Tech industry's biggest M&A deals of 2008

11.12.2008
The top 15 mergers and acquisition deals in the network industry for 2008 were worth nearly US$65 billion, and companies involved ran the gamut from those specializing in IT services to network routers to wireless and security. Carriers such as , Wireless and were among the biggest spenders. Given the practically nonexistent tech IPO market, proved to be a popular exit strategy for many this year. 

We've consolidated 60-plus tech M&A deals (and counting) from this year in our ongoing . Note that in many deals, the vendors don't publicly say how much they're forking over for their prize acquisitions, but here, we'll recap the top 15 based on publicly disclosed transaction values:

1. Verizon Wireless-Alltel: $28.1 billion (includes $22.2 billion in debt)

Apparently tired of being the second-largest U.S. wireless carrier, Verizon Wireless is vaulting past AT&T via this buyout of the nation's fifth-largest wireless carrier. After adding Alltel's 13 million customers to its ranks, Verizon will have the most subscribers in the United States, with around 80 million. AT&T, which has mostly held the lead for total wireless subscribers since merging with Cingular in 2004, had an estimated 71 million subscribers at the time the deal was announced in . As is frequently the case with big carrier deals, the Department of Justice requested that Verizon shed some assets in the name of . The Federal Trade Commission gave its in December.

2. HP-EDS: $13.9 billion

boasted in May when it announced the deal that it would double the company's services revenue and put it into the spot in the IT business services market behind IBM. More recently, HP detailed massive job cuts -- 24,600 of them -- and outlined its integration plans, including transferring HP services into EDS. Some worry that HP might keep its product and services for customers' comfort. According to the company's latest financial announcement, "HP Services (HPS) revenue increased 99% to $8.6 billion, led by $3.9 billion revenue resulting from the EDS acquisition." Apart from that buy, by 10% in 2008 over the previous year. 

3. Oracle-BEA: $8.5 billion

BEA stared down and got a better deal in January than the from a few months earlier. Some said at the outset that IBM might also be a winner from this deal by exploiting fear, uncertainty and doubt surrounding the middleware vendor's integration into Oracle. In July, Oracle spelled out its : All BEA products will continue under existing support timelines, with "no forced migration at all," Oracle CEO Charles Phillips said at the time. 

But moving forward, the combined company's middleware and infrastructure catalog will be broken into three categories: strategic; "continue and converge" and "maintenance," said Thomas Kurian, senior vice president, Oracle Fusion Middleware. Oracle also specified that BEA WebLogic Server will be Oracle's lead apps server, even though Oracle will continue to work on its own.

4. CenturyTel-Embarq: $5.8 billion

CenturyTel, a local exchange carrier and ISP that is based in Louisiana and that operates in 25 states, says merging with will give it a combined total of 8 million access lines, 2 million broadband subscribers and roughly 400,000 video subscribers. Additionally, the newly merged company would expand its reach to a total of 33 states, CenturyTel says. Not familiar with Embarq? You might know its ex-CEO: the ubiquitous Sprint CEO . 

5. Brocade-Foundry: $2.6 billion

Were still waiting for the i's to be dotted and t's to be crossed on this deal, initially . The value of the deal was downgraded from $3 billion to $2.6 billion , Brocade secured a loan in October to , and in November Foundry let pass a deadline by which it could have . The combination of Brocade and Foundry is seen as a direct effort to combat Cisco with a broader data center product collection, exploiting Brocade's strength in and Foundry's powerful routers.

6. Microsoft-Fast Search and Transfer (FAST): $1.2 billion

, suggesting that enterprise search has hit a tipping point, announced plans in January to gobble up this . Microsoft's efforts to play catch-up with also included a mid-summer buyout of search engine company Powerset for an . Unfortunately for Microsoft, the FAST deal hasn't been entirely smooth, as the Oslo-based outfit was charged with in November by Norwegian police. 

7. Sun-MySQL: $1 billion

The deal gives a stronghold in the , though also pits the company even more directly vs. big companies such as Oracle, IBM and Microsoft. Sun foresees big opportunities for database sales into those building Web-based businesses. Sun CEO Jonathan Schwartz also said that was nothing to sneeze at. 

