India Inc runs up an M&A bill of Rs 1.8 trillion

The value of mergers and acquisitions that India Inc snapped up in the first half of the year surged over seven times to a staggering $38 billion or over Rs 1.8 trillion, led by big ticket deals in the telecom and pharma sectors.

The mergers and acquisitions activity involving domestic firms witnessed a surge with the deal value reaching $38 billion in the first half of the year compared to the same period last year, global consultancy firm Grant Thornton said in the latest issue of Dealtracker.

"The deal values are very close to the heightened level of M&A transaction value that was seen in 2007. The number of deals for the first half of 2010 is the highest-ever historically," Grant Thornton partner for specialist advisory services Srividya CG said.

The significant increase in activity is driven by some of the large deals including the merger of Reliance Infratel's tower assets with GTL Infrastructure for $10.86 billion, Bharti Airtel's $10.7 billion acquisition of Zain's African assets and Abbott's acquisition of the domestic formulation business of Piramal Healthcare for around $3.72 billion.

The largest contributor to the deal value has been the telecom sector followed by several others such as pharma/ healthcare, banking and financial services, metals and ores, the study notes.

Interestingly, seven deals have been announced already which have are valued billion-dollar-plus --which is a record for the first six months of a year. Another report from VCCEdge, the financial research platform of VCCircle.com, states the M&A deal value during this April-June period touched $24.8 billion against $2.8 billion in the year-ago period.

"The second quarter of this year saw some big tickets deals, which sent the total M&A deal value soaring. This signaled the return of investor confidence and liquidity to the market," the VC Edge report notes.

In June, the total M&A and PE (including qualified institutional placement) deals were valued at $13.74 billion (67 deals) compared to $1.38 billion (43 deals) and in the same month of 2009, says the Grant Thornton report.

Further, total value of outbound deals (domestic firms acquiring businesses outside the country) was $0.13 billion (17 deals) in June.

While, total value of inbound deals (foreign companies or their arms acquiring domestic businesses) was $0.41 billion (6 deals) in June.

The Grant Thornton report says the most prominent region where outbound acquisitions have seen the highest include Africa, followed by Belgium, Britain and the US.

The largest acquirer of Indian businesses has been the US so far this year, in terms of both volume and value, it added.