UK technology companies were involved in a third of global technology takeover deals in 2008, according to a report by PricewaterhouseCoopers (PwC).
The value of merger and acquisition (M&A) activity in the UK technology sector increased 10 percent in 2008 to €17.7bn (£16 bn), in a year where global volumes declined by a fifth to 570 completions, the report said.
A few “mega deals” in the first quarter were behind the increase in M&A transaction value. But the final quarter of 2008 saw the lowest level of completions since a low in 2002 after the dotcom bubble.
Despite the increase in value, M&A deal activity fell during last year with 162 deals involving a UK bidder or target in 2008, compared with 184 in 2007. PwC said 2009 will witness a shift away from the "mega deal" as 91% of transactions were valued in the €10 million to €250 million range.
"The technology sector has held up better than many other industries. The harsh lessons learned from the bursting of the technology bubble in 2001/2002 have left the industry better placed to deal with today's challenges," said Andy Morgan, technology sector leader at PwC.
Morgan said technology companies that survived the dot.com burst are "better equipped" to deal with the current economic storm.
"But the big questions is – has the technology deal environment developed some truly defensive attributes, or will the inevitable impact of the downturn on corporate IT budgets hit home in 2009?" Morgan added.
The Financial Times reported that the largest deals that closed last year that involved UK firms included Reed Elsevier’s €2.4 billion acquisition of US risk IT group ChoicePoint, the KKR’s €773m buy-out of Northgate Information Solutions, another group with many government customers; and Axon’s takeover by HCL of India for €557m.