M&A SNAPSHOT

Q1 2012
APRIL 2012

M&A SNAPSHOT
OVERVIEW COMMENTARY
M&A activity in Q1 2012 was down from year ending 2011 levels. Within the $25 million - $1 billion transaction value range, median transaction size increased by 14% to $103mm, although M&A volume was down 28% to 41 transactions. While activity levels have been down for the past two quarters, we believe weve already seen the trough and expect M&A activity to increase for the foreseeable future. Several factors give us condence. First and foremost, the broader economic concerns which weighed on strategic decision making in Q3 and Q4 2011 have moderated somewhat. Second, the IPO market has shown increasing levels of activity. Sector IPOs included Millenial Media (mobile marketing), VIPShop (Chinese commerce), ExactTarget (muti-channel digital marketing), Demandware (digital commerce platform), Brightcove (video distribution platform), BazaarVoice (reviews) and Yelp (local reviews). History indicates that many of these companies will become active acquirers over the next 12-18 months. Q4 2011 IPOs, Groupon and Zynga are good examples, acquiring nine companies between themselves in Q1 2012. Third, marquee deals can be inuential to the psychology of the M&A market. As we nalize preparation of this report, Facebooks $1b acquisition of Instagram was just announced. That transaction, along with Zyngas acquisition of OMGPop, SingTels acquisition of Amobee and IBMs acquisition of Worklight were all high valuation premium transactions. This past quarter, Architect Partners has published its M&A Alert on ten of the most strategic transactions in the quarter.

FOLLOWING ANALYSIS
M&A DASHBOARD: NOTABLE ACQUIRERS: M&A TRANSACTIONS: OTHER NOTABLE TRANSACTIONS:
SUMMARY OF QUARTERLY ACTIVITY IN NUMBERS AND TONE ACTIVE INFLUENTIAL BUYER ACTIVITY SUMMARY OF TRANSACTIONS BETWEEN $25MM-$1B IN VALUE SUMMARY OF NOTABLE TRANSACTIONS WITHOUT ANNOUNCED VALUE OR ABOVE $1B.

COMING SOON
ANALYSIS OF VC-BACKED M&A EXITS

M&A DASHBOARD
COVERAGE
Architect Partners tracks M&A activity within the converging Internet | mobile | digital media sectors. The following assessment is focused on M&A transactions with announced values of between $25mm and $1B as these typically represent successful business-building endeavors. Q1
38

MARKET TONE
Good. Although pace has slowed, we anticipate upward trend in foreseeable future. Generally balanced buyer/seller dynamics. 2010 Q2 Q3
68 53 40

Q4

Q1
68

2011 Q2 Q3
61 63

Q4
57

2012 Q1
41

M&A Exits (#)........................................................................

$12 $6 $12

$14

$12

$11

$9

$5 27 17 18 16 23 23

$7

Total Consideration Paid ($b)...........................................

12

19 12

Venture-Backed M&A Exits (#).........................................

$75 $100 $98 $105 $98 $113 $80 $90 $103

Median Transaction Size ($mm)........................................

55% 45% 52% 49% 48% 49% 52% 42% 56%

U.S.-based Target (%)...........................................................

!"#$$ !%#$$ !"&$ !'($

!"#$

!%&$

!"'$

!(#$

!"#$

All Internet | Mobile | Digital Media M&A Exits(1)(#).....

Note: 1) Includes all Internet | mobile | digital media transactions regardless of transaction value. Transaction values within a range are presented as a mid-point value

NOTABLE ACQUIRERS
The following acquirers are generally active or inuential buyers within the Internet | mobile | digital media sectors. Below, we highlight announced acquisitions in the rst quarter of 2012.

ACQUIRER

# 6 3 3

TARGET

Software Business

3 2 2 2 2 2 2 2
Video Codec

1
4

NOTABLE ACQUIRERS (continued)

ACQUIRER # 1 1 1 1 1 1 1 1 1 1
Media Assets

TARGET

1 1 1 1
5

M&A TRANSACTIONS: $25MM-$1B

Below highlights M&A transactions that have announced values of between $25mm and $1b announced in Q1 2012 within the converging Internet | mobile | digital media sectors.
ANNOUNCED DATE TRANSACTION VALUE ($MM) AP INSIGHT SM M&A ALERT VCBACKED

BUYER

TARGET

TARGET DESCRIPTION

NON SERVICE PROVIDER TRANSACTIONS 1 01/23/2012 Semtech Gennum $501 Develops semiconductor products and intellectual property (IP) cores for consumer connectivity, enterprise, video broadcast and data communications applications. Develops online casino games.