Not surprisingly, the buyout has created something of a shakeup at MySQL, which has seen its or thinking about it. But MySQL faithful say they're generally optimistic about what , and in fact, Sun has announced several MySQL since the deal closed in February.

8. AT&T-Centennial Communications: $944 million

AT&T followed up its announced buyout of Wi-Fi specialist Wayport with the even bigger dollar acquisition of wireless service provider in early November. In purchasing Centennial, a regional provider of wireless communications services, AT&T says it will improve its wireless coverage in several rural areas in both the continental United States and in Puerto Rico.

9. Symantec-MessageLabs: $695 million

For , the acquisition gives it an alternative e-mail security offering to BrightMail, the company's antispam and antivirus appliance. MessageLabs offers a hosted . to the deal (along with the McAfee-Secure Computing transaction) with surprise given the high valuations of the acquired companies. 

10. Gores/Siemens-Enterasys: $550 million

This one's a little tricky. Enterasys will be combined with Siemens' Enterprise Communications group, of which a controlling interest was acquired by The Gores Group, the private equity firm that owns Gores will also include its SER Solutions call center software company in the joint venture. The result will be a $5 billion firm with more than 1 million customers, 15,000 employees and a presence in 80 countries, according to a fact sheet on the Siemens Enterprise Communications site. Gores will own a 51% stake in the joint venture while Siemens retains 49% ownership. Sadly, the CEO of Enterasys not long after the deal was made. 

11. McAfee-Secure Computing: $465 million

The September deal was touted as combining Secure Computing's in firewall, Web and e-mail gateway filtering with McAfee's intrusion prevention, desktop encryption, data-leak prevention, antimalware, regulatory compliance and centralized management McAfee CEO Dave DeWalt said at the time that the move is part of McAfee's efforts to offer a broader suite of products. McAfee earlier this year announced the purchase of data protection appliance and software maker .

12. HP-LeftHand Networks: $360 million

HP said in November it would buy to fill in its storage virtualization and iSCSI lines with products for midsize companies and remote offices and branches. The Boulder, Colo., was an early developer of SANs built around iSCSI. It sells software that runs on existing storage and industry-standard server platforms

13. Sophos-Utimaco: $314 million

With the acquisition, antivirus expert Sophos gets a sizeable foothold in the endpoint data protection market, where it will compete with McAfee and CheckPoint Software. Utimaco is dominant in Germany and Western Europe, selling mainly to the type of large-enterprise customers that Sophos covets, said Sophos CEO . Last year, Sophos bought its way into the network access control market via its .

14. Ciena-World Wide Packets: $290 million

The carrier Ethernet market has been this year, with anyone who is anyone announcing new products. Ciena attempted to solidify its position by snapping up privately held , which makes switches and routers for Ethernet service providers. Still on the block in this market: Nortel's .

15. AT&T-Wayport: $275 million

Wayport specializes in providing wireless-network management for several big companies, including Four Seasons hotels and McDonald's restaurants. By acquiring , AT&T will expand its Wi-Fi footprint to roughly 20,000 locations in the United States and more than 80,000 locations around the world. AT&T customers will have access to all the newly added Wi-Fi hot spots, the company says, and will be able to connect for free using their AT&T-enabled smartphones and laptops. Some industry observers say AT&T's move to treat Wi-Fi strategically is , whereas other carriers seem threatened by Wi-Fi.

One more for good measure

Cisco-Nuova: $678 million?

We weren't quite sure what to do with the announced in April. It's complicated in that Cisco already owned 80% of the switch maker. The reason we say it's difficult to judge the value of this transaction is that Cisco says the maximum potential payout for Nuova could reach $678 million based on the revenue of Nuova products over three measurement periods. The first measurement period will be early in Cisco's fiscal year 2010, the second measurement in late fiscal year 2010, and the third in mid fiscal year 2011. Nuova is behind Cisco's Nexus 5000 . 

IDG News Service contributed to this report.