“Motorola acquired Psion for £128m or 0.7 x revenues, hardly an exciting exit for the handheld computer company, particularly as it was one of the founders of the PDA (personal digital assistant) in the mid?1980s,” said Bryan Parker, head of mergers and acquisition at ICON Corporate Finance. “However, just as RIM is facing severe challenges to its retail handheld products, Psion which now focuses on retail and warehouse industrial handheld products, is also facing softer markets, he says. Motorola paid 88p a share in cash, up from 60p in the market it was a long way from the peak valuation of £30 for back in the dotcom boom.
Logica has also had a tough decade with its shares having fallen significantly over that time, and it was acquired in a £1.7bn bid from Canadian IT services giant CGI at the end of May. CGI raised £1bn from a large Canadian pension fund and $2bn in debt from banks to fund the deal. UK companies would struggle to raise these amounts in the economic climate said outgoing Logica chairman David Tyler,
The $5bn NDS deal was Cisco’s first big deal for a couple of years. Cisco sees NDS as a strategic fit for its video system Videoscape, as NDS’ software allows cable and satellite TV companies to deliver encrypted content through televisions and other devices. Staines-based NDS was established in 1988 as an Israeli start up company and was acquired by News Corporation in 1992 but following an earlier IPO, private equity player Permira was the 51% shareholder at exit. The group, like so many larger companies, is a melting pot of a number of other acquisitions like Orbis, Alphameric, Interactif, MediaHighway, Jungo and CastUp who all provided interactive TV related software.
The outlook isn’t too positive either, says Parker.
“Following the Facebook and Groupon flops, the IPO market is likely to remain quiet in the short term, so for UK technology shareholders looking to realise their equity, the M&A route still remains the only realistic option,” he said. “The good news is that trade acquirers from overseas are actively looking for deals and prepared to pay attractive prices. The bad news is that buyers are choosey, they don’t want headaches, they want well?run, profitable businesses with recurrent revenues that are growing. In particular, in the current low growth macro climate investors want growth and are prepared to pay for it.”
According to Parker, the hot sectors remain social media, e?commerce, information management, cloud computing, SaaS (software as a service) software, online gaming, business intelligence/analytics and IT security.