As we welcome 2021 and try to leave behind the previous year, it is time for summing up some of the most important key events from 2020. Although society is most likely to remember the passing year due to the hit of the global pandemic and the ongoing crisis that a large number of industries is facing, it was not all negative news. We prepared the list of some of the biggest and crucial mergers and acquisitions in the tech world happening in 2020. Look at how different sectors of the tech industry can change, improve, and develop due to the acquisitions they made in giant deals in 2020.
At the beginning of December, after weeks of speculations, one of the biggest tech acquisitions of 2020 was reported. Salesforce acquired Slack for $27.7 billion. Although Slack has gained a big success since it started operating under its current name in 2013, it has not been quite able to catch up to its giant competitors such as Microsoft Teams.
Slack’s Inability To Adjust To The Covid-19 Crisis
In Q2 of 2019, the company went public on the NYSE with a valuation of $23 billion. However, it has not had a great performance in 2020 which may be surprising due to the undoubted success of the work-from-home software during the Covid-19 pandemic. The biggest problem of Slack has been the inability to adjust to the crisis as quickly as its biggest competitor, Microsoft Teams that have far larger resources.
Slack’s Growth Since 2013
Since its launch, Slack growth has been unprecedented. Before they went public, they already had a valuation of $7 billion. They have managed to raise 8000 users within 24 hours of their launch and have received several impressive awards including the “Startup of The Year” awarded annually by TechCrunch. While Slack has enjoyed exponential growth, with the number of users spiking from 10,000 daily users at the beginning of 2015 to almost one million daily users in 2015, it still lays far behind its biggest competitor – Microsoft Teams. To compare, at the beginning of 2020, Slack had approximately 13 million users while Microsoft Teams had 100 million users.
Slack Vs. Microsoft
On its own, Slack could not compete with a giant like Microsoft. However, being a part of Salesforce gives them an increased competitive advantage. With the deal expected to close in the second part of this year, we cannot wait to see how the competition between Microsoft and Slack as a part of Salesforce will unfold.
Marc Benioff, the CEO of Salesforce has called the acquisition a “match made in heaven” and said that the tech acquisition will let the companies “shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world”. The two companies have enjoyed a successful and close collaboration relationship since 2016 and thus, the deal did not come as a complete surprise.
AMD Acquired Xilinx – $35 billion
The merger between AMD and Xilinx has been rumored about for years and in 2020 it has finally become a reality. The FPGA manufacturer Xilinx has been acquired by the international semiconductor giant AMD. AMD is known for its development of computer processors and similar technologies and the recent addition of Xilinx can significantly improve their operations.
Combined Power Of AMD And Xilinx
Xilinx leads its field with several solutions that are extremely valuable to AMD. Starting from their solutions for the data center, machine learning, and ADAS, as well as highly advanced 5G and high-speed IO.
The two companies combined will account for $135 billion and will have more than 13 000 engineers. The CEO of AMD, Dr. Lisa Su has commented on the acquisition by saying, “The Xilinx team is one of the strongest in the industry and we are thrilled to welcome them to the AMD family. By combining our world-class engineering teams and deep domain expertise, we will create an industry leader with the vision, talent, and scale to define the future of high-performance computing”.
New Era Of Adaptive Computing
Meanwhile, the CEO of Xilinx, Victor Peng, has said that they are excited to become a part of AMD and that the two companies share similar culture and goals and that with their combined power, gaining a broader customer base across a bigger number of markets will be possible. Peng said, “ Together, we will lead the new era of high performance and adaptive computing. Our leading FPGAs, Adaptive SoCs, accelerators, and SmartNIC solutions enable innovation from the cloud to the edge and end devices. We empower our customers to deploy differentiated platforms to market faster and with optimal efficiency and performance”
Intuit Acquired Credit Karma – $7.1 billion
In February 2020, a major fintech deal was announced as Intuit confirmed they will acquire Credit Karma for $7.1 billion. Intuit is the accounting and financial planning software giant while Credit Karma is one of the most promising fintech startups that allows users to estimate their credit score, shop for loans, or receive assistance with taxes, among many other features. The startup had more than 37 million monthly users at the beginning of 2020, as reported by TechCrunch.
Intuit’s Biggest Acquisition
The $7.1 billion that Intuit paid for Credit Karma is their biggest acquisition as of now. However, the company has a history of acquiring promising startups, with more than 30 acquisitions that they have made by 2020.
