Year of Sharks: Global Mergers & Acquisitions

The year 2006 saw a slew of motley buy-outs, ranging from Google’s buyout of YouTube for $1.6 billion to PE consortiums queuing up to buy hot semiconductor companies like Freescale and Philips Semiconductor (now NXP).

It also saw a lot of consolidation in the semiconductor space. In fact, the of $17 billion Freescale buy-out has been touted as the biggest takeover in the tech industry. For a change, the usual suspects like Oracle and IBM did not indulge in mega shopping sprees this year.

HP, on the other hand, shelled out $4.5 billion to buy Mercury Interactive. Intel chipped off its communications unit to Marvell, while AMD paid $5.4 billion to buy graphics chipmaker ATI.

AMD-ATI

Intel’s bete noir, AMD shocked the world in July this year with its decision to buy Canadian graphics chipmaker ATI. AMD acquired the company for $5.4 billion.

The deal altered the market dynamics of the chip industry and has pitted the nVidia-Intel combo against the newly melded AMD-ATI duo. AMD CEO Hector Ruiz said that the merger would also lead to the coming together of GPU and the CPU on the same piece of Silicon in future.

Google-YouTube

The New York Times had this to say about this deal: “A profitless web site started by three 20-somethings after a late-night dinner party is sold for more than billion dollars instantly turning dozens of its employees into paper millionaires.”

This $1.65 billion YouTube buy out - incidentally Google’s biggest acquisition to date - should warm up the hearts of dotcom start-ups wishing to latch on to the Web 2.0 wave.

Google intends to cash in on YouTube, which has caught the fancy of netizens with its video-sharing concept, by integrating the site with its search and search-based advertising.

Freescale

In what could set a precedent in the industry, a consortium led by Blackstone Group LP bought out Freescale Semiconductor, the former semiconductor arm of Motorola, for a princely $17.6 billion. This purchase is reportedly the largest private buyout of a technology company. The other buyers included the Carlyle Group, Permira Funds and Texas Pacific Group.

The deal is symbolic of investor confidence in chip companies that build the precious chips that power the almost endless number of consumer electronics devices that are flooding the market.

Philips Semiconductor (Now NXP)

Philips Semiconductor had a huge makeover this September: a new name and also new investors to boot. Its new moniker NXP that stands for “Next Experience”, was given by equity firms - Kohlberg Kravis Roberts, Bain Capital, Pax Partners, AlpInvest Partners and Silver Lake Partners, which bought 80.1 per cent of the company for $10.2 billion. Koninklijke Philips Electronics retained the remaining 19.9 percent stake in the company.

The new stakeholders in the company announced that they would invest €1 billion ($1.28 billion) into research and development.

LSI Logic-Agere Systems

Storage chip solutions provider LSI Logic led by the former Intel executive, Abhi Talwalkar, decided to purchase Agere Systems for $4 billion in stock in early December. The acquisition would help LSI get a foothold in the mobile chip market.

Motorola-Symbol Technologies

In this “symbolic” deal, Motorola Inc. agreed to buy Symbol Technologies, a maker of barcode and inventory scanning technology, for about $3.9 billion to boost sales of wireless handheld devices to corporate customers. Analysts had a lot of good things to say about this merger and in particular, the coming together of mobile computing and sensing technologies like RFID and wireless communications.

HP-Mercury Interactive

In July 2006, HP announced that it has signed a definitive agreement to purchase IT management software company, Mercury Interactive Corp. for $4.5 billion. This buy would help HP blend OpenView systems and network management software with Mercury’s application development management products.

Google snaps JotSpot

User-driven content is the buzz word of the Wiki age. Give way media moghuls, Bloggers and Wikians are coming.

Having seen the Encyclopedia bow down before Wikipedia, Google grabbed JotSpot, a 3-year-old company with a system for building collaborative Web pages called wikis.

JotSpot's product is a platform for building wiki-based applications. The company has an online spreadsheet and calendar that multiple people can edit.

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