Tech Deals Grow in Size and Shrink in Frequency, Study Says

Photographer: David Paul Morris/Bloomberg

Last year's transaction activity was driven by big deals, such as HP's $10.3 billion acquisition of Autonomy.

Broad shifts in the technology landscape and the large cash positions of some of its biggest players drove an increase in the amount spent on acquisitions last year, PricewaterhouseCoopers said in a study released today.

Technology companies spent $125 billion in deals in 2011, up 17 percent from the $107 billion spent in 2010. There were 308 deals in 2011, a drop of 21 percent from the prior year.

The growth in average deal size was helped by several multibillion-dollar transactions closing last year. They included HP’s $10.3 billion purchase of Autonomy, Intel’s $6.6 billion acquisition of McAfee and Texas Instrument’s $6.4 billion pickup of National Semiconductor. The boom in big deals looks to continue this year, as Google is expected to close its $12.5 billion bid for Motorola Mobility.

As the hardware sector saw declines in M&A volume and value, the average software deal grew for the second year in a row, to $438 million in 2011, up 49 percent from $294 million in 2010. Many software plays were driven by large companies staking out turf in emerging industries such as security, big data, social networking and online gaming, PricewaterhouseCoopers said in its report.

The fragile European economy and other global factors curbed cross-border mergers, which fell 21 percent last year. Still, U.S. companies looking to deploy foreign cash and capitalize on depressed markets abroad drove up U.S.-company purchases of foreign targets by 21 percent. Autonomy in the U.K., Luxembourg’s Skype and Germany’s Infineon were among these outbound deals.

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