Looking back, there were some huge tech acquisitions in 2016. AT&T bought Time Warner for $85.4 billion. Microsoft picked up LinkedIn for $26.2 billion. Verizon agreed to buy Yahoo for $4.8 billion.
Most of these acquisitions happened due to market changes and low interest rates that ignited a merger boom. But that boom has yet to die down. It certainly looks like the momentum will continue into 2017.
We’re guessing there are going to be some even bigger acquisitions this year. Some may even be alarming.
T-Mobile Will Finally Go
Ever since John Legere came on as CEO in 2012, T-Mobile has been on a steep rise. They were one of the first companies to adopt the “un-carrier” strategy, doing away with two-year contracts.
For a while, it looked like Sprint was going to acquire the carrier, but antitrust regulators denied the sale. They felt that a merger of the two wireless companies would set a dangerous precedent, and could even harm consumers.
So, T-Mobile is still trudging along, waiting for someone to come along and scoop it up. Who could that be?
The answer is Comcast. Yep, as crazy as that sounds, it’s likely, and that’s because Comcast has already announced plans to roll out a wireless service sometime this year. Initially, the company will lease network access from Verizon. If that does happen, and their service is successful, they’ll end up needing a network of their own.
This is where “ownership economics” — as Legere calls it — comes into play. To keep costs down and service reliable, Comcast will eventually need to purchase their own wireless spectrum. Where’s the best place to look? Why, T-Mobile, of course!
Sprint will likely join the race as well, continuing their pursuit of the company despite past failures.
Netflix Will Join the Big Leagues
Rumors abound that Apple, Google and even Disney are all interested in buying the streaming media giant. It would be a wise purchase for an entertainment brand. Netflix has an active subscriber base of millions, which only continues to grow.
Right now, the company has a market value of $50 billion, which means it would be an expensive sale. That’s exactly why it seems like a great time for the company to merge with one of the other tech giants in the industry.
Netflix’s CEO Reed Hastings made it clear he’s not interested in selling, but he won’t have a choice if they continue their spending trend. The company is on track to surpass the $6 billion mark in expenses. No doubt that’s due to the growing library of exclusives the company now offers, on top of all the other financial burdens of stocking a digital library.
To know for sure, we’ll have to keep a close eye on the company’s stock prices. If they start to drop, then a sale is not out of the question. Even so, those tech giants we mentioned are all salivating at the mouth waiting for a chance to scoop up the service.
There’s always the chance that a renowned gadget company could scoop up the service too. Don’t forget that Netflix also serves mobile content on a variety of devices.
Hewlett Packard and HPE Will Go to a Private Equity
HP and Hewlett-Packard Enterprise have had some tumultuous shifts over the past few years. The company has sold a large majority of its software and enterprise services and is instead focusing on a smaller portion of the market.
With Meg Whitman as CEO, HP restructured the company. For now, high-end servers, storage and data center hardware seem to be their game. But what’s left could easily be scooped up, and if the rumors prove true, that may actually end up happening sometime this year.
Recent mutterings reveal several private equities are interested in purchasing the company. The price would certainly be hefty, but that doesn’t vault it into the realm of impossible. On the contrary, a private equity may be extremely willing to dole out the necessary cash.
It’s happened before when Vista Equity Partners snatched up Ping Identity for about $600 million. Earlier that year, they had also acquired Marketo for $1.79 billion.
Expect Some Major Acquisitions Throughout 2017
These are just predictions, so there are no guarantees. We may be wrong or we may be right — only time will tell. But one thing is certain. Thanks to low interest rates and continued tech boom, there are sure to be some significant — maybe even surprising — mergers throughout the year.
What are your predictions?
Image by Jason Blackeye