Wall Street and tech analysts are predicting that 2022 could bring on a merger-and-acquisition shopping spree from the tech giants.
Microsoft and other cloud giants are already off to a hot start: The Redmond giant announced last week it was making its largest-ever acquisition, buying video-game publisher Activision in an all-cash deal valued at about $68.7 billion. Earlier this month, Google Cloud bought the Israeli security startup Siemplify for about $500 million. And right at the end of 2021, Oracle announced it planned to buy medical the records giant Cerner in a $28 billion deal.
More deals seem likely given this month's market woes, where tech stocks across the board have been hit hard suppressing their market caps and perhaps making takeover bids more feasible. Big names like Zoom are down 22%, and others as low as 40%, in the stock market's worst downturn since the first COVID-19 crash.
"The market downturn will lead to a surge of M&A in the tech sector," Wedbush analyst Dan Ives told Insider on Friday. "Between strategic and financial buyers there is roughly $600 billion of dry powder to do deals."
Matthew Hedberg, managing director of software research at RBC Capital Markets, told Insider that declining software-company valuations could indeed "open up some interesting potential M&A" from tech's biggest players.
In the cloud-computing and software space in particular, more deals could be on the horizon. Fluctuating startup and big company valuations, plus a changing view of M&A from the big cloud vendors, will likely lead to some top-dollar acquisitions this year, analysts told Insider.
Tech giants also have more buying power right now because they haven't been as punished by market volatility , Dan Newman, Futurum's principal analyst, said. So for an Amazon, Microsoft, or Google, if they "see something on sale, and it's going to fill a particular need," they're likely to set out on some "opportunistic shopping," Newman said.
Microsoft in particular has an even stronger position after reporting strong third-quarter earnings on Tuesday, led by its Azure cloud growth, which Ives called "robust cloud guidance 'for the ages," in a recent investor note.
To get a sense of which other companies might be on the tech giants' shopping lists this year, Insider asked analysts which firms they thought were ripe for acquisition. The companies included specialize in security, productivity software, data, and developer tools.
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12 Cloud Companies That Could Be Takeover Targets in 2022 - Business Insider
