Category: M&A

FICO adapts its BI software with $115m Adeptra acquisition

Contact: Thejeswi Venkatesh

Credit risk analytics giant FICO is acquiring Adeptra for $115m in order to get its hands on the target’s customer service issue-resolution SaaS software. The deal is FICO’s largest in eight years, and culminates a five-year reseller relationship between the two companies.

Adeptra provides customer service automation software using a SaaS delivery model to enable two-way mobile SMS, email and voice messaging as well as alerts between banks, card issuers, utilities and telcos and their customers. The company also provides related risk analytics software.

FICO will combine Adeptra’s software with its own predictive analytics decision management software in order to automate and expedite customer service resolution. FICO says Adeptra’s products are a natural fit with its Falcon Fraud Manager and Debt Manager products.

After reselling Adeptra’s software since 2007, FICO is now buying the company for $115m in cash, or 2.6 times trailing 12-month revenue. Adeptra had amassed more than 50 customers, including Citi, Barclays, Telstra and Sabre. The company lists ABS Ventures, ACT Venture Capital, Advent Venture Partners, Barclays and Foresight Group as its investors. Arma Partners advised Adeptra on its sale.

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

Increasing interest in Internet M&A, as Getty Images sells for $3.3bn

Ben Kolada

Contact: Ben Kolada

In another sign of growing interest in the digital media sector, and in Internet companies in particular, Getty Images has announced that its management and The Carlyle Group are acquiring the company from Hellman & Friedman for $3.3bn. The consortium is paying nearly 40% more for the company than H&F did just four years ago when it took Getty private in a $2.4bn deal. The deal is the largest Internet content and commerce acquisition since Silver Lake Partners and Warburg Pincus announced in May 2010 that they were taking Interactive Data Corp private for $3.4bn.

With the exception of a dip in 2003, M&A volume in the broad Internet content and commerce category has risen every year since we began tracking tech acquisitions in 2002. Unlike the greater tech sector, Internet deal volume was even resilient during the recent recession. According to The 451 M&A KnowledgeBase, while overall yearly tech M&A volume dropped 25% from its high of 4,032 transactions announced in 2006 to 3,020 in 2008, Internet M&A volume rose 10.5% over the same period.

Both older Internet properties and hot upstarts are attracting interest. The advent of social media has enabled today’s Internet startups to rapidly market their products to millions of consumers through powerful word of mouth marketing. Meanwhile, older Internet vendors that survived the tech industry’s nuclear winter a decade ago have now matured, and many are seeking liquidity.

Also driving M&A activity is the rise of serial Internet acquirers such as Google, which has picked up 31 Internet firms. And we’re seeing a resurgence of Internet consolidation shops, such as Rebellion Media and MITRE.

Internet content and commerce annual deal volume

Year Deal volume % change
2012 YTD 441 N/A
2011 787 26%
2010 625 9%
2009 572 13%
2008 504 4%
2007 485 6%
2006 456 53%
2005 298 62%
2004 184 8%
2003 170 -36%
2002 265 N/A

Source: The 451 M&A KnowledgeBase

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

JDS Uniphase tucks in GenComm as Wall Street focuses on earnings

Contact: Thejeswi Venkatesh, Ben Kolada

JDS Uniphase (JDSU) on Tuesday announced that after reselling GenComm’s test and measurement products, it has decided to acquire its OEM partner. GenComm provides wireless test and measurement hardware and software for troubleshooting, installation and maintenance of wireless base stations and repeaters.

Terms of the deal were not disclosed, but JDSU positioned the pickup as a tech and talent play, and further stated that revenue from GenComm’s products accounted for more than $7.5m of JDSU’s Communications Test and Measurement business division revenue in its fiscal 2012. The acquisition of Seoul-based GenComm will expand JDSU’s reach in the Asia-Pacific region.

The small tuck-in is likely to be quickly overshadowed by JDSU’s earnings call, which is scheduled after the closing bell today. Wall Street analysts expect the company’s fiscal year revenue to dip 7% to $1.67bn, due to the economic slowdown. JDSU isn’t the only company struggling in this sector, however. Danaher, a competitor to JDSU’s communications test and measurement business, recently reported Q3 earnings per share (EPS) below analysts’ estimates, and lowered its full-year 2012 EPS expectations.

Actian persuading Pervasive to go private

Ben Kolada

Contact: Ben Kolada, Thejeswi Venkatesh

After a tough 15 years in the public spotlight, Pervasive Software may have finally found a graceful exit. The data integration vendor, whose revenue has flattened since the turn of the century, today announced that it has received an unsolicited $154m buyout offer from Actian.

Pervasive would be wise to accept the offer, as the Austin, Texas-based company had done little to excite investors during its public lifetime. The company’s annual revenue has been roughly in the $40-50m range ever since 2000, and its shares have appreciated less than the broad, tech-heavy Nasdaq.

