Merger deals decline 25% in 2003-04: CMIE

Fiscal 2003-04 saw 1,118 merger and acquisition (M&A) deals, including 72 open offers, aggregating Rs 35,981 crore. In 2002-03, 1,224 M&A deals were struck but aggregating only Rs 23,785 crore. Over all, mergers dropped by 25 per cent to 284 deals in 2003-04.

The average value per acquisition soared to Rs 43.14 crore, 53 per cent higher compared with 2002-03, according to CMIE report on M&As.

Seventy-two open offers aggregating Rs 1,088 crore were announced during the year compared with 85 open offers worth Rs 4,878 crore in 2002-03, excluding subsequent exit options for offers made earlier.

More than three-fourths of the open offers announced during the fiscal were made by Indian acquirers. But these accounted for less than half of the total offer amount.

"Nearly 70 per cent of the offers made by Indian acquirers targeted companies with thinly traded scrips. The offer price as well as the offer amount involved in these cases were low," the report said.

Only 16 open offers made by foreign acquirers accounted for around 57 per cent of the total offer amount. However, several of these offers are currently under litigation. These include the open offers for Colour Chem, Vanavil Dyes & Chemicals, Ray Ban Sun Optics (India), and Ondeo Nalco India.

The largest deal of 2003-04 was the Rs 10,536 crore disinvestment of a 10 per cent stake in the Oil and Natural Gas Corporation by the government.

Excluding disinvestments and open offers, equity stake acquisitions amounted to Rs 15,877 crore during the fiscal.

Average valuation exhibited a 26 per cent rise to stand at Rs 27.28 crore per deal struck during 2003-04.