Intuit’s Stock Price Soars
Since the tech acquisition deal was announced, Intuit’s stock price soared by 24%. The CEO of Intuit, Sasan Goodarzi said that Credit Karma aims at the same future goals as Intuit. “They are the largest, most powerful fintech company out there,” Goodarzi said. “But what makes Credit Karma the most special is not just the scale of customers—which by the way has not been replicated by anyone—it’s their data.”
Morgan Stanley Acquired E*Trade – $ 13 billion
Another large acquisition happening in February was the one between Morgan Stanley and E*Trade. In February 2019, MS issued a press release saying that the two reached a final agreement under which Morgan Stanley will acquire the online brokerage company.
All-Stock Mega Transaction
The $13 billion merger was conducted as an all-stock transaction where all the E*trade stockholders received 1.0432 Morgan Stanley shares for each E*trade share they held.
The reasoning behind the merger was Morgan Stanley’s wish to broaden their Wealth Management franchise. Considering that E*Trade had more than 5 million accounts as of the beginning of 2020, its acquisition boosts the scale of Morgan Stanley in the Wealth Management sector.
Mike Pizzi Continues To Run E*Trade
It was decided that the CEO of E*Trade, Mike Pizzi would continue running the business within the Morgan Stanley franchise. James Gorman, the CEO of Morgan Stanley said that he is “delighted” to welcome Pizzi to the team after the tech acquisition.
As for Pizzi, he said in the February press release, “Since we created the digital brokerage category nearly 40 years ago, E*TRADE has consistently disrupted the status quo and delivered cutting-edge tools and services to investors, traders, and stock plan administrators. By joining Morgan Stanley, we will be able to take our combined offering to the next level and deliver an even more comprehensive suite of wealth management capabilities.”
It was definitely one of the biggest brokerage deals of the last years. Morgan Stanley is one of the major investment banks and they are managing more than $3.3 trillion in assets.
Ericsson Acquired Cradlepoint – $1 billion
In the telecom world, the most important M&A of this year was the acquisition of Cradlepoint by Ericsson in a deal worth $1 billion. The transaction was announced in the early fall of 2020 and closed at the end of Q4 of the previous year.
Undoubted Leader Of WAN 4G And 5G Solutions
Cradlepoint is the market leader in the field of WAN 4G and 5G solutions. Thus, it is a highly valuable acquisition for Ericsson that is trying to capture a large market share in the 5G industry. Based in the US and founded in 2006, Cradlepoint employs approximately 650 people and provides a rich portfolio of 5G ready products.
The Cradlepoint continues to operate under its current name, however, it is fully owned by Ericsson. Börje Ekholm, President and CEO Ericsson, said: “The acquisition of Cradlepoint complements our existing offerings and is key to our strategy of helping customers grow the value of their 5G network investments.”
Long-Standing Relationship Between The Two Companies
The two companies already enjoyed a long-standing relationship that goes back to the launch of the 4G network. Cradlepoint will allow Ericsson to create new revenue streams due to its 5G solutions.
The expert has generally viewed the deal as a mutually beneficial one that is well-balanced both in terms of the strategic fit and the purchase price.
Microsoft Acquires CyberX – $165 million**
The last merger that is worth mentioning is a relatively small one looking at the overall M&A world. However, it was still important to the tech world as it showed how giant tech companies are using the economic crisis to gather up assets for their long-term goals.
The approximately $165 million acquisition** of CyberX by Microsoft shows just that. CyberX is an Israeli cybersecurity startup that is known for its solutions regarding security breaches on IoT networks.
CyberX Cybersecurity Expertise Showing A Huge Value To Microsoft
Although the tech acquisition news was reported already back in February, the companies have only confirmed it in June. CyberX expertise in cybersecurity leveraging AI to detect and solve the challenges comes as extremely valuable to Microsoft.
As Microsoft has invested more than $5 billion into IoT in the last two years, security remains a crucial challenge which is where CyberX comes in. In their press release, Microsoft has said, “ With CyberX, customers can discover their existing IoT assets, and both manage and improve the security posture of those devices. Gaining this visibility is not only critical for understanding where security risks may exist and then mitigating those risks, but it is also a fundamental step to securely enable smart manufacturing, smart grid and other digitization use cases across production facilities and the supply chain “
“By joining forces with Microsoft, we will rapidly scale our business and technology to securely enable digital transformation for many more organizations,” added the co-founder and CTO of CyberX, Nir Giller.
* The detailed amount has not been disclosed, however, sources report that it was approximately $165 million