The overall value of European IT, communications and media mergers and acquisitions rose 48% to $52.9bn in the first half of 1998, according to Broadview’s Technology M&A Report: First Half 1998. The number of deals rose 13% from 841 to 946, the US investment bank says. US companies made 246 purchases in Europe, worth $11.4bn and accounting for 22% of total European M&A transactions. The worldwide number of IT, communications and media M&A transactions rose 15% from 2,212 to 2,546 in the first half of 1998, while the total deal value rose 148% from $117.7bn to $292bn. The surge in deal values reflects the fact that the multiples paid per dollar of revenue are now at an all-time high, says Victor Basta, managing director of Broadview’s European division. The worldwide value of media and content deals rose 56% to $51.7bn, with European companies involved in 72% of transactions as buyers or sellers. Media M&A activity accounted for over 50% of total European IT, communications and media deals in the first half of 1998. The number of European telecoms transactions rose 52% from 66 to 100 in the first half of 1998, but values were down 21% to $10.6bn. The focus in European telecoms M&A has changed from last year when carriers were forming major voice telephony alliances and acquisitions in preparation for deregulation. This year has seen consolidation in the UK cable TV sector, with Telewest buying General Cable for $1.1bn and NTL buying Comtel, Comcast and Diamond Cable for a combined $2.1bn. There has also been a surge in smaller strategic deals in the non-mainstream telecoms arena where European ISPs and other value-added communications services providers have been making purchases to strengthen their regional backbones and move into new geographical markets. Another reason for this activity is the 50% annual growth rates that ISPs and value-added services operators are experiencing, compared to rates of 10-15% for traditional telecoms companies, Basta says. The number of European software and IT services deals rose 65% from $2.6bn to $4.3bn in the first half of 1998, while the volume of deals rose 7% from 192 to 206. Activity in the software sector was driven by companies fighting to protect their position in the marketplace, illustrated by Network Associates Inc’s $640m takeover of UK-based Dr Solomon’s. In the European hardware and electronics sector, the number of deals fell from 133 to 123 but overall value rose 8% from $7.7bn to $8.3bn.
