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India sees 18% jump in M&As in September quarter

Livemint:  November, 2015

Mumbai: The disclosed value of mergers and acquisitions (M&As) involving Indian companies touched $7.7 billion during the June-September quarter, up 18% from $6.5 billion in the same period a year ago, advisory group EY said.

Out of 233 deals in the quarter, the technology sector saw the maximum number of deals at 36, as companies snapped up firms specializing in SMAC (social media, mobile, analytics and cloud) capabilities, the report said.

“Cross-border transactions were a significant driver of the M&A activity. This reflects increased business confidence of global players in the Indian economy and the domestic companies. The M&A activity on the domestic front, though subdued, is expected to pick up over the next few months as the economy continues to improve,” said Amit Khandelwal, partner and national director, EY.

Among a total of 233 deals, cross-border M&As with 116 deals having a cumulative disclosed value of $6.6 billion, accounting for 85% of the total disclosed deal value. Compared with the previous quarter, the deal volume increased by 27% (91 deals in 3Q14) and deal value by 150% ($2.6 billion in 3Q14).

The period witnessed three outbound big-ticket transactions ($500 million and above) and two inbound deals totalling $3.6 billion, compared to only one big-ticket cross-border transaction in 3Q14, an inbound deal valued at $610 million.

Key transactions within the space included ONGC Videsh Ltd’s agreement to acquire up to 15% stake in Russia-based CSJC Vankorneft for $1.3 billion, Lupin Ltd’s agreement to buy US-based Gavis Pharmaceuticals Llc and its affiliate Novel Laboratories Inc. for $880 million and Cipla Ltd’s agreement to acquire the US-based InvaGen Pharmaceuticals Inc. and Exelan Pharmaceuticals Inc. for a joint consideration of $550 million.

“Of the top 10 deals of the quarter in terms of value, 50% were outbound and drove the significant increase in value to $3.6 billion in 3Q15, compared to $0.3 billion in 1Q15 and $0.5 billion in 2Q15. These transactions marked an end to a prolonged absence of big-ticket outbound transactions from the M&A activity in India since 2012,” Khandelwal added.

Companies from the US continued to be the most active counterparts of Indian companies in the cross-border transactions. During the quarter, players from the US were involved as acquirers in 23 inbound deals and as targets in 9 outbound transactions, said the report.

Domestic M&A activity fell this quarter, both in terms of disclosed deal value and volume. The deal volume decreased to 117 from 141 in 3Q14 and aggregate disclosed deal value decreased to $1.1 billion from $3.9 billion in 3Q14, said the report. The largest deal in domestic arena was Birla Corp.’s agreement with Lafarge India to acquire its two cement assets for $768 million.