NEW YORK-The $61.4 billion purchase of Ameritech Corp. by SBC Communications Inc., the second-largest merger in history, accounted for the lion’s share of communications carrier consolidation activity during the last quarter.
The remaining $7.6 billion in announced carrier mergers during the quarter was divided among 51 other transactions, according to Mergerstat, published by Houlihan, Lokey, Howard & Zukin, a Los Angeles investment firm.
“The transaction environment has changed drastically. The ($24.56 billion) Kohlberg Kravis [& Roberts & Co.]/RJR Nabisco transaction held the record as the largest U.S. deal for over nine years. In the last 90 days, eight deals have surpassed it, three of which are over twice its size,” said Scott Adelson, managing director of Houlihan Lokey.
“While M&A activity is strong across all industries, we are experiencing a unique period of consolidation among financial services, communications and health-care companies based on deregulation and competitive pressures.”
Across all industries, the average size of all such transactions tripled during the first half of this year to $564.3 million, up from $194.3 million for all of last year. Some 88 “mega-deals” valued at $1 billion or more accounted for $634.2 billion and 82 percent of the total mergers and acquisitions market so far this year, according to Houlihan Lokey.
By this definition, three other communications-related mergers announced during the quarter are “mega-deals”: Tellabs Inc.’s $6.69 billion acquisition of Ciena Corp.; Alcatel Alshtom SA’s $4.2 billion purchase of DSC Communications Corp.; and Teleglobe Inc.’s $3.02 billion takeover of Excel Communications Inc.
M&A activity among telecommunications services providers had led the pack in all sectors during the first quarter, posting 56 mergers and acquisitions totaling $26.1 billion. SBC’s $4.4 billion takeover of Southern New England Telecommunications Corp. and Alltel Corp.’s $4.13 billion purchase of 360
