Amid economic uncertainties hurting business prospects, the value of M&A deals involving Indian companies nearly halved to $3.4 billion in the three months to September compared to year-ago period, according to global consultancy Ernst & Young.
In the September quarter of 2011, the overall value of M&A transactions stood at $6.9 billion. Global consultancy Ernst & Young today said the value as well as number of disclosed merger and acquisition deals slumped in the 2012 September quarter.
Moneycontrol.com
The M&A deal count fell to 161 in latest September quarter compared to 202 transactions in the year-ago period. “The current economic environment both at the domestic and global level had its bearing on the Indian M&A activity in the last three months. Besides, several cash-rich companies are playing the waiting game,” E&Y Partner and National Director ( Transactions Advisory Services) Amit Khandelwal said.
However, he noted that the recent flurry of policy reforms announced by the government should boost the investor sentiment and “consequently, M&A activity in the coming quarters”. E&Y said that outbound deals increased significantly in terms of value but decreased in terms of count.
“When compared to 3Q’11, this quarter’s outbound M&A declined significantly in both deal count (from 42 deals) and deal value (from $3.8 billion). “Besides the current economic headwinds, the reasons for India Inc’s caution on foreign acquisitions could be the recent wave of resource nationalism sweeping the globe and a weak Indian rupee,” E&Y said in a statement.
In terms of inbound transactions, the deal value as well as count fell in the latest quarter compared to year-ago period. “On a y-o-y basis too, inbound M&A decreased in both deal count (from 50 deals in 3Q’11) and deal value (from $1.2 billion in 3Q11). International buyers were cautious on M&As in India due to mismatch in valuation expectations, decline in the country’s GDP growth and policy-related apprehensions,” it noted.
With 21 deals, the technology sector recorded the highest number of transactions and third-highest amount of disclosed value at $494.5 million in the 2012 September quarter. The majority of the deal value was contributed by Infosys’ acquisition of Swiss consulting firm Lodestone Management for $348.8 million.
“The US continued to be the most-favored target destination as well in the latest quarter, especially for companies in the technology sector. Indian companies made eight acquisitions in the US collectively worth $$585.6 million,” the statement said.
Among the high value deals was Sahara India Pariwar’s acquisition of New York’s Plaza Hotel for $570 million.
PTI