01/12/2012

International Game Technology

Double Down Interactive

$500

01/27/2012

Siemens

RuggedCom

$427

01/13/2012

Lions Gate Entertainment

Summit Entertainment

$422

Provides wired and wireless communications and networking solutions (including switches, routers, servers, multiservice platforms and network management) that accommodate harsh industrial environments including extreme temperature (40C to +85C), water immersion and Zero-Packet-Loss immunity against high levels of electromagnetic interference. Operates a theatrical motion picture development, financing, production, and distribution studio.

03/03/2012

PLATO Learning

Archipelago Learning

$370

Provides subscription-based software-as-a-service education products including standards-based instruction, practice, assessments, reporting, and productivity tools to enhance students' performance via Web-based platforms. Develops power-efficient high bandwidth servers. !

02/29/2012

Advanced Micro Devices

SeaMicro

$334

03/05/2012

Singtel

Amobee

$321

Provides software which enables advertisers, publishers and wireless carriers to deliver targeted mobile marketing and advertising to mobile customers.

02/24/2012

Cisco

Lightwire

$271

Develops interconnect solutions for networking, communication, server, and storage systems for data center, metro, and telecom networks. Products include Ethernet optoelectronic interconnects and optical transceiver modules. Develops technologies that enable real-time voice, video, and data communications over the Internet and other networks based on the Internet Protocol (IP). Provides email and social media marketing solutions for businesses.

03/14/2012

Avaya

Radvision

$218

10

02/24/2012

Vocus

iContact

$189

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# 11 ANNOUNCED DATE 03/21/2012 BUYER Zynga TARGET OMGPOP TRANSACTION VALUE ($MM) $180 TARGET DESCRIPTION Provides an online platform that allows members to play games, chat, share photos and meet new friends online. AP INSIGHT SM M&A ALERT VCBACKED !

12

01/24/2012

Meredith

Allrecipes.com

$175

Operates as an online social network of food and entertaining enthusiasts who discover and share food ideas through user generated recipes, reviews, photos, profiles, and meal ideas. Provides mobile banking and payments solutions for financial institutions. !

13

03/26/2012

Monitise

ClairMail

$174

14

01/31/2012

ShoreTel

M5 Networks

$158

Provides hosted VoIP phone systems to businesses.

15

02/07/2012

Ienergizer

Aptara

$150

Provides digital publishing solutions including content management solutions and a publishing platform for multi-channel workflows.

16

01/23/2012

Intel

QLogic Corp Product Lines And Certain Assets Of Infiniband Business RealNetworks's Certain Patent and Codec Assets comprise Next Generation Video codec Software and Tools. Travel Channel International

$125

Provides fabric technology to connect servers in high-performance computing environments.

17

01/26/2012

Intel

$120

The purchase comprise Next Generation Video codec software and tools.

18

03/22/2012

Scripps Networks Interactive

$103

Produces and commissions original travel programming.

19

02/03/2012

Redbox Automated Retail

NCR, Certain Assets of Entertainment Line of Business SmartSynch

$100

The acquisition includes the purchase of the DVD kiosks, certain retailer contracts, and DVD inventory. Coinstar and NCR also will enter into a strategic supplier arrangement where Coinstar will purchase product and services from NCR. Develops IP-based smart grids for utilities, commercial and industrial customers. !

20

02/15/2012

Itron

$100

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# 21 ANNOUNCED DATE 02/14/2012 BUYER NCSoft TARGET Ntreev Soft TRANSACTION VALUE ($MM) $96 TARGET DESCRIPTION Develops 3D casual online, multiplayer online, and PC-online games. AP INSIGHT SM M&A ALERT VCBACKED

22

01/31/2012

IBM

WorkLight

$70

Offers HTML5 mobile application development and management platform which allows organizations to develop and deliver HTML5-based native applications that can be integrated with existing enterprise IT systems. Develops system on a chip (SoC) silicon powering femtocells.

23

01/05/2012

Mindspeed

Picochip

$65

24

01/05/2012

Synchronoss

Miyowa

$52

Provides messaging and social networking solutions for mobile devices. Its foremost solution, InTouch5, aggregates a users social networks, IM & Mail in one mobile interface. Provides mobile social marketing services.

25

03/16/2012

PlayPhone

Social Hour

$52

26

02/23/2012

Apple

Chomp

$50

Offers a mobile app search and discovery engine which allows users to easily find apps not just by the title of the apps and limited metadata, but by deeper functional descriptions of the apps. Provides managed television broadcasting services for broadcasters.

