The Hindu Business Line : M&A activity has slackened: KPMG

WHILE the M&A (merger and acquisitions) activity during the first half of 2004 showed growth in the Asia- Pacific region, the Indian market witnessed reduced activity.

Significantly, a large number of transactions in India have shadowed global parent transactions elsewhere, according to a KPMG report.

KPMG Corporate Finance's regular analysis based on the data provided by Dealogic shows a levelling out to the slide in global M&A activity since 2000.

According to KPMG findings, the Indian market showed a slight dip in activity with 109 deals being completed, indicating an eight per cent drop compared with the previous year. The highest deal in India was valued at $378 million of that of Hewlett Packard's buy out of Digital GlobalSoft, was significantly higher than the value in the last year deal of $260 million.

The Country Managing Director India - KPMG, Mr Ian Gomes, in a statement said: "these figures are below expectations given the optimism that surrounds the first quarter. At the start of the year a more stable economic landscape and a rebound in the equity markets helped the promise of increased M&A activity, but this has yet to materialise. While it is encouraging to see a flattening out in the value of completed activity, the drop in overall number of deals is a telling sign that recovery is still a way off."

Some of the significant telecom deals included Reliance's acquisition of FLAG Telecom in the UK, the Idea Cellular's acquisition of Escotel and Bharti's acquisition of Hexacom.

During the first half of 2003, M&A activity was concentrated mainly in chemicals (36 per cent), followed by telecom (17 per cent), logistics (14 per cent), and oil and gas (13 per cent). However, cross border activity seems to have taken a hit during the first half. The number of deals have fallen to 49 as against 90 in second half of 2003 and 83 in the first half of 2003. The value was reduced to $1,321 million from $1,563 million in first half of 2003.

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