Regional companies bullish on M&A deals

Smarting their way out of the global downturn, many companies from Chandigarh and Punjab are aggressively eyeing merger and acquisition (M&A) opportunities, both in India as well as overseas.

Even as the reduced availability of bank financing, uncertainty of growth and mediocre sentiments have affected growth, companies in the region continue to scout for potential acquisitions.

Hari Om Bhatia, president, corporate finance of Chandigarh-based Surya Pharmaceutical Ltd, said that his company was actively looking for inorganic growth opportunities in the pharma sector both in India and overseas.

The company was in advance stage for evaluation of targets for potential acquisition.

According to a recent report on M&As and private equity, based on the survey of various business houses across the country, conducted by UK-based accountancy firm Grant Thornton, M&As have seen a 80 per cent decline in deal values over the first six months of 2009 against the corresponding period last year.

However, Paras Arora, regional director (Chandigarh) , Grant Thornton, said, companies in the region were still bullish on M&A options.

Grant Thornton is a UK-based international accountancy and business advisory firm that specialises in providing both compliance and advisory services to businesses.

Arora added that few companies in the region from diverse fields, including pharmaceutical, IT, agri business and automobile ancillaries had mandated Grant Thornton to help them in their M&A deals

Arora said the companies were definitely buoyant over acquiring companies.

A region-based IT company operating in the field of providing mobile value-added service (VAS) to many telecom companies was eyeing acquisition opportunities to increase its product portfolio.

Similarly, Punjab agro-based food processing industry was looking to acquire companies in Europe and the US to market their products in the European countries.

Arora added that the reasons for a company looking for inorganic growth were many. The falling market valuations is tempting the companies to go in the inorganic growth.

The cheaper valuations not only provide companies opportunities to carry out deals at competitive prices but also help the company to expand their markets in other geographies of the world.

Arora added that growing succession issue mainly in the Western countries was also one main reason why companies were looking for deals in there.

He added that in many cases they had found that the offspring’s were not continuing with their family businesses and hard bargaining ensured better deal for buyers.