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TMFAleph1 (96.59)

My Prediction Re. The Next Tech M&A Deal

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May 12, 2010 – Comments (6) | RELATED TICKERS: MSFT , ORCL , IBM

Forgive me if I blow my own horn a little bit.

In HP Acquires Palm -- Who's Next in Tech? (Apr. 30, 2010), I identified Sybase (NYSE: SY) as one of two potential acquisition targets in what I predicted would be a "boom in technology sector M&A transactions over the next twelve to eighteen months, during which the shareholders of target companies could earn substantial premiums".

Today, SAP (NYSE: SAP) announced that it has agreed to acquire Sybase in an all cash deal for $65/ share, a 56% premium to yesterday's closing price.

Obviously, there is a share of luck involved here -- particularly with regard to the timing; however, I'm pretty chuffed to have gotten this right.

Alex Dumortier

6 Comments – Post Your Own

#1) On May 12, 2010 at 9:18 PM, Mega (99.96) wrote:

So who's next?  Something in networking like CHKP, VDSI, LLNW or CRNT? How about Apple buying Synaptics?  Or Western Digital buying STEC? Or Google buying a fast growing website in China or South America?

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#2) On May 12, 2010 at 9:31 PM, rd80 (97.31) wrote:

Nice call.

If only it were a stock swap.  Then you could have fun tracking the arb spread too.

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#3) On May 12, 2010 at 9:37 PM, TMFAleph1 (96.59) wrote:

MegaShort

I'm afraid what little expertise I have is mainly in the application software/ business services/ financial IT sub-sectors. However, I remain convinced that we are are the start of a significant dealmaking cycle in the technology sector.

In addition to the Sybase deal, witness the potential $15bn buyout of Fidelity National Information Services (NYSE: FIS), which would be the largest private equity deal since the start of the credit crisis. Admittedly, I think this is a bit of an exception, as I expect most deals will be done by strategic, rather than financial buyers.

Best,

Alex Dumortier

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#4) On May 12, 2010 at 9:39 PM, TMFAleph1 (96.59) wrote:

Thanks, rd80.

You can still track the risk arb spread -- in fact, it's that much easier in a cash deal ;-)

Alex D

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#5) On May 12, 2010 at 9:54 PM, Mega (99.96) wrote:

I don't really view lack of expertise as an impediment to speculating on acquisitions.  If I did I wouldn't have posted :)

The tech sector has a lot of cash on its balance sheets, that's for sure.  Eventually I think more dividends, buybacks and acquisitions are all inevitable.

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#6) On May 12, 2010 at 10:24 PM, rd80 (97.31) wrote:

in fact, it's that much easier in a cash deal

True, but it's more fun when you need a spreadsheet ...

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