London -- Mergers and acquisitions increased by more than 70% in the U.S. technology sector during the first half of 2006, compared with the corresponding period a year earlier, according to Datamonitor, a London-based market analysis firm with regional offices across the United States.
As a result of the M&A bonanza, observers say, insurance carriers may find themselves dealing with change, even at their longtime IT vendors. New owners seem likely to adopt new ways of doing business, they say.
The consolidation is gaining momentum, experts say, as IT services become more standardized, vendors hatch new strategies for the next phase of IT and carriers look to form strategic relationships with fewer suppliers.
A total of 26 telecom deals were signed in the first half, with a combined value of $115.9 billion, while 44 wireless deals in the period were valued at 40 billion, says Datamonitor.
Other categories were system software with 151 deals valued at $11.9 billion; storage, 15 deals worth $1.4 billion; services, 116 deals at a combined 14.1 billion; semiconductors, 18 deals at $5.2 billion; security, 35 deals at $4.5 billion; and networking, 66 deals at $6 billion, the market analysis firm says.
Among companies inclined to affect the insurance business, notable recent deals include Hopkinton, Mass.-based EMC Corp.'s purchase of Avamar Technologies Inc., Irvine, Calif., the latest of 12 EMC aquisitions this year.
Other recent mergers by insurance industry vendors have included Redwood Shores, Calif-based Oracle Corp.’s purchase of two companies--Siebel Systems, a San Mateo, Calif. Company known for customer relationship management systems, and PeopleSoft, a Pleasanton, Calif., enterprise software vendor.
Symantec Corp., a computer security company with headquarters in Cupertino, Calif., merged with Veritas, a Mountainview, Calif., storage management provider. IBM, Armonk, N.Y., took control DWL, which had headquarters in Atlanta and Toronto. Chicago-based SSA Global Technologies, another enterprise software company, acquired Epiphany, a CRM system provider in San Mateo, Calif. AMS Services, Bothell, Wash., bought ChoicePoint of Alpharetta, Ga.
Insurance carriers, perhaps mirroring the volatility on the vendor side, have been active on the M&A scene. Oklahoma City-based North American Group acquired CIC Insurance Brokers Inc., Lafayette, Calif., while The Hartford, Hartford, Conn., recently completed the integration of parts of CNA, Chicago.
Cairnstone Re, a Miami independent managing general underwriter, acquired CapRisk, a Lancaster, Pa.-based managing general underwriter of stop-loss insurance for employer self-funded health plans.
Source: Datamonitor and INN Reports
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