Accelerated M&A activity in the Nordics TMT sector in the first half of 2021
Tech companies in the Nordic region are trading and consolidating at a tremendous rate. Despite the pandemic, a surprisingly rapid economic recovery and solid growth indicators, everything points to a continued high pace in M&A transactions within technology, media and telecom (TMT).
The first half of the year showed an increase in number of M&A deals of 44 percent, with 265 deals in the technology, media and telecommunications sector in the Nordics alone, against a total of 401 corresponding M&A transactions throughout 2020.
Almost every other transaction is with a software company and some of the most significant transactions first-half year are: Intiviti Group from Sweden sold to Broadridge (€2.1bn), Planday from Denmark sold to Xero, Advania from Sweden sold to Goldman Sachs, and Swedish Tink sold to VISA (€1.7bn).
It is increasingly the international players who are coming back to the Nordic region. Compared to the same period last year, an increase of 7% international buyers is quite significant. Swedish companies are yet again best at attracting international buyers and are listed for 35 percent of the deal count with buyers outside the Nordic region.
Surge in Tech and Media shares
The Nordic indexes in technology, media and telecom (TMT) all beat the market by lengths. Since the beginning of January 2020, the Tech Hardware & Electronics index has gained 115.6% and the Software is up by 114%. During the same period, the benchmark index OMX Nordics increased by 41.7%.
The impressive performance of the TMT indexes is mainly driven by more M&A activities, far fewer COVID-related restrictions, and strong fundamental macroeconomic trends.
Valuations trending upwards
The valuation trend in the TMT sector is clear. They are worth their dots and bits in gold. Over the past six months, prices have in many areas doubled in response to investor enthusiasm for the positive prospects for the software and IT industry. The world has in last few months become far more digital and is supported by the future infrastructure – everything from mobile banking to endless Teams-meetings – that builds the bridges between us.
Focus on the core
The report also highlights a clear trend among larger companies. They focus on the core business and divests more peripheral parts of the groups. Either through divestments, complex carve-outs or management buy-ins (MBI) deals for the purpose of monetizing on underlying values.
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