The value of announced merger & acquisition (M&A) deals involving Indian companies amounted to $62.1 billion in 2017, down 3.5 per cent compared to 2016, but still elevated compared to historical M&A activity, said a Thomson Reuters report.
The report said despite the decline in deal value, the number of announced deals grew 10.6 per cent compared to the previous year. The average M&A deal size for transactions with disclosed values declined to $84.6 million in 2017 from $102.3 million in 2016. The report said inbound M&A activity hit a record high of $31.7 billion, up 15 per cent in 2017.
Outbound M&A activity, however, declined sharply by 73.5 per cent to $2.6 billion, making it the lowest outbound deals year since 2014. This totals to cross-border M&A activity of $34.3 billion, down 8.1 per cent in value compared to 2016.
Domestic M&A stood at $25.4 billion in 2017, down 0.5 per cent in value from over a year ago, despite the 18.6 per cent increase in the number of announced domestic deals. Completed M&A deals involving Indian companies totaled $59.4 billion in 2017, a 78.3 per cent increase over 2016 ($33.3 billion), while the number of completed deals grew by 27.3 per cent.
The telecom sector accounted for majority of the acquisitions involving Indian companies with a 29.8 per cent share worth $18.5 billion, a more than a six-fold increase in deal value compared to 2016, making it the highest annual period of M&A deals for the sector since 2007 ($19.4 billion).
In March, Vodafone Group PLC agreed to merge its Vodafone India assets with the mobile business of Idea Cellular for an estimated $11.6 billion, through a joint venture, via a scheme of arrangement. Upon completion, Vodafone will own 45.1 per cent stake and Idea the remaining 54.9 per cent interest in the joint venture. The pending transaction is currently the largest India M&A deal so far this year and the second largest-ever telecommunications deal involving India after the $12.7 billion Hutchison Essar-Vodafone Group deal in 2007.
Financials and high-technology rounded up the top three sectors for M&As, capturing 16.7 per cent and 11 per cent shares of the pie, respectively. Buyside Financial Sponsor M&A activity targeting Indian companies totaled $7.4 billion in 2017, a 59.1 per cent increase from 2016, but the number of deals declined 8.5 per cent. Private equity-backed M&A in India’s financial sector accounted for 44.2 per cent of the market share worth $3.3 billion, up 182.3 per cent from a year ago. Media & entertainment and consumer products & services followed behind with 10.5 per cent and 9.1 per cent shares, respectively. FE
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