Finance

Mergers Down in Q1 Compared to ’14’s Hot Pace

Tech-Media-Telecom Transactions Continue to Dominate Deals 4/27/2015 8:00 AM Eastern
TakeAway

The pace of telecom/media/ technology deals cooled in Q1, but the sector still saw the most M&A action.

Telecom, media and technology deals were down in the first quarter, unable to keep up the blistering pace of last year, but the sector continued to dominate overall business deals, according to M&A watcher Mergermarket.

 

There were 612 deals valued at a total of $144.3 billion in the first quarter, with Charter Communications’s planned $10.4 billion purchase of Bright House Networks and Frontier Communications’s $10.5 billion buy of Verizon Communications wireline assets in Florida and California among the top five transactions for the period. But it was still short of the 673 deals valued at $181.5 billion the sector logged during the same period in 2014.

 

The biggest deal in the period was a British wireless deal BT Group’s $19.05 billion purchase of U.K. wireless carrier EE Ltd. EE (formerly Everything, Everywhere, a joint venture between Deutsche Telekom and France’s Orange) is the largest mobile services provider in the U.K., with about 30 million customers, and the deal was seen as a way for BT to bundle its fixed wireline service, TV and broadband with a wireless offering.

 

Frontier Communications’s deal for Verizon Communications wireline assets in Florida, California and Texas (including its FiOS TV operations in those states) will effectively double the size of the regional carrier. The Verizon properties include 3.7 million voice connections, 2.2 million broadband connections, and 1.2 million FiOS video connections. The acquisition is expected to close in the first half of 2016.

 

The Charter-Bright House deal is contingent on another major cable deal closing successfully: Comcast’s $67 billion purchase of Time Warner Cable. Bright House, which formerly operated under the same programing contracts as Time Warner Cable, would add about 2 million subscribers in Florida, and parts of California, Michigan and Alabama to the Charter fold.

 

But last week doubts that Comcast-TWC would receive the necessary regulatory approvals continued to mount after reports surfaced that Federal Communications Commission staff would recommend a hearing on the merger. As a result, Comcast was expected to walk away from the dal as early as last Friday.

 

Comcast notwithstanding, Mergermarket said all M&A sectors saw declines in the first quarter. And though telecom was again the most active, it also had the largest decline, from $105.5 billion in Q1 2014 to $70.4 billion in Q1 2015. Media transactions, the research company said, valued at $10.8 billion, played a small part in the consolidated sector deal-making share for the quarter.

 

Although TMT’s global M&A activity share fell from 28.6% last year to 19.2% in the most recent quarter, the consolidated sector has still been the strongest globally, according to Mergermarket, followed closely by the Consumer sector, with $143.2 billion in total deal value in Q1 2015.

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