Home India News Mergers and acquisitions drop 41.5 percent in 9 months

Mergers and acquisitions drop 41.5 percent in 9 months


New Delhi : Mergers and acquisitions (M&A) in India have slumped by 41.5 percent to $26.8 billion during the first nine months of 2011 as rising interest rates and uncertainties in the global economy dampened sentiments, a report showed Friday.

During the January-September 2011 period, 177 mergers and acquisitions deals, valued at $26.8 billion, took place which is 16.9 percent lower in volume and 41.5 percent lower in terms of value when compared to the same period in 2010, according to data compiled by mergermarket, an independent mergers and acquisitions intelligence firm.

“With India’s benchmark Sensex slumping almost 23 percent year to date, rising inflation and interest rates and ongoing global woes, it is not surprising that domestic mergers and acquisition dwindled in the January-September 2011 period as compared to the same period last year,” Anjali Naik, Deputy Editor of mergermarket, Asia Pacific, said in the report.

Inbound deals accounted for 88.1 percent of all Indian M&A activity, four times that of Indian investments overseas. Inbound deals stood at $7.32 billion in July-September quarter as compared to $2.65 billion in the previous quarter.

The total deal value in the first nine months of 2011 was largely contributed by two inbound deals — British Petroleum’s $7.2 billion bid for Reliance Industries Limited and Vodafone Group’s purchase of 33 percent stake in Vodafone Essar for $5.46 billion.

Energy, mining and telecommunications sectors accounted for more that 50 percent of the M&A deals in the country.

However, each of the sectors saw a sharp decline when compared to the corresponding period last year. Energy and mining stood at $7.83 billion, a fall of 35.6 percent, telecommunications sector saw a massive decline in both deal value and deal count, from 16 deals worth $19.56 billion in January-September 2010 to three deals worth $6.13 billion in January-September 2011 — a significant drop of 68.7 percent.

“While valuations and deal values might be muted, activity is expected to continue on a smaller scale in the industrials and chemicals, financial services and consumer sectors,” Naik said.