asset sales in 2013

Date announced Target – asset Acquirer Deal value
April 8 Microsoft – Mediaroom assets Ericsson Not disclosed
April 3 Google – 3LM BoxTone Not disclosed
April 1 IBM – ShowCase software division Help/Systems Not disclosed
March 14 TeleNav – enterprise mobile business FleetCor Technologies $10m
March 5 VMware – SlideRocket business ClearSlide Not disclosed
February 25 HP – webOS assets LG Electronics Not disclosed
February 19 Oracle – Lustre assets Xyratex Not disclosed
February 5 United Business Media – data services businesses Electra Partners $251m
February 4 News Corp – IGN Entertainment j2 Global/Ziff Davis $50m
January 28 Sierra Wireless – AirCard business NETGEAR $138m
January 24 WebTech Wireless – NextBus business Cubic $20.9m

Source: The 451 M&A KnowledgeBase

 

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