The Hindu Business Line : Big ticket M&A deals slated for 2005

THE $600-million (Rs 2,609 crore) Holcim acquisition of ACC was rated among the top six mergers and acquisitions (M&As) till date the world over in 2005, the largest deal last month being the $3,280-million (Rs 14,264 crore) acquisition of Korea First Bank by Standard Chartered Plc.

If the overall plan of the Swiss major to spend $800 million (Rs 3,478.6 crore) in the Indian cement sector were to be factored in, it would have been almost on a par with the third-ranked $817-million acquisition of Kodak Polychrome Graphics by Eastman Kodak.

At Rs 3,500 crore, the Holcim-ACC transaction could well be overshadowed by a domestic deal that has been in the making for quite a while and is expected to fructify later this year.

The BSNL-MTNL deal with a transaction size of about Rs 4,000 crore is slated to top the M&A chart for 2005, according to investment banking circles.

Clearly, new benchmarks are getting set and action in M&As is just beginning to hot up from the Indian perspective. With the appetite of fund managers for Indian companies progressively on the rise and the likes of global cement major Cimex, Mexico, no longer able to ignore the country, the real India cross-border M&A story is yet to unfold, says Mr J. Niranjan, Joint Head - Investment Banking, M&A Advisory, ICICI Securities Ltd. While divergent views on whether the cash-rich MTNL should acquire BSNL or vice versa are still doing the rounds, the die seems to be cast for a grand telecom deal of some sort sooner or later. Meanwhile, private sector investment in cross-border M&As will see much action, says Mr Niranjan.

"The private equity funds are really working on this sector. Some of the deals that are in the making include leading players in the Indian auto components industry that is looking for overseas acquisitions. Then there are the Indian iron and steel majors that are looking for iron ore and coal mines abroad," Mr Niranjan said.

The companies that are tipped to be looking for overseas acquisitions include Tata Motors, Mahindra & Mahindra (auto components), SAIL, Coal India Ltd (coal mines) and quite a few oil and gas majors including Reliance and PSUs that are looking to prospect in West Asia, Africa and Europe.

Of course, quite a few such transactions have already been inked - Trevira and Flag telecom by Reliance and NatSteel by Tata Steel.

Meanwhile, on the domestic front, there at least two banking sector M&As that are waiting to happen, including the long- awaited consolidation between BoI and UBI. The mother of all M&As would be when the oil PSUs will be carved up between IOC and ONGC, but there is no guarantee that it will happen this year.

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