Technology takeovers may accelerate in 2011

NEW YORK: Technology companies that fueled more than $100 billion in acquisitions last year are likely to spend more in 2011 in a race to harness surging demand for cloud computing and security services. Intel, Hewlett-Packard and International Business Machines led purchases of more than 2,700 companies and still spent only a fraction of the cash piles they accumulated during the recession.

The dollar amount of announced tech deals gained 12%, lagging behind a 26% jump in worldwide mergers, according to data compiled by Bloomberg. “I’m bullish” on 2011, said Larry Sonsini, chairman and co-founder of Wilson, Sonsini, Goodrich & Rosati, the Palo Alto, California-based law firm that worked with security-software maker McAfee on its $7.7 billion agreed sale to Intel. “When I look at enterprise clients, I see they are poised to invest in growth on a global basis.”

Buyers aim to capture the $3.4 trillion in information- technology spending projected by researcher Gartner for 2011, a 3.5% increase from 2010. Cisco Systems and Oracle are among IT providers driving the convergence of services, software and hardware as they compete to become the most relevant to chief technology officers. More companies are moving to cloud computing, allowing them to access information over the Internet from external data centers. Sonsini’s firm worked on 62 technology acquisitions valued at a total of $16 billion in 2010, including the McAfee takeover — the biggest deal in the industry last year.

From his vantage point in Silicon Valley, Sonsini predicts an increase in many types of tech transactions this year.“Starting at the bottom of the enterprise ladder such as venture financing, we will see active investments in important areas such as cloud computing, clean technology, alternative energy, life sciences and Internet,” said Sonsini, whose firm helped take Google and Apple public. Venture capitalists are also pushing for paydays after a dearth of initial public offerings during 2008 and 2009. Worldwide, 94 technology companies held IPOs in 2010, up from 54 in 2009, according to Bloomberg data.