M&A deals top $18 bn this year

Merger and acquisition deals in India have gone up by almost two-and-a-half times (235 per cent) in the first 11 months of 2005 at $18.2 billion against $6.1 billion worth of deals during the corresponding period last year.

With this, India has advanced 12 slots in the global M&A ranking, from 29th to 17th, according to Deloitte Touche Tohmatsu. Between January and November this year, no less than 1,013 M&A deals were struck in the country.

These deals include mergers, complete acquisitions, stake buy-outs and block deals by private equity companies and financial institutions. There were 694 pure M&A transactions.

According to Alan S Alpert, managing partner (global transactions services), Deloitte Tax LLP, an outfit of Deloitte Touche Tohmatsu, M&A deals are on the rise in India on account of a fast-growing economy, positive changes in industry and investment regulations and a very promising market potential.

Among the industries, the telecom sector recorded a quadruple growth with deals aggregating $4.18 billion this year against $1.06 billion during the corresponding period last year.

While the telecom sector accounted for 23 per cent of the money involved in the deals, energy and financial sectors accounted for 20 per cent and 18 per cent, respectively, followed by the hi-tech industry sector (11 per cent), consumer products (5 per cent) and health care (4 per cent).

The rise in M&As has taken place in spite of a sustained stock market rally during the year. Traditionally, M&A activity slows down when stock markets are booming as valuations go up.

Major deals struck during the period include telecom major Vodaphone's stake acquisition in Bharati Tele-Ventures for $1.5 billion and Tata Tea's acquisition of Good Earth Tea.

During this period, Reliance Capital closed a deal for acquiring AMP Sanmar. Oracle's acquisition of i-flex, Essar's acquisition of the mobile business of BPL, and the Explora Labs deal closed by Matrix Lab were the other significant deals.

In the first half of the year, Indian companies bought out 42 companies. Information technology companies have been the busiest shoppers and relatively smaller companies have been the most active on the M&A turf.

In step with this trend, Mindteck acquired Singapore-based Netsys Consulting Ltd, Sierra Atlantic bought out Boston's Sceptre Database Consultants, and Secova eServices acquired US-based EmpactEBS.

Among the pharma companies, Wockhardt acquired Esparma of Germany and Dr Reddy's Lab bought Trigenesis Therapeutics, a US-based dermatology company. Matrix and Sun Pharma have also made their overseas ambitions clear, having declared intentions to acquire more firms.

Amongst automobile companies, Mahindra & Mahindra announced its first overseas acquisitions after it bought the manufacturing assets of China-based Jiangling Tractor for about Rs 36 crore. The company is now looking at eastern Europe for expansion.

In the banking sector, State Bank of India picked up 51 per cent stake in Mauritius-based Indian Ocean International Bank for Rs 36 crore in February. ICICI Bank acquired a little-known in Russia -- Investitsionno-Kreditny Bank.