India Inc M&A deals value down 41% in Apr-Sep, 2011, says a report

NEW DELHI: Corporate India announced 177 merger and acquisition deals worth $26.8 billion in the first nine months this year, a 41.5 per cent decline vis-a-vis the corresponding period a year ago, according to a report.

As per the report by global advisory firm mergermarket, titled 'Indian M&A Roundup Q1-Q3 2011', Indian M&A saw a 41.5 per cent decline in the value of M&A deals in the first nine months of 2011 and a 16.9 per cent drop in terms of volume, compared to the same period of 2010.

"With India's benchmark Sensex slumping almost 23 per cent year-to-date, rising inflation and interest rates and ongoing global woes, it is not surprising that domestic M&A dwindled in the Q1-Q3 2011 compared to the same period last year," Anjali Naik, the Deputy Editor of mergermarket, Asia-Pacific, said.

While the valuations and volume of M&A deals was muted, activity is expected to continue on a smaller scale in the industrials and chemicals, financial services and consumer sectors, Naik added.

Inbound deals worth $7.32 billion were recorded in the third quarter (July-September), compared to $2.65 billion in the previous quarter.

The total value of M&A deals in the first nine months of 2011 was largely accounted for by two inbound deals -- BP Plc's $7.2 billion transaction for acquisition of stake in Reliance Industries' oil and gas properties and Vodafone Group Plc's purchase of partner Essar's 33 per cent stake in Vodafone Essar Limited ($5.46 billion).

The Vodafone Group Plc/Vodafone Essar Limited deal announced in July was the second largest transaction recorded in the first nine months of 2011, boosting the Q3 inbound deal value to $7.32 billion, mergermarket said.

A sector-wise analysis shows that the energy, mining and telecommunications sectors accounted for more that 50 per cent of the total value of M&A deals involving Indian entities. However, each of the sectors saw a sharp decline when compared to the corresponding period last year.

The value of M&A deals in the energy and mining sectors stood at $7.83 billion, a fall of 35.6 per cent, while telecommunications sector transactions amounted to $6.13 billion (down 68.7 per cent).