Slump hits M&As too, April see only 9 deals

Written by Markets Bureau | Mumbai, May 11 | Updated: May 13 2008, 03:32am hrs
The uncertain scenario for the India Inc on the back of squeeze in liquidity, the rising uncertainty over the interest rates and rise in the input cost (fuel and oil) has resulted in the slow down in the domestic M&As deals. This is reflected by the fact that, the number of domestic deals that stood at 18 in the month of January has trimmed down to 9 in April.

According to the data from Grant Thornton, February saw 17 domestic deals on the local shores while in March the number dipped to 13 and it further slipped down to nine deals in April.

Pawan Prabhat, senior manager, UTI Securities (Investment Banking division) said, The volatile market coupled with step taken by Reserve Bank of India (RBI) to tame inflation by resorting to measures intended at tightening the liquidity has sacrificed India Incs growth and this taken a toll deals. Also companies may not opt to reflect their M&As immediately in the last fiscal year and would like to carry forward for the next year so we might see an increase in the number deals here on from the month of April.

Though there has been a rise in the total number of merger & acquisition (M&A) in April compared to that of March, but the value of these deals has come down significantly. In April the total value of all the deals taken together was $1.09 billion, which has been considerably low compared to that of March, which stood at $ 3.69 billion. According to the Grant Thornton, 41 M&A deals were announced in the month of April compared to 33 in the month of March.

After the deal in April, the total tally of M&A touched to166 deals in the first four months of the calendar year 2008 (CY08).

Out of 41 deals announced for April 2008, 9 were domestic deals, 23 cross-border outbound deals while remaining nine deals were cross-border inbound deals. While out of 33 deals in March, 13 were domestic deals, 15 cross-border outbound deals while remaining 5 deals were cross-border inbound deals. The most considerable cross-border deal in April have been of Jubilant Organosys acquisition of Draxis Health Inc for $ 255 million followed by Fresenius Kabis acquisition of 73.25% stake in Dabur Pharma for $218 million which was also the fraction of cross-border deal.

In April there were 9 domestic deals (both acquirer and target being Indian) with an announced value of $ 92 million, 23 of the cross border outbound deals (Indian companies acquiring business outside India) were valued at $610 million while other 9 were inbound deals (international companies or their subsidiaries acquiring Indian business) were at $ 385 million.

While in the month of March there were 13 domestic deals worth $ 0.22 billion, 15 cross-border outbound deals valued at $ 2.66 billion and 5 cross-border inbound deals were valued at $ 0.81 billion. The total number of M&A deals during the first 4 months of 2008 stands at 166, with an announced value of $10.73 billion as against 201 deals amounting to $ 37.82 billion during the corresponding period in 2007. The total number of M&A deals announced during 2007 stood at 676 with a total announced value of $51.11 billion.