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M&A Soared in 2021, with Oracle, Amazon Among Major Buyers

Software titan Oracle announced a $28 billion deal Monday to acquire health-record software company Cerner.
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Mergers and acquisitions are on a tear this year, totaling $2.4 trillion through Dec. 16, according to Refinitiv.

That blows away the previous record of $1.55 trillion for 2018, and nd it was before software titan Oracle  (ORCL) - Get Oracle Corporation Report announced a $28 billion deal Monday to acquire health-record software company Cerner  (CERN) - Get Cerner Corporation Report.

So let’s have a look at four of the largest, most interesting transactions announced so far this year.

As for the Oracle-Cerner agreement, it’s the biggest in the software company’s history. Oracle, which founder Larry Ellison built largely through acquisitions, gets a pipeline into the hot healthcare technology sector.

The deal also extends Oracle’s reach in the cloud business, where it trails leaders Amazon, Microsoft and Alphabet.

Ellison told analysts earlier this month that healthcare is “on par with banking in terms of the importance to our future,” the Wall Street Journal reports. Healthcare makes up 20% of the U.S. economy and has been slow to digitize.

Cerner is the second largest player in the medical record software sector, trailing only Epic Systems.

But not everyone was excited by the deal.

 “At first glance, we're not fans,” Morningstar analyst Julie Bhusal Sharma wrote Monday. “We don't foresee enough synergies for Oracle to justify the price that the company is paying for Cerner.

“Further, we view Cerner's narrow moat as having a negative trend. Our negative outlook is a function of continuing healthcare system consolidation, which we expect to favor best-of-breed EHR [electronic health records] vendor Epic.”

Microsoft Gets In The Game

In April, Microsoft  (MSFT) - Get Microsoft Corporation Report preceded Oracle’s foray into the healthcare cloud business with an agreement to acquire artificial intelligence and speech technology firm Nuance Communications  (NUAN) - Get Nuance Communications Incorporated Report for $16 billion.

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“This acquisition brings our technology directly into the physician and patient loop, which is central to all healthcare delivery,” Microsoft CEO Satya Nadella said on an investor call, according to Reuters.

“The acquisition will also expand our leadership in cross-industry enterprise AI and biometric security.” Nuance software was used in Apple’s pioneering virtual assistant Siri.

Nuance’s products include speech recognition, medical transcription and medical imaging. It counts 77% of U.S. hospitals as its customers.

Our Neighbors To The North

In September, Canadian Pacific Railway  (CP) - Get Canadian Pacific Kansas City Limited Report agreed to buy Kansas City Southern for $27 billion. The Canadian company won a bidding war over its domestic rival Canadian National Railway  (CNI) - Get Canadian National Railway Company Report, even though its final offer was $3 billion lower than that of Canadian National.

Kansas City Southern accepted the lower bid amid uncertainty as to whether a purchase by Canadian National would pass muster with regulators. Canadian Pacific will represent the first railroad with operations in the U.S., Canada and Mexico.

Canadian Pacific and Kansas City Southern first negotiated a deal in March for $25, before Canadian National entered the fray with its $30 billion offer.

The Canadian Pacific-Kansas City Southern team will have 20,000 miles of track from Vancouver to Veracruz, Mexico’s biggest port on the Gulf of Mexico, Bloomberg reports.

Amazon Goes Shopping

In May, Amazon  (AMZN) - Get Amazon.com, Inc. Report announced it would be buying MGM Studios for $8.45 billion, as the retail/technology colossus continues to expand in the entertainment industry. It’s the second largest purchase in Amazon history, after its $13.7 billion buyout of Whole Foods four years ago.

Amazon will use the purchase to grow its film and TV division, Amazon Studios. Privately-held MGM owns 4,000 films and 17,000 TV shows. For movies, the roster includes the James Bond catalog, “The Handmaid’s Tale” and “Fargo.” As far as TV shows, there’s “Shark Tank,” “Survivor” and “The Real Housewives.”

Amazon is in a heated competition with Netflix, Disney and others to win eyeballs for video content, especially streaming content, CNBC notes. The deal gives Amazon an opportunity to boost its Prime business, which now counts more than 200 million members.

Amazon has made some hay in the film and TV spheres already. On the movie side, that includes “The Big Sick” and “Manchester By The Sea.” For TV shows, there’s “The Marvelous Mrs. Maisel” and “Transparent.”