NEW YORK: Analysts at Goldman Sachs Group Inc. said that the market for mergers and acquisitions was “healthier than headline volumes suggest” and pinpointed some tech stocks as ripe for M&A.
In a note published recently, before Monday’s big deal, Goldman analysts led by Jessica Binder added LinkedIn, T-Mobile US Inc., TripAdviser Inc., and Twitter Inc. to the bank’s proprietary basket of companies that it believes have at least a 15 percent chance of seeing “strategic“ M&A action in the next 12 months.
Goldman categorizes companies in its M&A basket as a ‘one’ or ‘two,’ with one meaning that the analysts believe there is a 30 to 50 percent chance of strategic M&A activity and two implying a 15 to 30 percent chance.
Twitter, LinkedIn, T-Mobile, and TripAdviser were all ranked at two while names including SunEdison SemiConductor Ltd. and Kimberley-Clark Corp. were new additions that garnered ones.
News of the LinkedIn deal caused shares of Twitter to take wing.
Goldman’s M&A basket was last updated on June 4 of 2015 — back when Twitter was still trading above $35 and LinkedIn shares were at $213.
Goldman argued that the M&A market is healthier than it appears despite a 28 percent drop in total deal volume year-over-year.
“In our view volumes do not tell the whole story as one reason they appear so depressed is an absence of mega-cap deals,” the analysts wrote on June 10.
“There has been just one US transaction over $25 billion so far in 2016 vs. 13 last year.”
Microsoft’s $26.2 billion deal reflects its new focus on business services and cloud computing, CEO Satya Nadella said in an e-mail to staff.
The tieup “is key to our bold ambition to reinvent productivity and business processes,” he added.
He identified several ways for the firms to integrate their services.
Each company has collections of data about their users, or “graphs,” that complement the other’s.
Microsoft holds data such as contacts and calendars, while LinkedIn has deeper biographical and professional network information.
“If you connect these two graphs, that’s when the magic starts to happen,” Nadella said, adding that Microsoft can use this data with its Cortana virtual assistant and artificial intelligence.
“Imagine you’re walking into a meeting and Cortana tells you about the people in that meeting because it has access to that professional network,” he said.
With its biggest-ever acquisition and one of the largest in the tech sector, Microsoft is adding tools to connect with business as it moves further away from its roots as a pure software firm.
The acquisition aims to position the former tech sector as a Facebook-like entity oriented to business, with an array of services centered around cloud computing.
“This deal brings together the world’s leading professional cloud with the world’s leading professional network,” Nadella said in a statement.
Nadella added that LinkedIn “has grown a fantastic business and an impressive network of more than 433 million professionals.”
LinkedIn “will retain its distinct brand, culture and independence,” with Jeff Weiner remaining as LinkedIn CEO, the companies said.
The firms said they had reached a “definitive” agreement that would close later this year, with the support of LinkedIn chairman and controlling shareholder Reid Hoffman.
Analysts were divided about whether the deal is good for Microsoft.
Benedict Evans, a member of the Andreessen Horowitz venture capital firm who blogs about technology, said it seems to be looking toward the future.
“Very clever and oblique MSFT thinking — how will we communicate, share & connect in a decade? Not docs + e-mail. Social graph is key,” he said in a tweet, referring to the company’s Wall Street trading symbol.
In a note published recently, before Monday’s big deal, Goldman analysts led by Jessica Binder added LinkedIn, T-Mobile US Inc., TripAdviser Inc., and Twitter Inc. to the bank’s proprietary basket of companies that it believes have at least a 15 percent chance of seeing “strategic“ M&A action in the next 12 months.
Goldman categorizes companies in its M&A basket as a ‘one’ or ‘two,’ with one meaning that the analysts believe there is a 30 to 50 percent chance of strategic M&A activity and two implying a 15 to 30 percent chance.
Twitter, LinkedIn, T-Mobile, and TripAdviser were all ranked at two while names including SunEdison SemiConductor Ltd. and Kimberley-Clark Corp. were new additions that garnered ones.
News of the LinkedIn deal caused shares of Twitter to take wing.
Goldman’s M&A basket was last updated on June 4 of 2015 — back when Twitter was still trading above $35 and LinkedIn shares were at $213.
Goldman argued that the M&A market is healthier than it appears despite a 28 percent drop in total deal volume year-over-year.
“In our view volumes do not tell the whole story as one reason they appear so depressed is an absence of mega-cap deals,” the analysts wrote on June 10.
“There has been just one US transaction over $25 billion so far in 2016 vs. 13 last year.”
Microsoft’s $26.2 billion deal reflects its new focus on business services and cloud computing, CEO Satya Nadella said in an e-mail to staff.
The tieup “is key to our bold ambition to reinvent productivity and business processes,” he added.
He identified several ways for the firms to integrate their services.
Each company has collections of data about their users, or “graphs,” that complement the other’s.
Microsoft holds data such as contacts and calendars, while LinkedIn has deeper biographical and professional network information.
“If you connect these two graphs, that’s when the magic starts to happen,” Nadella said, adding that Microsoft can use this data with its Cortana virtual assistant and artificial intelligence.
“Imagine you’re walking into a meeting and Cortana tells you about the people in that meeting because it has access to that professional network,” he said.
With its biggest-ever acquisition and one of the largest in the tech sector, Microsoft is adding tools to connect with business as it moves further away from its roots as a pure software firm.
The acquisition aims to position the former tech sector as a Facebook-like entity oriented to business, with an array of services centered around cloud computing.
“This deal brings together the world’s leading professional cloud with the world’s leading professional network,” Nadella said in a statement.
Nadella added that LinkedIn “has grown a fantastic business and an impressive network of more than 433 million professionals.”
LinkedIn “will retain its distinct brand, culture and independence,” with Jeff Weiner remaining as LinkedIn CEO, the companies said.
The firms said they had reached a “definitive” agreement that would close later this year, with the support of LinkedIn chairman and controlling shareholder Reid Hoffman.
Analysts were divided about whether the deal is good for Microsoft.
Benedict Evans, a member of the Andreessen Horowitz venture capital firm who blogs about technology, said it seems to be looking toward the future.
“Very clever and oblique MSFT thinking — how will we communicate, share & connect in a decade? Not docs + e-mail. Social graph is key,” he said in a tweet, referring to the company’s Wall Street trading symbol.
