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Summary
- In the covid recovery world, M&A has become a famous strategy to expand existing business operations.
- The technology sector is one of the highest contributors to the M&A values reported.
- In June alone, the Australian market saw M&A deals of US$1.5 billion.
The recent Square - Afterpay takeover has taken the technology M&A Space with a storm. Australian fintech company Afterpay Ltd (ASX:APT) is set to be acquired by NYSE listed Square Inc, a financial services and digital payments company. The value of the buyout stands at US$29 billion. Subject to shareholder approvals from both companies, the deal would be closed in the first quarter of next year.
Related read: Australia’s biggest buyout: What you need to know about Square-Afterpay takeover deal
However, the tech M&A space had been quite busy much before the Square - Afterpay takeover. As per GlobalData’s deals database, M&A deals worth US$1.5 billion were announced in the technology sector in June. This was a 61.9% m-o-m growth. The value in June means a 142% increase over the average of the last twelve months. Of the total tech M&A deals across the globe in June, Australia's share stood at 5.09%.
© Timonschneider | Megapixl.com
Why is M&A a trending strategy post covid?
The M&A surge is a result of an increase in distress due to the pullback of the government's stimulus packages, increased momentum in the capital market, progress in the deals held back due to Covid 19 pandemic and succession and other allied factors.
In the 23rd EY Global Confidence Barometer survey, almost 50% of the technology executives were optimistic about growth in revenue in 2021. Moreover, 51% expressed the intent to pursue mergers and acquisitions (M&A) in the next year for better growth. Companies in the technology sector are organising their M&A strategy for enhancing resilience, improving digital technology and expanding market share through the process of consolidation. In addition, dwindling organic growth of tech companies in the coming times could mean M&A becoming the medium for growth.
Related read: Understanding Mergers and Acquisitions; Updates From The Aussie Land
Recent Tech M&A in Australia
M&A deals in the technology industry were-
- Sinch acquired Melbourne tech firm Message4U for US$1.3 billion.
- Superloop (ASX:SLC) acquisition of Exetel which is Australia’s largest independent internet service provider at AU$110 million.
- Access Intelligence PLC bought Isentia Group Limited (ASX:ISD), a media intelligence and insights company, for AU$67 million
- Caterpillar Holdings Australia acquired Minetec for US$14 million. Minutes is the world's sole supplier of tracking and data communications networks for increasing productivity and safety in underground mining activities. Minetech is a part of the Codan (ASX:CDA) group of companies.
- Nasdaq listed Upland software Inc acquired Panviva Pty Limited, an Australian player in knowledge management solutions. The purchase price paid was US$19.8 million.
- In April 2021, Indian IT consulting business giant Wipro agreed to buy Australian company Ampion, a technology service provider, for US$117 million.
