We did happen to come around several instances of news on tech acquisitions this year, but not all of them were that relevant in terms of the benefits they could reap in the near future. As the acquisition boom continues into the new-year, let’s spend some time on few of the top tech acquisitions which set on their initial journey this year and are being expected to be completed by end of the coming year. Here we go.
A general discussion…
The year saw big tech giants out on the acquisition spree with biggies like Apple (AAPL, Financial), Facebook (FB, Financial) and Google (GOOG, Financial) brokering important deals. The biggest shocker was Facebook’s buyout of WhatsApp and the Google’s sale of Motorola (MSI, Financial) followed by the Nest Labs acquisition.
Let’s take a look at the latest acquisitions that mattered in the technology world not because of the financial numbers involved but because of the new direction they gave to the acquiring lot, and the new strategies they depicted for the companies that took part in such deals.
The WhatsApp acquisition deal was huge
This deal was announced in early February this year and was closed with a price tag of $22 billion by Facebook, thanks to its increased value of stock in recent month. Facebook paid $4.98 billion in cash and 178 million of its stock to WhatApp, as well as 46 million of grants in restricted stock units for WhatsApp employees that will vest over a four year period. According to a Bloomberg piece, WhatsApp which had 400 million users in December, generated less than 3 cents in revenue for each one last year. By comparison, Facebook paid $55 per user when it acquired the company.”
But Facebook paid such a huge sum to acquire the loss making company as a part of the management strategy to build its own messaging app and WhatsApp serves this purpose. As a popular social networking site, Facebook now has a perfect photo sharing app which is Instagram and recently it added the messaging app, WhatsApp adding its list of active users to the kitty. In fact, as recent news sources have rumoured on WhatsApp advocating the addition of the voice calling feature, if the news is confirmed from the company’s end, it could offer wings to Facebook and add to its active monthly user count from all perspectives.
Facebook’s CEO, Mark Zuckerberg, has made it clear that WhatsApp is the path for Facebook to get its next batch of 1 billion users as only if the required numbers are achieved, would they start thinking of boosting their revenue and a business model.
Acquiring the music streaming company for diversification
Apple’s name is well renowned in the smartphone world and recently it expressed its desire to move into the music streaming industry, and thus to create waves there it confirmed in May this year that it had bought Beats Music for a deal worth $3 billion. Beats co-founders lovine and rapper Dr. Dre joined Apple as part of the acquisition of the music streaming and audio equipment company.
Though Beats Music had only about 200,000 subscribers at the time of the deal, Apple’s management seemed stern on this acquisition and were ready to spend their bucks on it. No more news has been sourced on this acquisition but surely we might have to keep an eye on Apple to see how this acquisition aids in entering a new domain of business and prosper just like it has already done in the smartphone and tablet arena.
Motorola earns a bright spot
Google which paid $12.5 billion to acquire Motorola in 2012 announced in January that it would be selling Motorola Mobility to Lenovo (LNVGY, Financial). As Moto phones are already generating enough buzz in developing markets like India this deal would be an excellent one for Lenovo as it shows the determination to grow as a smartphone maker in China and the rest of the world.
According to IDC data, Lenovo is the fourth largest smartphone vendor in the world with a 5.2% market share. And now with Motorola under its umbrella, the sales numbers are likely to go up remarkably.
Google added smart-home to its radar
While letting go Motorola, Google was thinking on improving its stand in the “Internet of things” space and thus it completed the acquisition of Nest Labs in January this year for a whopping $3.2 billion which was paid in a cash deal.
In a press release on this acquisition, Google stated that Nest would continue to operate independently under its founder, Tony Fadell. The internet giant said that the home device maker would retain its own brand identity and that the transaction would be closed in a matter of few months.
It was a sort of homecoming for Nest Labs as Fadell has been an ex-employee of Apple, popularly known as the “father of the iPod”. As Google explains Nest’s mission to be the “reinvention of unloved but important devices in the home.” For example, Nest has been selling its Learning Thermostat and smoke detectors and the connected devices aid in controlling it by using apps remotely, like the thermostat can be regulated to raise the temperature up or down.
Thus Google was excited to bring great experiences to homes in more countries and fulfil their dreams through this well-thought acquisition.
In essence, this deal was Google’s larger step into the living room, via regular devices made by Nest Labs that help to keep families safe by delivering amazing products.
Parting thoughts
It’s unlikely the only acquisitions that took shape during the year, but the ones discussed above were obviously remarkable in their own sense. In the coming year, we might need to stay tuned and watch how these acquisitions take real shape when the financial playbook of the companies reach greater heights as an impact of their decision to grow inorganically this year.
