Mergers & Acquisitions (M&A) activity involving Indian companies during the latest quarter (July-September 2012) declined 20 per cent year-on-year to 161 deals against 202 deals in the year-ago period, according to Ernst & Young’s latest Transactions Quarterly report.

During the period, the total disclosed deal value fell sharply by 51 per cent to $3.4 billion ($6.9 billion).

According to Amit Khandelwal, Partner and National Director, Transactions Advisory Services, Ernst & Young Pvt Ltd: “The current economic environment both at the domestic and global level had its bearing on the Indian M&A activity in the last three months.

“Besides, several cash-rich companies are playing the waiting game. However, the recent flurry of policy reforms announced by the Government of India should boost the investor sentiment and consequently, M&A activity in the coming quarters.”

Highest deal value

The highest deal value in the quarter was attributed to a single deal — Sahara India Pariwar’s acquisition of New York’s Plaza Hotel for $570 million.

The largest inbound deal of the quarter was US-based Hospira Inc’s acquisition of Penicillin and Penem active pharma ingredient (API) business of Orchid Chemicals and Pharmaceuticals for $200 million, said the report.

Highest number of deals

The technology sector recorded the highest number of deals (21) and the third-highest amount of disclosed value ($494.5 million).

The majority of the deal value was contributed by an outbound acquisition of the Swiss consulting firm Lodestone Management by Infosys for $348.8 million, said E&Y.

The US continued to be the most-favoured target destination as well, especially for companies in the technology sector.

Indian companies made eight acquisitions in the US collectively worth $585.6 million.

The Indian IT-BPO companies are buying out US-based BPO units to gain competencies in certain verticals, and strengthen their onshore presence and client relationships.

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