India Inc's Q1 M&A deal volume down 75% over last yr: report

The total number of M&A transaction in the first quarter of this year stood at $4.56 bn

India Inc's shopping spree witnessed a significant slowdown in the first quarter of this year as deal volume plunged 75% over last year but the deal tally could pick up steam in the coming days driven by the government's push to attract FDI, says a report.

According to audit, tax and advisory firm Grant Thornton, the total number of merger and acquisition transaction in the first quarter of this year stood at $4.56 billion, down from $18.39 billion in the same period last year.     

"The quarter clearly saw decline in deal activity, possibly driven by interplay of factors given the macro conditions as well as the pressure on liquidity," the Grant Thornton report said.

Commenting on the findings, Grant Thornton India Partner (Transaction Advisory Services) Raja Lahiri said, "Given the FDI regulatory changes in various sectors and Government's push to attract FDI, we believe that M&A deal activity should pick up this year".

Interestingly, excluding the internal mergers and restructuring, M&A deal values in the first quarter of this year were up 14% as compared to first quarter of 2012.

In the first quarter of 2012, out of the total M&A value of $18.39 billion, merger and internal restructuring deals amounted to $14.43 billion.

Inbound deals were the flavour of the very first quarter of this year as the total value of inbound deals wherein foreign companies or their subsidiaries acquired Indian businesses was $2.90 billion (through 29 deals) compared to $1.26 billion (by way of 36 deals) in first quarter of 2012.

The total value of domestic deals in first quarter of 2013 was $1.41 billion (via 66 deals) as compared to $2.01 billion (71 deals) during the corresponding quarter in 2012.     

The total value of outbound deals (Indian companies acquiring businesses outside India) in first quarter of 2013 was $0.19 billion (21 deals) compared to $0.69 billion (26 deals) during first quarter of 2012.     

Pharma and healthcare space dominated both M&A activity in the quarter. Mylan Inc's acquisition of Agila Specialties (Strides's injectable business) for $1.8 billion was the top deal for the quarter, the report said.