The Hindu Business Line : 57 M&As in Jan-Aug

The first eight months of 2006 has seen 57 mergers and acquisition (M&A) deals in the IT and ITES sector valued at over $1.73 billion as compared to 80 deals valued at $1.33 billion for the whole of the year 2005.

The deal value too has increased by 95 per cent on an annualised basis and the average deal size has almost doubled. The outbound cross border deal value has increased by close to 200 per cent on an annualised basis, says an M&A market report by Grant Thornton.

The top M&A deals include EDS' acquisition of majority stake in Mphasis BFL for $380 million, RR Donnelley& Sons acquisition of Office Tiger for $250 million, Subex Systems buying Azure Solutions for $140 million, Aditya Birla Group acquiring Minacs Worldwide for $125 million and i-flex Solutions buying Mantas Inc for $122 million.

The report points out there have been significant changes in the valuation multiples in the IT sector in the last 10 months compared to Grant Thornton's earlier analysis of the same period in 2005. The average overall (domestic, inbound and outbound) revenue multiple in the IT sector on a trailing basis increased from 1.45 to 2.22, while the average revenue multiple for acquisitions made by Indian IT firms (domestic and outbound) rose from 1.12 to 1.84.

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