Lack of big ticket transactions led to a decline in merger and acquisitions (M&A) deals which dropped to an eight-month low with August, witnessing just 33 deals aggregating to $0.6 billion, said a dealtracker report by Grant Thornton. M&A transactions reported about 30% decline in volume and value terms in August 2018 compared to August 2017. The year, so far, has marked a record $87.6 billion across 869 M&A and private equity deals, with deal values almost doubling compared to the same period last year, supported by increased multi-billion-dollar transactions.
“On account of absence of big ticket transactions, the month recorded the lowest deal values in 2018 – $2 billion across 100 M&A and PE deals. The month recorded only six deals valued over $100 million each compared to two billion-dollar deals and six deals valued at and over $100 million each in August 2017,” the report added.
Driven by Constellation Alpha Capital Corp’s acquisition of Medall Healthcare for $212 million, the largest investment in an Indian diagnostics company to date, the sector led the deal activity with 37% of the total M&A deal value, the report said. Grant Thornton pointed out that Constellation Health Holdings, a wholly-owned Singapore subsidiary of Constellation, is set to acquire 93% of the outstanding shares of Medall at the closing for approximately $166 million in cash, and the remainder of the outstanding shares of Medall on June 30, 2019.
Contrary to the previous month, August was driven by activity in the start-up sector, which accounted for with 37% of deal volumes. The media and entertainment sector was active this month with four deals, of which two were in the entertainment (multiplex and gaming) space.
Pankaj Chopda, director at Grant Thornton India, stated that lack of conclusion on large ticket IBC transactions and other domestic or cross border transactions impacted the deal report card in August 2018.
“Considering the proximity that BFSI, consumer and retail, manufacturing, IT and ITeS and pharma, healthcare and biotech sectors have to consumer consumption trends and lifestyle, they are expected to witness M&A deal activity. Further, lack of relief to power companies facing insolvency suits under IBC law will also drive M&A transactions in the sector,” he added.