Mobile – one of the most attractive sectors for M&A activity
09 March 2017
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Mobile – one of the most attractive sectors for M&A activity

All eyes were on Barcelona last week, where four full days were dedicated to the Mobile Industry at the Mobile World Congress 2017. Mobile-connected products and services, events to encourage kids and support women in the mobile industry, conference sessions dedicated to game-changing apps, products, services, devices, connected cars, virtual reality, new handsets and technologies – the programme had it all.

Discussions around advancements in technology and their impact on the mobile industry and around consumer IoT, content & media, government and public policies, networks, sustainable development, platforms, and the Fourth Industrial Revolution took place among highly anticipated speakers, mobile visionaries and representatives from over 2300 companies.

Daniel Kurgan, CEO at BICS, leading provider of mobile data services, spoke at the event about ways in which IoT and collaboration are transforming the mobile communications industry. “This year, we’ll see more M&A activity as mobile operators and pure-play telecoms businesses look to partner with digital service providers, cloud communications companies and even fintech companies to embed mobile and rich communications services into their core proposition.”

Mobile Industry: M&A Activity

As Ciesco’s M&A reviews have been showing, the Mobile sector has solidified its position as one of the most attractive sectors for M&A activity. The advancement of smartphone hardware, software and cellular networks has given more opportunity for rich media, video, and native ad placements within mobile browsers, apps and messaging platforms. This, paired with the access to accurate, real-time audience data, means mobile advertising is attracting an increasing share of marketers budgets.

“Almost 60% of Google’s net global ad revenues will come from mobile Internet ads in 2017, up from about 46% in 2015”

(Ciesco 2016 Global M&A Review)

Whilst the market for smartphones may not be witnessing the same double digit growth as it had previously enjoyed, the mobile advertising market is still growing and at a rapid pace.

Deal activity in 2016 has remained buoyant, with 90 targets being acquired, showing the sector continues to receive significant interest from companies as they seek to gain a technological advantage over competitors. In particular, app design and development shops are benefitting from this trend as apps increasingly dominate mobile usage. Apple’s App Store generated a record $28.5bn in 2016, $20bn of which goes to developers. In China, App Store sales grew 90% from that of 2015.

The largest deal in the mobile sector occurred in September. After weeks of speculation, San Francisco-based mobile marketing automation company AppLovin announced it had agreed to sell a majority stake to Orient Hontai Capital for an enterprise value of $1.4bn. With around 100 employees, backed by only $4m of angel funding and established in 2012, the sale is an incredible achievement, which CEO and co-founder Adam Foroughi puts down to ‘a product-first approach that created an algorithm that works more efficiently and effectively than competitors’.

Holding companies were active in the mobile sector. IPG’s media division, IPG Mediabrands, acquired UK mobile consultancy and app developer Mubaloo, enabling them to offer end-to-end development in-house, as well as UX and UI design capabilities. In January, WPP agency Grey looked to enhance their mobile offering with the acquisition of ArcTouch in the US.

Consulting giant Accenture acquired Mobgen, a Netherlands-based end-to-end mobile solutions provider, adding an additional 160 employees across Europe to Accenture Digital.

Buyers from the APAC region were keen to invest in the growing mobile sector, both domestically and internationally.

“China was the second most active country for deals in the Mobile sector, behind the US”

(Ciesco 2016 Global M&A Review)

China’s Mobvista, one of Asia’s largest mobile advertising companies, announced the acquisition of US-based NativeX in an all-cash deal worth $24.5m in March. NativeX specialises in monetization and advertising through their native ad technology for mobile games and apps.

In December, Spearhead Integrated Marketing Communications Group, a 2,500-employee strong listed Chinese group, announced plans to acquire San-Francisco mobile advertising platform, Smaato, for $148m. The acquisition will give Spearhead instant access to Smaato’s 1 billion monthly unique mobile users outside of China, and give Smaato access to the fast-growing mobile advertising market in China with over 1 billion mobile users.

Ecommerce giant Alibaba dived deeper into the mobile app distribution market with the $200m acquisition of Beijing-based Wandoujia, one of the best known Android app stores.

In a bid to take advantage of the rapidly growing ecommerce sector in China, Denstu Aegis Network acquired a 60% stake in Shanghai-based mobile ecommerce marketing agency VeryStar in May.

Ciesco tracks global M&A activity within the media, marketing, and related technology sectors throughout the year and publishes the key findings in an annual report in partnership with Experian. The report showcases Ciesco’s analysis of deals by volume and disclosed value, geography, and sector, together with an overview of the buyer landscape and private equity activity, revealing the key insights and trends, as well as an outlook for these sectors.

For a copy of the full 46-page report, including detailed analysis on:

Deal statistics, volumes, values

  • Notable deals
  • Buyer landscape
  • Emerging buyers
  • Private equity activity
  • Geographic overview
  • Cross-border activity
  • Sectors
  • Ciesco’s outlook

Please contact james.whyms@ciescogroup.com