Global cross-border tech M&A value remains strong

This year could see a new record for the number of tech deals between countries, even as macroeconomic and geopolitical uncertainty rises

Despite economic and geopolitical headwinds, cross-border dealmaking across the tech sector remains buoyant, with 681 deals announced in the first three quarters of 2018. Although deal volume was down 11% when compared to the same period in 2017, value remained consistent at US$89.4 billion.

Global reach

Major deals have been spread across the globe, demonstrating that high-profile acquisitions of cutting-edge technology companies are not exclusively a Silicon Valley phenomenon.

Four of the top five deals of the year so far targeted Indian, Italian, Israeli and German companies. Top of the list was the sale of 77% of Indian e-retailer Flipkart Internet by eBay, SoftBank and others to Wal-Mart Stores. Flipkart is India’s biggest online retailer and the US$16 billion paid by Wal-Mart is the highest amount ever paid by an overseas company for an Indian one.

The shift from bricks to clicks is underlined by Wal-Mart Stores’ decision to drop the word “stores” (and the hyphen) from its legal name, becoming simply Walmart Inc. from February 2018. “We felt it was best to have a name that was consistent with the idea that you can shop us however you like as a customer,” said Doug McMillon, Walmart’s president and CEO.

The deal underlines the way that retailers and brand owners are racing to build credible internet retail strategies in the face of fierce competition from giants such as Amazon and Alibaba.

The fourth largest deal was the acquisition of Israel-based automated optical inspection specialist Orbotech by US-listed semiconductor supplier KLA-Tencor for US$3.1 billion.

Back in the USA

Three transactions targeting US companies feature in the top ten. The largest saw US-based semiconductor specialist Integrated Device Technology taken over by Japan-based Renesas Electronics for US$7 billion. Meanwhile, German software giant SAP, Europe’s largest software firm, snapped up Nasdaq-listed Callidus Software for US$2.3 billion.

Europe’s hunger for US tech was also in evidence with Swiss drug maker Roche’s US$1.9 billion acquisition of Flatiron Health, Inc.—a specialist in applying big data techniques to the treatment of cancer.

In terms of target territories, the US topped the list as the most attractive destination for overseas investors by volume in the first three quarters of 2018, with 138 cross-border deals worth US$22.1 billion. It was followed by the UK with 79 deals and a total value of US$7.1 billion. India was the second top target by value, with 36 deals worth US$19.8 billion.

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