M&A activity involving Indian companies witnessed an upsurge in the April-June 2010 quarter, according to the Ernst & Young Transactions quarterly report. While the deal count of 155 deals was similar to that of April-June 2009, the total disclosed deal value reached $16.9 billion, almost 400% higher than the total deal value in the same period last year ($3.5 billion in April-June 2009).
Outbound deal activity was dominant, reflecting increased business confidence among Indian players to acquire companies abroad, a media release said. Outbound deals accounted for around 50% share in the aggregate deal value between April and June 2010. This was in sharp contrast to the same period last year, when outbound deals held a share of just about 6% in the aggregate deal value.
Says Ranjan Biswas, partner and national director, transaction advisory services, Ernst & Young, ?We are seeing deals materialize every second day. There is more liquidity and willingness to acquire amongst corporates.?
With the global economic climate improving, the April?June 2010 quarter witnessed four billion-dollar deals, cumulatively worth $11.3 billion, despite continued uncertainty in Europe. The same period last year did not witness even a single billion-dollar deal, while the last quarter witnessed three such deals cumulatively worth $13.7 billion.
The average deal size consistently increased over the past few quarters and rose to $296 million between April and June 2010, rising approximately six-fold from just $50 million in the same period a year ago and 18% higher than $251 million during January?March 2010.
The oil and gas sector led the pack, accounting for almost one-third of the aggregate deal value during April?June 2010. This sector also accounted for the largest deal of the quarter – Indian Oil Corporation, Oil and Natural Gas Corporation (ONGC), Petroliam Nasional Bhd and Repsol jointly acquired a 40% stake in Venezuelan oil and gas company Empresa Mixta for $4.8 billion. Reliance Industries was also active in M&A, with investments in Marcellus Shale ($340 million) and Eagle Ford Shale ($266 million). The pharmaceutical sector ranked second, with deals worth $3.9 billion. The key transaction was Abbott Laboratories? acquisition of Piramal Healthcare?s Healthcare Solutions business for US$3.7 billion. Other prominent deals were Hinduja Group?s acquisition of KBL European Private Bankers for $1.7 billion in the financial services sector, and Reliance Industries? acquisition of a 95% stake in Infotel Broadband Services for $1 billion from the telecommunications sector.
In terms of deal count, technology sector witnessed maximum deal activity with 22 deals, followed by industrial products (15 deals), financial services (14 deals), infrastructure (13 deals), and metals and mining (11 deals).