27

03/12/2012

Ericsson

Technicolor's Broadcast Services Division

$49

28

03/26/2012

RDA Microelectronics

Coolsand

$46

Develops IP cores for baseband communications including ICs, cores and software for GSM, GPRS, and EDGE.

29

03/09/2012

Green Dot

Loopt

$43

Provides a location-based check-in service which enables users to discover and review local places, share location updates, geotag photos, find nearby friends and get nearby deals/offers. Provides music streaming, TV and video streaming, payment and search services for mobile devices.

30

01/12/2012

Schibsted

Aspiro

$40

Note: Transaction values within a range are presented as a mid-point value

M&A TRANSACTIONS: $25MM-$1B (continued)

# 31 ANNOUNCED DATE 02/16/2012 BUYER Opera Software TARGET Mobile Theory TRANSACTION VALUE ($MM) $40 TARGET DESCRIPTION A mobile advertising network with a focus on the U.S. mobile advertising market. AP INSIGHT SM M&A ALERT VCBACKED

32

03/05/2012

Shuffle Master International

Ongame Network

$39

Provides online poker software solutions.

33

02/06/2012

Rambus

Unity Semiconductor

$35

Develops non-volatile storage-class memory products to the semiconductor memory data storage market.

34

03/02/2012

Laird

Summit Data Communications

$30

Provides embedded Wi-Fi hardware and software solutions for mobile data capture.

35

02/07/2012

Sage Pay

Integral Computers

$27

Provides cardholder present (CHP) payment processing solutions to SME retailers that have either standalone or integrated Electronic Point of Sale (EPOS) payments requirements.

M&A TRANSACTIONS: $25MM-$1B (continued)

# ANNOUNCED DATE BUYER TARGET TRANSACTION VALUE ($MM) TARGET DESCRIPTION AP INSIGHT SM M&A ALERT VCBACKED

SERVICE PROVIDER TRANSACTIONS 1 02/05/2012 Consolidated Communications Holdings Telekom Austria SureWest Communications $532 Telecommunications services provider. U.S.-based.

02/02/2012

YESSS! Telecommunikation's Frequencies, Base Station Sites, and Intellectual Property Rights Vividwireless

$514

These assets comprise IP rights, frequencies and base stations sites of Austrian mobile phone operator, YESSS! Telekommunikation GmbH.

02/20/2012

SingTel Optus

$248

Provides wireless broadband and Internet services. Australia-based.

02/29/2012

Altice One

Caboviso

$60

Provides cable television, high-speed Internet access, telephony, and data transport services for residential and business customers. Portugal-based.

03/27/2012

Riverwood Capital

MANDIC

$55

Internet service provider. Brazil-based.

01/16/2012

Tele2 Eesti

Televrgu

$32

Telecommunication service provider. Estonia-based.

Note: Transaction values within a range are presented as a mid-point value

10

M&A TRANSACTIONS: OTHER NOTABLE

A number of important transactions were announced in the rst quarter of 2012 with consideration in excess of $1b or with unannounced transaction values.
ANNOUNCED DATE 03/15/2012 TRANSACTION VALUE ($MM) $5,022 AP INSIGHT SM M&A ALERT VCBACKED

# 1

BUYER Cisco

TARGET NDS Group

TARGET DESCRIPTION Provides software solutions that enable service providers to securely deliver and monetize pay-TV (including cable TV, IPTV and satellite TV) services across multiple screens and devices (including set-top-boxes, DVRs, PCs, tablets and phones) to consumers. Provides an online platform that allows users to upload, share, watch, rate, and comment on videos in China.

03/11/2012

Youku

Tudou

$1,144

01/19/2012

Constant Contact

CardStar

NA

Develops a mobile application that allows consumers to consolidate membership and rewards cards and mobile coupons within a single application in their smartphone. Offers acceleration services for websites, mobile websites and applications through an integrated suite of Web and Mobile Acceleration Services from its global distributed points of presence (POPs). Offers communication service providers carrier-grade Wi-Fi wireless networking equipment allowing service providers to complement their existing wireless (3G and 4G) and wired networks with small-cell Wi-Fi networks as a quick and costeffective way to augment and manage network capacity. Provides network-connected digital marketing hub that integrates with point-ofsale systems in the convenience store and petroleum retailing market.

02/08/2012

Akamai

Blaze Software

NA

02/21/2012

Ericsson

BelAir Networks

NA

03/01/2012

VeriFone

LiftRetail

NA

03/15/2012

AOL

Hipster

NA

Enables users to create digital postcards with location data that can be shared with their friends and family.

Note: Transaction values within a range are presented as a mid-point value

11