India Inc on M&A spree: March deal tally at $5.4 billion

NEW DELHI: Corporate India's merger and acquisition spree witnessed a significant uptrend in March as deals worth $5.4 billion were announced, an eight fold jump over the same period a year ago, a Grant Thornton report says.

According to the tax, assurance and advisory firm, there were 48 M&A deals in March this year, while in the same month last year, the figure stood at $677 million by way of 43 transactions.

The surge in M&A deal value was primarily due to two deals valued over a billion dollars. The first being acquisition of Tass-Yuryakh oilfield for $1.3 billion by Indian Oil Corp, Oil India and a unit of Bharat Petroleum.

The other was Tokyo-based Yokohama Rubber Co's acquisition of off-highway-tyre manufacturer Alliance Tire Group for $1,200 million.

Due to the significant uptrend in M&A transaction value in March, the deal tally for the first three months of the year stood at $8,925 million, a 31 per cent jump over January-March 2015.

"Primary drivers for M&A growth were the strong outbound interest contributing to over 20 per cent of total deal values and consolidation in the domestic market with deal values growing by 66 per cent," Prashant Mehra, Partner at Grant Thornton India LLP, said.

Mehra noted that inbound transactions continued to be the highest contributor with deals valued around $3.5 billion contributing to about 30 per cent of the total deals.

On the M&A front, core sectors such as telecom, energy and automotive have attracted big ticket transactions which together contributed 50 per cent of the total M&A deal values.

The increasing number of big ticket transactions is another encouraging trend with the quarter witnessing 19 big ticket deals valued over $100 million, the report said.

"Easing FDI norms, regulations in cross border transactions apart from implementation of other key government initiatives will hopefully continue to drive business sentiment and maintain this deal momentum throughout 2016," Mehra said.