Big deals done this past year

1 Jan 2012

An overview of the biggest mergers and acquisitions of 2011 in the technology sector.

One of the first notable acquisitions of 2011 was AOL’s purchase of The Huffington Post blog in February, for US$315m in cash.

The move saw its founder Arianna Huffington appointed editor-in-chief, making her responsible for all AOL digital content.

The acquisition marked the latest in a line of digital acquisitions, including TechCrunch and Engadget, aimed to position AOL at the nexus point for connected news at a time when newspapers, despite three years of recession, have still not figured out a viable digital business model.

Three months later, microblogging giant Twitter bought social media client TweetDeck in a deal valued at US$40m, right from under the nose of another social media client firm UberMedia, which was close to buying TweetDeck for US$30m.

Developer Ian Dodsworth set up TweetDeck in London in 2008 and 19pc of Twitter’s 200m worldwide user base uses TweetDeck.

It is understood TweetDeck was bought via a combination of Twitter cash and stock.

The acquisition was the latest episode in a battle between Twitter and UberMedia, a company that makes popular Twitter-related products.

According to TechCrunch, the acquisition of London-headquartered TweetDeck was defensive as Twitter could not allow UberMedia to garner so much power.

UberMedia makes popular apps, like UberSocial, Echofon and Twidroyd, that allow users to access their Twitter feeds.

May also saw Microsoft confirm its acquisition of Skype for US$8.5bn in cash, stretching Skype’s support to services such as Xbox, Kinect, Windows Phone, Outlook and Lync.

Microsoft is aiming to use Skype’s video-calling service to enhance its existing portfolio of real-time communications products.

Products and services that gained Skype support include Outlook, Messenger, Hotmail, Xbox LIVE, Kinect, Windows Phone and Lync, among others. Microsoft had said it will continue to invest in and support Skype clients on non-Microsoft platforms.

Skype has become a new business division in Microsoft, with Skype’s CEO Tony Bates assuming the title of president of the Microsoft Skype Division.

Just a few weeks after the Microsoft-Skype news, online ads giant Specific Media purchased beleaguered social network MySpace for just US$35m.

News Corp bought MySpace in 2005 for US$580m and it was understood the company had been hoping to attract a price tag of US$100m, but it was not to be.

News Corp will retain a 5pc stake in MySpace.

Specific Media specialises in brokering online advertising space and is one of the largest online advertising firms in the US, with 79pc of unique US users, or 170.9m unique visitors.

At its peak, MySpace was the site of choice for music-oriented Generation Y early adopters, but failed to respond to the rise and rise of Facebook and its social graph strategy.

However, numbers of users began to slide, efforts to redesign and reinvigorate MySpace failed and in February, News Corp began the selling-off process.

In July, Electronic Arts announced it would acquire PopCap Games in a deal worth US$1.3bn in the bid to become more competitive in the social gaming market.

EA reportedly paid US$650m in cash and US$100m in shares.

In an open letter, John Riccitiello, CEO of EA, suggested there was a tight bidding war for the games company behind Bejeweled and Plants vs Zombies, however, PopCap Games ultimately chose EA due to the working culture within the company.

Riccitiello said the acquisition was made in order to add to its social gaming offerings and to push the company to reach US$1bn in digital business for 2012. In 2010, 80pc of PopCap Games’ revenue was from high-growth digital platforms.

A month later, internet search and advertising giant Google and Motorola Mobility entered into an agreement whereby Google was to acquire Motorola Mobility for US$40 per share in cash, or about US$12.5bn.

The board of directors of both companies approved the transaction.

The acquisition of Motorola Mobility, an Android partner, enables Google to supercharge the Android ecosystem and enhances competition in mobile computing. Motorola Mobility remains a licensee of Android and Android remains open. Google is running Motorola Mobility as a separate business.

Sanjay Jha, CEO of Motorola Mobility, said the acquisition offers significant value for Motorola Mobility’s stockholders and provides new opportunities for its employees, customers and partners worldwide.

Also on the mobility front, October saw a major move within Sony, with the company announcing its acquisition of Ericsson’s 50pc stake in Sony Ericsson, making the mobile handset business a wholly-owned subsidiary of Sony.

The transaction gives Sony an opportunity to rapidly integrate smartphones into its array of network-connected consumer electronics devices – including tablets, televisions and personal computers.

The transaction also provides Sony with a broad intellectual property (IP) cross-licensing agreement covering all products and services of Sony, as well as ownership of five patent families relating to wireless handset technology.

As part of the transaction, Ericsson is to receive a cash consideration of €1.05bn.

During the past 10 years, the mobile market has shifted focus from simple mobile phones to rich smartphones that include access to internet services and content. The transaction is a logical strategic step that takes into account the nature of this evolution and its impact on the marketplace, the companies said.