2013 M&As down 11.5 pct to $31.5 bn, lowest since 2009

Written by PTI | Mumbai | Updated: Jan 3 2014, 23:47pm hrs
MergersReflecting the general weakness in the economy, M&A involving domestic companies were down by 11.5 pct to $31.5 bn in the year just gone-by, the lowest since 2009 when it had stood at $21.5 bn. Reuters
Reflecting the general weakness in the economy, mergers & acquisitions (M&A) involving domestic companies were down by 11.5 per cent to USD 31.5 billion in the year just gone-by, the lowest since 2009 when it had stood at USD 21.5 billion.

According to data complied by a news agency, the number of deals also declined to 12.6 per cent to 967 from 1,107 in 2012.

During the fourth quarter of 2013, overall M&As totalled USD 7.1 billion, a 28.5 per cent sequential increase over Q3, but a decline 29.8 per cent from Q4 year-on-year.

The report also said the average M&A size climbed to USD 76.1 million, as more deals were announced above USD 1-billion mark, compared to USD 73.5 million in 2012.

Meanwhile, the economic slump had a larger impact on domestic M&As which plunged 69 per cent to USD 5.2 billion in the year, which is the lowest since 2004 when it stood at USD 2.0 billion.

The bulk of domestic activities were on the materials sector with deals worth USD1.5 billion being clinched constituting 29.4 per cent of the total domestic M&As, but this again was a massive 75.4 per cent lower that 2012.

However, total across the board, M&As grew a healthy 56.8 per cent to USD 24.7 billion compared over 2012, driven by a 43.5 and 83.1 per cent increase in the inbound and outbound M&As, respectively.

Completed M&A deals involving domestic companies totalled USD 29 billion, up 49.5 per cent from USD 19.4 billion in 2012.

Energy and power sectors lead the M&A street with 21.1 per cent market share or worth USD 6.7 billion, which is a whopping 173.3 per cent increase over 2012.

The second slot was occupied by the healthcare players, capturing 15.8 per cent of the total with USD 5 billion worth of deals, up 24.5 per cent from the previous year.

On account of the large oil and gas reserves, Mozambique was the top outbound FDI destination in terms of value, accounting for 52.9 per cent of the market share worth USD 5.1 billion from three deals.

The US, however, saw the most number of transactions (21 deals valued at USD 2.8 billion) up 53.3 per cent, capturing 28.8 per cent of all the outbound deals.

At 14.9 per cent, industrials came third, followed by telecommunications with 13.9 per cent, which together captured 28.8 per cent of the deals as both sectors witnessed a significant rise in deal value with 164.7 per cent and 347.3 per cent growth, respectively, from 2012.

However, private equity-backed M&As were down 46 per cent, recording the lowest levels since 2009.

Buy-side financial sponsor M&As totalled USD 2.6 billion in 2013, a 45.6 per cent decline from 2012, which was lowest since 2009 when deal value fell to USD 2.4 billion.

In-bound M&As rose 43.5 per cent as foreign firms acquired domestic companies reaching USD15 billion, despite the number of announced deals slipping 13.3 per cent from 2012.

The bulk of inbound acquisitions focused on the healthcare sector and captured 27.3 per cent of inbound deals worth USD 4.1 billion, a 102.2 per cent growth from 2012.

The chart topper was Unilever's USD 3.573 billion share buyback of Hindustan Unilever. This deal bolstered inbound deals from Britain to reach USD7 billion, or 46.9 per cent of the total in terms of value, while the US saw the most number of deals (86 M&As) worth USD 3.6 billion.

M&A advisory fees rose 33.2 per cent to USD 133.4 million in 2013, led by Citi with USD 16.2 million, and accounted for 12.1 per cent of the market share of the fee pool.