Mergers in Canada’s tech sector up: report

The number of mergers and acquisitions in Canada’s technology sector was up substantially in the second quarter, according to a report by consultants Ernst & Young.

TORONTO — The number of mergers and acquisitions in Canada’s technology sector was up substantially in the second quarter, according to a report by consultants Ernst & Young.

The firm said Monday that Canadian companies inked 30 technology deals in the second quarter — sixth-most in the world — up from 21 deals in the same quarter of 2010.

Canadian companies spent about $240 million to acquire foreign companies in cross-border deals, while Canadian firms sold about $480 million worth to foreigners.

The report was issued on the same day as a blockbuster takeover shook up the technology world, with Google announcing it would buy Motorola Mobility for US$12.5 billion.

Ernst & Young described the increase in deals during the quarter as a “surge” and attributed it to ongoing innovation in social media, cloud computing, smart mobility, Internet and mobile video, and smart grid and solar energy.

“New waves of innovation . . . are driving large and small deals across the globe,” Tony Ianni, the company’s head of corporate finance in its advisory services sector said in a statement.

“Interest in the technology sector continues to rise as information technology evolves into an increasingly valuable component of all products and services,” says Ianni.

Canada outranked technology heavyweights Japan and Taiwan when it came to the number of deals, but American, British, Chinese, Germany and French companies made more deals.

“Canada saw the second-highest number of cross-border deals, behind the United States — an uptick in volume and value we’ve seen developing over the last several quarters,” Ianni said.

“But the question on everyone’s mind is whether deal-making will lose momentum or continue to overcome increasing divergence between buyers and sellers over valuation, geopolitical unrest and global debt issues.”

Ernst & Young said the average value of global technology deals grew to $52 million, from $30 million in the same quarter last year.

Big-ticket deals worth $1 billion or more and cross border transactions played a big part in driving up the total value, the firm said.

After the quarter ended, a consortium that included Apple Inc., Ontario-based Blackberry maker Research In Motion Ltd. (TSX:RIM), Microsoft Corp. and Sony Corp. agreed to pay $4.5 billion for a collection of 6,000 patents from Nortel Networks, a bankrupt Canadian maker of telecommunications equipment.