India Inc's M&A deals halve to $9.4 bn in Q4

The merger and acquisition (M&A) deals by India Inc witnessed a decline of about 50% year-on-year  to $9.4 billion in the January-March quarter, says a report.

According to Ernst & Young's latest transactions quarterly report, a total of $9.4 billion deals were announced in the January-March quarter of calender year 2012, nearly half of the total deal value witnessed in the year-ago period.

In terms of deal count, 202 deals were announced as against 253 deals in January–March 2011, a fall of about 20%.

On a quarter-on-quarter basis, however, an uptrend was witnessed both in terms of number and value of deals.

As per the report, during January-March 2012, over 22% increase was seen in the number of deals and the deal value jumped 4.5 times over the October-December 2011 quarter.

Going forward, M&A activity is likely to gain momentum in the coming months, backed by improving stock markets and better availability of finance options, experts said.

"Transaction activity surged in Q1 of 2012 primarily on account of rise in the domestic consolidation. The upswing is likely to continue in the next quarter with improved investor sentiments," Ernst & Young Transactions Advisory Services Partner and National Director Ranjan Biswas said.

The pharmaceuticals sector is likely to witness more transaction activity, driven by the patent cliff in the US and the attractiveness of India as a low-cost R&D destination, the report said.

M&A activity during the quarter was highly tilted towards domestic deals which accounted for 126 (almost 63%) of the reported deals. This is a jump from the previous quarter, where domestic deals accounted for 48.5% of the total number of deals.

In terms of deal value, domestic deals dominated by contributing 88.4% of the total disclosed deal value for the quarter.

This trend in M&A activity in the January-March quarter is a deviation from that observed in the previous quarters, where cross-border transactions had outperformed domestic deals in terms of deal value.

The US continued to be the most acquisitive nation recording 10 deals worth $24.5 million, followed by Japan with seven deals worth $352 million.