Talking tech since 2003

Everyone loves an acquisition, especially when a lot of money is involved. It’s fun to talk about and even more fun to speculate what the acquiring company has planned for the acquiree. In 2012, there were some major acquisitions that took place and I would like to take some time to recap and discuss them.

The big deals in 2012 revolved mostly around social, from social applications to social media marketing companies — it’s clear that social technology is going to be a key part of our future.

Let’s dive into this.

Facebook & Instagram

Instagram facebook

Facebook’s acquisition of Instagram certainly made headlines this year with its massive price tag of $1 billion. While Facebook agreed to purchase Instagram for $1 billion, the actual cost of the acquisition came in at $715 million due to the falling share price of Facebook stock at the time the deal came to a close. In the end, the deal cost Facebook $300 million in cash and 23 million shares of stock.

At the time of the acquisition Instagram had no revenue and only 13 employees, there is no doubt it’s hard to turn down $1 billion, even if you believe your company has a bright future ahead of it. Despite the fact Facebook essentially kills every product/service it acquires, it said that Instagram would remain its own application, but have increased Facebook functionality and integration. Of course, for Instagram, it helps having the weight of Facebook behind you to continue to grow and develop even further.

I think Facebook needed Instagram too, especially before anyone else (Twitter) decided to swoop in and buy it. Nonetheless, I’m excited to see Instagram continue under Facebook in 2013 and beyond.

Microsoft & Yammer

Microsoft Yammer

Microsoft’s acquisition of Yammer, the enterprise social networking company, came in at a cool $1.2 billion. Microsoft has big plans for Yammer and they are starting by integrating it into Office 2013. I wouldn’t be surprised to see Microsoft utilizing Yammer as a way to compete against other enterprise software companies such as Salesforce either.

Zynga & OMGPOP

Zynga omgpop

When Zynga announced its acquisition of OMGPOP, the company behind the massive hit Draw Something, for between $180 to $210 million, there were mixed reactions — some thought it was a good idea, others didn’t (the others turned out to be right).

However, If you remember back in 2010, Zynga acquired Newtoy, the makers of Words With Friends for $53.3 million in cash and stock and after buying Newtoy, Zynga was able to double Words With Friends’ daily active users in 120 days. With the help of Newtoy’s titles, Zynga was able to grow its mobile footprint tenfold right in time for its IPO.

They really caught lightning in a bottle that time and I’m sure Zynga was hoping for the same this time around, but it didn’t happen. Instead the OMGPOP acquisition caused Zynga some real pain. Zynga wrote off $85 to $95 million related to the OMGPOP acquisition. Ouch.

Salesforce & Buddy Media

Salesforce buddy media

This year was a great year for social media marketing companies, as is evident by the Salesforce acquisition of Buddy Media. Salesforce acquired Buddy Media for a grand total of $689 million, with approximately $467 million coming in the form of cash, $184 million in common stock, and $38 million in vested options and restricted stock units.

The Buddy Media acquisition comes a little over a year after Salesforce acquired Radian6. As Salesforce continues to assert itself into the software as a service space with all of its enterprise offerings, it will be interesting to see how they bring together all of these products to provide a great experience and even better results for customers.

Google & Wildfire

Google wildfire

Google’s acquisition of Wildfire, another social media marketing firm, came just after Salesforces’ acquisition of Buddy Media and Oracle’s acquisition of Vitrue. The deal came in at $350 million, plus some earn outs and bonuses which could put it closer to $400 million when it’s all said and done.

The acquisition is allowing Google to get a piece of the money being spent on managing social presences across various social networks. Wildfire helps handle owned marketing, such as handling Pages and other properties brands control, to complementing Google’s DoubleClick AdX/Admeld paid marketing service for buying ads on search and other websites.

Another thing this acquisition allows Google to do is benefit from other social networks such as Facebook and Twitter, which in a way is Google hedging itself against the potential failure of Google+.

If anything, this acquisition showed us that Google understands that they can’t just rely on ads to do it all.


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