Value of IT M&As up 70 per cent in 1H 2006

Mumabi: The value of mergers and acquisitions (M&A) among companies in the technology sector increased by over 70 per cent in the first half of 2006, against the level of market activity in the year-ago period. This is revealed in a new report byu the London-based independent market analyst Datamonitor

Datamonitor's Technology Finance MarketWatch also shows that for two years on the trot, the telecoms sector has seen the biggest deals.

The report tracks all M&A activity in the IT sector and lists the fluxes in the financial performance of 500 of the biggest vendors of software, hardware and network equipment, consulting and professional services firms, and telecom and carrier services companies.

Scrutiny of deals tracked shows that the number of transactions recorded in the first six months of the year was up only slightly on the activity over the same period in 2005, going from 507 deals then, to 539 this time.

But of those deals tracked this year, the 539 transactions recorded in 2006 totalled $199.57 billion, against a value of $113.65 billion recorded for the 507 deals last year.

"The breakdown of deals for the different technology sectors tracked on a daily basis reveals the telecom sector scored big again this year, with 26 deals done to the value of almost $116 billion", says Tom Jowitt, senior analyst for technology finance, Datamonitor. "That's broadly comparable with the situation last year, when the 25 deals we recorded in that sector made for the then highest total value of $43 billion."

Two of the biggest deals in the market in the first six months involved telecom companies. "We had the $89.4-billion takeover by AT&T Inc of BellSouth Corp, the $15.5bn Softbank Corp acquisition of Vodafone KK. Then, there's private equity group Sonae SGPS SA's hostile US$12.8-billion bid for Portugal Telecom. In its half yearly results, Sonae says it is confident its offer for the acquisition will succeed."

Acquisitions in the broad market segment of systems software accounted for 151 deals worth some $11.9 billion. And the fast consolidating IT service sector also saw a heavy number of transactions. Some 116 acquisitions were recorded there worth a total of $14.1 billion.