M&A deals in India down 56% to $5.91 bn in Q3

New Delhi: The value of merger and acquisition deals involving Indian companies witnessed a 56 percent decline year-on-year to $5.91 billion in the third quarter of 2011, according to a report by global consultancy firm Grant Thornton.

Though the total value of merger and acquisition (M&A) deals in the third quarter this year dropped 56.25 percent, there was an increase in the number of transactions, said Thornton’s ‘Dealtracker’ report.

[caption id=“attachment_99987” align=“alignleft” width=“380” caption=“An industry-wise analysis shows that the mining sector accounted for the lion’s share of M&A deals during the quarter in terms of value. Reuters”]  [/caption]

Commenting on the findings, Grant Thornton India Partner and Practice Leader, Valuations, Srividya C G said: “There has been a trend reversal, with a higher proportion coming from outbound deals, unlike the first half of the year.” During the third quarter of this calendar year, there was a significant increase in cross-border transactions, wherein 63 such deals worth $4.88 billion were announced, accounting for over 80 percent of the total value of M&A deals.

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Meanwhile, there were 86 domestic deals worth $1.03 billion during the quarter. The trend was exactly opposite last year, wherein domestic deals worth $11.69 billion were announced and cross-border deals were valued at just $1.82 billion.

“While cross-border transactions have shown growth, there is a considerable decline in domestic M&A. However, there is an increase in the overall activity, which is seen by an increase in the number of M&A transactions,” Srividya said.

An industry-wise analysis shows that the mining sector accounted for the lion’s share of M&A deals during the quarter in terms of value, primarily due to two large outbound transactions. The telecom industry was the second-most targeted sector, while the power and energy sector saw the third-highest transaction value.

Out of $4.88 billion worth of cross-border deals in the third quarter of 2011, the total value of outbound deals- Indian companies acquiring or merging with businesses outside India- was $ 3.69 billion (via 29 deals), five times more than the year-ago period in terms of value, Grant Thornton said.

In the corresponding period last year, 39 outbound transactions worth $0.63 billion were announced. Meanwhile, the total value of inbound deals – foreign companies or their subsidiaries acquiring or merging with Indian businesses -in the third quarter was $1.19 billion through 34 deals, Grant Thornton added.

PTI