M&A in the TMT Sector
Regulation & Deal Execution Remain Key Concerns for TMT Investors
The trends that made 2016 a near-record year globally for M&A in the TMT sector look set to continue in 2017 – for better or for worse.
The desire for vertical integration and need for new technology looks set to drive considerable cross-border activity around the globe. Serendipity is presenting itself on the back of currency changes such as the Pound Sterling since the Brexit referendum. FTI Consulting's own research with the global investment community shows that 68% expect to see substantial M&A activity or interest for UK companies as a direct result of the currency sliding to US$1.20.
However, the impact of regulation – on the ability to do deals as well as on the cost of running the business – remain a key issue for investors.
Deal activity in 2016 gives a good sense of the fundamentals underlying many trends for 2017. According to MergerMarket, TMT organisations completed 3021 deals worth US$698.2 billion last year. This volume was propelled forward by a substantial 683 transactions worth US$295 billion announced in the fourth quarter alone, making it the highest Q4 deal value on record. Big transactions included AT&T’s US$105 billion intended acquisition of Time Warner; Qualcomm’s US$45 billion purchase of the Netherland’s NXP Semiconductors; and CenturyLink’s decision to buy Level 3 Communications. All three of those blockbuster deals were announced in October, and the AT&T/Time Warner deal was the largest acquisition in any sector globally for the whole year, according to data from MergerMarket.