JEGI H1 2013 M&A Overview: Media & Marketing M&A Activity Relatively Flat Year‐Over‐Year
New York, NY June 27, 2013 – The media, information, marketing, healthcare and technology sectors saw a healthy 708 transactions in the first half of 2013, roughly even in both volume and value with the first half of 2012, excluding Alibaba Group’s buy‐back of 20% of its shares from Yahoo for $7.1 billion in 1H 2012. As expected, the year got off to a slow start following the rush of year‐end deal closings ahead of impending tax law changes. The second quarter saw a pickup in both number and size of announced M&A transactions, according to The Jordan, Edmiston Group, Inc. (JEGI) (www.jegi.com), the leading independent investment bank specializing in M&A advisory services across these core markets.
Deal volume in the first half of the year was driven by continued activity in the Marketing & Interactive Services sector, which accounted for nearly one third of the total deals announced and approximately 25% of transaction value. Education Information, Technology & Training saw a surge in deal value, due to BC Partners’ $4.4 billion acquisition of a majority stake in academic publisher Springer Science & Business Media in the second quarter.
The subsequent most active sectors were B2C Online Media & Technology and Healthcare Information & Technology, both with over 100 deals and over $4 billion in value in 1H 2013. The Database & Information Services and Mobile Media & Technology sectors also saw strong activity this half, with $3.2 billion and $2.7 billion in deal value, respectively.
Large Deals in 1H 2013
The second quarter of 2013 saw six deals with $1 billion or more in value, after none in the first quarter. Interestingly, only one was led by a private equity firm; the rest were strategic company acquisitions.
- BC Partnersʹ $4.4 billion acquisition of a majority stake in Springer Science & Business Media, as noted above;
- Salesforce.com’s $2.25 billion acquisition of ExactTarget, a provider of cross‐channel digital marketing SaaS solutions;
- The $1.4 billion I HS acquisition of R.L. Polk & Co., a provider of automotive intelligence and marketing solutions;
- Google’s $1.3 billion acquisition of Waze, a social mobile application that enables drivers to build and use real‐time road intelligence on smartphones;
- Yahoo’s $1.1 billion acquisition of Tumblr, an online platform that enables users to share text, photos, quotes, links, music, and videos across any channel; and
- The $1.0 billion Roper Industries acquisition of Managed Healthcare Associates, provider of pharmacy solutions and data analytics for long‐term care and other healthcare providers.
Four additional deals in 1H 2013 rated $500 million to $1 billion in value, with a mix of private equity firm acquirers and strategic company buyers.
- Onex Corporation’s acquisition of Nielsen Expositions, a leading operator of business‐to‐business tradeshows in the U.S., for $950 million (JEGI advised Onex on this transaction);
- The Expedia acquisition of a 61% stake in Trivago, a hotel search web site, for approximately $627 million;
- Alibaba Group’s acquisition of an 18% stake in Weibo, an online microblogging service, for $586 million; and
- The Temasek Holdings acquisition of a 10% stake in Markit Group, a financial information services company that provides credit derivative pricing services to financial instructions, for $500 million.
Healthcare IT – A Key Driver of M&A Activity
The U.S. healthcare system is undergoing unprecedented change as a result of the Patient Protection & Affordable Care Act (ACA) signed in March 2010, and these changes have created opportunities for companies across the entire healthcare landscape. We are at the dawn of the information age in healthcare, and data and information solutions will lead the transformation of healthcare by addressing many of the industry’s major issues and challenges. As a result, Healthcare IT is a key driver of M&A activity, and JEGI expects this surge in healthcare IT M&A to continue over the next 12‐24 months. JEGI has identified four major “Market Catalysts” that will drive M&A activity in this sector:
- Higher Patient Volumes at Lower Reimbursement Rates – Innovative operational and work flow solution software tools have emerged as a way to improve financial performance by eliminating waste and streamlining operations. Given the immediate need to optimize operational and financial performance across healthcare, JEGI believes that companies providing these next‐generation solutions will be in high demand by software vendors seeking to expand their presence in the market. We expect acquirers to include traditional players, such as Emdeon, Allscripts and MedAssets, as well as relatively new market entrants.
- Informatics and Data‐driven Decision Making – Healthcare companies are looking to accomplish value‐based medicine, which is the highest level of the informatics life cycle. This requires additional investments in a variety of technical components in order to create an end‐to‐end platform to enable enhanced use of a system’s data, including data collection, data aggregation, decision support, and communication. M&A activity will be driven by the large size of the market, the desire of large vendors to fill out their product portfolio and innovation from smaller participants.
