2014 seems to be shaping up as the year of the merger. Three mega-mergers, totaling an estimated $110 billion, have come out in just the last several months, and there could be more on the horizon. The reason for mergers is simple, cash-rich companies are looking for different ways to expand their businesses, and change the face of technology. The technology sector, admittedly, has seen the most merger deals on the table this year.
Comcast Looks to Merge with Time Warner Cable
Comcast has made headlines since January, when the company entered into talks with Time Warner Cable. Comcast, currently the number one cable, telephone and business internet service provider in the country, is looking to acquire Time Warner Cable, which is currently ranked as the second largest provider.
The merger would expand Comcast\’s reach into several new markets. The deal, which is worth an estimated $46 billion, has some regulatory issues to contend with, and the FCC commission is not yet on board with it. In an attempt to have the FCC sign off, the company announced a spin-off company, in conjunction with a smaller cable company. The spin-off company is an attempt to lower their total number of customers. Neither deal has been finalized, but talks are moving forward, and the FCC is appearing to be more favorable towards the notion in recent weeks.
Facebook Buys WhatsApp in a Surprise Bid
Facebook is no stranger to gobbling up smaller, technology companies and social media avenues. In 2012 Facebook purchased Instagram for $1 billion. Instagram, if you\’re not aware, is a social media app that allows users to share pictures and short videos. Its use exploded since its inception and has shown no signs of slowing down since the merger.
In 2014, Facebook has moved to purchase WhatsApp, the Wi-Fi enabled texting program that became popular the year before, for $19 billion in a cash and stock deal. WhatsApp has become increasingly popular worldwide, and allows users to speak to those internationally without incurring expensive data charges. The app relies on a Wi-Fi connection to send and receive text messages.
Apple Sets Sights on Beats
Apple has set its sights on Beats Music and Beats Electronics. The merger, announced in late May, would give Apple access to the Beats technology, including their headphones and music subscription service. The merger would allow Apple to close up several holes in its service, including its attempt at iTunes Radio, which has been hailed as a rare statistical failure. The acquisition will also effectively squash other companies from using the Beats technology. Currently HTC and HP both have Beats in their products. The acquisition will cost Apple $3 billion, with a $2.6 billion cash deal, and $400 million vested.
Google Purchases Nest
Nest, a company in the technology sector working on smart products, was gobbled up by Google for $3.2 billion this year. Google has gone on a bit of a merger and acquisitions tirade in the last two years, first purchasing Motorola in an attempt to garner a stronger hold in the smartphone market. Now, Nest. Nest is producing smart thermostats and smoke detectors, and have several more innovative products in the pipeline. Now that they have merged with Google, you can expect to see more innovative products rolling out of the company. The Behemoth that is Google has both the time and money available to spend on the growing company.
Mergers and acquisitions are nothing new, especially in the technology sector, but it has been many years since the world has seen so many mega-mergers taking place. Industry insiders agree that it makes perfect sense, and it is a good way for larger companies to bolster their revenue in a stale economy. Start-ups and small companies are also poised to profit from the deals.