m-a-2015
Business Management

This year in M&A: Tech deals & Christmas cheer

This is a contributed piece by Brett Cole of ansarada


Yahoo, Yahoo, Yahoo

If grace under fire defines the stature of leaders then Marissa Mayer has it in spades. Asked by CNBC why shareholders should trust her after Yahoo called off its plans to spin off its Alibaba stake because of tax risk, Ms. Mayer’s reply was all business.

“We still do feel the forward spin that we had originally proposed is very likely to be tax efficient. But that said, we did overall, see indications, certainly in the market, around uncertainty as to the tax treatment and the duration of time it might take in order to get to resolution. And so given that, we feel it’s prudent at this time to look at alternatives like the reverse spin. But this is really a board level question and I can also hand it to Maynard (Webb, Yahoo chairman).”

But defusing hostile questions it of course the least of Ms. Mayer’s concerns. She gave birth to twins a short time after the interview.

Yahoo shareholders and indeed all of Silicon Valley will watch what Ms. Mayer does in the next year with Yahoo. How will it deal with its investments in Alibaba and Yahoo Japan? Can Yahoo, with one billion users, be saved? If Yahoo is sold can Ms. Mayer get a decent price tag for a core business that has annual revenue of about $5 billion?

Her decisions will go a long way as to how history remembers her tenure as a CEO that ironically may be more about her ability as a merger and acquisition deal maker than as the chief executive of a business.

Qualcomm

Who says you can’t face down so-called activist hedge funds? Qualcomm has shown a bit of steel in its spine by rejecting the argument of Jana Partners that asked in April, after becoming a shareholder, that the chipmaker split and cut costs.

Qualcomm has concluded that splitting into two separate companies, one that makes research advances and sells intellectual property, and the other that makes chips, would be good for the company.

“The strategic benefits and synergies of our model are not replicable through alternative structures,” said Steven Mollenkopf, Qualcomm’s chief executive.

Qualcomm argues its research into chip designs is aided by making chips, since the chip business enables the company to gain rapid adoption of its designs and helps it participate in establishing industry standards. The less profitable chip business, in the meantime, benefits from lower research and development costs, Qualcomm said.

Still, while chip demand is robust, competition is hurting the bottom line companies such as Qualcomm.

Dell’s Christmas

It would be remiss in the holiday season not to spread a little cheer in an otherwise bah humbug year for tech IPOs.

Atlassian, the Sydney, Australia maker of business development and collaboration software, was the fifth-biggest IPO in the US when it priced its stock earlier this month.

Perhaps partly inspired by Atlassian, which priced its IPO above its expected price range, but mostly because he needs to close a $10 billion financing gap, billionaire Michael Dell has decided to sell shares in an IPO of SecureWorks security division.

SecureWorks, which helps companies check for computer intruders, is one of several assets that Dell’s parent company, Denali Holding, hopes to sell or take public as it looks to close the $67 billion EMC deal. Dell is also seeking a buyer for its Perot Systems technology-services unit that it acquired for $3.9 billion, the Wall Street Journal reports.

For Mr. Dell a nice present would be the successful execution of these two deals.

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