JEGI 2013 M&A Overview: Deal Volume Rises in 2013 vs. 2012, due to Blockbuster Publicis/Omnicom Merger
New York, NY January 2, 2014 – Mergers and acquisitions in the media, information, marketing and related technology sectors saw 1,394 transactions announced at a total value of $88.6 billion. Dominated by the $21.9 billion Publicis/Omnicom merger, the value of announced deals climbed 19%, while the number of deals remained relatively flat vs. 2012, according to The Jordan, Edmiston Group, Inc. (JEGI) (www.jegi.com), the leading independent investment banking firm specializing in M&A advisory services across these core markets.
Marketing & Interactive Services continued to lead with 479 announced transactions valued at $45.1 billion, accounting for approximately 66% of total deal volume and nearly 50% of value in 2013, including the blockbuster Publicis/Omnicom merger.
Healthcare Information & Technology was the second most active sector with $10.5 billion in deal value, followed by Mobile Media & Technology, ending the year with $7.4 billion in M&A, more than double the total for 2012. The Education Information, Technology and Training, Database and Information Services, and B2C Online Media & Technology sectors each saw over $6 billion in announced transaction value.
The Return of Large Deals
2013 saw 14 transactions at $1 billion+ in value, with four of the top five in the Marketing & Interactive Services sector. The largest deal of the year was the $21.9 billion merger of Publicis and Omnicom, expected to close in the first half of next year. The top five also included the acquisitions of email marketer ExactTarget by Salesforce.com, sports marketing agency IMG Worldwide by William Morris and Silver Lake, and shopper marketing group Valassis Communications by Harland Clarke, a unit of MacAndrews & Forbes. The only top five deal outside of marketing was the acquisition of Springer Science+Business Media by BC Partners.
The remaining top 30 deals were well diversified across sectors, including Database & Information Services with four deals, the largest being I HS’s $1.4 billion acquisition of R.L. Polk & Co.; Marketing & Interactive Services with another six deals; B2C Online Media & Technology with three deals, led by Yahoo’s $1.1 billion acquisition of Tumblr; Exhibitions & Conferences with three deals, the largest being Onex Corporation’s $950 million acquisition of Nielsen Expositions (a JEGI transaction); Healthcare Information & Technology with three deals, including Roper Industries’ $1.0 billion acquisition of Managed Healthcare Associates; Mobile Media & Technology with three deals, the largest being Baidu’s $1.8 billion acquisition of 91 Wireless Websoft; Education Information & Technology with two more deals; and Consumer Magazines with one deal, the Funke Mediengruppe $1.2 billion acquisition of Axel Springer’s Regional Magazines, Program Guides & Newspapers.
JEGI Deal Announcements in Q4 2013
JEGI finished out the year strongly, closing four transactions in the last quarter of 2013 with a wide range of buyers. The deals announced in Q4 included (JEGI client listed first):
- The sale of Competitrack, an advertising tracking company, to Market Track, a portfolio company of Aurora Capital;
- The sale of BGT Partners, a creative digital consultancy, to PwC;
- The sale of Thomson Reuters’ fiduciary tax outsourcing business to EY; and
- The sale of JD Events’ Content and Communications World (CCW) and Satellite Communications Conference and Expo (SATCON) events to the National Association of Broadcasters (NAB).
JEGI foresees that M&A activity will continue to gain momentum in 2014, with a healthy pipeline of transactions and several promising market factors. Technology advances, particularly in mobile and data analytics, continue to drive large and middle-market companies to make acquisitions in order to maintain competitive relevance. Strong debt markets will continue to encourage lending for private equity and strategic acquirers. At the same time, private equity firms are expected to continue divesting companies acquired during the peak of 2006-2008 as these approach a typical five to seven year hold period, and PE firms are also looking to invest the capital that was raised in record amounts during 2007 and 2008. And most importantly, business and consumer confidence appear to be cautiously rebounding as the US economy resumes hiring.
