By Megan Davies and Joseph A. Giannone
SAN FRANCISCO (Reuters) - Private-equity investors are hungry for technology takeovers because of the industry's more predictable growth, rising piles of cash and cheap stock prices.
Investors also see deal opportunities ahead as technology conglomerates shed business units to chase higher returns.
"I think there is still so much opportunity in the technology world that there's going to be years and years of good deals available," Jim Davidson, a founding member of Silver Lake Partners, told the Reuters Venture Capital Summit in San Francisco.
Slowing rates of profit growth and increased global competition has fueled consolidation among technology companies over the past year.
"Private equity people look at technology and see a pretty significant ability to be an agent to change, and to make companies more efficient or more aggressive with their capital structure," said Colin Stewart, vice chairman of global capital markets at Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz).
That's driving a spate of leveraged buyouts (LBOs) in the technology industry. Leveraged buyouts firms borrow funds to take public companies -- or parts of companies -- private, aiming to improve performance and resell them.
Earlier in September, chip maker Freescale Semiconductor Inc. FSL.N agreed to be bought for $17.6 billion by a private equity consortium in what could be the biggest leveraged buyout of a technology company. That followed an $11.4 billion buyout of SunGard Data Systems in March 2005.
But increased buyout interest has raised fears that investor returns could be hurt by firms taking on too much debt. Continued...
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