M&As: economic recovery for our industry?

• 3M is to acquire Cogent Systems, demonstrating a small company brings original technology developments into a large diversified group.
• Verifone is in the process of acquiring Way Systems, a technology startup specializing in classical card transactions on a mobile phone based payment terminal, demonstrating the company’s will to expand beyond the traditional payment terminal market.
• Safran is bidding to acquire biometric and credential units of L-1 Identity Solutions, in an effort to build a world-class giant in the ID industry.
• Atos Worldline acquires Venture Infotek, a major India-based payment processor, which will help the essentially European Group to reach a critical size in the software development and transaction processing industries.
• Intel, in a buying spree has announced the acquisition of McAfee, a security expert that will bring Intel closer to end-user demands, and the takeover of Infineon Wireless Solutions, a supplier of cellular platforms to handset vendors. One may notice the value of the software expert McAfee transaction is 4 times greater than the value of semi conductor developer Infineon Wireless Solutions.

Such major Mergers and Acquisitions may be seen as a signal of a recovery of the economy, they may also just be the outcome of processes that had been undergoing for months. Globally, market consolidation leads to a reduced number of players in each field. With these announcements, there will be less ID experts able to manage large-scale systems, less payment processors, and less suppliers of subsets for mobile handsets…. This will, undoubtedly trigger more redundancies, but also will reduce competition intensity. And less competition intensity may lead to keeping higher prices globally, and to reduce innovation.

No one can be sure the market will win at the end of the day.

Thierry Spanjaard

Chief Editor

Smart Insights