Category: M&A

Oracle pays up for an ‘Eloquent’ marketing platform

Brenon Daly

Contact: Brenon Daly

Two months ago, we noted that Oracle was rumored to be looking to acquire a marketing automation vendor. At that point, the buzz was that the acquisitive software giant, which has done social media-flavored marketing deals recently, was eyeing Marketo to be its platform. Instead, Oracle went with Eloqua, paying $956m for the company (on a fully diluted equity basis).

Eloqua, which went public in August but recently shelved a subsequent follow-on offering, had about $85m in cash, giving the proposed transaction an enterprise value of $871m. Using that figure, Oracle is valuing Eloqua at about 9.7x trailing sales – a valuation that’s about 50% higher than it paid in either of its acquisitions of fellow publicly traded SaaS application vendors over the past 14 months. (Both RightNow and Taleo went off at closer to 6.5x trailing sales.)

For Eloqua, the deal wraps a short – but rather profitable – stint on the public market. It only went public four months ago, but it is leaving the Nasdaq at twice the price it joined. Eloqua first sold shares to the public at $11.50, while Oracle is paying $23.50 for each share in the acquisition. The transaction is expected to close before mid-2013.

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

End of an encryption era?

Ben Kolada

Contact: Ben Kolada

There has been considerable consolidation in the drive encryption sector over the past half-decade, most recently with Dell acquiring OEM partner Credant Technologies. However, with Dell taking Credant off the table, meaningful consolidation may be complete as there are few potential buyers left.

Dell is buying its OEM disk encryption software partner Credant in what could be seen as a tech tuck-in. The acquisition provides Dell with the IP rights to technology it already sells – Credant’s Data Protection Suite was available on Dell’s laptops and workstations as a preconfigured option. Terms weren’t disclosed, but we’re hearing that Credant generated trailing revenue in the $20-30m ballpark. (We’ll have a full report on the transaction in our next Daily 451.)

After earlier rounds of consolidation in this sector by security giants Symantec, McAfee and Check Point Software, there aren’t many potential acquirers left. In fact, it appears that the number of likely targets may outnumber the likely acquirers. Although M&A in this sector seems to be either at its end or near it, two remaining targets we would point to are still-independent vendors WinMagic and Zecurion.

Similar acquisitions to Dell buying Credant

Date announced Acquirer Target Deal value TTM revenue
September 22, 2011 Wave Systems Safend $12.8m Not disclosed
April 29, 2010 Symantec GuardianEdge Technologies $70m $18m
April 29, 2010 Symantec PGP $300m $75m
October 8, 2007 McAfee SafeBoot $350m $60m*
November 20, 2006 Check Point Software Technologies Protect Data [dba Pointsec] $586m $63.8m

Source: The 451 M&A KnowledgeBase *451 Research estimate

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

A bearish outlook for tech IPOs in 2013

Brenon Daly

Contacts: Brenon Daly

In our just-published report on our annual survey of corporate development executives, the shoppers told us they don’t expect to have to outbid the public market when they consider acquisition targets. Almost half (47%) said they anticipate the IPO market to offer ‘less competition’ in 2013, which is three times higher than the 15% that predicted ‘more competition.’ (For comparison, last year one-third of responses (33%) forecasted more competition from IPOs, while one-quarter (26%) indicated less competition.)

The chilly outlook for offerings underscores just how difficult the IPO market has become. In the back half of 2012, there have been only about a half-dozen tech offerings. Although there have been some eye-popping market caps created (for instance, Workday, which came public in mid-October, now trades at $8.5bn), there just haven’t been enough to see a real threat of ‘dual tracking,’ according to corporate buyers.

If anything, the IPO market will be even quieter in 2013. The median forecast from our corporate development executives called for just 20 offerings, down from about 25 offerings in each of the two previous surveys. Click here to see our full report on the outlook for tech IPOs and M&A in 2013 from a key market participant: corporate development executives.

Projected number of tech IPOs in coming year

Period Median response
December 2012 for 2013 20
December 2011 for 2012 25
December 2010 for 2011 25
December 2009 for 2010 15
December 2008 for 2009 5

Source: 451 Research Tech Corporate Development Outlook Survey

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Tech buyers pull in their M&A plans for 2013

Brenon Daly

Contact: Brenon Daly

Even as 2012 is shaping up to be a lackluster year for tech M&A, next year could be even quieter. In 451 Research’s annual survey of corporate development executives, these buyers dramatically pulled in their acquisition plans for 2013. Just 38% of corporate shoppers said they would be increasing their M&A activity in the coming year – the lowest forecasted activity level in the six years of our survey.

