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Tech Mergers and Acquisitions were Big in 2016


Netari News - Tech Mergers and Acquisitions were Big in 2016

Investors and Tech Companies Doubled Down in 2016 on Data Center and Cloud

Companies placed major bets on cloud, security and the data center in 2016, with six of the year's 10 most important acquisitions for the industry focused around these technology areas.

Vendors, distributors and solution providers spent a total of $133 billion on the year's most significant deals, acquiring more than 230,000 employees from companies delivering a combined $103 billion in annual sales.

Five of the acquired entities are based in California's Silicon Valley, three are based in other West Coast locations, and two are headquartered in Massachusetts. Six of the acquisitions were carried out by vendors, one was carried out by a distributor, one was carried out by a solution provider, and two were enacted by entities outside the IT industry.

Here's a look back at the 10 deals that were most pivotal to the IT sector.

10. Salesforce

Company acquired: Demandware

Head count: 800 employees

Annual sales: $237.3 million

Purchase price: $2.8 billion

Deal closed: July 11

San Francisco-based cloud powerhouse Salesforce purchased Burlington, Mass.-based Demandware to create a new product line for a new business division: the Salesforce Commerce Cloud.

Salesforce said the Commerce Cloud would be an important part of its Customer Success Platform and create opportunities for companies to connect with customers in new ways. Before the acquisition, Salesforce offered software that enabled salespeople to keep track of their customers.

Solution providers said the deal will help Salesforce and its partners tap into the e-commerce space, which has been growing rapidly as retailers continue to expand their online presence.

9. Tianjin Tianhai

Company acquired: Ingram Micro

Head count: 27,700 employees

Annual sales: $43 billion

Purchase price: $6 billion

Deal closed: Dec. 6

Irvine, Calif.-based Ingram Micro was acquired by Chinese logistics firm Tianjin Tianhai, who folded the world's largest IT distributor into affiliated, $29 billion conglomerate HNA Group.

Ingram Micro CEO Alain Monie said in November that becoming part of HNA enables the distributor to gain market share in China and invest without being hamstrung by Wall Street.

Three of Ingram Micro's top executives have left as part of the acquisition process: President and Chief Operating Officer Paul Read; Chief Financial Officer William Humes; and Executive Vice President, Secretary and General Counsel Larry Boyd. The distributor also turned over much of its board of directors.

8. Symantec

Company acquired: Blue Coat Systems

Head count: 1,700 employees

Annual sales: $598.3 million

Purchase price: $4.65 billion

Deal closed: Aug. 1

Mountain View, Calif.-based Symantec fulfilled the acquisition promises the company made when it became a standalone security vendor earlier this year, bolstering its threat protection, cloud and web security software capabilities with its acquisition of Sunnyvale, Calif.-based Blue Coat Systems.

As part of the deal, Blue Coat CEO Greg Clark assumed the role of CEO at Symantec, filling a vacancy left by the departure of Symantec CEO Mike Brown. Later in the year, Symantec Chief Financial Officer Thomas Seifert stepped down and was replaced by former Blue Coat CFO Nick Noviello.

The deal created a single security vendor with around $4.2 billion in annual revenue, the majority of which comes from enterprise security.

7. Microsoft

Company acquired: LinkedIn

Head count: 9,700 employees

Annual sales: $2.99 billion

Purchase price: $26.2 billion

Deal closed: Dec. 8

Six months after revealing an agreement to acquire LinkedIn for $26.2 billion, Microsoft closed its largest acquisition ever.

The Redmond, Wash.-based vendor has several product integrations planned, including LinkedIn identity and network with Microsoft Outlook and the Office suite; LinkedIn notifications within the Windows action center; and enabling LinkIn members to draft resumes in Word to update profiles, and discover and apply to jobs on LinkedIn. Microsoft also plans to leverage LinkedIn to help users develop new skills online.

LinkedIn CEO Jeff Weiner will remain in charge of that company's affairs under Microsoft's ownership, and said that day-to-day operations will remain essentially unchanged.

6. Oracle

Company acquired: NetSuite

Head count: 4,600 employees

Annual sales: $741.1 million

Purchase price: $9.3 billion

Deal closed: Nov. 7

Oracle struck a deal to acquire cloud application company NetSuite, gaining access to the San Mateo, Calif.-based company's cloud ERP, CRM and ecommerce applications.

NetSuite has been a fast-growing company, consistently reporting revenue growth between 30 percent and 35 percent every quarter. But the focus on growth came at a price: The company had yet to turn a profit, and financial analysts said pressure on the company's stock indicated that investors were getting impatient.

While NetSuite was originally most successful in selling to small and midsize businesses and organizations, more recently it had been adding large enterprises and global companies to its customer roster. Oracle has been expanding sales of its cloud-based applications in recent years, although its customer base is more weighted toward large enterprises.

5. KKR & Co.

Company acquired: Optiv Security

Head count: 1,001-5,000 employees

Annual sales: $947.3 million

Purchase price: $2 billion

Date of announcement: Dec. 6

Expected to close: First quarter of 2017

Optiv Security is looking to take its vision global under KKR & Co.'s new private equity ownership.

One of the first steps under the new owners will be to sit down and "hone the master plan" to expand Optiv globally, said Dan Burns, CEO of the Denver-based company, No. 25 on the CRN Solution Provider 500. Optiv currently sells its products and services in 76 countries, but does so primarily using partnerships and regional distributors.

Burns said a large part of that strategy under New York-based KKR will be acquisitions, focusing initially on Europe and then Asia. From there, he said, Optiv could look to expand into South America and other regions two to three years down the line.

4. Tech Data

Entity acquired: Avnet Technology Solutions

Head count: 6,200 employees

Annual sales: $9.65 billion

Purchase price: $2.6 billion

Date of announcement: Sept. 19

Expected to close: First half of 2017

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