Indian M&A Deals - H1 2007 update

According to data compiled by global consultancy firm Grant Thornton, 42 cross-border deals with an announced value of $4.11 billion were carried out by Corporate India in May, while 32 domestic M&As garnered just $0.26 billion to their kitty.

The total number of M&A deals announced in May was worth $4.37 billion, with United Spirits buying out Whyte & Mackay for $1.11 billion, and Suzlon Energy’s controlling stake in REpower for 1.7 billion dollars, being the most significant deals of the month, Thorton said.

The M&A deals in the month totalled 74 with announced values of $4.37 billion as against 57 deals worth $3.98 billion in April, Thornton’s Dealtracker report said.
Out of the total cross-border deals, 30 were outbound with Indian companies acquiring businesses outside the country for a value of $3.79 billion.

There were 12 inbound deals (international companies acquiring Indian businesses) with an announced value of close to $0.32 billion. Besides, the total number of private equity deals announced during the month stands at 24 with an announced value of $1.56 billion as against 23 deals with a total announced value of $0.44 billion in April.

Some top deals
Canadian steel maker Algoma’s shareholders approved the $1.74 billion sale of the company to Essar Steel Holdings, clearing the way for a deal struck in mid-April. Algoma said it expects the acquisition to be completed by June 18.

May’s largest deals were United Spirits’ acquisition of Scottish beverage maker Whyte and Mackay for $1.2 billion and Suzlon Energy’s purchase of a controlling stake in Germany’s RE Power for $1.7 billion.

According to Grant Thornton Corporate Advisory Services - The average size of acquisitions in 2007 has been about $160 million to $180 million but that number has been inflated by a few multibillion-dollar deals. Out of the 287 M&A deals reported so far this year, only about 20 have been worth more than $160 million.

Deal activity is likely to remain brisk in technology and pharmaceuticals. Telecom, which saw one of the largest inbound acquisitions of the year when British giant Vodafone agreed to buy Hutchison Telecom’s stake in Hutchison Essar for $11.1 billion, is another possible venue for more deals, but it would likely consist of fewer transactions with larger value.

India is the world’s fastest-growing cellular market, adding over 6 million subscribers a month.

World Bank’s private sector arm, International Finance Corporation (IFC) invested 30 million dollars in Kanoria Chemicals and Electrotherm India in May.

Private equity investor Sequoia Capital invested about $7 milion in IT firm Minglebox.com, while Reliance Capital picked up a stake in Precision Wires for $4.12 million, the data show.

Some of the major inbound cross-border deals include French banking major BNP Paribas’s acquisition of 45 per cent stake in financial services firm Sundaram Home Finance for $45.81 million.

Besides, Standard Chartered Bank bought 49 per cent stake for $34.19 million in UTI Securities and Interpublic Group hiked its stake in Lintas India to 100 per cent for $100 million.

In March and April, there were 111 M&A deals with a total value of about $6.12 billion. These included 62 domestic deals with a value of $0.73 billion. The number of inbound cross-border deals has been 17 with a value of $1.98 billion and the number of outbound cross border deals was 32 with a value of $3.41 billion.