Mergers and acquisitions activity remains subdued in January-March quarter: EY report

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Mumbai | Published: June 4, 2019 3:07:21 AM

While inbound deal value increased by 21%, outbound deal value declined by 53% year-on-year (y-o-y). On the volume front, both inbound and outbound deal activity declined by 14% and 17% y-o-y, respectively.

merger and acquisition, merger and acquisition deals, value declined, cross border m&a activity(Image: Reuters)

Mergers and acquisitions (M&A) activity in India remained subdued in the first quarter of calendar year 2019 with only 242 deals worth $9.9 billion getting recorded compared to 260 deals having a disclosed deal value of $21.6 billion a year ago, according to a report released by EY.
Global M&A market remained subdued while the uncertainty around general elections results also appeared to have added to the sub-par performance, the report added.

“While, it was a soft quarter, the activity of mid-sized deals (between $20 million and $500 million) remained in line with the long-term quarterly mean, highlighting the steady foundation of the M&A market,” it said.
Domestic activity continued to dominate the Indian M&A in the first quarter, with 158 deals accounting for an aggregate disclosed deal value of $7.1 billion. This contributed about 65% to the total deal volume and nearly 72% to the total disclosed deal value.

“While consolidation remained the primary deals driver, financial deleveraging, faster pace of insolvency proceedings and opportunistic buys by the big industry players also added to the push. The quarter also witnessed two mega deals in the domestic arena. The largest deal was the $3.2-billion merger of Bandhan Bank and Gruh Finance. It was followed by the Tata group-led consortium’s $1.2-billion investment in GMR Airports,” it said.
Cross-border M&A showed mixed trends during the quarter.

While inbound deal value increased by 21%, outbound deal value declined by 53% year-on-year (y-o-y). On the volume front, both inbound and outbound deal activity declined by 14% and 17% y-o-y, respectively.

“The US continued to be the most active cross-border M&A partner for Indian companies during the quarter, with a total of 28 deals totaling to $840 million. Japan and Germany emerged as other favourite trade partners,” EY indicated.
Going ahead, India is expected to witness a stable M&A activity on the back of domestic consolidation and continued interest of foreign investors, EY stated in
the report.

“While some companies may take a pause in the current volatile world, many are expected to continue with their growth strategy and make the best use of available opportunities in domestic arena. While domestic consolidation will continue to drive deal activity, corporate restructuring and balance sheet deleveraging by highly-indebted player will also provide a push to the deal-making,” it said.

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