India Inc announces $14 bn M&A deals in just 45 days in 2010

NEW DELHI: India Inc has once again started to splurge this year with the domestic firms announcing merger and acquisition deals worth a whopping $14 billion in just 45 days.

The way the companies have begun shopping, it looks the year 2010 is all set to overtake the M&A deal tally of 2009 by a huge margin. In just 45-days of 2010 India Inc has announced deals worth $14 billion, while in the year 2009, corporate India made deals worth a modest $11.9 billion.

According to the monthly deal report of VCCEdge, a financial research provider, the M&A deal value during January 2010 stood at $2.8 billion and yesterday's $10.7 billion Bharti-Zain offer, wherein Bharti intends to buy Kuwait-based Zain telecom's mobile operations in Africa, takes the total kitty to over $14 billion.

In terms of deal size, the Bharti-Zain deal would be the third largest transaction involving an Indian firm after an estimated $13.5 billion offer by Reliance to get control of the bankrupt petrochemicals firm LyondellBasell Industries (which is currently under discussion) and the Tata Steel's takeover of Europe-based Corus for $12 billion.

The Bharti-Zain deal could catapult Bharti Airtel in the league of world's top 10 telecom operators.

Bharti has entered into exclusive talks with Zain for acquiring its African operations based on an enterprise value of $10.7 billion, the telecom major said in a statement today.



This is Bharti's third attempt in the last two years to enter the African market. In September 2009, Bharti's talk with MTN for a $23-billion merger deal fell apart due to various regulatory hurdles, including dual listing. Last month it had bought a 70 per cent stake in Bangladesh's Warid Telecom.

Some of the other mega M&A deals involving an Indian entity are -- the Vodafone Hutchison deal ($10.8 billion), the Hindalco-Novelis transaction ($6 billion), Daiichi- Ranbaxy ($4.50 billion), ONGC-Imperial ($2.80 billion) and NTT DOCOMO-Tata Teleservices ($2.70 billion).

In 2009, the global economic slowdown forced corporate India to look largely within the country for merger and acquisitions, as domestic deals accounted for about 60 per cent of the $12-billion worth of deals.

The trend seems to be reversing as Indian companies have started to venture out and have announced or are reported to have interests in some multi-billion dollar outbound deals, such as the estimated $13.5-billion takeover of global petrochemicals major LyondellBasell by Mukesh Ambani-led RIL and the recent Bharti-Zain deal.

Industry experts, however, believe that though there has been an increase in deal activity since the last quarter of 2009, but it will still take some time before corporate India gets back to the peak M&A activity levels of 2007 and 2008.

Meanwhile, global M&A activity also seems to be bouncing back after the $19.5 billion Kraft-Cadbury deal and $2.7 billion Hewlett Packard-3Com deal, among others.