Telecommunications

Biggest acquisitions in tech

Quinton Bronkhorst

 ·2 Sep 2013

US firm Verizon Communications and Britain’s Vodafone Group have reportedly signed a $130 billion deal on Monday (2 September) that will see the US telecom giant gain complete control of Verizon Wireless.

The deal is believed to be the third-largest in corporate history.

Verizon Wireless started out of a $90 billion joint venture between Vodafone and Verizon Wireless (Bell Atlantic Mobile and GTE Wireless) in 1999. Verizon Communications owns a 55% stake in the company, while Vodafone, through subsidiaries, owns the other 45%.

Vodafone is no stranger to triple-figure billion-dollar deals, and currently holds the silver crown with the world’s second-largest acquision, in which the telcoms giant acquired Germany’s Mannesmann in 2000 in a massive $185.1 billion hostile take-over.

Another major acquisition by Vodafone in 1999, saw the company buy up Airtouch Communications for $57.4 billion.

The largest acquisition of all time however, according to Bloomberg, is the $186.2 billion acquistion of Time Warner by America Online in 2000.

Largest mergers and acquisitions (Bloomberg)

Big tech acquisitions

Upon approval, the Verizon/Vodafone deal will mark the biggest acquisition in the technology and telecoms space in the past decade.

Vodafone’s take-over of Mannesmann still tops the list, overall, while AT&T‘s acquisition of BellSouth in 2006 for $83.1 billion will shift from second largest, to third largest acquisition in the sector.

AT&T previously bid for T-Mobile in 2011 for an amount of $39 billion, but the deal was blocked and subsequently pulled.

While telcos dominate the “big deal” merger and acquisition activity in the tech sector, more contemporary tech giants such as Google and Microsoft have also been actively snapping up companies in recent years.

In May 2012, Google finalised its buyout of Motorola Mobility for a sum of $12.5 billion, making it the largest acquisition by the online search giant to date, and one of the largest in tech’s history.

Other large-sum acquisitions by Google were those of Internet ad serving service provider, DoubleClick (which was bought up for $3.1 billion in 2008), and online video service, YouTube for $1.65 billion in 2006.

Microsoft acquired online voice and video IM, Skype in 2011 for $8.5 billion, while Yahoo followed on Facebook‘s $1 billion buy up of social image-sharing network, Instagram in 2012, with its own $1.1 billion buy of micro-blogging platform, Tumblr, earlier in 2013.

On 3 September 2013, Microsoft announced its intentions to buy mobile phone maker, Nokia‘s phone unit for $7.2 billion.

Tech’s largest acquisitions

Acquisitions in South Africa

One of the largest acquisition deals out of South Africa was the 2008 deal between Telkom and Vodafone, which saw Telkom sell a 15% stake in Vodacom to the UK mobile operator for R22.5 billion. This pushed Vodafone’s share-holding in Vodacom up from 50% to 65%.

In 2009, South Africa’s second-largest operator, MTN was in the process of a merger deal with India’s Bharti-Airtel at a value of $23 billion (R191.5 billion) – but it was canned after South Africa’s government rejected the deal.

In 2011, Reunert purchased the business and net assets of ECN for R171,9 million; ECN Telecommunications now operates as Nashua ECN, a division of Reunert Limited.

In 2012, Telkom and Korea’s KT Corp came close to finalising a deal which would have seen KT acquire a 20% stake in Telkom worth $380 million (R3.9 billion). However, the deal was blocked, again, by the South African government, who also has a large share in the operator.

In August 2013, Allied Electronics (Altron) finished the process of merging Allied Technologies (Altech) into its main business operations through a R1.8 billion buyout deal. Altech has since delisted from the JSE.

Vodacom is said to be in talks to acquire Neotel

While the South African tech and telecom market has been void of any high-profile M&A activity in the past year, there has been talk of a possible acquisition of fixed-line operator, Neotel, by Vodafone-owned mobile operator, Vodacom.

Vodacom is rumoured to be in advanced discussions to acquire Neotel, with industry sources indicating that the mobile operator is currently performing due diligence on Neotel following successful acquisition discussions between the companies.

More on mergers and acquisitions

Analysts weigh up Neotel Vodacom deal

$130 billion Vodafone, Verzon deal nears completion

Vodafone: how do we spend $130 billion?

Yahoo $1.1 billion Tumblr buyout details emerge