Citi overtakes Merrill Lynch as Apollo-Cooper deal falls through

The global investment bank tops the coveted M&A league table for the year with deals such as Unilever's open offer for local unit

Global investment bank Citi overtook rival Bank of America Merrill Lynch (BankAm-ML) in the mergers and acquisitions (M&A) league table for 2013 as Apollo Tyres’ $2.5-billion bid to acquire the US-based Cooper Tire fell through on Monday. This is the second time in a row that the US-based investment bank has overtaken its rivals.

BankAm-ML was the banker to Apollo Tyres for the deal that was called off, after a legal dispute started following an unexpected opposition from labour unions of Cooper’s China unit. The investment bank ended the year with five deals worth $6.3 billion in the year that included Videocon Industries’ sale of its oil asset in Mozambique and its acquisition by ONGC Videsh.

According to data available with financial news wire Bloomberg, Citi ended the year with the five deals worth $7.3 billion, a 23-per cent market share in the $31.26 billion of M&A transactions involving Indian companies as a target or an acquirer.

The biggest deal for Citi in the year was Anglo-Dutch firm Unilever’s open offer for its Indian unit, Hindustan Unilever, to raise its stake up to 75 per cent. In the deal valued $3.57 billion, the parent was able to acquire 67.28 per cent of its Indian unit. Citi officials were not available for comment.

M&A in India shrunk to 725 deals in 2013 from 1,589 in the previous year. The deals where value was disclosed were worth $31.26 billion in 2013, down from $75.49 billion in the previous year. The average size of such deals in this period was down to $84.95 million from $91.94 million.

With India’s gross domestic product (GDP) growth coming down to 4.5 per cent and US GDP growth improving to 3.6 per cent, investment in India has suffered. Revival in the US economy has diluted the interest of US-based companies in Indian assets.

“Valuations people will pay for assets in India have come down,” said Raj Balakrishnan, managing director and head of investment banking at BankAm-ML, in a recent interview to this newspaper.

“While that does not apply in every sector, as growth rates vary, sector to sector and asset to asset, people are taking only rational calls,” he said.

Swiss bank UBS was ranked third in the M&A league table this year with two deals worth $6.07 billion that gave it a 19.4-per cent market share.