The lackluster performance factored into today’s offer. Actian’s bid values Pervasive at 2.3 times trailing sales. The best comparable deal is IBM’s Cast Iron Systems pickup in May 2010, which we estimate was valued at 6.7x revenue. And Boomi took an estimated 20x valuation in its sale to Dell in November 2011, though that target was much smaller. In fact, had it not been for Pervasive’s strong cash balance, the deal value would have been much less palatable. Pervasive held $42m in cash and no debt as of June. That treasury reduces the acquisition’s total cost to Actian by more than one-third.

Pressuring Pervasive’s shareholders to act on the offer, Actian is taking an unusually persuasive tone in its acquisition announcement, blatantly pointing out that its offer is the highest closing price reached by Pervasive’s common shares in the past 10 years. The deal carries a 30% premium to Pervasive’s closing share price on Friday, August 10.

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

VMware’s aggressive M&A of disruptive technologies

Brenon Daly

Contact: Brenon Daly

One of the highest compliments that can be paid to any technology company is to call it ‘disruptive.’ And by both organic and inorganic means, VMware has certainly earned that accolade. That’s on top of the more than $40bn of market value that it has also earned.

Starting with its homegrown server virtualization (a radically disruptive technology to the server industry), VMware has steadily expanded into other markets through M&A. Along the way, we’ve seen that at the root of disruption is conflict, with VMware’s acquisitions putting it on a collision course with vendors of various sizes in various markets.

For instance, VMware has taken some shots at Microsoft through purchases such as Zimbra and SlideRocket, which take aim at Microsoft cash cows Exchange and PowerPoint, respectively. More recently, VMware dropped $1.26bn on Nicira, a deal that could threaten Cisco Systems and other networking providers because Nicira’s technology effectively virtualizes networks.

And earlier this week, VMware bolstered its log management/analytics business by picking up Log Insight. The acquisition is a bit of an elbow jab at Splunk, which has collected a sky-high market capitalization of nearly $3bn as the market leader in log management/analytics. Of course, it’s important to keep these tussles in perspective – Splunk is still a Gold Sponsor at VMworld later this month.

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

Dell as a mobile manager?

Ben Kolada

Contact: Ben Kolada, Rachel Chalmers, Chris Hazelton

Dell hasn’t hidden its intentions of leveraging its hardware legacy to extend into the enterprise IT market, particularly in regards to software. The PC and server giant recently reinforced its goals with the $2.6bn acquisition of systems management vendor Quest Software. But, as we point out in a recent report, its next move is likely to be in mobile management.

Former CA Technologies CEO and current head of Dell’s software division, John Swainson, made our job a bit easier. Swainson hasn’t been explicit with his plans, but we read some of his recent statements as a signal that Dell may make an imminent move into mobile device management.

That makes sense. Connected devices are the primary target for new applications. They’re also fountains of data that can be gleaned and distilled into BI – which is among the four focus areas for Dell’s software group: security, systems management, business intelligence and applications. In a report detailing the possible future of Dell’s mobile management, we prognosticate about how the company may move into this sector, and with whom. Click here to read the full report.

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

Vista Equity rolls up the rollups

Brenon Daly

Contact: Brenon Daly

Just a half-year after Vista Equity Partners dropped a quarter-billion dollars on bankrupt enterprise software vendor CDC Software, the buyout shop has significantly bulked up the platform with the addition of Consona. The combined entity, which is the collection of more than 30 separate acquisitions by the two companies over the years, also got a name change. It now does business as Aptean.

With the double-barreled deals, Vista Equity now has a fairly sizable ERP and CRM business. CDC was generating about $220m in sales when Vista Equity picked it up earlier this year. The addition of Consona will push Aptean’s top line to nearly $350m, according to our understanding. (Terms of the transaction weren’t officially released.)

Perhaps more important to Vista Equity, however, is the fact that Consona probably throws off as much – if not more – cash than the much larger CDC. Our understanding is that Consona ran at an EBITDA margin in the 30% range, meaning it generates about $40m of cash flow each year. And that level is almost certain to go up when Vista Equity consolidates some of the duplicate operations of CDC and Consona.

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

A modest recovery in the tech M&A market

Brenon Daly

Contact: Brenon Daly

Spending on tech M&A in July rose about 50% from July 2011, only the second month so far this year where the value of deals around the globe increased from the previous year. In fact, the $20.6bn we tallied last month stands as the busiest July in a half-decade, only slightly trailing the $21.7bn recorded in July 2007.

The boost last month came from the top end of the market, where we saw five transactions valued at more than $1bn. That compares to an average of about three 10-digit deals each month in the first half of 2012.

More broadly, last month saw a number of significant acquisitions, including Dell’s $2.6bn purchase of Quest Software (the company’s second-largest deal); VMware’s high-risk move into networking with the $1.2bn acquisition of pre-revenue startup Nicira Networks; Ingram Micro’s largest-ever transaction, bolstering its mobile offering through the $650m pickup of BrightPoint; and Apple’s first reach for a fellow publicly traded company, AuthenTec.

