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IoT sector mergers and acquisitions: 2018 year to date

M&A update: 2018 year to date

Deal volume as of June 30, 2018 is up, compared to the same period in 2017. For 2018, we have seen a total of 78 transactions close with another 22 announced. As of June 30, 2017, there had only been 45 transactions completed, representing an increase of 73.3% from 2017 to 2018. This puts 2018 IoT M&A on track to get close to or outpace 2017, which had 123 transactions close in the entire year. It should be noted, in addition, that deal volume so far in 2018 exceeds each of the five full years from 2010 to 2015.

Total disclosed transaction value of $1.1 billion in 2018 through June 30 is about 50% lower than the $2.3 billion during the same time in 2017 — a period which included the acquisition of ServiceMax, a cloud-based asset-tracking and field management company, by GE Digital for $915 million, and the acquisition of Comptel Corp., a data fabric and advanced IoT analytics company, by Nokia for $373 million.

So far in 2018, there have not been any deals closed over the $1 billion mark. However, 2018 could be a record year for IoT M&A in terms of dollar volume, with the closing of the acquisition of NXP Semiconductors by Qualcomm possible this year and expected to top $44 billion. With eight of the required nine global regulatory approvals already achieved, Qualcomm is waiting for approval from China before the acquisition can be finalized. This would represent the largest transaction in terms of IoT M&A; the previous largest transaction was Softbank’s 2016 $31 billion acquisition of Arm Holdings.

That said, there are a few other deals currently pending that are above $1 billion in transaction value, which include the $2 billion acquisition of GlobalLogic Inc. by Canada Pension Plan Investment Board. GlobalLogic provides IoT product development services, as well as adaption of existing products and services for a digital landscape.

The biggest closed deals in 2018 year-to-date are 3i Infrastructure’s acquisition of Wireless Infrastructure Group for $249 million and AVX Corporation’s $150 million acquisition of Ethertronics Inc and AU Optronics Corp.’s acquisition of Qisda Corporation for $115 million.

Private placement update

Private placements are also up in terms of transaction volume compared with the same period in 2017. There have been 150 completed transactions as of June 30, 2018 compared to 78 transactions completed by the same time in 2017, representing an increase of 92% year over year.

Dollar volume has also increased from $430 million by June 30, 2017 to $1.6 billion by June 30, 2018. It is noteworthy that the average deal size in 2017 was about $5.5 million and the average deal size in 2018 has doubled to about $10.7 million.

The closed transactions leading the higher dollar volume consist of the December 28, 2017 close of Huaqin Telecom Technology and the May 7, 2018 close of Mesosphere. Huaqin specializes in one-stop services from market research, product design and R&D to manufacturing of IoT products, like wearable devices, smart home products, AR/VR devices and auto electronics. The lead investors were Intel Capital and Hua Capital, raising $133 million. In 2018, Mesosphere leads the closed transactions having raised $125 million with T. Rowe Price and Koch Disruptive Technology as the lead investors. Mesosphere specializes in hybrid cloud infrastructure to power IoT and data-driven applications.

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