The M&A market in the first quarter of 2009 went almost – but not quite – on hold in the face of the economic downturn plus tight credit markets. Transactions and transaction value declined 36% and 91%, respectively, versus Q1 2008. In the first quarter of the year, 129 transactions were announced across the media, information, marketing services and technology sectors, as tracked by JEGI, marking a 7% decline against Q4 2008 deal activity. However, the $1.3 billion in deal value in Q1 2009 is the lowest on record since JEGI began compiling M&A volume more than 10 years ago.

Major media, information, marketing and technology companies continue to re-tool their businesses for digital and are actively looking for strong acquisition opportunities of high-growth, emerging businesses

Marketing and interactive services was very active in the first quarter, with 37 deals announced, valued at $467 million. However, there were few significant transactions in Q1, 2009 to compare with the more notable transactions of Q1 2008, such as the recap of Undertone Networks by JMI Equity and the sale of e-Dialog to GSI Commerce.  Noteworthy transactions in Q1 2009 include JEGI’s sale of mSnap to SmartReply, and Haggin Marketing’s acquisition of SolutionSet.

Online media & technology was the most active sector for M&A in Q1 2009, with 43 transactions, accounting for 33% of total deals announced. Major media companies, such as The Walt Disney Company, were active in acquiring consumer online media companies to expand their digital offerings. Others spun off non-core assets, such as IAC’s sale of Match.com to Meetic for $100+ million, and its divestitures of ReserveAmerica and 236.com. However, many transactions were last-resort exits for companies that could not continue independently, which helped account for an 87% drop in deal value, as compared to the first quarter of last year.

The database and information services sector saw eight transactions completed in the first quarter of 2009. Deal value for this sector sharply declined from the first quarter of 2008 in the absence of multi-billion dollar transactions, such as Hellman and Friedman’s $2.4 billion acquisition of Getty Images and Reed Elsevier’s $4.1 billion purchase of ChoicePoint. 

JEGI has compiled a list of the 20 most active Strategic Acquirers during the period of 2004 to 2008.   United Business Media ranked number one with 50 acquisitions, Thomson Reuters ranks second with 42 acquisitions, Reed Elsevier ranks forth with 39 acquisitions.  Yell Group (Yellow Pages) is ranked 7th with 28 deals, Yahoo ranks 9th with 27 deals followed by Microsoft, rank 10th with 26 deals.  Experian is ranked 17th with 18 deals.  Source: JEGI Client Briefing  April 2009  www.jegi.com

BIIA Newsletter April 2009 Issue