- The Emergence of the Consumer Patient – With more individuals realizing that they cannot be passive participants in their own health treatment, patients have become better consumers and are applying greater scrutiny to the care they receive. In response, innovative companies are leveling the information imbalance in healthcare and enabling the consumer patient to better determine price, quality and ultimately value. Pricing and quality transparency tools, social media platforms and patient engagement solutions have emerged recently to address this trend. This will drive a considerable amount of M&A activity, as most healthcare companies are still under‐invested in patient communication and engagement tools.
- Transformation of the Healthcare Insurance Market – The healthcare insurance market is also undergoing dramatic change as a result of the ACA. Corporations are struggling to meet the requirements set forth under the ACA and are seeking ways to alleviate the financial burden imposed by healthcare insurance premiums. Information technology will play a key role in this transformation by creating public and private insurance exchanges and helping to create a B2C marketplace for healthcare insurance. M&A activity in this area has begun, and we expect many transactions to occur in the near‐term.
Active Quarter for JEGI
M&A activity picked up for JEGI in the second quarter of 2013, with five deal closings, although only four have been officially announced, including (JEGI client listed first):
- Onex Corporation’s $950 million acquisition of Nielsen Expositions, as mentioned above;
- MyWebGrocer, a leading provider of shopping and shopper marketing software and services, receiving a significant investment from private equity firm HGGC;
- The sale of Group SJR, a leading digital consultancy specializing in insights, content creation, curation, and audience development, to Hill+Knowlton Strategies, a subsidiary of WPP; and
- The sale of Digital Broadcasting Group (DBG), a leading creator, producer, and distributor of premium video content across digital media, to Alloy Digital.
M&A Highlights for 1H 2013
M&A activity for the b2b online media and technology sector was slow in the first half of 2013, as compared to 1H 2012, with a 26% decline in the number of deals announced and deal value sharply down primarily due to the $7.1 billion Alibaba Group/Yahoo transaction in the first half of 2012, as mentioned above. Notable Q2 2013 deals included: Answers Corporation’s acquisition of Webcollage, a web‐based application used to publish product information for manufacturer retail channels, for $37 million; TheStreet’s acquisition of DealFlow Media’s DealFlow Report, Life Settlements Report and PrivateRaise Database newsletters; and IntraLinks’ acquisitions of both PE‐Nexus, an Internet deal flow exchange and private social network for M&A, and MergerID, an online matching tool for buyers and sellers of mid‐market companies around the world.
B2c online media and technology was an active sector for M&A in 1H 2013, with 119 transactions at a total value of $4.0 billion. Compared to 1H 2012, the number of deals dropped slightly, by 10%, and transaction value remained flat. Notable deals in the second quarter of 2013 included: Yahoo’s $1.1 billion acquisition of Tumblr; Alibaba Group’s acquisition of an 18% stake in Weibo for $586 million; Baidu’s acquisition of PPStream, a provider of online video services, for $370 million; DreamWorks Animation’s acquisition of AwesomenessTV, operator of a YouTube channel for teens, for $150 million; and Demand Media’s acquisition of Society6, an e‐commerce marketplace for artists, for $94 million.
Transaction value for the business‐to‐business media sector increased dramatically vs. 1H 2012, with several deals over $10 million, whereas 2012 saw very few in the $10+ million range. The number of transactions remained flat, with 15 in 2013, compared to 14 in 2012. In the first quarter of the year, Catalyst Investment Managers acquired Reed Business Information Australia for $42 million and Euromoney Institutional Investor acquired financial publisher Insider Publishing for $25 million. Notable deals in Q2 included: Edmond de Rothschild Investment Partners and BNP Paribas’ acquisition of Reed Business Information France; LexisNexis’ acquisition of Sheshunoff Information Services, publisher for finance professionals, from Thompson Media Group; and Times Media Group’s acquisition of BDFM Publishers from Pearson.
The consumer magazines sector also saw significant growth in the first half of 2013, with 24 transactions at a total value of $281 million, due to a few larger deals in Q1 2013. The most prominent deal was NC2 Media’s $75 million acquisition of Lonely Planet Publications, a publisher of travel guidebooks, digital books, city guides, and maps. Notable deals for the second quarter included the TeamRock and Harwood Private Equity $15.4 million acquisition of Classic Rock and Metal Hammer magazines from Future, and Arthur Frommer’s repurchase of Frommer’s Travel Guides, which were sold to Google in August of 2012.
M&A activity for the database and information services sector saw a total value of $3.2 billion in 1H 2013, which was down 26% from the first half of 2012. In 1H 2012, deal value was largely driven by the $3.3 billion take‐private of Transunion by Advent International and GS Partners. The sector only had one deal above the $1 billion mark this year, I HS’s $1.4 billion acquisition of R.L. Polk & Co. Other prominent deals in Q2 2013 included: the Temasek Holdings acquisition of a 10% stake in Markit Group for $500 million; McGraw Hill Financial’s acquisition of a 22% stake in CRISIL, a provider of ratings, research, and risk and policy advisory services, for $335 million; and Electra Partners’ acquisition of UBM’s data services business, Delta, for approximately $214 million.
