EU buyouts of American IT firms skyrocket

Computer World –

Spurred by Internet fever, global business launched 447 digital-media mergers and acquisitions (M&A) in the first half of this year, some 200% more than in the first six months of 1998, according to investment bank Broadview International LLC.

All told, global digital-media M&A deals added up to $37.5 billion in transactions, representing a 658% increase in value from the same period a year before, according to Broadview's "Technology M&A Report: First Half 1999," which was released today.

In the same report, Broadview noted a large jump in European acquisitions of U.S. information technology companies, as the overall value of IT mergers and acquisitions led by European companies grew 293% to $72.8 billion in the first half of this year, the report said.

British conglomerate General Electric Co., or GEC, for example, made five technology acquisitions in the past six months, Broadview noted, and Siemens AG has been involved in five M&As. Nokia Corp. and Philips Electronics NV both have been involved in four.

Together, Siemens, Alcatel SA, L. M. Ericsson Telephone Co., Philips, Nokia, GEC Group and Vodafone Group PLC led more than half of the world's 10 largest technology deals in this year's first six months, spurred on by new competition in Europe, Broadview said.

In North America, companies transacted $36.5 billion worth of digital-media M&As -- nearly a 700% jump from the first six months of 1998, Broadview reported. The number of North American digital-media deals -- such as DoubleClick Inc.'s pending purchase of Abacus Direct Corp. -- skyrocketed 234% from 112 in the first half of 1998 to 374 in the first half of this year.

Among North America's 10 largest digital-media transactions are Healtheon Corp.'s pending purchase of WebMD Inc., Yahoo Inc.'s acquisition of Inc., @Home Network Inc.'s purchase of Excite Inc. and Global Crossing Ltd.'s purchase of Frontier Corp., Broadview said.

While the U.S. has been under the spell of the Internet for some time, Net fever has finally caught on in Europe, Broadview said, noting that European businesses went on a U.S. shopping spree in the first half of this year.

For example, France's Alcatel SA, looking to bolster its strengths in the corporate networking and IP markets, in March announced plans to buy California networking vendor Xylan Corp. Also in March, Germany's Siemens set up a U.S.-based data networking company (Unisphere Solutions Inc.) in order to buy and house its new data and IP acquisitions, including three Massachusetts companies Siemens bought this year (Redstone Communications Inc., Castle Networks Inc. and Argon Networks Inc.)

This year's U.S. shopping extravaganza was led by the U.K., whose companies were involved in nearly 50% of the total European M&As, Broadview said. France came in second with 17%, while Germany garnered 11% of the total.

For next year, Broadview is predicting more than 200 Internet M&As in Europe. European M&A software deals have also jumped, increasing 88% to 373 transactions worth $9.3 billion, Broadview said.

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