Digital M&A – Deals That Shaped 2018
This year saw some landmark acquisitions in the digital commerce and communications industry – we review the highlights (so far).
With the month of December still left to play out, 2018 has witnessed some big moves in the merger and acquisition arena across the digital marketing and ecommerce sectors.
Despite competition for investment dollars from emerging peripheral markets (notably AI and blockchain), e-retail platforms, digital marketing services and payment solutions all attracted major attention from both trade and strategic buyers.
With 7 acquisitions at $1bn+ closed in H1 2018 alone, several of the alliances struck throughout the year are set to alter the commercial landscape for some time to come.
Here’s our pick of the standout deals of the year so far:
US retail giant Walmart splashed out $16bn to acquire a 77 percent stake in Flipkart, India’s largest online retailer.
Seen by analysts as a strategic move to keep pace with other e-retail heavyweights (chiefly Amazon, who moved onto Walmart’s home turf of in-store grocery shopping with their purchase of Whole Foods), the deal included $2bn of new equity funding for growth and left the door open for Flipkart to go public at a later date.
After being delisted from the NASDAQ in 2016 by Vista Equity Partners for $1.8bn, Marketo found a new home for a hefty $4.75bn as Adobe looked to fortify their digital marketing offering (Experience Cloud) to keep pace with competitors Salesforce, HubSpot, Oracle and SAP. Beginning life as recently as 2006, Marketo added marketing automation to the Adobe product suite as part of a rapidly-expanding digital experience portfolio.
Variously described as an ‘engagement’ or ‘communications’ platform, Twilio offered developer-focused capabilities in channels covering voice, video, chat, SMS, social media and connected devices – with the addition of email marketing specialist SendGrid for $2bn in stock, a key gap was plugged (albeit for a price that stunned many onlookers). With the acquisition slated to close in the first half of 2019, combined revenues could be north of $700m by that point.
Carrying property listings for nearly 15,000 estate agency branches, Zoopla has been a dominant force in the UK residential property market and the ‘PropTech’ sector. US PE heavyweight Silver Lake, impressed by the growth of the online platform and its 50 million monthly visits, forked out £2.2bn for the ZPG group of companies – a nice deal for founder Alex Chesterman, who was also behind the LoveFilm movie subscription service acquired by Amazon.
WPP & Dentsu splurge
Leading marketing conglomerates WPP and Dentsu Aegis both added to their sprawling portfolios throughout the year. While no single deal made the big news, the two giants got their checkbooks out on a number of occasions.
WPP added Hirshron-Zukerman Design Group, Gorilla Group, 2Sale and Emark, creating additional capabilities in fields covering design, marketing technology, Amazon retail services and more, before announcing the merger of JWT and Wunderman to create a new advertising superpower.
In May payment superpower PayPal spent $2.2bn to purchase Swedish fintech firm iZettle, adding point-of-sale hardware to its suite of commerce solutions. Timing was tight on the deal, as iZettle had filed for IPO only days before PayPal announced the news.
Targeting the small business sector, iZettle uses a mobile-based card reader to allow digital payments, similar to rival Square.
The purchase is part of a series of diversification moves by PayPal, who also own P2P payment platform Venmo and business loan provider Swift Financial.
The only acquiror to appear twice on our list, Adobe showed their ambition with a double-headline year, not only buying Marketo but also scooping up e-commerce platform provider Magento from European PE firm Permira for $2.68bn, a revenue multiple of over 11x.
Once again up against Salesforce and Oracle (among others), Adobe saw Magento as a key gap in its ability to provide e-retailers with a comprehensive infrastructure and marketing solution, adding the capability to build, run and market web stores through a single platform provider.