On the other side, fully one out of five respondents (20%) indicated they would be slowing their purchases in the coming year, up significantly from the previous two years. It’s also important to note that the dour forecast for 2013 is coming off an already low base. With just two weeks of the year remaining, tech M&A spending for 2012 is all but certain to come in below the level of both 2011 and 2010. That would snap two straight years of increased spending.

The views of corporate development executives are an important indicator of the overall health of the tech M&A community, as they go a long way toward setting the tone in the market. We will have a full report on the survey results – including the outlook for valuation and specific types of acquisitions – in tomorrow’s Daily 451.

Projected change in M&A activity

Period Increase Stay the same Decrease
December 2012 for 2013 38% 42% 20%
December 2011 for 2012 56% 30% 14%
December 2010 for 2011 52% 41% 7%
December 2009 for 2010 68% 27% 5%
December 2008 for 2009 44% 33% 23%

Source: 451 Research Tech Corporate Development Outlook Survey

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A return to dealmaking for Epicor?

Ben Kolada

Contact: Ben Kolada

After Apax Partners combined ERP giants Epicor Software and Activant Solutions last year, the new firm has been fairly quiet in the M&A market. Now that the dust has settled on the $2bn combination and declining revenue has been reversed, we wonder if the ‘new’ Epicor might return to the M&A market in fuller force.

Neither Activant nor Epicor had fully recouped the losses they suffered during the recession. But Apax’s Epicor announced fiscal 2012 results today that show revenue is steadily growing. On a trailing basis, Activant and Epicor combined posted revenue of $813m in the 12 months leading up to their pairing. Revenue for the just-closed fiscal year, which ended September 30, rose 5% to $855m.

After having some time to digest the merger, we wonder if the new Epicor may return to dealmaking. In their previous lives, Epicor and Activant were fairly frequent acquirers. The two companies combined had announced a dozen deals in the decade leading up to their merger. Since selling to Apax, the new Epicor has done just three, two of which were sub-$10m tuck-ins.

However, Epicor recently made a move that signals it may return to big-ticket M&A. In October, Epicor closed its $155m acquisition of ERP, SCM and BI software vendor Solarsoft Business Systems, which was doing about $90m in annual revenue.

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

It’s war over MIPS Technologies

Contact: Tejas Venkatesh

The bidding war over mobile and embedded chip IP company MIPS Technologies continued Tuesday as CEVA upped the ante again, offering $90m for the operating business of MIPS. The topping bid came just one day after Imagination Technologies raised its offer to $80m. MIPS will give CEVA a boost in its existing markets and a chance to extend into system-on-chip products from simple digital signal-processing (DSP) cores, which aren’t seeing much growth.

CEVA’s latest offer is a 50% premium to Imagination’s initial agreement with MIPS three weeks ago. The current round of bidding values the company at 1.1x trailing sales. MIPS is a solid fit for either suitor. While CEVA is motivated by declining prospects in its core single-function DSP market, MIPS will help Imagination better compete with ARM Holdings. There is little overlap with their products and customers, and the deal will help Imagination enter brand-new niches in networking and infrastructure. MIPS is also already directly supported by the Android OS.

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

SEOmoz’s acquisition announcement gets listed

Ben Kolada1 Comment

Contact: Ben Kolada

Search engine optimization (SEO) specialist SEOmoz could also be considered a public relations expert. Rather than issuing a staid press release that follows the typical format, the company announced its acquisition of GetListed on Tuesday in rare form that included both style and substance. Having one characteristic without the other can cause a release to be a flop, but when combined together the impact can be profound.

Privately held SEOmoz announced on Tuesday the $3m cash and stock acquisition of GetListed, also privately held, using both a more formal press release and a ‘ransom note’ format.

The strategic rationale for the deal makes sense. The purchase of GetListed provides SEOmoz with software tools that SMBs use to analyze and utilize free local marketing outlets, such as Google Places. The deal adds a local component to SEOmoz’s otherwise geo-agnostic software.

But the substance of the announcement arguably carried more weight than the rationale of the fairly small transaction. Privately held companies are not required to disclose sensitive details of acquisitions, such as price, and very few choose to do so.

In providing both substance (the price of the transaction) and style (the ransom note format), SEOmoz was able to generate considerable media coverage. For example, a quick Google search for ‘seomoz’ and ‘getlisted’ generated more than three times as many results as a search for ‘urban airship’ and ‘tello’ – a pairing that was announced the same day.

