HIGH VALUE M&A DEALS SET NEW TREND

Mumbai
The Economic Times Financial Chronicle

The merger and acquisitions for the month of August show telltale signs of high valuation deals. The total number of M&A deals in the month stands at 31 valued at $4.63 billion as against 43 deals amounting to $ 0.58 billion in July.

“The figures in August could be a commencement of a trend of high value deals, although it is too early to conclude. But if the same trend of high value consolidations continue for 12 to 8 months, it will be undoubtedly healthy for our economy,” said K Subramanian, director, Deloitte Haskins and Sells, which sees a potential high value M&A deals market in India by 2010.

Explaining the rationale behind such high value deals, Subramanian added, “under the present economic situation, these deals will help companies minimizing losses and maximizing profits on the other hand. M&A deals in aviation industry (e.g. Air Deccan-Kingfisher) and telecom industry are two respective burning instances.”

According to the figures revealed by Dealtracker - Grant Thornton, the most significant deals in August have been ONGC’s acquisition of Imperial Energy Plc for $ 2.80 billion followed by Infosys Technology’s acquisition of UK based Axon for $ 0.81 billion and CBay systems acquisition of MedQuist Inc for $ 0.28 billion.

There were 9 domestic deals with a value of $ 0.08 billion and 22 cross-border deals with a value of $ 4.55 billion. Furthermore, 17 of the cross border deals were outbound deals (Indian companies acquiring business outside India) with a value of $ 4.48 billion and 5 were inbound deals (international companies or their subsidiaries acquiring Indian business) with a value of $ 0.08 billion, the Grant Thornton report says.

The total number of M&A deals during the first 8 months of 2008 stands at 346, with a value of $22.74 billion as against 456 deals amounting to $ 48.23 billion during the corresponding period in 2007.

During August, there were 2 IPOs listed which raised a sum of $ 32.06 million from the public. The most significant IPO was $ 21.60 million by Nu Tek India. The total funds raised through IPO during the period Jan-Aug 2008 was US$ 4,405.40 million from 39 IPOs.

The total number of private equity deals announced during the month of August stands at 31 deals valued at $ 944 million as against 29 deals amounting to US$ 650 million in July. The total number of PE deals during the first 8 months of 2008 stands at 246, with a total value of $ 8.69 billion as against 260 deals amounting to $ 10.74 billion during the corresponding period in 2007.