World+dog did 107% more tech, telco and media deals this year so far

Analyst pins global deal values at $371bn for first half 2018

Mergers and takeovers in the tech and telco sector increased 107 per cent in the first half of 2018, compared with the same period in 2017, according to analysts.

Mergermarket said the total global deal value for technology, media and telecom sectors was $371.1bn in the first half of the year – despite the collapse of some high-profile sales and concerns about trade tariffs.

The report (PDF), penned by analyst Elizabeth Lim, calculates deal values as including the implied equity value and the net debt – meaning some figures are higher than those reported previously – and aims to assess trends in the markets for H1 2018.

It put the total technology deal values at $171.5bn – some 46.2 per cent of the overall total. This sub-sector made up 78.5 per cent of the total deal volume, with 1,329 deals tabled in the first half of the year.

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This is despite the collapse of a major one that would have seen Qualcomm pay out $51.9bn for Dutch chip maker NXP Semiconductors, and Donald Trump blocking Broadcom's bid to slurp up Qualcomm.

Lim noted, though, that another sale which observers thought "might become a pawn in transpacific negotiations" after the White House nixed the Broadcom/Qualcomm deal did go through. This was the megabucks buyout of Toshiba's microchip unit by a consortium led by Bain Capital and including Apple.

Telco activity made up the second biggest chunk in the overall sector in H1 2018, accounting for 35.1 per cent of the deal value ($111.2bn) and 3.5 per cent of deal volume. That included the largest deal of the period – Sprint's $58.9bn bid for T-Mobile.

Media deals registered $88.4bn total deal value, with 305 transactions and one of the hottest competitions of the whole sector – the battle over UK biz Sky, which is listed in the report at the April offer value from Comcast, of $40.7bn.

However, Sky is an attractive entry point in the large European market and comes with extensive sporting rights in the region – and has resulted in a bidding war between Comcast and Rupert Murdoch's Fox.

In mid-July, Comcast improved its offer to £25.9bn (which, with net debt added is £33.1bn, or $46.2bn), and the battle shows no sign of abating soon, as media reports this weekend indicated Murdoch was considering tabling a new offer.

The issue is complicated further by the fact that Disney last month gained approval to buy out Murdoch's 21st Century Fox – which owns a 30 per cent stake in Sky. Comcast had been sniffing around Fox, but switched its focus to Sky after Disney won that round.

Lim said that the "media M&A drama" was clear demonstration of how much the field has changed as a result of streaming services.

"Such events are indicative of the immense pressure felt by the dominant media companies from the likes of Netflix, which could have spillover effects into the rest of the entertainment industry," Lim said.

"Comcast's strategy to stay competitive with Disney must include the acquisition of Sky or its equivalent." ®

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