Of course, even with the acceleration in July, year-to-date spending on deals is still running roughly one-quarter lower than where it was last year. Assuming that level continues through the remainder of the year, 2012 would come in with the lowest total deal value since the recession year of 2009. That would snap the streak of two consecutive years of recovery in the tech M&A market.

2012 monthly activity

Month Deal volume Deal value % change in spending vs. same month, 2011
January 340 $4.1bn Down 65%
February 266 $10.4bn Up 16%
March 292 $16.8bn Down 30%
April 277 $14.1bn Down 47%
May 310 $15.6bn Down 47%
June 291 $13.3bn Down 20%
July 326 $20.5bn Up 49%

Source: The 451 M&A KnowledgeBase

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

Rebellion Media set on consolidating digital media

Ben Kolada2 Comments

Contact: Ben Kolada

Rebellion Media was founded just earlier this year, but has already announced enough acquisitions to make itself appear like a veteran player in the digital media sector. From its first acquisition announcement, Sortable.com, announced July 11, the company has been printing a deal a week. In fact, Rebellion is buying companies at such a breakneck pace that official announcements are playing catch-up to Rebellion’s corporate website, which already lists all of the brands it has acquired so far.

Waterloo, Canada-based Rebellion Media isn’t hiding its intentions, saying on its website that it will continue to be ‘aggressive’ in M&A. The startup has so far announced acquisitions of content, mobile and Web development and e-commerce-related vendors. Targets so far have been located in its home country, Canada, but future deals are likely throughout North America and beyond.

The company primarily targets content and reference Internet properties in the health and wellness, technology, entertainment and sports verticals. But it isn’t restricting itself to this group. Rebellion recently announced the purchase of Jingu Apps, an LBS-based mobile instant messaging and friend-finding service. The company has reinforced its acquired assets with its traffic and monetization platform called TRACE, which stands for ‘Traffic, Revenue and Content Engine.’

Rebellion isn’t yet working with bankers, instead preferring to use M&A knowhow that its executives garnered from their prior experiences. CEO Ted Hastings was previously president of digital media rollup shop Cyberplex. As for funding, the company has taken an undisclosed amount of financing from American Capital. Although we weren’t given specific guidance on who or where Rebellion might acquire next, future transactions could be in the SEM/SEO and e-commerce sectors.

Rebellion Media’s announced M&A

Date announced Target Target summary
July 31, 2012 Universal Properties Owns domain names for purposes of Web development and search engine optimization.
July 24, 2012 Jingu Apps LBS mobile instant messaging application that enables BlackBerry and iOS users to connect with nearby users of WhatsApp, Hookt, LiveProfile, Touch and Kik mobile social networks and communities.
July 17, 2012 Scott Hastings (10 sports websites) Group of combat sports news and reference content websites, including www.fighters.com, www.fightline.com, www.mmatraining.com and www.mmaconvvert.com.
July 11, 2012 Sortable.com Provides online electronics buying advice and reference content that allows consumers to compare and rate products.

Source: The 451 M&A KnowledgeBase

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

Google’s admission of failure?

Ben Kolada

Contact: Ben Kolada

Google has finally found a way to monetize Facebook’s platform. After failing to acquire Facebook when it had the chance several years ago, and now with its own attempts at social networking a bit spotty, official word came on Tuesday that Google is acquiring social marketing startup Wildfire Interactive. Google is reportedly paying $250m for Wildfire, a respectable price tag that likely values the target at 7-10x revenue.

Google’s own ‘Insights for Search’ search analysis engine shows interest in Orkut, its attempt at a social network that found most of its popularity outside the US, and its Google+ social network trending downward over the past 12 months. Meanwhile, interest in Facebook has remained remarkably high.

In acquiring Wildfire, Google is recognizing its social shortcomings, and not a moment too soon. There has been rapid consolidation of social marketing startups in just the past three months.

Sector stalwarts Vitrue and Buddy Media have already been acquired by Oracle and salesforce.com, respectively, leaving only a few hot startups left. Beyond Wildfire, we’d point to GraphEffect, Hearsay Social, Syncapse and Lithium Technologies as the next to go. And there will likely be bidding competition for these firms. Large CRM vendors SAP and Microsoft could make a play here, as well as Teradata, which could buy into social to build on top of its recent purchases of marketing specialists Aprimo and eCircle.

Recent select M&A in social marketing

Date announced Acquirer Target Deal value
July 31, 2012 Google Wildfire Interactive Not disclosed
July 10, 2012 Oracle Involver Not disclosed
June 4, 2012 salesforce.com Buddy Media $689m
May 23, 2012 Oracle Vitrue $325m*
April 18, 2012 Marketo Crowd Factory Not disclosed

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

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