M&A activity: frenzied

M&A activity: frenzied

Are we in 2005? Recent investments furiously look similar to M&A moves in the end of the 90s. A large company which is investing billion of dollars in a small company with almost no sales, recall me some famous operations before the telecom downturn. Or another large company frenziedly pursuing an asset purchasing strategy, recalls me lots of names in the 95-00 time frame. Yes, the main difference with today is scale. But it could the start of a new race.

So, eBay (auction portal and online retailer) is buying Skype (Voip) for some $2.6bn to $ 4bn. Diversification seems the main criteria for the move, as synergies are not yet field proved. Skype has about 50m+ customers, but almost no sales ($50m), and a business case different from eBay. The move is a bet on Voip. How far can regulators distort the VOIP market? Nothing is yet definitively written.

The second big move of the week is Oracle buying Siebel for $3.6bn ($6bn minus cash available). For Oracle it is its seventh acquisition in the year! The strategy is clear: growth in buying market share and customers. But can a company integrate and digest seven (at least) large acquisitions (worth $17bn) in a year? Are they going in the wall? Larry Ellison, Oracle CEO, has to be clever.

The third operation is NextWave buying Packetvideo. The move is surprising for both companies. First NextWave is just emerging from a bankruptcy process, and plans to launch a commercial broadband wireless network in Las Vegas this year and in 2007 in New York. PacketVideo was split in 2003, when Alcatel bought its networking business, and is now selling software to handset makers. Is there a market rationale behind the deal? Not immediately obvious.