Jeffrey Maddox’s Analysis of Recent Mergers and Acquisitions in Houston

Jeffrey Maddox

May 17, 2022

Jeffrey Maddox

Recent Mergers and Acquisitions in Houston

The number of recent mergers and acquisitions has grown dramatically. We will explore HP’s purchase of Cray, AMD’s acquisition of Xilinx, and Oracle’s acquisition of Cerner. The global economy has been recovering from COVID-related losses, with company share prices increasing. Recent mergers and acquisitions have exceeded $4.3 trillion in volume, up from $3.6 trillion in 2010. As a result, Houston has the third-highest concentration of Fortune 500 HQs in the U.S., proving the strength of Houston’s economy through mergers, expansions, and M&A.

HP buys Cray

HP’s purchase of Cray will result in a number of synergies for both companies. For one thing, the acquisition will provide HPE with a strong competitor in the High-Performance Computing (HPC) and artificial intelligence (AI) markets. Jeffrey Maddox thinks that the merger also opens up a number of opportunities for both companies. Whether or not the deal will be successful will depend on the Cray executives’ ability to turn the company around.

AMD buys Xilinx

The AMD buy of Xilinx was one of the biggest recent mergers and acquisitions. The company had spent its entire corporate life as a second-rate company to Intel, but CEO Lisa Su seized the opportunity by negotiating a $35 billion stock deal to acquire Xilinx, a maker of programmable chips. Despite delays in its next-generation chip production due to a manufacturing glitch, AMD shares skyrocketed in anticipation of the merger.

Optum buys Change Healthcare

A new acquisition has been announced: UnitedHealth Group’s Optum plans to purchase Change Healthcare for $13.5 billion. Jeffrey Maddox reminds that the deal is expected to close in the second half of the year, and the company plans to add Change Healthcare’s software, data analytics capabilities, research, and revenue cycle management offerings to its portfolio. The two companies intend to combine their services to reduce administrative costs, streamline payment processes, and facilitate healthcare data exchange. The deal faces challenges, however, as the American Hospital Association, which represents nearly 5,000 hospitals, is calling for an antitrust review of the deal. This is due to concerns that the deal could diminish competition in the sale of health IT products.

Oracle-Corner

The proposed Oracle-Cerner merger and acquisition have entered the antitrust review phase, and Cerner shareholders have a month to accept the offer. Oracle is paying $95 a share for Cerner’s shares, making the deal the largest deal in the company’s history. When all regulatory conditions are fine, they will close the deal. The deal will create over 18,000 new jobs, and it would help Oracle expands into healthcare technology.

Microsoft-Nuance

In the last few months, Microsoft has been looking to expand its artificial intelligence and healthcare offerings with the acquisition of Nuance Communications. Nuance’s AI solutions are already used by 55% of U.S. physicians and 77% of U.S. hospitals. Microsoft will also add Nuance’s technology to its cloud-service platform, which is aimed at improving clinical productivity and patient outcomes. However, the two companies have agreed to close the deal in the first half of this year, making it the second-largest acquisition in Microsoft history.

Wipfli buys Larkin, Ervin, and Shirley

The merger between two accounting firms could be beneficial to both parties. Calvetti Ferguson, a Houston-based accounting and advisory firm, has acquired Larkin, Ervin, and Shirley, LLP, which specializes in expatriate tax services. The combined firm now has 140 employees in six cities, including Fort Worth. Since last year, the firm also acquired Mark M. Jones Associates. Therefore, the combined firm will be the headquarter in Houston. It has a revenue of $20 million for 2019 and employs about 140 people in Texas. The merger has increased its Texas headcount by one partner.

AMD buys Cray

It’s not clear exactly what AMD’s plans are for the company, but the deal has many positives. Jeffrey Maddox emphasized that the company is a leader in the supercomputer market, with a deal with the US Department of Energy to provide the Aurora supercomputer by 2021. This is only one of two exascale systems currently in development, and Cray is a subcontractor on both. The company is also the largest supercomputer manufacturer in history, and this deal puts it in a better position to compete for such contracts.

Marvell Technology buys Inphi

Marvell’s $6.6 billion acquisition of Inphi is the latest semiconductor transaction. Marvell stockholders would control 80% of the merged firm, while Inphi owners will possess 17%. In the first year, the merged business should save $125 million in costs and increase non-GAAP profits per share. Marvell expects the deal to close in the second half of 2021.

Intel buys Xilinx

In one of the most high-profile mergers and acquisitions of recent years, AMD bought Xilinx for $49 billion. While the deal was initially expected to close later this year, the two companies expressed optimism that regulatory approval would be obtained before the end of the year. Now, it looks like the deal is likely to close in the first quarter of 2022. AMD CEO Lisa Su and Xilinx CTO Peng have agreed to join the AMD board.