M&A Highlights for 2013
Transactions for the b2b online media and technology sector decreased by 32% in 2013 vs. 2012, down to 57 deals for the year. Deal value could not compare to the $7.1 billion Alibaba Group/Yahoo and $3.3 billion Carlyle Group/Getty Images transactions in 2012. Notable deals in the fourth quarter of 2013 included Tribune’s acquisition of Gracenote, provider of online music recognition technology, from Sony for $170 million, and RealPage’s acquisition of Active Building, an online community portal for resident and staff communications in the multifamily housing industry, for $20 million.
The b2c online media and technology sector saw a decline in the number of deals and deal value, 13% and 39% respectively, in 2013 compared to 2012; however, it remained the second most active sector in number of deals. 2013 had 219 deals for a total of $6.2 billion in value in this sector. Q4 2013 saw a few notable deals, including: Groupon’s acquisition of Living Social Korea, a web-based platform for buying and selling products and services online, for $260 million; HomeAway’s acquisition of Stayz Group, provider of online holiday booking services in Australia, from Fairfax Digital for $195 million; the IAC/InterActiveCorp acquisition of ValueClick’s Owned & Operated Websites, comprises a broad range of content and e-commerce websites including Investopedia and PriceRunner, for $80 million; and the acquisition of upLynk, provider of live, linear, and on-demand video streaming services on various devices and platforms, by Verizon Digital Media Services for a reported $75 million.
M&A activity for the business-to-business media sector remained flat in 2013 compared to 2012, with 34 total transactions. Deal value rose slightly, by 10%, up to $452 million. Notable transactions in Q4 2013 included: RLJ Equity Partners’ acquisition of Naylor, producer of b-to-b magazines, websites, events and related services for associations, from ZelnickMedia and Clarity Partners for an undisclosed amount; the management team buyout of TTG Media, a weekly publication and online website for the travel industry, from UBM for an undisclosed sum; and the acquisition of Women in Higher Education, a magazine to empower women working in the higher education field, by John Wiley & Sons also for an undisclosed amount.
The number of transactions in the consumer magazines sector dropped 14% from 2012 to 37 transactions in 2013. However, deal value rose dramatically by 515% to $1.7 billion for 2013, largely due to Funke Mediengruppe’s $1.2 billion acquisition of Regional Newspapers, TV Program Guides & Women’s Magazines from Axel Springer in Q3. The fourth quarter was very quiet in the consumer magazines sector; the only deal of note was Bonnier’s acquisition of Sport Diver UK, a magazine focused on the diving industry, from Archant Lifestyle, for an undisclosed sum.
The database and information services sector saw a 17% increase in the number of deals to 69, but a decline in value, down 47% to $6.0 billion, mainly due to the $3.3 billion take-private of Transunion by Advent International and GS Partners in early 2012. Notable deals from this quarter included: BC Partners’ acquisition of Mergermarket, a mergers and acquisitions intelligence servicing company, from The Financial Times Group/Pearson, for approximately $625 million; Experian’s acquisition of 41st Parameter, a fraud detection software company, for $324 million; and EY’s acquisition of Thomson Reuters’ fiduciary tax outsourcing business for an undisclosed sum (a JEGI transaction).
The education information, technology and training sector grew in 2013 vs. 2012, up 27% in number of deals to 81 and 32% in value to $7.0 billion, driven by BC Partners’ $4.4 billion acquisition of a majority stake in Springer Science+Business Media earlier this year. Notable deals in Q4 included: Pearson’s acquisition of Multi Brasil, provider of English language education in Brazil, for approximately $829 million; Rosetta Stone’s acquisition of Tell Me More, publisher of learning language software for corporates, government, academic institutions, and others, for $29 million; Software Technology’s acquisition of Chalkable, provider of educational application tools for students, teachers, administrator, and parents, for a reported $10 million; and Goldman Sachs’ acquisition of a 49% stake in ProQuest, provider of electronic and microform information products to academic, school, public, corporate, and government libraries worldwide, from ABRY Partners for an undisclosed sum.
