In previous posts, we looked at Telecom and Data Center acquisition activity from 2016. In this final M&A post we will cover Cloud and Unified Communications (UCaaS). Similar to the last couple of years, the high level of acquisition activity in the cloud and UCaaS marketplace was fueled by companies trying to keep pace with the latest technology innovations and/or gain market share.
Below is the M&A recap for 2016:
(This market segment is rather broad, please forgive if we miss a couple.)
In an effort to keep up with competitors, Oracle made a few acquisitions in 2016.
Oracle bought some much needed market share with a $9.3B acquisition of NetSuite. Buying NetSuite, one of the first cloud-services companies, will help Oracle compete against the likes of Salesforce.com Inc., Microsoft Corp. and SAP SE. The NetSuite acquisition represents a serious ramping up and is Oracle’s second largest acquisition after its hostile $10.3B takeover of PeopleSoft Inc. in 2005.
Oracle also acquired Dyn, the Internet traffic company that was the victim of an epic hack last October that knocked out multiple popular sites for much of a day. The purchase price Oracle agreed to pay was not disclosed, though an unnamed source pegged it at slightly more than $600M.
The tech giant made a few other purchases in 2016 as well:
- Palerra - a startup that helps companies use cloud computing resources securely
- Opower - a cloud-based software company that stores and analyzes billions of meter readings, helps to improves customer service, and meet regulatory requirements for utility companies
- Textura - a cloud services company that offers contract and payment management solutions for the construction industry
Cisco acquired Jasper Technologies, a cloud-based Internet-of-Things service platform provider that calls itself the “on switch” for IoT. The acquisition, in which Cisco paid $1.4B in cash and assumed equity awards, as well as additional retention-based incentives, is Cisco’s biggest purchase since it bought cybersecurity company Sourcefire in 2013 for around $2.5B.
Cisco also bought ContainerX, an early-stage startup that develops virtual container technology for data centers. The terms of the deal were not disclosed. ContainerX is billed as a multi-tenant, Container-as-a-Service platform for both Linux and Windows.
IBM made a couple purchases in 2016 to help bolster their offering, Bluewolf, a Salesforce partner that will help extend IBM's analytics platforms, design and consultancy businesses, with the overall aim of delivering "differentiated, consumer-grade experiences via the cloud." They also bought Massachusetts-based Resilient Systems, a privately held cybersecurity firm that specializes in incident response.
Blue Coat scrapped its IPO plans in favor of a $4.65B takeover by IT security rival Symantec. The acquisition creates a single security vendor with around $4.2B in revenue for 2016, the majority of which comes from enterprise security, and a portfolio that includes endpoint, email, DLP, data center, cloud security and secure web gateway solutions.
Akamai made a few moves to boost its cloud offerings and talent pool. They acquired Concord Systems to add in a bit of big data. Then they acquired Soha Systems to add enterprise secure access capabilities to the mix.
BroadSoft continued to roll up smaller players, adding to the company's potential market reach with key technology and talent acquisitions. Early in the year they acquired Transera, entering the cloud contact center space. The next acquisition was Intellinote, a company that specialized in enterprise messaging and collaboration software. VoIP Logic was the third purchase of 2016, which added a wholesale component to the business, helping smaller service providers take advantage of their cloud capabilities.
Other UCaaS acquisitions:
- Vonage made a deal of its own, acquiring Nexmo to boost its cloud communications capabilities aimed at the enterprise space.
- Masergy will be changing private equity hands, as Berkshire Partners revealed the purchase of the company from ABRY Partners.
- After Mitel announced that it would acquire Polycom for $1.96B and consolidate the two companies’ enterprise communication businesses, private equity firm Siris Capital swooped in with a better offer. They agreed to acquire Polycom for $2B in cash and take it private.
While mergers and acquisitions typically conjure up uneasy feelings, the current rate of consolidation in the cloud and UCaaS market will drive competition and, in turn, innovation. We see this as a positive aspect and look forward to seeing how it all shakes out.
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