Though perhaps a stretch, after seeing the success of its own public relations model, we wonder if SEOmoz may want to offer public relations capabilities to its customers. If it decides to go this route, one likely target would be young startup AirPR, which provides a platform for companies to find public relations professionals.

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

A mixed November for tech M&A

Brenon Daly

Contact: Brenon Daly

Lifted by three deals each valued at more than $1bn, tech M&A spending in November jumped 63% to $11.4bn. That marks the second consecutive month where spending increased, year-over-year, and only the fourth month that has been the case in 2012.

With just one month to go in the year, overall spending in 2012 is almost certain to come in lower than each of the past two years. So far this year, the aggregate value of transactions is about 20% lower than the first 11 months of last year and 7% lower than the same period in 2010.

In November, a trio of significant deals – each representing distinctly different strategies – contributed to the year-over-year increase in spending. (Although we should note, on an absolute basis, the November total came in lower than the average spending of about $15bn in the preceding 10 months of 2012.)

The largest transaction of the month, RedPrairie’s $2bn take-private of JDA Software Group, was an old-fashioned consolidation move. Meanwhile, Priceline.com’s $1.8bn reach for Kayak.com represented a platform expansion, while Cisco Systems made a pricey cloud play with its $1.2bn purchase of Meraki.

2012 monthly activity

Month Deal volume Deal value % change in spending vs. same month, 2011
January 342 $4.1bn Down 65%
February 280 $10.4bn Up 16%
March 292 $16.8bn Down 30%
April 282 $14.1bn Down 47%
May 314 $15.6bn Down 47%
June 301 $13.3bn Down 20%
July 338 $21.1bn Up 52%
August 279 $10.3bn Down 74%
September 281 $5.8bn Down 38%
October 289 $32.6bn Up 125%
November 278 $11.4bn Up 63%

Source: The 451 M&A KnowledgeBase

NCR rings up another software purchase with Retalix

Brenon Daly

Contact: Brenon Daly

NCR will hand over $763.5m in cash for Retalix, the latest example of an old-line hardware vendor using M&A to build up its more valuable software and services business. The deal is actually the second significant software acquisition by the company formerly known as National Cash Register, and takes the equity value of the transactions to a collective $2bn. In mid-2011, NCR dropped $1.2bn on fellow publicly traded company Radiant Systems.

NCR leaned on the credit market to finance nearly all of its purchase of Radiant, the largest acquisition the company has done. It will add a bit more debt to cover the just-announced reach for Retalix. An Israeli company, Retalix has no debt and about $133m in cash, lowering the net cost of the business to roughly $650m.

In comparing NCR’s two software plays, the valuations line up rather closely. NCR’s bid for Radiant valued the company (on the basis of enterprise value) at about 3.2 times trailing sales and 21x trailing EBITDA. For Retalix, the comparable figures are 2.4x trailing sales and 25x trailing EBITDA.

Further, the premium NCR paid for Radiant, compared with the stock price 30 days prior, came in at 47%; for Retalix it was 50%. A final similarity between the two deals: the advisers. J.P. Morgan Securities banked NCR in both deals while Jefferies & Company worked for both Radiant and Retalix.

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

Zillow steps up its shopping

Contact: Tejas Venkatesh

After going public in the summer of 2011, real estate website Zillow has gone on an acquisition spree, purchasing five companies for an aggregate value of more than $80m. On Monday, it announced its latest buy: rental search website HotPads for $16m in cash. The San Francisco-based company, which took in just $3m in funding from Meakem Becker Venture Capital, helps Zillow access a younger and more rental-focused audience.

The deal comes just three weeks after Zillow announced the acquisition of mortgage-pricing SaaS provider Mortech for $17.5m. Sensing increased competition, Zillow has picked up the pace of its M&A program, buying three companies in the past two months. (The vendor has been able to cover those purchases, in part, by a well-timed secondary offering in September. It raised more than $150m – twice as much as it landed in its mid-2011 IPO – in early September, selling shares at about $40 each. The stock is now roughly $25.)

Zillow isn’t alone in stepping up its M&A activity. Move Inc, the owner of REALTOR.com, has inked two pickups of real estate websites in the past two months, after being out of the market for more than a year. We wonder now if fellow real estate website Trulia will also go shopping. The company certainly has the money, following its IPO two months ago in which it raised about $100m.