Reports

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M&A Activity

Internet

Internet sector M&A activity stayed level, with eight companies purchased since the start of the year, the same as in the previous quarter. The disclosed amounts for transactions increased markedly, with $934 million in reported deals for this quarter compared to $84 million for two deals last quarter, although one large transaction accounted the entire change in aggregate transaction amount.

The largest deal in the Internet sector was the sale of social network Bebo to AOL for an estimated $850 million. The all-cash deal is presumed to be part of AOL's strategy to grow a once-strong user base that has been diminished by the loss of dial-up subscribers and users of the now-defunct AOL browser. Bebo's largest user base is in the United Kingdom, and AOL is in a good position to grow the audience further by leveraging the company's considerable access to professionally produced content from partners.

Popular multimedia sharing site and social network imeem purchased Anywhere.FM, which allows users to upload and manage a music library online. Event ticket reseller TicketsNow was acquired by Ticketmaster, which has long dominated the online tickets market.

Digital Media

Only two digital media companies changed hands this quarter, no change since last quarter. Internet ad agency Weblistic, which specializes in local-focused Internet networks, was acquired for an undisclosed sum by Spot Runner, a well-funded startup focused on the same market. The acquisition was primarily a market share addition.

Software

Sun's acquisition of MySQL for $1 billion was the stand out transaction of the quarter. Viewed as a bold positioning move by Sun, the deal goes a long way to validating the commercial open source service business as one with a long term future. HP's acquisition of Exstream Software for $371 million was seen as a market consolidation play, giving HP access to technology delivering enterprise-level applications that manage the printing of documents and marketing materials for specific audiences.

Maven Networks, the online video platform provider, which had previously recorded venture investment of $23 million, cashed out to Yahoo! in a deal worth $160 million. In what some saw as an odd deal, Dell acquired MessageOne, an email as a service provider for $155 million. Finally, in a deal that underscores the continuing importance of bank trading platforms, Wombat Financial Software Inc was acquired by NYSE/Euronext in a deal worth $200 million.

eCommerce

There were no disclosed eCommerce M&A transactions during the quarter. The previous quarter showed only 2 transactions, for undisclosed amounts, so M&A activity in the sector remains at a low ebb.

Table 2

Venture M&A Activity – 4th Quarter 2007


Industry M&A
Transaction Amounts
% Change
Vs. Prior
Quarter
M&A
Number of
Transactions
% Change
vs. Prior
Quarter
Internet $934 Million + 800 % 8 - 38 %
Digital Media Undisclosed N/A 2 0 %
eCommerce Undisclosed N/A 0 --
Software $2.18 Billion + 29 % 34 - 24 %
Total $3.11 Billion + 74 % 44 - 29 %

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