Inbound merger and acquisition (M&A) deal volumes surged 30 per cent in 2011, while the volume of outbound ones dropped 35 per cent, according to a research report. Foreign companies acquired majority stakes in 131 Indian companies in 2011.
There were 65 inbound deals, with an announced value of $9.99 billion. In comparison, 2010 had witnessed a total of 101 inbound deals, of which there were 50 transactions with announced values, amounting to almost $8.4 billion.
A study by Venture Intelligence, a research service focused on private equity and M&A transaction activity in India, stated the largest inbound M&A deal by value announced in 2011 was Vodafone’s buyout of Essar Group’s stake in mobile phone services firm Vodafone Essar for $5.46 billion in March. The second-largest inbound deal was the acquisition of business process outsourcing firm Intelenet by UK’s Serco Group for an estimated $630 million. This was followed by International Paper’s acquisition of a 75 per cent stake in publicly-listed Andhra Pradesh Paper Mills for $388 million.
US-based companies were the leading acquirers of Indian companies in 2011, followed by English and Japanese firms, Venture Intelligence data showed.
The volume of outbound deals (Indian companies acquiring foreign companies/assets) dropped by about 35 per cent to 127 deals in 2011, compared with 194 in the previous year. Among these, there were 62 deals with an announced value of $9.9 billion, against 104 such deals worth $23.7 billion in 2010. The largest outbound deal was Mundra Port & SEZ’s acquisition of the Abbot Point Coal Terminal in Queensland, Australia for $2 billion. In another major outbound acquisition, GVK Power & Infrastructure acquired various Australia-based coal mines from the Hancock Group for $1,260 million.
The domestic segment saw 333 deals in 2011, compared to 337 in 2010. Of these, 108 deals had an announced value of $6.1 billion, compared with 142 deals worth $34 billion in 2010.
Overall, in 2011, Indian companies were involved in a total of 591 M&A deals, including both cross-border and domestic transactions. Of these, 235 deals had an announced transaction value of $26 billion. The volume of transactions was lower compared to 2010, which saw a total of 632 M&A deals (including 296 deals with an announced value of $66.4 billion). Median deal values, for both outbound and inbound deals, rose sharply in 2011, while that in the domestic segment remained flat.
Led by the Aditya Birla Group’s acquisition of a controlling 67 per cent stake in Columbian Chemicals for $875 million, manufacturing companies emerged as the most active dealmakers (cross-border and domestic deals) in 2011. Other top deals in this industry included the Hero Group’s buyout of Honda from their two-wheeler joint venture (for $854 million), Essar Group acquisition of Zimbabwe Iron and Steel Corporation ($750 million), International Paper’s acquisition of Andhra Paper Mills ($388 million) and MAN Truck and Bus’ buyout of its Indian joint venture partner in MAN Force Trucks ($202 million).
Led by iGate Global Solution’s acquisition of Patni Computer Systems for $1,200 million, the information technology information technology-enabled systems segment had emerged as the second most active industry for deal making in 2010. Publicly-listed Fortis Healthcare’s acquisition of two of its promoter owned entities — international hospital chain Fortis International (for $665 million) and diagnostics chain Super Religare Laboratories (for $211 million) — dominated the healthcare and life sciences segment that emerged as the third-most active industry in 2011.