The education information, technology and training sector saw strong growth in the number of deals announced in the first half of 2013 – up 52% vs. 1H 2012. Additionally, deal value increased significantly, due to BC Partners’ $4.4 billion acquisition of a majority stake in Springer Science & Business Media. Other notable deals in the second quarter of this year included Elsevier’s acquisition of Mendeley, a social platform for academics and organizations to collaborate on research, for $69 million, and Pearson’s acquisition of IndiaCan Education, provider of training for educating and employing the youth in India, for $22 million.
The number of deals in the exhibitions and conferences sector remained flat, with 30 transactions in 1H 2013 vs. 28 transactions in 1H 2012. However, deal value spiked, due to Onex’s $950 million acquisition of Nielsen Expositions (a JEGI transaction). Additional notable deals for the quarter included: Reed Expositions’ acquisition of Expo Nacional Ferretera, a Mexican event serving the hardware, construction and electrical markets, for $25 million; Global Sources’ acquisition of a 70% stake in Shenzhen International Machinery Manufacturing Industry Exhibition (SIMM), manufacturing tradeshows in China, for $16 million; and Hanley Wood’s acquisition of the Greenbuild Conference & Expo, an event for the sustainable construction industry.
The healthcare information and technology sector was the third most active sector in the first half of 2013, with 104 transactions at a total value of $4.2 billion. The number of deals increased by 16%, but deal value dropped by 25%, as 2012 saw more large transactions, including nine deals over $200 million in value. Notable deals for Q2 2013 included: Roper Industries’ $1.0 billion acquisition of Managed Healthcare Associates; Qiagen’s acquisition of Ingenuity Systems, a provider of information solutions and services for life science researchers, for $109.4 million; JLL Partners’ acquisition of BioClinica, a provider of integrated clinical research technology solutions to pharmaceutical, biotechnology, medical device companies, for $104.9 million; and Jawbone’s acquisition of BodyMedia, maker of wearable health tracking devices, for approximately $100 million.
Although the number of deals and value declined in the marketing and interactive services sector in 1H 2013 vs. 1H 2012, by 11% and 17%, respectively, the sector continues to be a major driver of M&A activity, with 224 deals accounting for $6.8 billion of value in the first half of 2013. Notable transactions this year included the:
- Salesforce.com acquisition of ExactTarget for $2.25 billion;
- Trulia acquisition of Market Leader, a provider of online technology and marketing solutions for real estate professionals, for $314 million;
- Accenture acquisition of Acquity Group, a provider of brand e‐commerce and digital marketing services, for $285 million;
- Significant investment in MyWebGrocer by HGGC (a JEGI transaction), for which terms were not disclosed;
- Intel acquisition of Mashery, a provider of API management services that enable companies to leverage web services as a distribution channel, for approximately $180 million;
- Salesforce.com acquisition of EdgeSpring, a provider of visual analytics and business intelligence solutions, for $79 million;
- Genesys Telecommunications Laboratories acquisition of SoundBite Communications, a provider of cloud‐based marketing, proactive customer care, and collections/payments solutions, for $66 million;
- St. Ives acquisition of Branded3 Search, an integrated digital marketing and search engine optimization (SEO) agency, for $38 million;
- Wipro acquisition of Opera Solutions, a provider of big data predictive and prescriptive analytics, for $30 million;
- Chime Communications acquisition of People Marketing, a sports marketing and communications agency, for $29 million;
- Alloy Digital acquisition of DBG (a JEGI transaction), for which terms were not disclosed;
- Hill+Knowlton Strategies, a subsidiary of WPP, acquisition of Group SJR (a JEGI transaction), for which terms were not disclosed;
- Taylor Nelson Sofres, a subsidiary of WPP, acquisition of Sinotrust Market Research, provider of market research and consulting services, from Experian, for an undisclosed sum;
- Accenture acquisition of Fjordnet, a provider of digital service design consulting services, for an undisclosed sum.
The mobile media and technology sector increased by 14% in number of deals, up to 82 transactions, and rose in overall deal value by 6%, reaching $2.7 billion, in 1H 2013 vs. 1H 2012. Notable deals in the second quarter included: Google’s $1.3 billion acquisition of Waze; LinkedIn’s acquisition of Pulse, a mobile news aggregation startup, for $90 million; and Facebook’s acquisition of Parse, a provider of cloud‐based software developer kits for mobile devices, for a reported $85 million.