Expected cash repatriation will drive Microsoft’s M&A spree in 2017
Earlier in the series, we learned how Donald Trump’s cash repatriation proposals could help tech companies with significant cash parked abroad to continue their M&A (mergers and acquisitions) sprees in 2017.
Thus, with its huge cash reserves, Microsoft (MSFT) would be one of the top beneficiaries of President Trump’s proposed tax reductions. Microsoft’s significant cash reserves have paved the way for it to go on an acquisition spree, similar to Oracle (ORCL), IBM (IBM), and Salesforce (CRM).
Tech’s record global M&A activity in 2016
The deals between Microsoft and LinkedIn (LNKD), Symantec (SYMC) and Blue Coat Systems, Salesforce and Demandware, and Oracle and Netsuite were among the prominent acquisitions announced in 2016. Leading software companies have been busy acquiring companies that could enhance their reach and domain expertise, and generate revenues and earnings. Many cloud and SaaS companies became acquisition targets in 2016.
2016 marks the second year on record in which technology deals accounted for the majority of M&A deals. Dealogic recently calculated that although global M&A (mergers and acquisitions) deals fell approximately 22% in 2016 in the technology sector, M&A deals have risen 12% YTD (year-to-date).
The combination of Microsoft’s significant cash reserves and growing interest in key technologies (AI, augmented reality, big data, and cloud) will likely push it to pursue many strategic acquisitions in 2017.