Programmatic Lunch

2016: The Year in Acquisitions

Alex Spencer

As the year draws to a close, we've taken a look over some of the industry's biggest and most surprising buyouts of the past 12 months, starting with a round-up of smaller deals and working our way up to our pick for acquisition story of the year.

for sale

Apps and ads
In the first major deal of the year, marketing services group St Ives acquired development firm The App Business. In January, it paid £22.3m for an 82.2 per cent share of the company, before acquiring the rest through an option arrangement.

That was followed in February by Microsoft's $250m acquisition of SwiftKey, the UK company behind the successful mobile keyboard app. SwiftKey's own app are still operating, while Microsoft integrated the technology into its own typing software – but the main thinking behind the acquisition seems to be an interest in how SwiftKey’s predictive technology could play into Microsoft’s work with AI, which has taken its first major steps this year.

Also in February, enterprise mobile consultancy firm Mubaloo was bought by marketing agency IPG Mediabrands for an undisclosed sum, planning to fold its talent and resources into IPG’s specialist mobile division, Ansible. Speaking to Mobile Marketing nine months on, Mubaloo MD Sarah Weller said of the acquisition process: “We have put a lot more focus into our relationships with Mediabrands, working closely with McCann and Initiative for example, who are pulling us in for the digital strategy parts. It’s giving us access to clients we would not have had a chance of getting in to pitch before.”

In June, mobile marketing technology company Fiksu was bought by global asset management firm Noosphere, which folded the acquisition into Californian marketing agency ClickDealer. The move came one year after Fiksu had to abandon plans for an IPO, laying off 10 per cent of its workforce, with the cutting of another 10 per cent of staff and a number of its international offices following later that year.

Ad management platform Sizmek was acquired by private equity firm Vector Capital in August for approximately $122m in cash. The price was up two-thirds on Sizmek’s share price at the time, but shareholder rights law firm Tripp Levy alleged at the time that the deal “unfairly under-values the true going-forward inherent value of Sizmek” to the detriment of shareholders.

In November, Adobe acquired video DSP TubeMogul for approximately $540m. The deal aimed to create ‘the first end-to-end independent advertising and data management solution that spans TV and digital formats’, with TubeMogul integrated into Adobe’s Digital Marketing business.

Finally, just last week, Manchester-based digital product agency Code Computerlove was bought by WPP-owned global media agency MediaCom for an undisclosed sum. Code will remain in its Manchester office, and continue to be run by founders Tony Foggett, Louis Georgiou and Wini Tse – who maintained a combined 25 per cent stake in the business.

Microsoft-Logo-IRL.jpgMicrosoft sells Nokia, buys LinkedIn
The ongoing saga of Nokia’s ownership – which began when the manufacturer’s mobile business was bought by Microsoft in 2013 – continued this year, as it first acquired smart health firm Withings in April, and then was sold off by Microsoft in May.

FIH Mobile, part of the Hon Hai/Foxconn Technology Group, bought out the Nokia brand and its Vietnamese manufacturing facility for $350m, compared to the €5.4bn Microsoft paid for the full business less than three years earlier – and what remained of Microsoft-owned Nokia was seemingly dumped just a few days later, as it announced 1,850 job cuts.

By June, Microsoft had moved onto its next major acquisition, LinkedIn. It paid $26.2bn, the biggest deal in its history – beating its 2011 acquisition of Skype, for $8.5bn – and one of the biggest acquisitions in recent tech history.

pebble-time-three-colours.pngFitbit and Pebble
In May, Fitbit acquired wearable payment platform Coin for an undisclosed sum, in order to incorporate the NFC payment solution into its activity trackers and other wearables.

Fitbit followed up on this acquisition in December, as it confirmed long-standing rumours and bought fellow wearable maker Pebble. The official price of the deal remains undisclosed, but initial reports pointed to a price between a price between $34m–40m. Interestingly, this did not include Pebble’s hardware products – the smartwatches it originally made its name with on Kickstarter – and was instead focused on acquiring Pebble’s staff, which will work on wearable software with Fitbit.

Pebble CEO acknowledged it was a “bittersweet” development, as the company had been forced to take the deal after its recent struggles, which saw it lay off a quarter of its staff in March. While Pebble devices will continue to function as normal for now, this support may not be maintained in the longer term.

verizonVerizon buys Yahoo – or does it?
At the very beginning of 2016, we already had a pretty good idea of what the year’s biggest acquisition story would be. Last December, we reported on rumours that Yahoo – after a difficult few years – was considering selling off its core business, though no buyers had stepped forward at the time.

What we could never have predicted, however, was just how drawn-out and complex that selling process would turn out to be.

Yahoo set a deadline of 11 April for acquisition offers, with names as diverse as Time Inc, Microsoft, Rakuten and the Daily Mail all buzzing round as potentially interested parties. By the end of the month, the buyers were narrowed down to around 10 companies, and when bidding entered the third and final round in June, that was down to just three: US telcos Verizon and AT&T, and a consortium led by Quicken Loans founder Dan Gilbert.

Verizon eventually won out, with a bid of $4.83bn – and that, it appeared, was that.

Then, however, came not one but two disclosures of user data breaches from Yahoo. The first, which took place in late 2014 and was announced in September, affected 500m accounts – setting a new record which was broken only by Yahoo itself in December, when it revealed an August 2013 hack which had compromised over 1bn accounts.

Reports began circling after the first disclosure, but almost immediately after the second came word that a legal team led by Verizon’s general counsel Craig Silliman was assessing the damage from the breaches, with an eye to renegotiating a lower price for the deal or plugging the plug completely. Only time will tell what it decides.

If Verizon does end up pulling out, it won’t be the only major deal to fall through this year.

Three logo IRL storeIn May, the £10.3bn takeover of O2 by Hutchison, owner of rival UK operator Three, was blocked by the European Commission over anti-competition concerns. The European Commission said it had strong concerns that UK mobile customers would have less choice and pay higher prices as a result of the takeover, and that it would harm innovation in the mobile sector.

In July, meanwhile, Opera was forced to renegotiate a deal, first forged in February, which would have seen a consortium of Chinese companies acquire its entire business, after it failed to get regulator approval. The deal was changed to cover just Opera’s mobile and desktop browser, performance and privacy apps, technology licensing business and 29.1 per cent stake in Chinese firm mHorizon. The price of the acquisition shrank accordingly, from $1.2bn to $600m.