M&A Has Returned, Will It Last? – Real Time Insight

There were three big deals that caught my eye yesterday, each for different reasons. One was aggressive, one was defensive and one was a play that reminded me financial buyers still see value where others do not.

First the aggressive deal. Facebook acquired Instagram for $1 billion shortly after the photo sharing network raised $50 million from venture capital at a valuation of $500 million. This deal was aggressive in that Facebook paid a lot for something that it wasn’t doing that well in, mobile pictures. The iPhone app for Facebook made users take several steps before they could add pictures. Another aspect here is the upcoming IPO for Facebook just got sweeter for investors.

The second deal was a defensive one. Microsoft purchased a portfolio of patents from AOL for a little more than $1 billion. This deal, to me, was defensive as Microsoft wanted to protect itself from any future litigation on roughly 800 technology topics. This follows the Google acquisition of Motorola Mobility (for its patents) and the Yahoo! lawsuit against Facebook and Facebook’s subsequent acquisition of patents from IBM. These deal seem to be more of a fortification of the wall than a new weapon to conquer your enemies.

Finally, there was the AT&T deal with a private equity group to sell a controlling interest in the physical production of the Yellow Pages. The $950 million deal is perplexing in that the yellow pages are a dying brand and business, but is still profitable. One report has yellow page revenue north of $3 billion last year, making the price to sales of the deal well below 1.0, or what Warren Buffett would call a bargain.

Does this M&A give you confidence in the market? Yes, this is mostly tech focused, but it does cover the gambit of why M&A happens. Where else do you see M&A in the market?