The mergers and acquisitions market has “sprung back to life”, said Lina Saigol in the FT. On Monday ten deals worth a total of $27bn were announced across several sectors; the first quarter, by contrast, was dominated by defensive pharma mega-mergers.
The market upswing has bolstered overall corporate confidence, while some companies have managed to persuade banks to lend them money to do deals. Big firms are also taking advantage of lower valuations.
The major deals included PepsiCo offering $6bn for its two biggest bottling companies; pharma giant GlaxoSmithKline paying $3.6bn for skincare group Stiefel Laboratories; and software behemoth Oracle pouncing on its ailing Silicon valley Neighbour Sun Microsystems for $7.4bn.
Oracle takes on IBM
Oracle’s business is based mostly on databases for corporate computer systems and business software, so why is it buying a hardware maker specialising in servers? Because Sun “has been beefing up its software business”, says Economist.com. It boasts Solaris, one of the best operating systems, and Java, a programme behind most business applications.
Buying these “jewels” will also prevent IBM snapping them up. Indeed, said David Wighton in The Times, IBM will now have “a large rival that competes across its whole product range, from hardware to software”.
• ORCL: $19; 12m change -10%