Deal Street is still hot: M&As touch $6 bn in first two months of 2008

MUMBAI, MARCH 27: Though the markets did not continue the new year party and took a bow after the first fortnight, the consolidation story has treaded an upward path in the last two months. India Inc announced 92 mergers and acquisitions (M&A) in January and February. The Tata Motors’ deal with Ford to acquire Jaguar and Land Rover at $2.30 billion is expected to bolster the M&A scenario. The company had been in talks for the UK brands for several months and signed a definitive agreement on Wednesday.

According to global consultancy firm Grant Thornton, the cumulative value of the deals in January and February stands at nearly $6 billion. Topping the M&A list is the banking and financial services. Together with shipping and ports, they attracted the maximum number of deals during the period. “There have been 92 merger and acquisition deals worth $5.96 billion in the first two months of 2008,” Grant Thornton said in the latest issue of its magazine Dealtracker. Outbound deals have outnumbered domestic ones in terms of value breakup. Domestic deals accounted for $2.7 billion whereas outbound deals stood at $2.8 billion. Inbound deals valued $450 million, the report showed.

The most significant M&A deal in the first two months of 2008 has been HDFC Bank’s acquisition of Centurion Bank of Punjab, followed by a subsequent merger. Deals worth $2.51 billion were entered into in banking and financial services, while those in the shipping and ports sector amounted to $1.4 billion. The other most significant deal was the acquisition of 17.2 per cent stake by Walt Disney Company in UTV Software Communication for consolidating its stake to 32.10 per cent in the domestic media company.

In PE, there were 90 deals worth $3.55 billion in the first two months. The top PE deal during the January-February period was Citi Venture Capital and AIG’s joint investment of $380 million in Akruti City. Real estate and infrastructure, as well as the power and energy sectors, garnered the maximum PE investment with $1.13 billion and $550 million respectively.

However, compared to the corresponding period last year, the number of deals and the billions spent on mergers is just one sixth. There were 102 M&A deals with a total value of about $36.80 billion in that period. The volumes had surged to record levels as two significant deals (Tata Steel’s acquisition of Corus valued at $13.6 billion and Hindalco’s acquisition of Novelis valued at $6 billion dollars) were announced in that period.

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