Following recent rumors of Oracle aquisition and IPO, it was announced todat that Red Hat (Nasdaq: RHAT) has agreed to acquire JBoss Inc., an Atlanta–based provider of open-source middleware.
The deal is valued at around $350 million (40% cash, 60% stock), plus up to $70 million in possible milestone payments. JBoss has raised VC funding from firms like Accel Partners, Matrix Partners and Intel Capital.
Interesting convergence deal where OpenWave (ex UnWired Planet, ex Software.com, provider of value added software stack for the telecom industry) buys into a consumer/content music provider.
Openwave Systems Inc., agreed today to acquire Musiwave, a music entertainment services supplier, for up to EUR114.5 million in cash and stock.
MusiWave did close a third round of funding in September 2002 for 4M€. Shareholders includes ETMF II L.P. a private equity fund advised by BNP Paribas Private Equity, Ventech and CAPE (Crédit Agricole Private Equity).
At €114M, this is a great demonstration of Europe ability to build exit in the 100M€ windows.
During Bubble1.0 analysts said "CMGI can grow at 150% as far as the eye can see so it makes sense to pay 1000 times earnings for them". Now the thinking is that if you can grow users 50% per annum, then the value of your user base grows in value even faster--by maybe 200% each year. Such is EBay's logic behind the $3 Billion price tag for the profitless Skype. These lofty valuations are based on so-called network effects.
Reed's law is Metcalfe's law on steroids. Metcalfe's Law states that the value of a network is roughly equivalent to the square of its nodes. IM clients, and p2p file-sharing apps might be examples of this. Belief in this phenomenon plus new technology enabling collaboration has resulted in boatloads of money being poured into the "social software" space. Again, lots of folks are looking for the next Skype. By the way, Reed's Law, which I don't quite understand is even more bold, because instead of a network being valued as n^2, where n is the number of users (nodes), n becomes the exponent, valuing the network as 2^n..
=> Where is the recognition that many kinds of networks degrade with size. Take del.icio.us, which I love. I subscribe to the finance-tag feed. So everyday, I see 50 or so headlines to articles that discuss finance. If, one day, it got bought out by Google, that number turned out to be 500 I'd stop reading the feed. Perhaps, I'd switch over to del.irio.us.
Even if a network is able avoid degradation, it's inevitable that growth will taper when new nodes start to become irrelevant or redundant. Such was the conclusion of two economists who discovered that Metcalfe's law overshoots the mark big-time:
Metcalfe's Law came from Bob Metcalfe, a founder of networking equipment supplier 3Com and coinventor of the now-ubiquitous Ethernet networking standard. According to the law, a network with 20 telephones--or alternatively, fax machines, instant-messaging teenagers or Internet-phone callers--is four times more valuable than a network with 10. A network with 30 nodes is nine times more valuable than one with 10.
Not so, Odlyzko and Tilly argue. "The fundamental fallacy underlying Metcalfe's (Law) is in the assumption that all connections or all groups are equally valuable," the researchers report.
If Metcalfe's Law were true, there would have been tremendous economic incentives to accelerate network mergers that in practice take place slowly. "Metcalfe's Law provides irresistible incentives for all networks relying on the same technology to merge or at least interconnect."
The researchers propose a less dramatic rule of thumb: the value of a network with n members is not n squared, but rather n times the logarithm of n. That means, for example, that the total value of two networks with 1,048,576 members each is only 5 percent more valuable together compared to separate. Metcalfe's Law predicts a 100 percent increase in value by merging the networks.
International Business Machines Corp. has acquired today application relocation software provider Meiosys to provide more capabilities for its UNIX and Linux e-server platforms and to help advance its information on-demand strategy and virtualization capabilities.
Founded in 2000, Meiosys is privately held with venture financing provided by Alven Capital, BayTech Venture Capital, Cisco Systems, Credit Lyonnais Private Equity, Partech International, Siparex, Wellington Partners, and others. 16M$ was invested in the company, unclear yet what the transaction value was.
Headquartered in Palo Alto, California, the Company has 30 full-time employees between its offices in Palo Alto, California and Toulouse, France, and had assembled a team experienced in mission-critical application development in the aerospace, telecom and defense industries.
Meiosys provides transparent application virtualization and stateful application relocation technology to platform vendors that offer enterprise-grade Utility Computing and On-demand computing solutions through its MetaCluster Product line.
Perfect example by Innovacom and Banexi of build to exit by M&A, invest around 10M€, and exit by industrial M&A around 100M€ and generate the 15-25% IRR thatwill make LP come back into European Technology asset class:
Thomson acquired Inventel for about EUR68 million ($87.8 million) in cash and stock. Inventel raised one round of financing in May 2001 for EUR6 million.
Inventel designs a variety of wireless products aimed at the fixed network, including WiFi and Bluetooth gateways and modem routers and digitally enhanced cordless and wireless phones. Inventel's customers included Internet providers like France Telecom SA, Belgacom NV, and British Telecom and telecom equipment manufacturers.
The transaction included about 3.2 million shares and an undisclosed amount of cash, Thomson's shares closed Monday at EUR21.29, down 11 European cents from Friday. At that price, the stock portion of the deal is valued at about EUR68.1 million. The total price was close to Inventel's expected 2005 revenue of more than EUR100 million.
Qualcomm Inc. announced today that it has acquired mobile interface company Trigenix Ltd. , a mobile user interface company, for about $36 million in cash.
Trigenix Ltd (formerly 3G LAB) was founded in March 2000 in Cambridge, UK. The VC group 3i invested £2m in Trigenix (formerly 3G LAB) first funding round in April 2000, and followed on with a £3m investment in May 2001. Trigenix and QUALCOMM have worked closely together over the past year on enabling a customizable wireless device user interface via the BREW solution. Qualcomm will use the acquisition to drive forward its BREW strategy, as the combination of Trigenix's Trigplayer and other tools into the BREW client software produces a much richer offering through a truly integrated solution.
Quick math from an investor perspective: 5M£ in (or 7.5M€) for 36M$ out (or 30M€), good example of how software can be a capital efficient investment.
In 2003, Trigenix has been deployed by mobile network operators across 6 European countries. Over a hundred customised Trigenix user interfaces have been released to allow users to personalise their mobile phones, choosing from a rich selection of themes based on films, lifestyle, television, sports, music, and travel. Trigenix has its headquarters in Cambridge, UK, home to a dynamic and thriving community of mobile industry technology companies...
12 :: Kinnernet 2007 Tel Aviv - Israel
March 15 to 17 in Ohalo Manor, Kibbutz Kinneret, Jordan Valley. Followed by the Marker Conference in Tel Aviv March 18/19 and Mishkenot Shaananim Symposium in Jerusalem on March 20.
11 :: DLD 2007 DLD Conference
Munich January 21-23 2007.
DLD (Digital, Life, Design) is one of Europe's freshest conferences covering digital innovation, gaming, arts and science, bringing together thought leaders from Europe, the Middle-East, America and Asia
10 :: LE WEB 3 Paris
Dec 11/12 2006
I'll participate (with 1000 others ;-)) to was should be a great European tech gathering...
I'm also hosting a Dinner on Wed Dec 13 (register on my blog if you are interested)