India's M&A deals up 12% on back of HUL open offer

Mumbai: On the back of $5.4 bllion Unilever open offer in HUL, the overall merger & acquisition (M&A) deals involving Indian companies clocked 12.3 percent growth in the first half of 2013 at $20.1 billion over the year ago period, according to Thomson Reuters.

“The second quarter of 2013 saw overall domestic M&As totaling $15.3 billion, a whopping 214.3 percent

sequential jump from the first quarter, driven by a $5.4 billion open offer in Hindustan Unilever by Unilever, taking the total M&As to $20.1 billion in the first half of the year,” the media and information firm said in a report today.

[caption id=“attachment_922667” align=“alignright” width=“380”]  Reuters[/caption]

The average deal size climbed up to $82.8 million as more deals were announced above $1 billion in value,

compared to $73.1 million in the year ago period, it said.

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However, domestic M&As declined by a whopping 68.3 percent at $2.3 billion, from the year ago period, marking the lowest first half-level since 2004, when it stood at $1.2 billion.

The bulk of domestic activity focused on the financials sector with $657.3 million, down 69.4 percent

from last year, the report said.

Total cross-border M&As grew 70.8 percent to $17.0 billion compared to the first half of 2012 as inbound and outbound M&As rose 32.4 percent and 294.5 percent, respectively. Of this, completed M&As stood at $12 billion, up 16.9 percent in H1 of the current year over the same period last year.

Giving a break-up, the report said consumer staples captured 28.2 percent, or $5.7 billion, accounting for the majority of the deals involving domestic companies, which is a 435.2 percent jump over the same period last year.

This uptick was driven by Unilever’s pending open offer to raise its interest in HUL to 75 percent by acquiring a 22.52 percent for a total value of $5.4 billion. This is the biggest deal on record for consumer staples involving domestic companies.

Industrials, energy and power sectors also witnessed a significant rise in deals with a triple-digit percentage spike each, and captured 19.6 percent and 15.7 percent of the market share, respectively, according to the report.

Private equity-backed M&As slumped 49 percent, the lowest since 2004, totalling just $834.5 million in the reporting period. The materials sector accounted for 42 percent of such M&As worth $350.2 million, a 14-fold spike.

When it comes to in-bound M&As, the numbers rose 32.4 per cent with foreign firms acquiring domestic companies in a deal value of $11.2 billion. This is the strongest start to a year since 2011 when it stood at $17.5 billion.

With Unilever and Diageo open offers pending, Britain accounted for 51.3 percent of in-bound M&As in terms of value, while the US saw the most number of deals - 45 transactions worth $2.6 billion, it said.

The activities on outbound M&A front grew a staggering 294.5 percent to $5.8 billion, making it the highest first half level in terms of deal value since 2010.

The outbound deals were dominated by the industrials sector with 45.6 percent share as deal value grew 17-times to $2.6 billion. Energy & power followed closely and accounted for 43 percent with $2.5 billion.

The US was the top most targeted nation in terms of value and number of deals - $2.7 billion from 14 announced deals - a 46.6 percent market share.

Mozambique accounted for 43 percent share from a single deal worth $2.5 billion, thanks to the ONGC-OIL pact for Videocon’s gas field announced late last month.

The report noted the M&A advisory fees rose 20.5 percent to $55.4 million. Citi took the top spot on M&A fee rankings at $14.6 million, accounting for 26.3 percent market share of the fee pool.

PTI