M&A activity in India up 16.5% at $26.1n in Jan-Sept 2014: report

Mergers and acquisition (M&A) activity in India jumped 16.5 per cent to touch $26.1 billion in the first nine months of the year 2014. This is also the highest since 2011 when the deal value was $34.5 billion in the corresponding nine-month period, Thomson Reuters said in a report.

The average M&A deal size as per disclosed value of transactions climbed to $75.2 million, compared with $63.1 million last year, helped by deals like the $4 billion acquisition of Ranbaxy by Sun Pharmaceuticals, which is still pending regulatory approvals.

According to the report, M&A activity has been led primarily by domestic deals while cross border deals saw a decline. The value of domestic M&As stood at $11.1 billion, up by 207 per cent over the same period last year while cross border M&As dropped 40.2 per cent to $10.7 billion compared with the same period last year.

The decline was evident in both inbound and outbound M&As, with the deal value falling by 24.6 per cent and 70.2 per cent, respectively. The report noted.

M&A activity targeting Indian companies totalled $2.6 billion this year, up 24.8 per cent in deal value from last year. This was driven by Canada Pension Plan Investment's acquisition of Kotak Trustee Co's shares in Kotak Mahindra Bank for $371.5 million (around Rs2,198 crore) in a privately negotiated transaction.

In addition, Canada Pension Plan also agreed to acquire an undisclosed minority stake in L&T Infrastructure Development Projects from Larsen & Tourbo Ltd for $322.2 million.

The report indicated that the healthcare sector accounted for a majority of the acquisitions with a share of 23.4 per cent and value of $6.1 billion, a 145.8 per cent increase from last year.

Energy and power sector had a 14.4 per cent share of M&As with $3.7 billion worth of deals, down 39.8 per cent.

Technology, media, and telecommunications sector captured an aggregate market share of 16.7 per cent, as combined deal value increased 35 per cent to $4.3 billion, the report added.

The US was the top most targeted nation in terms of value and the number of deals, which accounted for 27.8 per cent of the market share worth $509 million from 25 announced transactions.

United Kingdom is currently the top acquirer of Indian companies in terms of value with $2.5 billion from 18 announced deals and accounted for 27.9 per cent of India's inbound M&A activity.

India's overseas acquisitions stood at $1.8 billion during the first nine months of 2014, a 70.2 per cent fall year-on-year, and the lowest for the first nine months period since 2009 ($576.3 million).