The Hindu Business Line : M&A activity in India far from bullish, says KPMG study

THE M&A (mergers and acquisitions) activity in India was lower than the previous year with 258 deals in 2004 — a 25 per cent drop compared to the previous year, according to a KPMG Corporate Finance analysis.

While there are indications to show a visible shift from organic growth stories to consolidation and buy-outs, the deal values were estimated at about $5,595 million, indicating that the average deal size has increased.

The Country Managing Director of KPMG India, Mr Ian Gomes, said in a statement, "We are at a turning point in global M&A. After the much-heralded return of the market at the start of 2004, we are now finally in a position to call a recovery, albeit a modest rise by bid numbers."

The KPMG analysis based on a Dealogic study shows that there is a 47 per cent increase in M&A since the end of 2000, whereas the Indian market actually indicates stagnation. While Asia is seen to be outperforming, Europe is lagging behind and the US, on the other hand, has recorded higher values.

The highest deal value of 2004 — Hewlett Packard's buy-out of Digital GlobalSoft (a Compaq India subsidiary initially) for $378 million — was significantly higher than last year. The M&A activity was concentrated on telecommunications, which accounted for 21 per cent, followed by IT and software with 19 per cent and industrial manufacturing (12 per cent).

Significant deals included Reliance's acquisition of Flag Telecom, Idea Cellular's acquisition of Escotel, Bharti's acquisition of Hexacom and Qualcomm's investment in Reliance Communications.

India witnessed about 38 outbound investments largely lead by ONGC's continued acquisition of oil blocks overseas, followed by deals in the pharma and automotive sectors. Among these are Tata Motors' acquisition of Daewoo's truck unit, M&M's bid of Jiangling tractor unit of China and Bristlecone in the US, and Sona Group's acquisition in France and TVS Group's acquisition of an autoparts company.

There were a host of other investments by large funds like that of Warburg Pincus in Moser Baer, Max India and Radhakrishna Foods and of CDP Capital in Sony Entertainment Television.

More Stories on : Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page