The exhibitions and conferences sector saw a 28% increase in number of deals to 64, and a sharp increase of 329% in deal value, up to $3.8 billion. The jump in value was driven by Goldman Sachs’ acquisition of PSAV, provider of creative, audiovisual, interactive, staging, and facility services for events, for $900 million this quarter, as well as the $950 million Onex Corporation acquisition of Nielsen Expositions (a JEGI transaction) and the $946 million Vista Equity Partners acquisition of Active Network, earlier this year. Other notable deals in this quarter included: Emerald Expositions’ acquisition of George Little Management (GLM), a leading tradeshow operator, for $335 million; SFX Entertainment’s acquisition of a 40% stake in Rock World, an electronic music festival in Rio, for approximately $65 million; and the National Association of Broadcasters’ acquisition of Content and Communications World (CCW) and Satellite Communications Conference and Expo (SATCON) from JD Events for an undisclosed sum (a JEGI transaction).
Compared to 2012, the number of transactions in the healthcare information and technology sector rose by 34%, while the value remained flat. It was the third most active sector (in terms of number of deals) and the second largest sector (in terms of deal value) in 2013, with 209 transactions at a total value of $10.5 billion. Notable deals for Q4 included: Experian’s acquisition of Passport Health Communications, provider of software and solutions for hospitals and other healthcare providers, for $850 million; Hearst Corporation’s acquisition of an 85% stake in Homecare Homebase, a healthcare software company that provides solutions for the homecare and hospice industry, for an undisclosed amount; and Perceptive Software’s acquisition of PACSGEAR, provider of image connectivity solutions for medical image management and electronic health record systems, for $54 million.
The marketing and interactive services sector continues to be the most active overall in both number of deals and deal value in 2013, with 479 transactions announced at a total value of $45.1 billion, or $23.2 billion without the $21.9 billion Publicis/Omnicom merger. There were several notable deals in the last quarter of the year, including:
- Silver Lake Management and William Morris Endeavor Entertainment acquisition of IMG Worldwide, a marketing and talent agency in the sports, entertainment, fashion, and media businesses, from Forstmann Little for $2.3 billion
- Harland Clarke Holdings acquisition of Valassis Communications, provider of direct-marketing products, including coupon dispensers in grocery aisles, newspaper inserts, social media, and more, for approximately $1.9 billion
- Oracle acquisition of Responsys, a marketing automation firm, for approximately $1.6 billion
- Dealertrack Technologies acquisition of Dealer.com, provider of marketing and operations software and services for the automotive industry, for $994 million
- R. Donnelley & Sons acquisition of Consolidated Graphics, provider of digital and commercial printing, fulfillment services, print management and Internet-based technology solutions, for $698 million
- Alliance Data Systems acquisition of a 60% stake in Brand Loyalty International, provider of promotional campaign-driven loyalty programs for food retail sector, for $360 million
- Verizon Digital Media Services acquisition of EdgeCast Networks, a content delivery network, for a reported $350 million
- Bain Capital acquisition of a 66% stake in Macromill, provider of B2B marketing research services, from Yahoo Japan for approximately $343 million
- Apple acquisition of Topsy Labs, a social media analytics company that provides real-time search and analytics, for a reported $200 million
- Answers Corporation acquisition of ForeSee Results, a provider of online customer satisfaction measurement solutions, for a reported $200 million
- Market Track acquisition of Competitrack, an advertising tracking company, for an undisclosed sum (a JEGI transaction)
- PwC acquisition of BGT Partners, a digital creative consultancy, for an undisclosed sum (a JEGI transaction)
The mobile media and technology sector continues to grow rapidly as the number of transactions rose by 17% to 145, and deal value more than doubled to $7.4 billion, due to SoftBank Corp. and GungHo Online Entertainment’s acquisition of a 51% stake in Supercell, provider of games for iPads, iPhones, and tablets, for $1.5 billion this quarter, as well as Baidu’s $1.8 billion acquisition of 91 Wireless Websoft and Google’s $966 million acquisition of Waze earlier this year. Other notable transactions from this quarter included Under Armour’s acquisition of MapMyFitness, a suite of social wellness-oriented websites and mobile and tablet applications, for $150 million, and Alibaba Group’s acquisition of UMeng, provider of an analytics tool for mobile developers, for $70 million.